On 1 July 2020, bill of law 7216B setting up a Luxembourg register of fiducies and trusts (the "RFT"), under the supervision of the Administration de l'Enregistrement, des Domaines et de la TVA (the "AED"), was passed in Parliament (the "RFT Law").
Following the adoption of the law of 13 January 2019 establishing a register of beneficial owners ("BOs") of Luxembourg entities (the "RBE Law"), the RFT Law implements into Luxembourg law the last provisions of Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (the "4th AML Directive") and certain provisions of Directive 2018/843 of the European Parliament and of the Council of 30 May 2018 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (the "5th AML Directive"). The RFT Law also repeals the law of 10 August 2018 on the information to be obtained and held by Luxembourg fiducies, as its relevant provisions have been directly incorporated into the RFT Law.
This Newsflash reviews the main features of the RFT Law, which will impact the obligations incumbent on Luxembourg fiduciaires and trustees, as well as professionals subject to anti-money laundering and counter terrorist financing ("AML-CTF") obligations under i.a. the amended law of 12 November 2004 on the fight against money laundering and terrorism financing (the "2004 Law").
1. Scope of the RFT Law
1.1. The fiducies and trusts subject to the RFT Law
The RFT Law applies to:
- all (including foreign) fiducies (fiduciary arrangements) and express trusts for which a fiduciaire or a trustee is established or domiciled in the Grand Duchy of Luxembourg; and
- all fiducies and express trusts for which the fiduciaire (fiduciary agent) or trustee is established in a third country, where the fiduciaire or trustee enters into a business relationship in the Grand Duchy of Luxembourg with a professional, i.e. an entity subject to the 2004 Law, or acquires real estate located in the Grand Duchy of Luxembourg on behalf of such fiducie or trust.
It is further specified that all legal arrangements that have a structure or functions which are similar to those of a fiducie or a trust also fall within the scope of the RFT Law and must be considered as fiducies and trusts within the meaning of the RFT Law.
1.2. The persons to be considered to be fiduciaires and trustees for the purpose of the RFT Law
The following are fiduciaires and trustees:
- all fiduciaires of fiducies within the meaning of the amended law of 27 July 2003 on trusts and fiduciary arrangements and trustees of trusts within the meaning of the Hague Convention of 1 July 1985 on the law applicable to trusts and on their recognition;
- all persons having a similar position to that of a fiduciaire or trustee in legal arrangements having a structure or functions which are similar to those of a fiducie or a trust; and
- all persons occupying an equivalent position to that of a fiduciaire or trustee in a legal arrangement which does not fall within the scope of the RFT Law but that have a structure or functions which are similar to those of a fiducie or a trust.
2. Obligations set out by the RFT Law
2.1. Obligation for fiduciaires and trustees to set up an "internal file"
2.1.1. Scope of the obligation to set up an "internal file"
The obligation to set up an "internal file" applies to all fiduciaires of fiducies and all trustees of express trusts administered in the Grand Duchy of Luxembourg.
2.1.2. Information to be obtained and held by the fiduciaires and trustees
18.104.22.168. BO-related information
In line with the RBE Law, under the RFT Law, fiduciaires and trustees are required to obtain and hold, at the registered place of business of an express trust or fiducie, information on such trust or fiducie, including the identity of all person(s) identified as BOs thereof.
The RFT Law defines the concept of BOs of fiducies and trusts by reference to Article 1(7) of the 2004 Law i.e. all of the following persons shall be considered to be BOs of fiducies and trusts:
- the settlor(s);
- the fiduciaire(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 be determined, the class of persons in whose main interest the legal arrangement or entity is set up or operates; and
- any other natural person exercising ultimate control over the fiducie or trust by means of direct or indirect ownership or by other means.
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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.