1. AML/KYC update

1.  Implementation of certain provisions of Directive (EU) 2018/843 into Luxembourg law

On 25 March 2020, two new laws were published in the Luxembourg official gazette regarding the implementation of certain provisions of Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 ("5th AML Directive") into Luxembourg law:

• The law of 25 March 2020 amending, among other things, the law of 12 November 2004 on the fight against money laundering and terrorist financing ("2004 Law") in view of implementing certain provisions of the 5th AML Directive of the European Parliament and of the Council of 30 May 2018 into national legislation.
• The law of 25 March 2020 establishing a central electronic data retrieval system related to payment accounts and bank accounts identified by IBAN and safe-deposit boxes held by credit institutions in Luxembourg.

Pursuant to the entry into force of these laws, the Commission de Surveillance du Secteur Financier (CSSF) issued the following:

• Circular 20/742 of 4 May 2020 was issued drawing the attention of financial sector professionals to the major changes introduced by the two above-mentioned laws dated 25 March 2020 to the anti-money laundering/combating the financing of terrorism (AML/CFT) regime applicable to the Luxembourg financial sector, as provided for in the 2004 Law.
• A communiqué of 9 April 2020 was issued regarding the new professional obligations of virtual asset service providers and the related registration process.
• Circular 20/747 of 23 July 2020 was issued (updated on 7 September 2020 (Annex 1: description of the technical modalities that the professionals are required to strictly follow) and on 9 October 2020 (Annex 2: description of the structure of the data file to be submitted by the professionals to the CSSF)) concerning technical rules relating to the application of the law of 25 March 2020 establishing a central electronic system retrieval system. It provides clarifications about the technical and IT aspects of the central electronic data retrieval system, which is based on creating and making a file available to the CSSF by each of the professionals with regard to payment account, bank accounts and safe deposit boxes. 
• A Q&A related to CSSF Circular 20/747 was issued.

2. New Luxembourg register for fiducies and trusts

 On 14 July 2020, a new law setting up a Luxembourg register of fiducies (fiduciary arrangements) and trusts ("Register of Trusts") under the supervision of the Administration de l'Enregistrement, des Domaines et de la TVA (AED) was published in the Luxembourg official gazette ("RFT Law") and it entered into force on 17 July 2020.

The RFT Law fully implements Article 31 of Directive (EU) 2015/849 of the European Parliament and of the Council of 25 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing ("4th AML Directive"), as amended by the 5th AML Directive with respect to the obligations of the covered entities to obtain and hold certain information, in particular, on their ultimate beneficial owners (UBOs) at their registered office and the registration obligation for trusts and fiducies.

1. Scope of the registration obligation for trusts and fiducies

The RFT Law applies to any fiducie and any express trust as defined by the RFT Law with a fiduciary agent or a trustee established or residing in Luxembourg. Legal arrangements that have a structure or functions similar to that of fiduciary arrangements and trusts defined by law are also included.

When fiduciary agents or trustees are established or are resident in different member states, fiduciary agents or trustees established or resident in Luxembourg may provide the AED with an attestation providing proof of registration or an extract from the information on the beneficial owners stored in an EU register.

It also applies to any express trust or fiducie for which the fiduciary agents or trustees are established outside the European Economic Area to the extent that the fiduciary or the trustee, in the name of the fiducie or the trust, establishes a business relationship with a professional within the meaning of the 2004 Law or acquires a property that is located in Luxembourg.

When the fiduciaries or trustees form multiple business relationships on behalf of the trust in different member states, the fiduciary or trustee established or residing in Luxembourg must submit a certificate to the AED, a registration certificate or an extract of the details on the UBOs as recorded in a register kept by a member state.

2. Information to be filed with the Register of Trusts

The following information ("Relevant Information") will be electronically filed with the Register of Trusts for each entity 

• Register's number
• Name of the entity
• Date of the formation of the entity
• Certain identification information (listed in the RFT Law) regarding each UBO (individuals or companies)
• Whether the entity holds or owns a controlling interest in any corporate or other legal entity other than those referred to in Article 30 (1) of the 4th AML Directive, through direct or indirect ownership, including through bearer shareholdings or through control via other means.

3. Meaning of "beneficial owner"

The RFT Law refers to the definition of a UBO provided for by Article 1(7) of the 2004 Law.

The following persons will be considered to be the UBO of fiducies and trusts: 

• The settlor(s)
• The fiduciary agent(s) or trustee(s)
• The protectors
• If any, the beneficiaries or, where the individuals who will benefit from the legal arrangement or entity have yet to determined, the class of persons in whose main interest the legal arrangement or entity is set up or operates
• Any other natural person exercising ultimate control over the fiducie or trust by means of direct or indirect ownership or by other means.

4. Access to the Register of Trusts

The Register of Trusts will be made electronically available to: 

• National authorities, self-regulatory bodies within the context of their supervisory mission with respect to AML/CFT and professionals listed in Article 2 of the AML Law (“Professionals”) (e.g., credit institutions, investment firms, insurance or reinsurance companies) within the context of their customer due diligence measures
• Any person demonstrating a legitimate interest as part of the AML/CFT framework upon a duly motivated request addressed to the AED with supporting documentation (limited access).

Information filed with the Register of Trusts is submitted, updated and removed online through MyGuichet.lu.

In exceptional circumstances, a UBO may request that access to the information filed with the RFT be limited for a maximum period of three years (possibly renewed upon a duly justified request). This may apply if the UBO is exposed to a disproportionate risk, a risk of fraud, kidnapping, blackmail, violence, intimidation or where the UBO is either a minor or legally incapable. In such a case, the access to the Relevant Information will be limited to the national authorities, credit and financial institutions, public notaries and bailiffs.

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