07 June 2024



The European Securities and Markets Authority (ESMA) has released its final report on the guidelines on funds’ names using ESG or sustainability-related terms (the “Guidelines”), which also include a minimum investment threshold and qualifying criteria for different categories of ESG- and sustainability-related terms. The purpose of these Guidelines is to ensure that fund names using ESG- or sustainability-related terms are fair, clear and straightforward.


Luxembourg Market Update:

Luxembourg's regulated investment funds saw a 1.7% increase in net assets in March, extending the sector's growth over the past six months, to a total of €5.485trn at the end of the month, according to the CSSF. Net inflows amounted to €1.844bn, while rising financial markets contributed €90.09bn. The regulator says the number of legally distinct fund structures fell from 3,260 at the end of February to 3,251, comprising 2,124 umbrella funds with 12,777 sub-funds and 1,127 single-portfolio fund entities, and that all equity fund segments saw net outflows in March.

Regulatory Developments in and beyond Luxembourg:

18 April 2024: FATF ministers commit to stepping up efforts to fight money laundering, terrorist and proliferation financing

The Ministers of the Financial Action Task Force (FATF) met in Washington DC to discuss strategic issues and to take stock of FATF progress over its last mandate. Ministers reaffirmed their unwavering commitment to combat financial crime, and fully support the FATF as the global standard-setter for preventing and combatting money laundering, terrorist financing and the financing of the proliferation of weapons of mass destruction (AML/CFT/CPF).

Despite the significant progress made, the ministers noted the presence of some gaps in effective implementation of the FATF standards. As per the Ministerial Declaration, further efforts are also required on supervision and preventive measures, beneficial ownership transparency, investigating and prosecuting money laundering, and confiscating the proceeds of crime.

Ministers also committed to fully and effectively implement the FATF standards and to hold any member countries accountable if they fail to do so.

The Ministerial Declaration highlights how FATF will continue its strategic focus on countering terrorist financing and encourage all jurisdictions to strengthen cooperation to better detect, investigate, prosecute and disrupt terrorist financiers. In addition, the FATF encourages all jurisdictions to implement measures to prevent WMD (Weapons of Mass Destruction) proliferators from raising and moving funds. FATF ministers will meet next in April 2026

24 April 2024: Circular CSSF 24/857 on stress test scenarios under MMFR

The purpose of the Circular is to inform you that the CSSF, as competent authority, integrates the latest version of the ESMA Guidelines on stress test scenarios under the MMF Regulation (Ref. ESMA50-43599798-9011), as published on 19 December 2023, in its administrative practices. All money market funds (MMFs) under the supervision of the CSSF and Luxembourg managers of MMFs shall duly comply with the 2023 Guidelines.

29 April 2024: CSSF launches new webpage on CSRD

The CSSF has launched a new webpage concerning the Corporate Sustainability Reporting Directive (CSRD). On the upper right of the webpage, there are links to an overview on the CSRD, its scope and application as well as the main requirements of the European Sustainability Reporting Standards (ESRS). The latter includes links to the work of the European Financial Reporting Advisory Group (EFRAG) in this context.

2 May 2024: CSSF publication of Overseas Funds Regime roadmap

The CSSF informs that the UK Financial Conduct Authority (FCA) and HM Treasury have jointly issued a roadmap to explain how the Overseas Funds Regime (OFR) is intended to be opened to European Economic Area (EEA) funds authorised under Directive 2009/65/EC, as amended, following the UK Government’s decision to grant equivalence in relation to those funds (with the exception of money market funds).

By way of a reminder, the OFR is meant to replace the current Temporary Marketing Permissions Regime once it expires. The CSSF invites Luxembourg domiciled UCITS and management companies to closely monitor any implications deriving therefrom with a view to ensuring a smooth continuity of their marketing activities towards UK investors.

All the necessary information and practical specifications in relation to the aforesaid roadmap can be found on the FCA’s website.

3 May 2024: EC releases a summary of responses to SFDR review

The European Commission (EC) has published a summary of the responses received in the course of the SFDR review consultation.

