Listed banks intensively appoint Chief Compliance Officers, potentially ushering in a profound transformation in banking compliance governance

Shishi Yu, China Securities Journal

As of March 2, nearly 30 listed banks have announced appointments of Chief Compliance Officers. Among them, Agricultural Bank of China, China Construction Bank, Bank of China, Lanzhou Bank, Qingnong Commercial Bank, and others have announced that their Chief Compliance Officers are also their Presidents.

Industry experts believe that establishing a Chief Compliance Officer is not only an important measure for banks to respond to regulatory policies but also promotes a deep restructuring of the banking compliance management system, which is beneficial for banks to shift from “passive regulatory compliance” to “proactive compliance governance.”

Compliance Starts at the Senior Management Level

Recently, listed banks have been actively announcing appointments of Chief Compliance Officers.

On February 27, five listed banks announced their Chief Compliance Officer appointments. Except for Bank of Communications, which appointed its Chief Risk Officer Liu Jianjun as Chief Compliance Officer, the positions at China Construction Bank, Zheshang Bank, Lanzhou Bank, and Qingnong Commercial Bank are held by their Presidents. Among them, Lü Linhua’s appointment at Zheshang Bank will take effect after his President’s appointment is approved. On February 13, Agricultural Bank of China announced that its President Wang Zhiheng was appointed as Chief Compliance Officer; on the same day, Bank of China issued a board resolution announcing that President Zhang Hui was appointed as Chief Compliance Officer. On February 12, Everbright Bank announced that the board approved Yang Wenhua as Vice President and Chief Compliance Officer.

Looking at the current roles of the appointed Chief Compliance Officers, most are also Presidents, with some banks appointing Vice Presidents, Chief Risk Officers, or Assistant Presidents as Chief Compliance Officers. A few banks have adopted a dedicated Chief Compliance Officer model.

A relevant person from the State Financial Regulatory Administration previously stated in a Q&A that financial institutions need to improve their ability to operate legally and compliantly, integrating compliance management organically into corporate governance, operational structures, and business processes. This requires compliance to start from the top, promoting the effective operation of the compliance management system from a high level.

Compliance Management Must Be Serious and Independent

Industry analysts note that the recent wave of appointing Chief Compliance Officers by banks mainly responds to the requirements of the “Regulations on Compliance Management of Financial Institutions” issued by the China Banking and Insurance Regulatory Commission in December 2024. The regulations will take effect on March 1, 2025, with a one-year transition period.

“The regulations clearly state that financial institutions should establish a Chief Compliance Officer at their headquarters, who can be a dedicated compliance officer or a senior management member, depending on their operational circumstances,” said a person from the board office of a state-owned bank. Having senior management serve as Chief Compliance Officers helps ensure compliance responsibilities are taken seriously from the top, fostering a compliance culture, raising awareness among all employees, and creating an environment where violations are not dared, not allowed, and not wanted, effectively supporting high-quality development.

The regulations also specify that the Chief Compliance Officer and compliance officers must not be responsible for front-office operations, finance, fund management, internal audit, or other departments where there could be conflicts of interest with compliance duties. Exceptions are made for bank Presidents (General Managers) serving as Chief Compliance Officers or Presidents of provincial or primary branches serving as compliance officers.

A relevant person from the State Financial Regulatory Administration emphasized that the core of compliance is to follow laws, regulations, and supervisory standards, avoiding crossing “bottom lines” or “red lines.” This requires compliance management to be serious and independent.

Moving Toward Proactive Compliance Governance

Experts generally agree that the establishment of a Chief Compliance Officer signifies a new stage in banking compliance governance. Under the guidance of the regulations, financial institutions should build a comprehensive compliance management system that covers all areas and levels, embedding compliance into decision-making, business operations, and across the entire process, achieving a shift from “passive regulatory compliance” to “proactive compliance governance.”

“The unique nature of financial institutions demands higher compliance standards than typical enterprises,” said Dong Ximiao, Chief Economist at Zhaolian and Deputy Director of the Shanghai Financial and Development Laboratory. He believes that financial institutions must adhere to compliant operations, cultivate a compliance culture, guide employees to enhance risk and compliance awareness, and continuously improve compliance management levels to effectively prevent operational risks.

According to the specific requirements of the regulations, the Chief Compliance Officer at banks should bear primary leadership responsibility for compliance management within their institutions and staff. Their main duties include: overseeing compliance management, organizing the development of compliance systems, supervising compliance departments and roles, ensuring strict and effective implementation of compliance standards, promoting the development of compliance policies, conducting compliance reviews and inspections, handling major compliance incidents, managing compliance assessments, problem rectification, and team building, and reporting regularly to regulators.