30 November 2022



In a landmark preliminary ruling on 22 November 2022, the Court of Justice of the European Union (CJEU) has declared the 5th AML Directive (5AMLD) invalid insofar as it imposes a public access regime for national UBO registers.


Luxembourg Market Update:

The aggregate assets of Luxembourg-domiciled regulated investment funds – UCITS and Part II funds, SIFs and SICARs – amounted to €5.038bn at the end of September, down 4.95% from €5.300bn at the end of the previous month and from a record €5.859bn at end of last year, according to the CSSF. Net capital outflows accounted for €40.9bn of the €262.4bn decline in assets during September, with the remaining €221.5bn coming from falling securities market values. The financial regulator says the number of legally distinct fund structures fell from 3,413 to 3,403, reflecting in part the ongoing conflict in Ukraine, high inflation and rising interest rates. A total of 2,221 entities have an umbrella structure containing between them 13,186 sub-funds, representing a total of 14,368 fund portfolios.

Regulatory Developments in and beyond Luxembourg:

18 October 2022: CSSF communiqué on eligible entities for the opening of cash accounts in relation to Luxembourg AIFs

The CSSF has published a communiqué concerning eligible entities for the opening of cash accounts in relation to Luxembourg alternative investment funds (AIFs).

The CSSF reminded practitioners that all cash of an AIF must be booked in cash accounts opened in the name of the relevant AIF, in the name of their Alternative Investment Fund Manager (AIFM) acting on behalf of the relevant AIF, or in the name of the depositary acting on behalf of the relevant AIF with an entity as specified under Article 19(7) of the Law of 12 July 2013 (the “AIFM Law”).

For AIFs that have appointed a professional depositary of assets other than financial instruments (PDAOFI) under Article 26-1 of the Law of 5 April 1993 on the financial sector, as amended, none of the AIF’s cash can be held directly by the PDAOFI itself.

Only central banks, EU authorised credit institutions as well as third country authorised banks (each an “Eligible Entity”), as further clarified in Article 86(a) of the Commission Delegated Regulation (EU) 231/2013 and in points (a), (b) and (c) of Article 18(1) of the Directive 2006/73/EC which it refers to, may qualify as Eligible Entities for the purpose of holding cash accounts in the relevant market where cash accounts are required for the purposes of the AIF’s operations.

In light of the above, for AIFs for which an electronic money institution (EMI) or a payment institution (PI) has been appointed to hold cash accounts, the CSSF provides that their designated AIFM or the appointed depositary should analyse the cash account 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) is appointed; and
  • an Eligible Entity as defined above is appointed in relation to the opening of cash accounts for such AIFs.

For the avoidance of doubt, the CSSF states that any new AIF must ensure that the cash accounts will be held by an Eligible Entity. No new sub-funds can be set up within AIFs for which the cash accounts are currently held by an EMI or a PI.

19 October 2022: ELTIF revisions

The Council and the European Parliament have reached a provisional agreement on the review of the regulation on European long-term investment funds (ELTIF) aimed at increasing the attractiveness of the ELTIF regime for investors and asset managers. However, technical discussions are ongoing.

24 October 2022: FinDatEx publishes EET v1.1

FinDatEx has issued a new version of the European ESG Template. This new version updates the initial EET with the SFDR RTS as of 1 January 2023. FinDatEx recommends that v1.1 should be used as of 1 December 2022 and should not be used anymore after 30 April 2023. For the differences between V1.1 and V1.0, an “explainer” presentation is posted on the website.

25 October 2022: Circular CSSF 22/821 on Long Form Reports

The CSSF has published Circular CSSF 22/821 on practical rules concerning the self-assessment questionnaire and related reports of approved statutory auditors. The purpose of the circular is to introduce a revised version of the long form report following on from the regulatory developments and the evolving supervisory practices since 2001. The revision of the long form report as contemplated under Circular CSSF 01/27 is the result of a thorough reconsideration of its objective, scope and content in order to realign it with supervisory and prudential points of focus as well as to suppress redundancies between existing reports.

The circular also introduces the self-assessment questionnaire to be filled in on an annual basis by the institutions. It also introduces the Agreed Upon Procedure report(s) and the annual separate report on the protection of financial instruments and funds belonging to clients as required under Article 7 of the Grand-ducal Regulation of 30 May 2018 to be established by the auditors of the institutions.

More details on the circular are available in the communiqué of 25 October 2022.

31 October 2022: Sustainable Finance - EC adopts Delegated Act and draft templates - gas and nuclear-related activities that comply with the Taxonomy

The European Commission has adopted amendments to the Commission Delegated Regulation (EU) 2022/1288 of 6 April 2022 supplementing Regulation (EU) 2019/2088 of the European Parliament and of the Council with regard to regulatory technical standards specifying:

  • the details of the content and presentation of the information in relation to the principle of ‘do no significant harm’;
  • the content, methodologies and presentation of information in relation to sustainability indicators and adverse sustainability impacts;
  • the content and presentation of the information in relation to the promotion of environmental or social characteristics and sustainable investment objectives in pre-contractual documents, on websites and in periodic reports.

