Recital 1

(1)Whether institutions obtain permission from their competent authorities to use the alternative internal model approach laid down in Title IV, Chapter 1b, of Regulation (EU) No 575/2013 depends on whether those institutions comply with the requirements set out in Part Three, Title IV, Chapter 1b of that Regulation, including requirements as regards methods, processes, controls, data collection, organisation of the risk control unit and internal validation function, and IT systems. Institutions are allowed to modify the methods, processes, controls, data collection, organisation of the risk control unit and internal validation function, and IT systems, as approved by their competent authorities, provided that such modifications have been notified to their competent authority or have been approved by their competent authority, depending on the nature of the modifications, in accordance with Article 325az(7) of Regulation (EU) No 575/2013. That also applies to modifications triggered by the application of regulatory requirements, where those modifications encompass the use of methods or approaches that are not part of the existing competent authority’s permission.