Circular CSSF 24/860 is a CSSF circular, published 29 August 2024. Subject: Update of Circular CSSF 12/552, as amended by Circulars CSSF 13/563, 14/597, 16/642, 16/647, 17/655, 20/750, 20/759, 21/785, and 22/807, relating to central administration, internal governance and risk management.
\nRelevant for: Credit institutions, Specialised PFS.
\nKeywords: Accounting, Audit Committee, Central administration, Credit risk, Depositary, Information and communications technology (ICT), Information security, Internal governance, Liquidity, Market risk, Operational risk, Outsourcing, Remuneration, Risk management.
\nUpdate of Circular CSSF 12/552, as amended by Circulars CSSF 13/563, 14/597, 16/642, 16/647, 17/655, 20/750, 20/759, 21/785 and 22/807, relating to central administration, internal governance and risk management
\nIn case of discrepancies between the French and the English texts, the French text shall prevail.
\nUpdate of Circular CSSF 12/552, as amended by Circulars CSSF 13/563, 14/597, 16/642, 16/647, 17/655, 20/750, 20/759, 21/785 and 22/807, relating to central administration, internal governance and risk management
\nTo all credit institutions and professionals performing lending operations
\nLuxembourg, 29 August 2024 Ladies and Gentlemen, The purpose of this circular is to clarify certain provisions of Circular CSSF 12/552 (“the Circular”). It notably specifies the definition of significant institutions in Part I of the Circular and introduces the definition of “transactions with related parties”. The scope of application of the Circular has also been clarified for (mixed) financial holding companies when they are intermediaries in the holding chain in order to promote proportionality. Certain elements of the Circular have been adjusted for consistency with the applicable regulations. o
\nThe requirement to establish an audit committee in Part II has been aligned with the Law of
\nThe provisions concerning the veto right of the head of the risk management function and
\n23 July 2016 concerning the audit profession. their ability to challenge management decisions have been adapted to fully comply with the European Banking Authority (“EBA”) Guidelines on internal governance (EBA/GL/2021/05). Some adjustments have also been made to align with Circular CSSF 22/806 on outsourcing arrangements.
\nIn Part III, Chapter 3 on credit risk, the Circular now establishes direct links with Circular CSSF
\nadopting
\nthe
\nEBA
\nGuidelines
\nloan
\norigination
\nand
\nmonitoring
\n(EBA/GL/2020/06) and Circular CSSF 17/675 adopting the EBA Guidelines on credit institutions’ credit risk management practices and accounting for expected credit losses (EBA/GL/2017/06) and develops the content of the requirements applicable for exposures to individuals secured by mortgages on residential property and for exposures to real estate developments. o
\nFinally, in accordance with Directive 2013/36/EU, the term “risk control function” has been replaced by “risk management function” throughout the Circular, and the legal references have been updated.
\nA version of the Circular showing the changes made is attached to this document. In the near future, the CSSF plans to publish a consolidated and amended version of all applicable Questions/Answers (“FAQs”) relating to the Circular. This Circular is applicable from 30 September 2024.
\nAnnex
\nCircular CSSF 12/552 as amended by Circulars CSSF 13/563, 14/597, 16/642, 16/647, 17/655, 20/750, 20/759, 21/785, 22/807 and 24/860
\nIn case of discrepancies between the French and the English texts, the French text shall prevail.
\n13/563,
\nCSSF
\n14/597,
\nCSSF
\n16/642,
\nCSSF
\n16/647,
\nCSSF
\n17/655,
\nCSSF
\n20/750,
\nCSSF
\n20/759,
\nCSSF
\n21/785 and, CSSF 22/807 and 24/860 Central administration, internal governance and risk management
\nCircular CSSF 12/552 AS AMENDED BY CIRCULARS CSSF 13/563, CSSF 14/597, CSSF 16/642, CSSF 16/647, CSSF 17/655, CSSF 20/750, CSSF 20/759, CSSF 21/785, AND CSSF 22/807 AND 24/860
\nIn case of discrepancies between the French and the English texts, the French text shall prevail.
\nThe text above is the opening of the document; the PDF carries the whole.
\nDocument page, PDF. Source: Commission de Surveillance du Secteur Financier (CSSF), reproduced with the CSSF's consent. The French text prevails.
"}