The regulation requires financial market participants to disclose the extent to which their portfolios are exposed to gas and nuclear-related activities that comply with the Taxonomy, as set out in the Complementary Climate Delegated Act (CDA). By increasing transparency, these amendments will allow investors to make informed investment decisions. The amendment to the Delegated Regulation can be found here. The amendment to the Annexes can be found here.

These amendments are now subject to scrutiny by the European Parliament and the Council. Given we are dealing with a delegated act, the adoption procedure is different from the ordinary legislative procedure. The scrutiny period for these acts typical lasts for a period of three (3) months, which can be extended once, so in theory extendable to six (6) months.

Please note that in the procedure for delegated acts, there is no mandatory second reading, hence the 6 months period is not a given as most acts go through an ordinary 3 months adoption. Of course it is impossible to tell in advance whether either of the co-legislators will choose to extend the scrutiny period.

It is also possible for the scrutiny period to be shortened should the adoption be needed as a matter of urgency. Given the Commission is stressing in Recital (10) (page 5 of the Act) that the amendments to Delegated Regulation (EU) 2022/1288 are limited adjustments of the existing regulatory framework and are necessary to align the disclosure framework to Delegated Regulation (EU) 2022/1214, which is to apply from 1 January 2023, it is not excluded that the co-legislators may hasten the procedure to ensure the requirements kick in on that date.

Obviously at this stage, the question at stake is whether the co-legislators (Council and European Parliament) will raise an objection during the scrutiny period or not. It could be worth considering the legal action initiated by Austria (which Luxembourg is supporting) against the European Commission for including nuclear and gas in the Taxonomy Complementary Delegated Act and whether it could potentially impact the adoption by the European Parliament.

As far as the European Parliament is concerned, once an Act is submitted to the Parliament for scrutiny, it usually follows a non-objection procedure (a silent procedure). For the Act to be opposed, a plenary vote first needs to be triggered. One should however bear in mind that since MEPs previously chose not to object to the inclusion of gas and nuclear in the taxonomy by a comfortable margin, it would be odd that this more technical aspect be rejected.

8 November 2022: CSSF communiqué on AML/CFT controls applied in terms of preventing tax offences

The CSSF has published the results of a thematic review on controls applied in terms of preventing tax offences as per Circular CSSF 17/650 (amended by Circular CSSF 20/744) performed in November and December 2021.

Key Findings:

The main takeaway of the review was that the overall understanding of the risks associated with ML/TF linked predicate tax offences as well as the related mitigation measures put in place by the entities inspected were satisfactory. Nevertheless, the CSSF noted the following key findings:

  1. Weaknesses in risk assessment

In some cases, the risk assessment did not cover all relevant aspects of Circular CSSF 20/744. IFMs must ensure that their risk assessment includes all relevant tax specific indicators concerning their collective investment activities mentioned by the Circular.

  1. Shortcomings in the control function environment

The CSSF noted weaknesses regarding verifications performed by the control functions in the context of the AML/CFT predicated tax offences, as in some cases these were not sufficiently covered at the level of the compliance monitoring plan and/or at the level of the internal audit plan.

  1. Tax calculation, filing and reporting

The CSSF noted weaknesses with regard to delegated subscription tax calculation and filing as well as investor tax reporting, where the IFM was not systematically part of the related contractual arrangements. In another case, the CSSF noted that the IFM did not appropriately monitor the tax risks arising from securities lending activities, whereby the entity was not part of the contractual arrangements with the lending agent. Besides, the agreements did not contain any clause relating to the prevention of tax fraud. In these instances, the CSSF noted that the processes surrounding tax compliance were not sufficiently documented.

Best practices

The CSSF noted best practices for some of the IFMs such as in particular:

  • a tax due diligence was performed, documented and endorsed by the governing body of several IFMs prior to performing complex investments;
  • risk assessments made in relation with Circular CSSF 20/744 were reported to and endorsed by the governing body.

9 November 2022: Communication to the investment fund industry on SFDR RTS confirmation letter – Update

After expiry of the deadline of 31 October 2022 and taking into account the imminent application date (1.1.2023) of the Commission Delegated Regulation (EU) 2022/1288 of 6 April 2022 supplementing Regulation (EU) 2019/2088, the CSSF would like to confirm that Luxembourg-based UCITS, SIFs, SICARs and UCIs Part II which still need or wish to update their prospectus/issuing document shall follow the instructions set forth in the CSSF communication dated 6 September 2022 for the filing of the prospectuses/issuing documents.

Requests duly accompanied by the confirmation letter referred to in the above-mentioned CSSF communication and notably updates limited to comply with the aforementioned Commission Delegated Regulation will be processed on a best effort basis in view that the respective investment funds comply with the Commission Delegated Regulation from its date of application.

14 November 2022: Grand-ducal Regulation of 14 November 2022 (only in French)

The law provides details on the Law of 19 December 2020 on the implementation of restrictive measures in financial matters.

