REGULATORY CLIENT UPDATE / DECEMBER 2022

REGULATORY CLIENT UPDATE / DECEMBER 2022

Highlights:

As reported in our last regulatory client update, the Court of Justice of the European Union (CJEU) has declared that Luxembourg’s public access regime for the national UBO registers is unlawful. Therefore, access to the Luxembourg’s Register of Beneficial Owners (RBO) has been temporarily blocked. The RBO is available again for professional users listed under Article 2 of the Law of 12 November 2004 on the fight against money laundering and terrorist financing. Organisations are requested to designate a primary owner who can manage internal access for other users.

Luxembourg Market Update: New platform for fund data management

Fund Data Exchange (FDX), a Luxembourg platform currently being under development, seeks to create a common fund data standard and reduce inefficiencies in the Luxembourg fund ecosystem. The platform, spearheaded by ONE group solutions and Alis Exchange, is already being worked on within ILA, the North American bankers’ association, and the Findel Group. In January, the Luxembourg association for investment funds (ALFI) will launch a call for interest, to attract contributions from its members to further mobilise the initiative for the benefit of the fund industry.

Regulatory Developments in and beyond Luxembourg:

11 November 2022: CSSF updates FAQs on CBDF

The CSSF has updated its FAQs on the cross-border distribution of funds (CBDF), notably the notification procedures in relation to the CBDF Regulation. The FAQs highlight the changes regarding notifications submitted to the CSSF.

14 November 2022: ESAs update FAQs on PRIIPs KIDs

The European Supervisory Authorities (ESAs) published an updated version of the FAQs on the Key Information Document (KID) for packaged retail and insurance-based investment products (PRIIPs). Of note is that the ESAs have adopted ESMA’s interpretation on benchmark disclosures from the UCITS KIID to the PRIIPs KID.

17 November 2022: CSSF updates FAQs on MiFID II/MiFIR

The CSSF has updated its FAQs on MiFID II/MiFIR.

2 December 2022: CSSF publish FAQs on SFDR

The CSSF has released FAQs on the Sustainable Finance Disclosure Regulation (SFDR). The FAQs apply to:

1. Financial Market Participants (FMPs):
   1. Alternative Investment Fund Managers;
   2. UCITS Management Companies;
   3. Managers of a qualifying venture capital fund registered in accordance with Article 14 of Regulation (EU) No 345/2013; and
   4. Managers of a qualifying social entrepreneurship fund registered in accordance with Article 15 of Regulation (EU) No 346/2013
2. Financial Products:
3. Alternative Investment Funds (AIFs), and
4. Undertakings for Collective Investment in Transferable Securities (UCITS).

In its FAQs, the CSSF covers the following questions:

1. Updates of prospectuses/issuing documents: (Q1) Nature of the changes made to the SFDR RTS pre-contractual templates and (Q2) Qualification of a change to a prospectus/issuing document which is strictly limited to introducing templates under the SFDR RTS;
2. Website disclosures: (Q3) Compliance by Investment Fund Managers with website disclosure requirements of Article 10 SFDR;
3. Pre-contractual disclosures: (Q4) Nature of the disclosure of investment thresholds under SFDR, (Q5) Whether sustainable investments under Article 9 SFDR shall meet at all times the conditions of Article 2(17) SFDR and (Q6) Whether exclusion strategies are sufficient for funds disclosing under Article 8 and Article 9 SFDR;
4. Periodic disclosures: (Q7) Application date of periodic disclosure requirements under SFDR RTS.

With regard to (Q5) mentioned above, it’s worth noting that the CSSF states that all investments must meet their stated sustainability qualifications at the date of the actual investment. The CSSF also states that the thresholds set for a fund on the minimum proportion of sustainable investments should be considered binding. The regulator also says that fund management companies should keep investors informed on investment strategies, noting that for an article 9 SFDR fund, the selection process should be explained as well as the criteria for excluding certain investments.

7 December 2022: CSSF announces 2023 AML survey

The CSSF has announced that its annual online AML survey for the year 2022 will commence on 15 February 2023. Answers to the survey questions will have to be submitted through the CSSF eDesk portal by 31 March 2023.

The objective is to collect standardised key information concerning money laundering and terrorism financing (ML/TF) risks to which professionals under CSSF supervision are exposed and the implementation of measures to mitigate these risks. This cross-sector survey contributes to the CSSF’s ongoing assessment of ML/TF risks present in the financial sectors under its supervision and forms part of the AML/CFT risk-based supervision approach put in place by the CSSF.

The 2022 survey remains mostly unchanged compared to the previous year. However, some questions have been removed, added or amended. The new and amended questions have been highlighted in the survey.

The completion of the survey may be delegated within the CSSF eDesk portal but the ultimate responsibility for completion and submission shall remain with the “RC” or the “RR”.

15 December 2022: CSSF holds annual AML conference

The CSSF hosted its annual AML/CFT Virtual Conference. Among the topics covered were:

1. The annual CSSF AML Survey (please refer to the update above);
2. Initial feedback on the AML/CFT external report (as per Circular CSSF 21/788);
3. A 2022 special project on dedicated funds;
4. Feedback from 2022 onsite inspections;
5. Requirements around Suspicious Transaction and Order Reports (STOR).

16 December 2022: CSSF publishes new version of FAQs on the Law of 17 December 2010

The CSSF has published version 15 of the FAQs on the Luxembourg Law of 17 December 2010 relating to undertakings for collective investment.

16 December 2022: CSSF publishes new version of FAQs on the Luxembourg Law of 12 July 2013 on alternative investment fund managers

The CSSF has published version 20 of the FAQs on the Luxembourg Law of 17 December 2010 relating to undertakings for collective investment.

16 December 2022: CSSF publishes new version of FAQs on SIFs and SICARs that do not qualify as AIFs

The CSSF has published version 20 of the FAQs on SIFs and SICARs that do not qualify as AIFs.

21 December 2022: EMIR Refit reporting standards

The CSSF has published a communiqué new reporting standards applicable to derivatives reporting under EMIR as of 29 April 2024. This is based on details published by ESMA related to the reporting of derivatives as required under Article 9 of EMIR and the new technical standards that will become applicable. This publication consists of several documents:

1. The final report on guidelines for reporting under EMIR;
2. The validation rules under EMIR that trade repositories are required to apply as well as the notification templates of significant reporting errors to NCAs;
3. The XML EMIR Reporting Schemas towards trade repositories (incoming) and from trade repositories (outgoing).

For further information, please contact:

Tobias Ettlin
m: +352 691 111 931
tobias.ettlin@one-gs.com

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/