“The inspection plan reflects our priority of increasing the compliance maturity of new market participants and products. We focus on the EMI/PI sector, with a total of 36 supervisory actions: 10 inspections, 23 thematic analyses and 3 assessment visits. This year, we will pay particular attention to thematic analyses, which in addition to routine supervisory measures, will return to market participants as recommendations, guidelines and other assistance,” says Rūta Merkevičiūtė, Director of Financial Services and Markets Supervision Department of the Bank of Lithuania.
According to the plan, the experts of the Bank of Lithuania plan to inspect 13 electronic money institutions, 3 banks, 3 credit unions, 2 issuers and 2 financial brokerage firms, 4 consumer credit providers and peer-to-peer lending platform operators and 1 management company.
The inspections will largely focus on risk management, compliance with internal control and other requirements as well as quality assurance. The focus will also remain on the prevention of money laundering and terrorist financing.
This year the Bank of Lithuania also intends to carry out a wide range of thematic analyses aimed at assessing the maturity of the market, cyber security, sustainability and prevention of money laundering and terrorist financing. For instance, thematic analyses of international sanction monitoring systems are foreseen at 7 banks and 13 electronic money and payment institutions (EMIs/PIs), and thematic analyses for assessing the reliability of the internal control and management system and for ensuring the internal audit function are foreseen at 10 EMIs/PIs. It is also planned to carry out a thematic analysis on safekeeping of insurance premiums (customer funds) collected by insurance brokerage firms and timely settlement with insurance companies (up to 20 companies).
The Bank of Lithuania points out that this year there will be no separate inspections of crowdfunding operators (there are currently 21 of them). The Crowdfunding Regulation, which harmonises the requirements for the activities and licensing of crowdfunding service providers across the European Union, entered into force on 10 November 2021. It amends the Republic of Lithuania Law on Crowdfunding and requires the existing crowdfunding platform operators wishing to continue providing services to reapply for a licence over the year. As a result, compliance of the operators of these platforms with legal requirements will be assessed during this process.
In addition to routine inspections and taking into account market participants’ operational changes or complaints and risks, the Bank of Lithuania also conducts inspections that are not pre-announced. Inspections of banks directly supervised by the European Central Bank might be also carried out (in cooperation with experts from the European Central Bank).
Plans for routine inspections have been published by the Bank of Lithuania since 2017 to ensure smoother and more constructive cooperation between the supervisory authority and financial market participants. Announcing inspections in advance also serves as a preventive measure: financial institutions assess potential operational shortcomings and eliminate them in advance. This results in a much faster and more efficient inspection process.
