On 18 October 2022, the Commission de Surveillance du Secteur Financier (the "CSSF") has issued a press release regarding eligible entities for the opening of cash accounts in relation to Luxembourg alternative investment funds ("Press Release").
The CSSF has reminded AIFs managed by authorised AIFMs that:
- In accordance with article 19(7) of the law of 12 July 2013, as amended (the "AIFM Law"), all the cash of an alternative investment fund ("AIF") has to be booked in cash accounts opened with: central banks, EU authorised credit institutions and third country authorised banks, as set out under article 18(1) (a), (b) and (c ) of Directive 2006/73/EC, or another entity of the same nature, in the relevant market where cash accounts are required provided that such entity is subject to effective prudential regulation and supervision which have the same effect as European Union law and are effectively enforced and in accordance with the principles set out in Article 16 of Directive 2006/73/EC (each an "Eligible Entity");
- The depositary must ensure that the AIF's cash flows are properly monitored, and payments made by or on behalf of investors upon the subscription of units or shares of an AIF have been received and all cash of the AIF has been booked in cash accounts opened in the name of the AIF or in the name of the AIFM acting on behalf of the AIF or in the name of the depositary acting on behalf of the AIF with an Eligible Entity;
- A professional depositary of assets, other than financial instruments under article 26-1 of the law of 5 April 1993 on the financial sector, as amended ("PDAOFI"),cannot directly hold the cash of an AIF; and
- Any new AIF must ensure that cash accounts will be held by an Eligible Entity.
In light of the above, AIFs that have appointed an authorised AIFM and have their cash account with an electronic money institution or a payment institution, shall reassess their set up, in order to ensure that, as soon as possible and by no later than 30 June 2023:
- a depositary within the meaning of article 19(3)(i) of the AIFM Law is appointed; and
- cash of the AIF is deposited with an Eligible Entity.
AIFs that have appointed an authorised AIFM shall not set up new sub-funds whose cash accounts are held by an electronic money institution or a payment institution.
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.