The Law of 5 May 2026 transposing Directive (EU) 2024/1619 (CRD VI) marks a significant milestone for the Luxembourg financial sector. While the reform addresses multiple areas, including third-country branches, ESG risks, supervisory powers and sanctions, internal governance clearly emerges as one of its central pillars.
A strengthened governance framework
CRD VI introduces a more robust and structured approach to governance, reflecting a broader European trend towards enhanced accountability and supervisory convergence.
Key developments include:
A framework still under construction
Despite the entry into force of the Law, the governance framework is not yet fully stabilised.
EBA Guidelines on internal governance
The EBA is currently revising its guidelines on internal governance (EBA/GL/2021/06) to reflect CRD VI changes, notably:
- Clearer role definitions.
- Enhanced governance structures.
- Stronger accountability requirements.
Publication is expected by the end of Q3 2026 and will be a key milestone for implementation.
CSSF Circular 12/552: status quo (for now)
Until the EBA guidelines are finalised:
- CSSF Circular 12/552 remains applicable.
- It will only be updated afterwards to ensure alignment with the European framework.
However, institutions should note that certain provisions resulting directly from amendments to the Law of 5 April 1993 on the financial sector (LFS), notably on mapping of duties and governance organisation, are already applicable.
Practical implications for institutions
The CRD VI governance framework will require institutions to:
1. Review governance structures
- Ensure clear organisational structures and reporting lines.
- Align governance arrangements with new expectations.
2. Formalise accountability
- Draft and maintain individual statements of responsibilities.
- Establish and periodically update a management responsibilities map.
3. Reassess suitability processes
- Strengthen fit‑and‑proper assessments.
- Prepare for more detailed documentation and supervisory scrutiny.
4. Anticipate regulatory updates
- Monitor the following upcoming publications closely:
- EBA revised guidelines on internal governance (EBA/GL/2021/06)
- EBA/ESMA revised suitability guidelines (EBA/CP/2025/20)
- CSSF updates to Circular 12/552
Conclusion
CRD VI represents a decisive step towards a more accountability‑driven and structured governance model for EU banks.
While the Luxembourg legal framework is now in place, the full picture will only emerge with the forthcoming EBA and CSSF guidance.
How PwC can help
- Governance gap assessment
- Mapping of duties and accountability framework
- Enhancement of fit‑and‑proper framework
- Target governance model and documentation
- Implementation support and change management
- Regulatory readiness and supervisory interactions
Governance gap assessment
- Review of your current governance framework against CRD VI requirements
- Identification of gaps in:
- Organisational structure
- Allocation of responsibilities
- Internal control framework
- Prioritisation of actions based on risk and regulatory expectations
Mapping of duties and accountability framework
- Design and implementation of:
- Management responsibilities maps
- Statements of responsibilities for key roles
- Alignment with upcoming EBA expectations and emerging market practices
- Facilitation of workshops with senior management and control functions
Enhancement of fit‑and‑proper framework
- Review and upgrade of internal fit‑and‑proper policies and processes
- Support in designing:
- Suitability assessments
- Documentation packagesGovernance around appointments and renewals
- Preparation for enhanced supervisory scrutiny and future EBA/CSSF guidance
Target governance model and documentation
- Definition of a robust and proportionate governance model, including:
- Committees and reporting linesControl function positioning and independence
- Escalation and decision‑making processes
- Drafting or updating of:
- Governance charters
- Internal policies and procedures
- Board documentation
Implementation support and change management
- End‑to‑end support from design to implementation.
- Coordination across Risk, Compliance, Legal, HR and business lines.
- Training sessions for:
- Board members
- Senior management
- Key function holders
Regulatory readiness and supervisory interactions
- Preparation for future CSSF inspections and reviews.
- Assistance in responding to regulatory queries.
- Support in aligning with upcoming:
- EBA Guidelines on internal governance
- EBA/ESMA suitability framework
- CSSF updates to Circular 12/552
Contact us
Isabelle Melcion-Richard
Advisory Partner, Regulatory & Compliance, PwC Luxembourg
Tel: +352 49 48 48 2469
Ryan Davis
Advisory Partner, Risk & Compliance Advisory Services, PwC Luxembourg
Tel: +352 621 333 580