17 November 2022: ESAs publish Q&As on SFDR Delegated Regulation

The European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) have published Q&As on the SFDR Delegated Regulation (Commission Delegated Regulation (EU) 2022/1288). The document contains questions and answers regarding the following topics:

  • Current value of all investments in PAI and Taxonomy-aligned disclosures
  • PAI disclosures;
  • Financial product disclosures;
  • Multi-option products;
  • Taxonomy-aligned investment disclosures;
  • Financial advisers and execution-only FMPs.

The ESAs also refer to certain aspects of their clarifications document issued on 2 June 2022.

17 November 2022: Communication on the launch of a Standardised Model Prospectus

The CSSF has announced the availability of a Standardised Model Prospectus that applicants can use when submitting an application for approval of a new UCITS.

The Standardised Model Prospectus has been developed with the aim to facilitate the drafting of a conventional prospectus for a UCITS project of average complexity and to facilitate through standardisation its examination by the CSSF during the processing of the application file.

While the Model Prospectus is set up to reflect current and up-to-date practice, the content is composed of information of a universal nature and will need customisation to suit the context and circumstances of any specific fund project

The Standardised Model Prospectus provides freedom to add or alter text, however limited to the extent to not override the benefit of standardisation.

The Standardised Model Prospectus shall not be considered as a new regulatory requirement or a guarantee for the approval. The current authorisation process covering the submission of a request, the exchange of comments where relevant and the approval process of a UCITS remains unchanged as described on the webpage “Authorisation of a UCITS”.

Please visit the dedicated Standardised Model Prospectus page on the CSSF website for further information on the scope, conditions of use and practical guidance in respect to the new proposal.

18 November 2022: EU to introduce ESG naming rules

The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, is seeking input on draft guidelines on the use in funds’ names of ESG or sustainability-related terms.

22 November 2022: CJEU invalidates the public access to UBO registers as imposed by the 5th AML Directive

In accordance with 5AMLD, the Luxembourg Law of 13 January 2019 establishing the Register of Beneficial Owners (RBO Law) foresees unlimited public access of certain personal data of beneficial owners (BOs) registered with the Register of Beneficial Owners (RBO). It also provides for the possibility to obtain an exemption from that public access under very strict conditions, proving, in essence, the existence of a disproportionate risk for the BO's personal situation. In its judgment of 22 November, the Grand Chamber of the CJEU concludes that the provision of 5AMLD, which requires Member States to ensure that the information on the beneficial ownership of corporate and other legal entities incorporated within their territory is accessible in all cases to any member of the general public, is invalid. The general public’s access to the RBO without limitation constitutes an unjustified interference with certain fundamental rights, as protected notably by the Charter, and can therefore no longer apply.

The right of access to UBO registers of public authorities and AML professionals is not affected since it is enshrined in other provisions of the AML Directives whose validity is not at issue. However, in practice, the access by AML professionals to the RBO is currently blocked since it was based on the online public access available to the public at large, which is invalid. As indicated in the press release of the Ministry of Justice of 23 November 2023, a practical solution is currently being sought to that problem.

24 November 2022: MiFID rules related to sustainability: application of the requirements relating to product governance

The CSSF would like to remind supervised entities that from 22 November 2022 onwards, the date of application of the Grand-ducal Regulation, entities are required to take into account sustainability factors when specifying the target markets for the financial instruments and structured deposits they manufacture and/or distribute.

The European Securities and Markets Authority (ESMA) is currently finalising the update of its “Guidelines on MiFID II product governance requirements” in order to take into consideration these amendments. These guidelines will provide firms with further guidance on the application of the new requirements.

As a reminder, according to Commission Delegated Regulation 2021/1253, since 2 August 2022, providers of investment advisory and discretionary portfolio management services are required to obtain specific information on their clients’ preferences regarding sustainability and meet such preferences, while also meeting their other investment objectives and taking into account their financial situation and knowledge and experience.

24 November 2022: The European Supervisory Authorities call for evidence on greenwashing

The ESAs have published a Call for Evidence on Greenwashing, aiming at better understanding the key features, drivers and risks associated with greenwashing and to collect examples of potential greenwashing practices.

The call for evidence seeks input on potential greenwashing practices in the whole EU financial sector, including, but not limited to, banking, insurance and financial markets, from all interested stakeholders, including, but not limited to, financial institutions under the remit of the three ESAs and retail investors.

As it seeks to collect information relating to practices and potential greenwashing risks in the sectors within the remit of the three ESAs, the call for evidence contains a section on general greenwashing-related aspects relevant for the whole financial sector, as well as three additional sections covering specific aspects within the remit of each of the ESAs.

Respondents are invited to contribute to this call for evidence, both to the common part and to the ESA-specific sections, or to those sections of the call for evidence which are relevant to a given respondent through the following link:

Respondents are invited to submit their responses by 10 January 2023.

For further information, please contact:

Tobias Ettlin:
+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:

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