Which financial sector companies are required to conduct an internal audit?

Internal audit

By: Kristina Mjasojedova

23 Aug 2024 3 min read

Those operating in the financial sector are bound by various laws along with requirements for internal audit arising from those laws. In addition, the Auditors Activities Act governs the provision of internal audit service, defining who is allowed to be engaged in the professional activities of an internal auditor.

An internal audit is obligatory for a large share of companies in the financial sector. Data on internal auditor must be submitted to the Financial Inspectorate already upon applying for an operating licence. Internal procedure rules must also describe how internal audits are organized and their function in the enterprise. 

The following companies in the financial sector are subject to the internal audit obligation:

  • credit institutions;
  • creditors and credit intermediaries;
  • providers of crowdfunding service who issue loans to consumers;
  • payment institutions and e-money institutions;
  • fund managers;
  • investment firms;
  • insurers;
  • collection agencies;
  • virtual asset service providers.

The following table gives you an overview of which requirements in relation to internal audit apply to companies operating in the financial sector.

Market participants

Relevant act

Necessity of internal audit

Requirements applicable to head of internal audit unit/internal auditor

Banking and credit

Credit institutions (banks)

 Credit Institutions Act, § 59

Obligatory

Certified Internal Auditor

Creditors

Creditors and Credit Intermediaries Act, § 45

Obligatory

No specific professional level required

Credit intermediaries

Creditors and Credit Intermediaries Act, § 45

Obligatory

No specific professional level required

Crowdfunding

Consumer credit crowdfunding

Creditors and Credit Intermediaries Act, § 45

Obligatory

No specific professional level required

Insurance

Insurers

Insurance Activities Act, § 103

Obligatory

Certified Internal Auditor

Payment services

Payment institutions

Payment Institutions and
E-money institutions Act, § 51

Obligatory

Certified Internal Auditor

E-money institutions

Payment Institutions and
E-money institutions Act, § 51

Obligatory

Certified Internal Auditor

Investing

Fund managers

Investment Funds Act, § 349

Obligatory if necessary and proportional

Certified Internal Auditor

Investment firms

Securities Market Act, § 832

Obligatory if necessary and proportional

Certified Internal Auditor

Virtual asset service

Virtual asset service providers (VASP)

Money Laundering and Terrorism Financing Prevention Act, §724

Obligatory

Certified Internal Auditor

Collection service

Debt collection agencies

Forthcoming Credit Collection and Purchasers Act, § 42

Obligatory

Certified Internal Auditor

 

 

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Authors

  • Kristina Mjasojedova

    Kristina studied accounting and economics at Tallinn University of Technology. She is comfortable with numbers, and she assures that every client achieves the best possible result. View Profile

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