2023 was another busy year. Many legal and regulatory changes have impacted your business, and will continue to impact it in 2024. That is why we are pleased to provide you with an overview of this year's major legal and regulatory developments under Luxembourg and EU law. This flashback will help you take stock of the main legal trends which marked 2023, and the outlook sections will give you a sense of what we anticipate for the near future.
Back to 2023 – Forward to 2024
| Back to 2023 – Forward to 2024 |
On 27 September 2023, the Financial Action Task Force (FATF) published its Mutual Evaluation Report on Luxembourg's anti-money laundering and counter-terrorist financing (AML/CFT) framework. Compared to the mutual evaluation of 2010, Luxembourg has made significant efforts. While Luxembourg was often only partially compliant with FATF Recommendations in 2010, the 2023 report shows that Luxembourg is now largely compliant or compliant in almost all areas. The assessment is composed of two elements: (i) "technical compliance" aims to assess whether AML/CFT laws, regulations and other measures are in line with FATF Recommendations and are supported by an appropriate Luxembourg institutional framework; (ii) "efficiency" seeks to assess whether these AML/CFT systems are operational and to what extent Luxembourg has achieved the defined objectives set by the FATF. For both elements, Luxembourg received good to very good results. Luxembourg financial sector authorities and market players are also praised for showing a strong understanding of the AML risks to which Luxembourg is exposed, given the importance and international nature of its financial centre. The FATF highlights the key role of the Financial Intelligence Unit in producing and disseminating a wide range of highquality financial intelligence products which are widely used by law enforcement and other authorities and the constructive and good quality mutual legal assistance, extradition and international co-operation. As an improvement point, the FATF recommends, among others, that market players continue their efforts to understand the risks relating to financing of terrorism, particularly professionals from the non-financial sector offering trust and company services. The report summarises the AML/CFT measures in place in Luxembourg as at the date of the onsite visit in November 2022. |
| Revised EBA Guidelines on ML/TF risks when facilitating access to financial services by non-profit organisations |
The CSSF integrated the revised EBA Guidelines on money laundering and terrorist financing (ML/TF) risk factors into its administrative practice via its Circular 23/842. Earlier in 2023, the EBA published its revised ML/TF risk factor Guidelines. In this revised version, the EBA clarified the steps that professionals must undertake to get a good understanding of how an individual not-for-profit organisation (NPO) is set up and operates and what factors professionals should consider when assessing the ML/TF risk associated with business relationships with NPO customers. The revision followed the EBA's 2022 Opinion on de-risking that led the EU Commission to ask the EBA to issue revised guidelines on the steps professionals must take to facilitate access to financial services by NPOs. CSSF Circular 23/842 and the revised EBA ML/TF risk factor Guidelines have been applicable since 3 November 2023. |
| New EBA Guidelines on policies and controls for effective management of ML/TF risks when providing access to financial services |
The CSSF integrated the EBA Guidelines on policies and controls for the effective management of ML/TF risks when providing access to financial services into its administrative practice via Circular 23/843. Earlier in 2023, the EBA published new guidelines that complement the EBA ML/TF risk factor Guidelines by specifying the policies, procedures and controls that professionals must have in place to mitigate and effectively manage ML/TF risks. The new EBA Guidelines clarify the steps to be undertaken by professionals when evaluating whether to refuse or terminate a business relationship with a customer based on considerations related to ML/TF risks or AML/CFT compliance and the requirement to comprehensively document their decisions when refusing or terminating the business relationship. The Guidelines also establish a complaint mechanism that professionals must put in place. CSSF Circular 23/843 and the new EBA Guidelines have been applicable since 3 November 2023. |
| EBA report on ML/TF risks associated with payment institutions | On 16 June 2023, the EBA published a report on ML/TF risks associated with EU payment institutions. In this report, the EBA provides an overview of ML/TF risks identified in the payment institutions sector and suggests that progress needs to be made in relation to the risk awareness of payment institutions in this area. Read more... |
| CSSF integrates ESMA Guidelines on MiFID II suitability requirements and MiFID II product governance requirements into its administrative practice |
The CSSF has, via Circular 23/835, integrated the revised ESMA Guidelines on certain aspects of the MiFID II suitability requirements into its administrative practice. ESMA reviewed and amended the Guidelines following the EU Commission's adoption of amendments to Commission Delegated Regulation (EU) 2017/565 that require the integration of sustainability factors, risks and preferences into certain organisational requirements and operating conditions for entities in scope of the ESMA Guidelines. In addition, the revised Guidelines also take into account the results of ESMA's 2020 Common Supervisory Action on the application of the MiFID II suitability requirements, sustainability preferences and organisational requirements. Read more... The CSSF has also, via Circular 23/840, integrated the revised ESMA Guidelines on MiFID II product governance requirements into its administrative practice. ESMA reviewed and amended these Guidelines to comply, among other matters, with Commission Delegated Directive (EU) 2021/1269 as regards the integration of sustainability factors into product governance obligations. Read more... CSSF Circulars 23/835 and 23/840 and the respective ESMA Guidelines apply to investment firms and credit institutions when providing portfolio management services or investment advice. They also apply to UCITS management companies and external AIFMs when providing individual portfolio management services. The two Circulars and both revised ESMA Guidelines have applied since 3 October 2023. The previous versions of the ESMA Guidelines ceased to apply on that date. |
| Luxembourg Blockchain law III |
The law of 15 March 2023 on certain aspects of the DLT Pilot Regime (Regulation (EU) 2022/858), often referred as Blockchain law III, aims to:
Both the DLT Pilot Regime and Blockchain law III are applicable as from 23 March 2023. Read more... |
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
