Update for credit institutions and professionals carrying out lending operations
On April 22, 2022, the Commission de Surveillance du Secteur Financier (the “CSSF”) issued circular CSSF 22/807 updating circular CSSF 12/552 as amended relating to central administration, internal governance and risk management (the “Circular 12/552“).
1. Main objective
The update aims to implement recent changes to relevant EBA and ESMA guidance and further reflects that the regulatory requirements for outsourcing arrangements, which were previously included in Circular 12 /552, have now been moved to the new CSSF general circular 22/806 on outsourcing arrangements (discussed in our Newsflash on CSSF circular 22/806 – available here_).
2. Key Changes
Key changes to central administration, internal governance, and risk management requirements introduced as a result of the update include:
- circular 12/552 now includes a definition of ESG risks and explicit requirements to take them into account;
- the roles and responsibilities of the Chief Compliance Officer and the AML/CFT compliance function have been further clarified and now also include the obligation to adopt a “compliance monitoring plan”, enabling progress to be monitored AML/CFT compliance monitoring measures implemented;
- a specific section dedicated to the documentation of loans granted to members of the management body and their related parties has been added, which specifies in particular the information to be collected and, on first request, to be made available to the competent authority in this regard ;
- the section relating to subcontracting agreements has been considerably shortened and now includes references to the outsourcing rules provided for by the new CSSF general circular 22/806 relating to subcontracting agreements and to CSSF regulation 12-02 relating to the fight against money laundering and the financing of terrorism.
The corresponding updates will enter into force on June 30, 2022. As of this date, all credit institutions and professionals performing credit operations must comply with the obligations and requirements provided for in the revised Circular 12/552.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.