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© 2007 International Monetary Fund - page 29 / 41





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Prudential regulations and requirements


Market risk-related computations, capital charge, and necessary reporting

requirements are in force in the Slovakia. Risk-weighted capital adequacy requirements are applied on both a “solo” and “consolidated” basis. However, there is an uncertainty whether, and to what extent, the NBS can impose additional capital requirements if appropriate to deal with particular risk profiles (e.g., for non-arm’s length exposures or “hidden” losses or other situations where “prudential filters” are required) on a case-by-case



General requirements for risk management processes and procedures are

stipulated by the NBS’s decree on risk management and risks. Determining the efficiency of risk management as well as management oversight and assessing the inherent risks taken by an institution are an integral part of the NBS’s ongoing off-site and on-site supervision. Credit risk—although still relatively modest—is the predominant risk in the Slovak banking sector. Market risks are low, and country and transfer risk are almost nonexistent. Although there are no specific requirements for the management of interest rate risk in the banking book, proper management of interest rate risk is verified by the NBS. The management of liquidity risk is as covered by a special decree issued by the NBS. While the NBSA requires that senior management must address all significant internal operations in order to create an effective comprehensive internal control system and the NBS has detailed inspection procedures to assess adequacy of banks’ internal control systems, the NBS has not yet issued

a decree on the matter.

Abuse of financial services


The Slovak Republic has implemented the relevant EU anti-money laundering

legislation. As a member of the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures (MONEYVAL), the Slovak Republic observes most of the FATF 49 Standards. The Slovak Republic has established a financial intelligence unit— the Financial Intelligence Unit of the Bureau of Organized Crime (SJFP-UBPOK)—which is a member of the Egmont Group. Financial professions, in the broadest sense, are required to

report suspicious transactions to the SJFP-UBPOK. Account opening procedures require formal identification of the account holder. Banks are obliged to refuse execution of transactions from clients on an anonymous basis and to determine the ownership of funds used by customers for every transaction in excess of EUR 15,000. That said, a recent peer review by MONEYVAL indicated that some gaps remain in the AML framework and these should be addressed

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