BNM Publishes Exposure Draft on Outsourcing Arrangements
BNM issued a revised prudential framework on outsourcing arrangements for financial institutions. The framework aims to ensure that risk management practices for outsourcing arrangements remain effective moving forward amid intensification of technological advances in a more globalized and digitized environment. This exposure draft sets out BNM’s proposed regulatory requirements on outsourcing arrangements by financial institutions. Responses on the proposed regulatory requirements must be submitted to BNM by October 27, 2017.
The proposals seek to ensure that financial institutions effectively monitor and control risks arising from outsourcing arrangements and that these arrangements do not hamper BNM’s continued ability to effectively supervise the business of financial institutions, including with respect to recovery and resolution efforts. The proposals in the exposure draft reinforce BNM’s expectations on broader governance and set out improved processes that must be in place to manage outsourcing arrangements. These include enhanced due diligence on service providers and stronger protection of data confidentiality. BNM also expects financial institutions to demonstrate that controls over outsourcing risk management arrangements are operating effectively and remain commensurate with risk profiles of financial institution. The revised requirements also ensure BNM’s continued ability to conduct effective supervisory oversight on financial institutions, including the increasingly complex outsourcing arrangements and concentration to a particular service provider. The policy document comes into effect on January 01, 2018, subject to certain transitional arrangements.
Related Link: Exposure Draft on Outsourcing (PDF)
Comment Due Date: October 27, 2017
Effective Date: January 01, 2018
Keywords: Asia Pacific, Malaysia, Banking, Outsourcing Arrangements, Prudential Framework, Exposure Draft, BNM
Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
