C.2.2 Individual appropriate knowledge, skills and experience

Members of the management body should have an up-to-date understanding of the business activities of the issuer of ARTs or of the CASP and all its risks, at a level commensurate to their responsibilities. This includes an appropriate understanding of those areas for which an individual member is not directly responsible but is collectively accountable together with the other members of the management body.

Members of the management body should have a clear understanding of the issuer of ARTs or of the CASP’s governance arrangements, their respective role and responsibilities and, where applicable, the group structure.

Members of the management body should understand the conflicts of interest that may exist between the issuer of ART or the CASP and any of its stakeholders.

Members of the management body should be able to contribute to the implementation of an appropriate corporate and risk culture, corporate values and behaviour within the management body to conduct the business in a competent and responsible manner.

The assessment of appropriate knowledge, skills and experience should consider:

• a. the role and duties of the position and the required capabilities;
• b. the knowledge and skills attained through education, training and practice;
• c. the practical and professional experience gained in previous positions and other cur-rent directorships; and
• d. the knowledge, skills and experience acquired and demonstrated by the professional conduct of the member.

The level and profile of the education of the member and whether or not it relates to the financial sector, including crypto-assets markets, or other relevant areas should be considered. In particular, education in the areas of finance, including crypto assets, economics, law, accounting, auditing, administration, financial regulation, information technology, and quantitative methods can in general be considered to be relevant for financial entities, including issuers of ARTs and CASPs.

The assessment should not be limited to the educational degree of the member or proof of a certain period of service in a financial entity, issuer of ARTs or CASP or other firms in areas related to markets in crypto assets and other financial markets. A more thorough analysis of the member’s practical experience with regard to the activities of the issuer of ARTs or of the CASP should be conducted, as the knowledge gained from previous occupations depends on the nature, scale and complexity of the business as well as the function that the member performed within it.

To properly assess the skills of the members of the management body, issuers of ARTs and CASPs should consider using the non-exhaustive list of relevant skills set out in Annex II to the Joint EBA and ESMA Guidelines on the assessment of the suitability of members of the management body and key function holders under Directive 2013/36/EU and Directive 2014/65/EU, taking into account the role and duties of the position occupied by the member of the management body.

When assessing the adequate knowledge and experience of a member, consideration should be given to theoretical and practical experience relating to:

• a. financial markets regulation in particular with regard to financial instruments, as de-fined in Article 4(1), point (15) of Directive 2014/65/EU and DLT financial instruments as defined in Article 2(1)(11) of Regulation (EU) 2022/858;
• b. crypto assets, including asset-referenced and e-money tokens;
• c. the relevant understanding of the different nature of different kinds of crypto assets;
• d. risk management principles and procedures;
• e. the management of liquidity risks, market and credit risk in relation to the business activities of the issuer of ARTs or of the CASP;
• f. requirements under Regulation (EU) 2022/2554 of the European Parliament and of the Council of 14 December 2022 on digital operational resilience for the financial sector⁶ ;
• g. requirements regarding the use of third-party providers, including outsourcing ar-rangements and third-party provider management;
• h. accounting and auditing;
• i. anti-money laundering and antiterrorist financing obligations;
• j. data protection requirements;
• k. the ability to assess the effectiveness of an issuer of ARTs or CASPs’ arrangements that ensure effective governance, oversight and internal controls;
• l. the interpretation of financial information and the identification of key issues based on this information;
• m. managerial knowledge, including strategic planning, the understanding of an institu-tion’s business strategy or busi ness plan and accomplishment thereof;
• n. the ability to present their views, discuss strategies and business objectives; and
• o. where the members position is within an issuer of ARTs, the relevant legal require-ments for the issuing of ARTs.

⁶ OJ L 333, 27.12.2022, p. 1 – 79

With reference to point i. above, without prejudice to the national transposition of Directive 2015/849/EU, the member of the management body of CASPs identified as responsible for the implementation of the laws, regulations and administrative provisions necessary to comply with Directive (EU) Directive 2015/849/EU should have good knowledge, skills and relevant ex-perience regarding ML/TF risk identification and assessment, and AML/CFT policies, controls and procedures. This person should have a good understanding of the extent to which the in-stitution’s business model exposes it to ML/TF risks.

When assessing the practical and professional experience gained from previous positions, particular consideration should be given to:

• a. the nature of the position held and its hierarchical level;
• b. the length of service within a position;
• c. the number of subordinates;
• d. the nature and complexity of the business where the position was held, including its organisational structure;
• e. the scope of competencies, decision-making powers, and responsibilities of the mem-ber;
• f. the technical knowledge gained through the position;
• g. additional knowledge gained from academical activities.

Where applicable, members of the management body in its supervisory function should be able to challenge the decisions of the management body in its management function and other relevant management decisions where necessary and to effectively oversee and monitor management decision-making.