Financial Market Authority Issues Circular Letter on Organisational Regulations and Bank Secrecy
The Financial Market Authority (FMA) has issued a circular letter outlining the organisational regulations that credit institutions must implement and continuously monitor to ensure proper business management. The letter also addresses bank secrecy requirements.
Organisational Regulations
Credit institutions are required to establish an organisational structure, define clear decision-making processes, and maintain documentation and reporting obligations. Specifically:
- Credit institutions with total assets exceeding EUR1 billion or listed on a regulated market must establish an audit committee.
- Those with total assets exceeding EUR5 billion must also set up:
- Nomination committee
- Remuneration committee
- Risk committee
Suitability of Managing Directors and Employees
The FMA emphasized the importance of ensuring the suitability of managing directors, supervisory board members, and holders of key functions. Credit institutions are required to:
- Provide ongoing training for governing bodies and employees
- Implement an audit function and risk management system
Remuneration Requirements
Credit institutions must adopt policies and practices that encourage sustainable and long-term behavior among employees. The FMA emphasized the importance of transparency and proportionality in remuneration policies.
Anti-Money Laundering (AML) and Know-Your-Customer (KYC) Requirements
The authority issued guidance on AML and KYC requirements, stressing the need for:
- Due diligence
- Reporting to prevent money laundering and terrorist financing
Depositor Protection
The circular letter addressed depositor protection, highlighting the importance of ensuring rapid and comprehensive compensation of depositors’ claims in the event of a guarantee. The FMA emphasized that every credit institution must belong to a protection scheme and comply with the requirements set out in the Act on Deposit Guarantee Schemes and Investor Compensation.
Bank Secrecy
The authority reiterated the importance of bank secrecy, emphasizing that:
- Banks, their shareholders, corporate bodies, staff, and other persons acting on behalf of the bank have an obligation not to disclose certain information and secrets that come to their attention based on their relationship with customers.
Conclusion
The circular letter aims to provide credit institutions with a comprehensive overview of the organisational regulations and requirements they must implement to ensure proper business management and compliance with regulatory obligations.