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 N.V. 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 special mechanisms1.

The legislator has recently inserted into the supervisory laws an obligation for approved auditors to submit an annual declaration to the supervisor stating whether or not they have identified special mechanisms2. To this end, a new reporting line is being created in the NBB application eCorporate; the procedures for submitting the aforementioned annual declaration are the same as those for submitting periodic reports at the end of the financial year.

This new obligation falls within the general mandate of approved auditors, as laid down in the various supervisory laws, to verify, within the framework of their legally defined activities, whether the financial entities for which they exercise their functions comply with legal provisions and function correctly. In this regard, it is noted that financial entities are expected to conduct a tax prevention policy whereby the persons responsible for effective management, in the case of the management board, in the report on the assessment of internal control 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 mechanisms3.

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 have concrete elements regarding special mechanisms in the course of carrying out their duties4. 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 mandate 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, B.S. 18 June 2021.

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3 See in this regard 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 establishing 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 a breach of the sectoral supervisory laws, approved auditors working at institutions on which the Bank exercises (co)supervision pursuant to Articles 12bis and 36/2 must make a report to the Bank when they have concrete elements regarding special mechanisms within the meaning of Article 36/4.”