Home and host financial supervision for cross-border financial activities.
Home financial supervision conducted by the country of a financial institution. The primary responsibility of home financial sector supervisors is to oversee the operations and activities of all financial institutions within the group and ensure compliance with applicable laws, regulations, and standards.
Host financial supervision conducted by the jurisdiction where a foreign financial institution operates or provides financial services through a branch, subsidiary, or offering its services on a cross-border basis. Host financial sector supervisors have the responsibility to ensure that foreign financial institutions operating within their jurisdiction, through a branch or a subsidiary, comply with local laws, regulations, and supervisory requirements.
Both supervisors, home and host, work in coordination:
- ML/TF/PF risk assessments. Home and host share their ML/TF/PF risk assessments of the financial institutions under their jurisdiction. This information will help the supervisors understand the inherent risks posed by the financial institutions.
- Emerging ML/TF/PF issues. Home and host share information on emerging threats, vulnerabilities, and typologies. This includes intelligence related to new methods, techniques, or channels used for ML/TF/PF purposes. By exchanging this information, supervisors can enhance their understanding of evolving risks and adapt their supervisory approaches accordingly.
- Supervisory findings. The supervisors can share their findings, inspection reports, enforcement measures and other supervisory information related to ML/TF/PF risk management and AML/CFT compliance of financial institutions, but also on fit and proper assessments. This includes details on deficiencies, weaknesses, and areas of improvement identified during inspections or ongoing supervision. The supervisors can use this information to complement their supervisory activities and assess the effectiveness of the institutions operating within their jurisdiction.
- Changes in AML/CFT regulations. Home supervisors can inform host supervisors about changes in AML/CFT regulations, laws, or guidance within their jurisdiction. This exchange of information ensures that host supervisors stay updated and can align their supervisory expectations and requirements with the evolving AML/CFT standards for the group.
- Joint inspections. Home and host supervisors can conduct joint inspections in the host countries. For some overarching AML/CFT topics, such as the AML/CFT risk management and governance systems of a financial institution, joint supervisory activities or inspections might be a good option.
