Regulatory Alerts2020-12-07
Added · Updated
Update of Circular CSSF 12/552 on central administration, internal governance and risk management
Circular CSSF 12/552 is updated to incorporate European Banking Authority guidelines on internal governance, suitability assessments, default definitions, high-risk exposures, interest rate risk, and modified duration corrections. The scope is extended to financial holding companies and mixed financial holding companies, while proportionality is linked to the notion of systemic institution and clarified for internal control functions. Enhanced provisions regarding diversity and independence of the management body are introduced, along with requirements to consider environmental, social and governance risk factors and a new summary chapter for depositary bank activities. The circular applies in its entirety to credit institutions and in part to professionals performing lending operations, with a separate circular applying to investment firms, and becomes effective on 1 January 2021.