Internal control system: BaFin market survey of banks and savings banks
In 2017, BaFin conducted a market survey to evaluate the internal control systems (ICS) in banks and savings banks, focusing on first-level controls within the framework of the German Securities Trading Act. The survey included on-site visits to 45 out of 110 institutions and emphasized the importance of a three-tier control system comprising business process controls, compliance monitoring, and internal audits. While all institutions had functional ICS, optimization opportunities were identified in areas like control coordination, feedback mechanisms, and compliance function monitoring. The survey highlighted the need for formalized control activities and better-coordinated efforts between centralized and decentralized units. BaFin’s future focus will include the efficient implementation of ICS, particularly under the new regulations of MiFID II.
Potential opportunities for optimisation for an efficient ICS
- Comparisons of contact with clients and business transactions
- Comprehensibility of control activities
- Coordination of control activities of different organisational units
- Feedback of control results
- Transparency of the control status and escalation procedure