On 22 April 2022, the CSSF issued a new Circular CSSF 22/807 updating Circular CSSF 12/552 relating to central administration, internal governance and risk management, as amended (“Circular CSSF 12/552“).
- Scope and timing
Circular CSSF 12/552, as amended by Circular CSSF 22/807, is applicable to credit institutions, including their branches. It also applies to Luxembourg branches of credit institutions from third countries, to Luxembourg branches of credit institutions established in another Member State and, in part, to professionals carrying out lending transactions (“Entities in scope“).
The updated CSSF circular 12/552 has been applicable since 30 June 2022.
- Main changes made by CSSF circular 22/807
Since June 30, 2022, the CSSF applies the following guidelines:
Furthermore, the CSSF updated certain parts of CSSF Circular 12/552:
- the strengthening of the responsibilities of the supervisory body (which must (i) take ESG risks into account in the monitoring and management of the institution’s risks, (ii) improve equality between men and women and the representation of the under-represented gender among the members of the management body, and (iii) hold the majority of its meetings in Luxembourg);
- strengthening requirements for authorized management to implement gender-neutral policies that ensure fair treatment and equal opportunity for all staff;
- strengthening of the rules on conflicts of interest;
- reinforcement of AML/CFT requirements in internal governance arrangements;
- update of the requirement of the internal alert system to be implemented by the Scope Entities taking into account the EU whistleblower directive terms; and
- repeal of Chapter 7 outsourcing requirements. Covered entities must now comply with the requirements of the new
Circular CSSF 22/806 relating to outsourcing agreements.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.