This book examines a key aspect of the post-financial crisis reform package in the EU and UK-the ratcheting up of internal control in banks and financial institutions. The legal framework for internal controls is an important part of prudential regulation, and internal control also constitutes a form of internal gate-keeping for financial firms so that compliance with laws and regulations can be secured. This book argues that the legal framework for internal control, which is a form of meta-regulation, is susceptible to weaknesses, and such weaknesses are critically examined by adopting an interdisciplinary approach. The book discusses whether post-crisis reforms adequately address the weaknesses in regulating internal control and proposes an alternative strategy to enhance the `governance' effectiveness of internal control.
Iris H-Y Chiu is a Reader in Law at University College London.
Part I: The Elements of Internal Control in Banks and Financial Institutions 1. The Role of Internal Control in the Meta-Regulation of Financial Institutions 2. The Role of Compliance 3. The Role of Risk Management 4. The Role of Internal Audit 5. The Contextual Frameworks of Corporate Governance Part II: Making Internal Control Effective in Banks and Financial Institutions 6. Regulating Aspects of Corporate Governance and Organisational Culture as a Broader Framework for Internal Control 7. Incentive-Based Approaches to Improve Internal Control Efficacy: Enforcement and Whistle-Blowing 8. The Need for Enhanced Professionalism for Internal Control Functions 9. Concluding Remarks