Bangladesh Bank has introduced major reforms in the internal audit system of all scheduled banks through a new directive issued on Tuesday. The Internal Control Management System (ICMS) replaces the 2016 guidelines on internal control and compliance. Under the new rules, internal audit, compliance, and risk management functions are separated to ensure greater independence. For the first time, a whistleblower mechanism is made mandatory, allowing internal auditors to confidentially report corruption or serious irregularities by a bank’s board or managing director directly to Bangladesh Bank without prior approval from management.

The directive requires each bank to establish secure channels such as hotlines, email, or sealed written submissions for receiving complaints while ensuring whistleblower anonymity. Bangladesh Bank will take action against any bank that retaliates against whistleblowers. The new system also introduces forensic, concurrent, and virtual audits to strengthen oversight. Banks must adopt technology-based monitoring to detect trade-based money laundering, credit and market risks, cyber threats, and fraud.

All scheduled banks have been instructed to complete necessary organizational changes and implement the new directive by December 31.