Our way to a successful transition
On April 22, the Commission de Surveillance du Secteur Financier (CSSF) has published the Circular 22/806, followed by a Q&A Webinar held on June 8, highlighting the key changes.
While general requirements have been updated, ICT requirements are only a collection from several older circulars. In essence, those rules describe the internal governance requirements for planning, implementing, monitoring and managing outsourced activities.
During the Webinar the CSSF pointed out that although all entities are required to fully comply, the principle of proportionality (e. g. size of the company, nature of activity) is always carefully applied.
Key changes at a glance
- Introduced principle of proportionality
- Extended scope to all supervised entities
- Assessment of critical and important functions
- Outsourcing authorization has been dropped, prior notification is sufficient
- Requirements for a formal register, a policy and a dedicated outsourcing function
The circular is part of the European convergence in financial supervision. In February 2019, the European Banking Authority (EBA), had issued its recommendations on outsourcing arrangements (EBA/GL/2019/02).
The CSSF highlighted during the webinar that the current circular has been amended to include further guidance and to take into account national specifics, and that it should not be regarded separately, but rather in correlation with other guidelines.
Originally, the EBA guidelines were intended to apply only to credit, payment and electronic money institutions, whereas the CSSF has chosen to extend their scope to other categories of supervised entities. However, in most cases branches of EEA credit institutions are usually out of scope.
We have developed a structured approach to achieve full compliance prior to the implementation of the circular. Our approach focuses on identifying all active and planned outsourcing projects at the earliest possible stage. This enables you to inform your service providers in the required time frame. Without good cooperation with your service providers, the review and update of all active outsourcing contracts will not be possible in time.
- From June 30, 2022, all outsourcing agreements entered into, under review, or amended must be fully compliant
- By December 31, 2022, the review and update of all existing outsourcing arrangements should be finalized
- The CSSF announced that a template for a preliminary notification will be published shortly
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