REGULATORY CLIENT UPDATE / FEBRUARY 2022
Reserved Alternative Investment Funds (RAIFs) in Luxembourg are now required by the AED, as part of their regulatory obligations, to provide an annual RC report for AED's review no later than five months after the end of the financial year end of the RAIF.
This regulatory reporting obligation comes in addition to the already established obligation that RAIFs are required by the AED to submit an annual AML survey that is similar in scope to the one which the CSSF performs each year.
The report is intended to be a summary of the RC’s activities and the operation of the AML/CFT framework of the RAIF.
Luxembourg Market Update:
As of 31 December 2021, net assets of Luxembourg investment funds reached an all-time high of EUR 5.9 trillion. This represents a year-on-year increase of EUR 886 billion or + 17.8%. With growth of 29.9%, private equity was the asset class with the greatest proportional increase in assets last year. Investment vehicles in the grand duchy held around 10% of the world's €56.6trn in fund assets in 2020, behind only the US with 46%.
Regulatory Developments in and beyond Luxembourg:
22 December 2021: Draft Anti Tax Avoidance Directive (ATAD) 3 released
The European Commission has published a Directive proposal setting out rules aimed at addressing the use of so-called shell companies. Member States are expected to implement the proposal into national law by 30 June 2023 with an effective date of 1 January 2024. The proposal targets EU entities involved in cross-border activities on an outsourced basis. The Proposal introduces specific reporting obligations in order to identify “shell entities” (listed companies and regulated financial undertakings, such as UCITS and AIFs are not is scope). Once qualified as a shell, an undertaking would be denied treaty benefits and EU directive access.
Companies will want to take a close look at their structure in order to anticipate potential impacts that may arise from the implementation of the new rules.
4 January 2022: CSSF published updated versions of the FAQs on virtual assets for UCIs and credit institutions
The updated FAQs address questions such as the eligibility of virtual assets in UCITS and AIFs, specific authorisations needed in order to manage virtual assets and specific AML considerations around such assets.
18 January 2022: New Luxembourg RCS submission rules applicable as of 31 March 2022
The Luxembourg Business Registers ("LBR") has issued a public notice concerning new requirements for all Luxembourg entities. In a first step, all natural persons willing to register with the RCS or to update their registration will have to communicate their Luxembourg national identity number ("NIN"). In a second step, all natural persons currently registered with the RCS will also have to communicate their NIN. The regulation will come into force as from 31 March.
20 January 2022: ESMA Common Supervisory Action on valuation of UCITS and open-ended AIFs
The ESMA has launched a Common Supervisory Action (CSA) working with member state regulators to collect data on the valuation of UCITS and open-ended AIFs. The aim of the CSA is to assess the compliance of supervised entities with the UCITS and AIFMD frameworks, respectively, with regard to the valuation of illiquid assets. The review will be conducted using a common assessment framework developed by ESMA. The CSSF is expected to launch its data collection exercise in March 2022 targeting selected IFMs with a data collection questionnaire. A CSSF press communiqué has been released.
25 January 2022: ESMA publishes a new FAQ on SFTR relating to settlement fails
ESMA amended its Q&A on SFTR with an updated response to Q2 on the reporting of settlement fails. In this update, ESMA deals with the case where the counterparties have been unable to modify the maturity date of an SFT due to a failed settlement that takes place after the day following the maturity date.
31 January 2022: ESMA Common Supervisory Action on valuation of UCITS and open-ended AIFs
The CSSF has issued Circular 22/795 on the application of the ESMA Guidelines on marketing communications. This Circular states that the CSSF will apply the Guidelines has integrated them into its regulatory approach. The CSSF intends to perform thematic reviews on compliance with the applicable requirements. It is expected that the CSSF will issue an FAQ on this topic in due course.
31 January 2022: Survey related to the fight against money laundering and terrorism financing
The CSSF has published its instructions for the annual online survey for the year 2021 collecting standardised key information concerning money laundering and terrorism financing (ML/TF) risks. The survey will be launched on 15 February. In substance, the 2021 survey remains mostly unchanged compared to the previous year. However, some questions have been removed, added or amended. The new questions have been highlighted in the survey. Answers to the survey questions will have to be submitted through the CSSF eDesk portal by 15 April.
2 February 2022: Annual RC report for RAIFs
Reserved Alternative Investment Funds (RAIFs) in Luxembourg are now required by the AED to provide an annual RC report for AED's review no later than five months after the end of the financial year end of the RAIF.
The RC report must cover at least the following points:
The signed version of the RC report must be submitted by email to the following email address: AED.firstname.lastname@example.org
For further information, please contact:
m: +352 691 111 931
Disclaimer: This regulatory update has been prepared for clients of ONE group solutions and its subsidiaries for informational purposes and is not intended to be relied upon as professional advice. Please visit: https://www.one-gs.com/
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