3. The relevant institutions’ assessment of the suitability of key function holders

While all institutions should ensure that their staff are able to perform their functions adequately, relevant institutions should specifically ensure that key function holders are of sufficient good repute, have honesty and integrity, and possess sufficient knowledge, skills and experience for their positions at all times and assess the aforementioned elements, in particular:

• a. when applying for an authorisation;
• b. when appointing new key function holders, including as a result of a direct or indirect acquisition or increase of a qualifying holding in an institution;
• c. where necessary, in accordance with paragraph 36.

Relevant institutions should monitor on an ongoing basis the reputation, honesty, integrity, knowledge, skills and experience of key function holders to identify, in the light of any relevant new fact, situations where a re-assessment should be performed. In particular a re-assessment should be made in the following cases:

• a. where there are concerns regarding their suitability;
• b. in the event of a material impact on the reputation of the individual;
• c. where there are reasonable grounds to suspect that money laundering or terrorist financing has been or is being committed or attempted or there is an increased risk thereof in connection with that institution and in particular in situations where the institution:
• i. has not implemented appropriate internal controls or oversight mechanisms to monitor and mitigate ML/TF risks (e.g. identified by supervisory findings from on-site inspections or off-site inspections, supervisory dialogue or in the context of sanctions);
• ii. has been found to be in breach of its AML/CFT obligations at home or abroad; or
• iii. has materially changed its business activity or business model in a manner that suggests that its exposure to ML/TF risk has significantly increased;
• d. as part of the review of the internal governance arrangements by the management body;
• e. in any event that can otherwise materially affect the suitability of the individual.

The assessment of the individual reputation, honesty, integrity, knowledge, skills and experience of key function holders should be based on the same criteria as those applied to the assessment of such suitability requirements of the members of the management body. When assessing knowledge, skills and experience, the role and duties of the specific position should be considered.

Assessing the initial and ongoing suitability of key function holders is the responsibility of the institutions. Where the assessment for some key function holders is also carried out by competent authorities for supervisory purposes, the responsibility to assess and ensure the suitability of those key function holders continues to remain with the institutions.