On 26 March 2018, the ABBL organised a members’ event on the subject of, “On-site investigations by Luxembourg, European and foreign authorities in the financial sector”. Intrigued at the idea of masked avengers banging on the doors of Luxembourg banks in the wee small hours, Delano asked for more details.

Margaret Ferns: Why did the ABBL organise this members’ event?

Catherine Bourin: In view of the increasing amount of regulation, it is becoming harder for bankers to get a clear view of which are applicable to them. There are also a growing number of regulations that grant authorities extended investigation powers with higher sanctions.

This is why the ABBL decided to create a specific working group dedicated to on-site inspections and issued guidelines with practical recommendations to banks. There is a wide range of institutions (national, European and other foreign authorities), which are given broad-ranging powers in this respect: the financial sector regulator (CSSF), the insurance supervisory authority (CAA), the national data protection commission (CNPD), the competition council, the labour and mines inspectorate (ITM), and even the state intelligence service and tax authorities, as far as Luxembourg authorities are concerned.

MF: Have on-site inspections become more common?

CB: Recent events confirm the relevance of this issue. With regards to compliance with EU competition rules, the European Commission carried out such investigations on the premises of certain financial institutions as well as banking associations in Poland and the Netherlands at the end of last year. The number of investigations by authorities is clearly on the rise. In the field of data protection, under the new legal framework, national authorities have new investigative powers allowing them to carry out data protection audits, including access to an undertaking’s premises.

MF: Are “dawn raids” really as dramatic as they sound?

CB: Banks can be faced with either announced or unannounced visits, so-called “dawn raids” due to the fact that they may take place very early in the morning. Such investigations may take place simultaneously on professional and private premises. Consequently, banks must be in a position to manage these urgent situations. To that end, it is essential to ensure that the employees are well informed and properly prepared. Adequate preparation enables good cooperation with the investigators while safeguarding the bank’s rights.

MF: What are the chances of these inspections happening in Luxembourg?

CB: Banks in Luxembourg are used to the on-site inspections conducted by the CSSF, usually with advance notice, as this is part of the regulator’s powers to conduct controls in banks and assess the conformity of their internal procedures. This is, however, less common for other authorities, but it could happen, and banks should get ready for these potential visits (such as from the CNPD or the ITM).

MF: Please briefly describe the ABBL’s advice in this respect?

CB: Our guidelines intend to give banks general recommendations regarding the types of behaviour to be adopted or prohibited in the event of an investigation. The guidelines should also help them in setting up internal procedures. It is necessary to make all staff members aware of this issue and to provide specific training for those who will be in charge of managing such investigations, in particular the bank’s reception personnel, who will be the first point of contact with the investigators.

In addition to its guidelines on on-site investigations, the ABBL has adopted a specific action plan on competition law, which aims at ensuring that the ABBL and its members remain compliant with competition law. The main actions are: ensuring the awareness of the ABBL members (including at board level), adopting an internal policy, developing a training programme on on-site inspection with the House of Training and encouraging our members to send their staff to the sessions.