Off-site controls of regulated institutions
The WAMU Banking Commission conducts off-site and on-site controls of regulated institutions, either on a corporate or consolidated basis, to ensure compliance with banking regulations and any other legislation applicable thereto.
The Commission defines frequency and scope of the audits and evaluations of regulated institutions, taking into account, among other things, their size, structure, risk profile, the nature and complexity of their activities, and their systemic importance.
The WAMU Banking Commission continuously monitors and assesses, especially in the context of document-based audits, the regulated institutions’ compliance with the recommendations, supervisory measures and supervisory decisions resulting from the audits.
Off-site controls or permanent monitoring consists, among other tasks, in analyzing prudential and accounting reports that regulated institutions are required to produce and submit to the WAMU Banking Commission. It also involves regular discussions and meetings with the senior management of the institutions, monitoring of the implementation of the recommendations of the WAMU Banking Commission, and addressing the shortcomings identified by on-site audit teams.
As part of ongoing monitoring activities, institutions also prepare and submit to the WAMU Banking Commission a preventive restructuring plan (PRP) setting out the actions they plan to undertake to restore their financial stability in the event of a significant deterioration of their financial situation. The procedures for preparing and submitting this document to the Regulatory Authority are set out in Circular No. 001-2020/CB/C of March 27, 2020, relating to preventive recovery plans for institutions subject to the supervision of the WAMU Banking Commission.
The PRPs are subject to an assessment by the Supervisory College.
The information collected from the regulated institutions can be used, after processing and analysis, to assess developments in their individual situations. The information also provides a basis for general or specific studies on the overall development of the banking system as well as microfinance and electronic money issuing operations in WAMU.
Off-site controls make it possible to pinpoint signs of vulnerability in an institution, which would justify appropriate action being taken. It also plays a warning, preventive, and advisory role in relation to on-site controls, thereby making it possible to target investigations more effectively.
The WAMU Banking Commission performs reinforced supervision on systemically important banking institutions for which it lays down more stringent prudential requirements.
On-site controls of regulated institutions
On-site controls are carried out by the following bodies :
- the Directorate of On-Site Inspection of Credit Institutions and Electronic Money Institutions (DCPECEME) ;
- the Directorate of On-site Supervision of Decentralized Financial Systems (DCPSFD).
These Directorates are mainly responsible for implementing the inspection program of the regulated institutions within their remit, as well as any other mission that the hierarchy decides to entrust to them.
They are organized along the lines of an audit firm and consist of inspection teams, led by a Heads of Mission.
The audit program is designed in accordance with the risks identified during off-site and on-site controls, which makes it possible to draw up a list of the most vulnerable institutions.
off-site controls are supplemented by on-site controls. In addition to their primary purpose of identifying and assessing the risks incurred by regulated institutions, they aim to assess the accuracy of the financial and accounting information provided to the supervisory authorities, compliance with prudential regulations, management quality and the outlook of regulated institutions.
These audits may cover corporate governance, the efficiency of internal and external audits, compliance with accounting and prudential requirements and the institution’s strategic choices. They may also cover commercial practices, the anti-money laundering and anti-terrorist financing mechanism, the performance of information systems, the effectiveness of risk management and the implementation of the recommendations of the WAMU Banking Commission.
On-site controls may be extended to related companies. They can be comprehensive, specific, or thematic. They may also aim at ensuring effective implementation of the recommendations and decisions of the WAMU Banking Commission.
The purpose of comprehensive audits is to assess all the areas of activity and management of an entity. Specific or targeted audits, on the other hand, are more limited in scope, or focus on the assessment of specific aspects of the management of a regulated institution or on the implementation of the recommendations and decisions of the WAMU Banking Commission. Thematic audits focus on cross-cutting issues common to several institutions.
