1. Member States shall require competent authorities to review the arrangements, strategies, processes and mechanisms implemented by third-country branches to comply with the provisions that apply to them under this Directive and, where applicable, with any additional regulatory requirements under national law.

2. On the basis of the review referred to in paragraph 1, competent authorities shall evaluate whether the arrangements, strategies, processes and mechanisms implemented by third-country branches and the capital endowment and liquidity held by them ensure a sound management and coverage of their material risks and the viability of the third-country branches.

3. Competent authorities shall conduct the review and evaluation referred to in paragraphs 1 and 2 of this Article in accordance with the criteria for applying the principle of proportionality published in accordance with Article 143(1), point (c). In particular, competent authorities shall establish a level of frequency and intensity for the review referred to in paragraph 1 of this Article that is proportionate to classification as class 1 and class 2 third-country branches and that takes into account other relevant criteria, such as the nature, scale and complexity of the third-country branches' activities.