Uniform Letter to Approved Auditors Regarding Obligations Concerning Special Mechanisms

THE GOVERNOR your reference your correspondence Financial stability, AML supervision and prudential policy for banks Kurt Van Raemdonck National Bank of Belgium NV company number:
tel.: + 32 2 221 53 39 de Berlaimontlaan 14 0203.201.340 our reference email kurt.vanraemdonck@nbb.be 1000 Brussels RPR Brussels TA/2021/07/072/KVR/BK BELGIUM www.nbb.be Brussels, 6 July 2021 Uniform letter to approved auditors regarding obligations concerning special mechanisms Madam Auditor Sir Auditor Pursuant to the various supervisory laws, it is prohibited for credit institutions, listed companies, insurance and reinsurance undertakings, payment institutions and electronic money institutions, central counterparties, central securities depositories and supporting institutions operating in Belgium to establish a special mechanism 1. The legislator has recently inserted into the supervisory laws the obligation for approved auditors to submit annually a declaration to the supervisor indicating whether or not special mechanisms have been identified 2. To this end, a new reporting line is being created in the NBB's eCorporate application; the same procedures apply for submitting the aforementioned annual declaration as for the submission of periodic reports at the end of the financial year. This new obligation falls within the general mandate of approved auditors, as set out in the various supervisory laws, to verify, within the framework of their legally defined activities, that the financial entities in which they exercise their functions comply with legal provisions and function correctly. In this regard, it is noted that financial entities are expected to implement a tax prevention policy whereby persons responsible for effective management, if applicable the management body, in the internal control assessment report or, for insurance and reinsurance undertakings, in the reporting on the assessment of the effectiveness of the governance system, should pay particular attention to the prohibition on establishing special mechanisms 3. The legislator has also deemed it useful to clarify that approved auditors, due to their whistleblowing function, are obliged to report to the supervisor when they possess concrete elements regarding special mechanisms during the execution of their duties 4. In this regard, auditors must strictly respect the requirements regarding the exercise of the whistleblowing function, as described in Chapter E of Circular NBB_2017_20 of 9 June 2017 concerning the cooperation duties of approved auditors. Yours faithfully Pierre Wunsch Governor

1 See also Circular NBB_2021_16 of 6 July 2021 concerning special mechanisms.
2 Law of 2 June 2021 containing various financial provisions on fraud prevention, Moniteur belge 18 June 2021.

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the governance system should pay particular attention to the prohibition on establishing special mechanisms 3 The legislator has also deemed it useful to clarify that approved auditors, due to their whistleblowing function, are obliged to report to the supervisor when they possess concrete elements regarding special mechanisms during the execution of their duties 4. In this regard, auditors must strictly respect the requirements regarding the exercise of the whistleblowing function, as described in Chapter E of Circular NBB_2017_20 of 9 June 2017 concerning the cooperation duties of approved auditors. Yours faithfully Pierre Wunsch Governor 3 See Circular NBB_2021_17 of 6 July 2021 concerning tax prevention policy. 4 Art. 35/3, second paragraph of the Law of 22 February 1998 laying down the organic statute of the National Bank of Belgium, which reads as follows: “Within the framework of their obligation to report on their own initiative to the supervisor as soon as they become aware of decisions or facts that may indicate an infringement of the sectoral supervisory laws, approved auditors working at institutions subject to (joint) supervision by the Bank pursuant to Articles 12bis and 36/2 shall make a report to the Bank when they possess concrete elements regarding special mechanisms within the meaning of Article 36/4.”