Off-site supervision of regulated institutions
The WAMU Banking Commission conducts off-site supervision and on-site inspections of regulated institutions, either on a solo or consolidated basis, to ensure compliance with banking regulations and any other applicable legislation.
The Commission defines the frequency and scope of inspections and assessments of regulated institutions, taking into account, among other factors, their size, structure, risk profile, the nature and complexity of their activities, and their systemic importance.
The WAMU Banking Commission continuously monitors and assesses, particularly through desk-based reviews, regulated institutions’ compliance with the recommendations, supervisory measures, and supervisory decisions resulting from inspections.
Off-site supervision or continuous monitoring consists, among other tasks, in analyzing the prudential and accounting reporting returns 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 these institutions, monitoring the implementation of recommendations issued by the WAMU Banking Commission, and addressing shortcomings identified by on-site inspection teams.
As part of continuous monitoring activities, institutions also prepare and submit to the WAMU Banking Commission a Preventive Recovery 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 Supervisory 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 assessment by the Supervisory College.
The information collected from regulated institutions can be used, after processing and analysis, to assess developments in their individual situations. This information also provides a baseline for general or specific studies on the overall development of the banking system, as well as microfinance institutions and electronic money issuers' operations within the WAMU.
Off-site supervision makes it possible to pinpoint early signs of vulnerability in an institution, which would justify appropriate supervisory action. It also plays an early-warning, preventive, and advisory role in relation to on-site inspections, thereby enabling more effectively targeted investigations.
The WAMU Banking Commission performs enhanced supervision on systemically important banking institutions, for which it lays down more stringent prudential requirements.
On-site inspections of regulated institutions
On-site inspections are carried out by the following bodies :
- the Directorate for On-site Inspection of Banking Institutions (DCPEB) ;
- the Directorate for On-site Inspection of Microfinance Institutions (DCPIM).
These Directorates are primarily responsible for implementing the inspection program for regulated institutions within their remit, as well as any other mission that senior management decides to entrust to them.
They are organized along the lines of an audit firm and consist of inspection teams led by Heads of Mission.
The inspection program is designed in accordance with the risks identified during off-site supervision and on-site inspections, which enables the drawing up of a list of the most vulnerable institutions.
Off-site supervision is supplemented by on-site inspections. In addition to their primary purpose of identifying and assessing the risks incurred by regulated institutions, they aim to verify the accuracy of the financial and accounting information provided to the supervisory authorities, compliance with prudential regulations, the quality of management, and the outlook of regulated institutions.
These inspections may cover corporate governance, the efficiency of internal and external audit functions, compliance with accounting and prudential requirements, and the institution’s strategic choices. They may also cover commercial practices, the anti-money laundering and countering the financing of terrorism (AML/CFT) framework, the performance of information systems, the effectiveness of risk management, and the implementation of recommendations issued by the WAMU Banking Commission.
On-site inspections may be extended to affiliated entities. They can be full-scope, targeted, or thematic. They may also aim at ensuring the effective implementation of recommendations and decisions issued by the WAMU Banking Commission.
The purpose of full-scope inspections is to assess all areas of activity and management of an entity. Targeted inspections, on the other hand, are more limited in scope, focusing on the assessment of specific aspects of a regulated institution's management or on the implementation of recommendations and decisions issued by the WAMU Banking Commission. Thematic inspections focus on cross-cutting issues common to several institutions.
