Authorisation is subject to the production of evidence showing the existence in Luxembourg of the central administration and of the registered office of the institution in respect of which authorisation is sought.

EU and national legislation require that financial institutions have robust governance arrangements, which include a clear organisational structure, well-defined, transparent and consistent lines of responsibility, effective risk identification, management, monitoring, reporting processes, control mechanisms as well as all standards and principles aiming at setting an institution’s objectives, strategies and risk management framework; how its business is organised; how responsibilities and authority are defined and clearly allocated; how reporting lines are set up and what information they convey; and how the internal control framework is organised and implemented, including accounting procedures and remuneration policies. Internal governance also encompasses sound information IT systems, outsourcing arrangements and business continuity management.

These governance arrangements should in that respect be appropriate to the size, nature, scale and complexity of the financial institution.

While implementing robust internal governance arrangements, credit institutions have to comply with the provisions of the Law of 5 April 1993 on the financial sector (“LSF”), in particular Articles 5, 7 and 38 of the LSF as well as with different CSSF circulars providing precisions on different topics, in particular with Circular 12/552 on central administration, internal governance and risk management.

Suitability of members of management bodies and key function holders

The Joint ESMA and EBA Guidelines on the assessment of the suitability of members of the management body and key function holders specify eligibility criteria and requirements. These Guidelines provide further guidance on the scope of suitability assessment to be made, the assessment process for institutions and competent authorities, and related policies.

With regard to the appointment of members of the management body and key function holders, credit institutions have to follow the prudential appointment procedure of key function holders in credit institutions as indicated below.

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Ngoc Dinh LUU
Last update: 04 May 2020