Of note:

  • There is a divergence among respondents regarding on whether the SFDR is the right place to set entity-level disclosure requirements;
  • Many respondents indicated that they would support a hybrid approach combining established SFDR concepts with a voluntary categorisation framework, although there were diverging views on the approach to be taken in detail. Irrespective of the chosen approach, most respondents emphasised the importance of the categories being focused on retail investors, incorporating international frameworks, and leveraging existing national labels;
  • Respondents were predominantly located in EU countries, with France, Germany, Belgium, Spain, and Luxembourg being the most represented.

7 May 2024: ESMA Call for Evidence on the review of the Commission Directive 2007/16/EC on UCITS eligible assets

ESMA has launched a Call for Evidence in the context of the European Commission’s formal request to ESMA to provide technical advice on the review of the Commission Directive 2007/16/EC on UCITS eligible assets (‘UCITS EAD’). The Commission has mandated ESMA to carry out an assessment of the implementation of the UCITS EAD in the Member States and to analyse whether any divergences have arisen in this area and to provide a set of recommendations on how the EAD should be revised to keep it in line with market developments.

To this end, ESMA seeks stakeholders input on a number of questions, inter alia, to gather insights on the manner and the extent to which UCITS have gained direct and indirect exposures to certain asset classes that may give rise to divergent interpretations and/or risk for retail investors (e.g. structured/leveraged loans, catastrophe bonds, emission allowances, commodities, crypto assets, unlisted equities).

ESMA will consider all comments received by Wednesday, 7 August 2024.

8 May 2024: ESMA answers new Q&As on performance fees

The European Supervisory and Markets Authority (ESMA) has answered the following new questions on performance fees:

  • Can the manager of a Fund of Funds (FoF) charge performance fees?
  • Where a manager applies an additional reference indicator to the performance fee model (e.g.: a hurdle rate on top of the High-Water Mark model or the benchmark model), should the minimum performance reference period be applied to the additional reference indicator?

Both the Q&As on UCITS and the AIFMD have been updated.

14 May 2024: CSSF AML/CFT Conference for Investment Firms

In order to foster interaction with the investment firms under its supervision, the CSSF held an online conference on 23 April 2024 highlighting the key issues on AML/CFT for the sector. Representatives of the Luxembourg Ministry of Justice and the Luxembourg Financial Investigations Unit (FIU) were amongst the speakers.

The speakers gave feedback and clarifications on the following topics:

  • Key take-aways from AML/CFT investment firms’ supervision.
  • Results of the FATF’s Mutual Evaluation 2023.
  • Findings, typologies and best practices by the FIU.

The conference slides can be found here.


15 May 2024: ESMA publishes its Final Report on Guidelines on funds’ names using ESG or sustainability-related terms

ESMA has published its Final Report on Guidelines on funds’ names using ESG or sustainability-related terms. In this Final Report, ESMA provides an overview of the feedback received on the related ESMA consultation, which ran from 18 November 2022 to 20 February 2023, and explains how this feedback has been considered. The Final Report also contains the final Guidelines on funds’ names (the “Guidelines”). These Guidelines apply to UCITS management companies (as well as UCITS which have not designated a UCITS management company), alternative investment fund managers including internally managed AIFs, EuVECA, EuSEF and ELTIF and Money Market Fund managers.

The purpose of the Guidelines is to specify the circumstances where the fund names using ESG or sustainability-related terms are unfair, unclear or misleading. Investment fund managers and internally managed funds (“IFMs”) that include ESG or sustainability-related terms in the names of the UCITS and AIFs they manage must comply with the requirements included in the Guidelines.

Categories of terms

ESMA distinguishes different categories of ESG- and sustainability-related terms:

  • “Environmental”-related terms mean any words giving the investor the impression of promoting environmental characteristics, e.g. “green”, “environmental”, “climate”, etc. These terms may also include the abbreviations “ESG” and “SRI”.
  • “Sustainability”-related terms mean any terms derived from the base word “sustainable”, e.g. “sustainably”, “sustainability”, etc.
  • “Impact”-related terms mean any terms derived from the base word “impact”, e.g. “impacting”, “impactful”, etc.
  • “Transition”-related terms encompass any terms derived from the base word “transition”, e.g. “transitioning”, “transitional” etc. and terms deriving from “improve”, “progress”, “evolution”, “transformation”, “net-zero”, etc.
  • “Social”-related terms mean any words giving the investor an impression of promoting social characteristics, e.g. “social”, “equality”, etc.
  • “Governance”-related terms mean any words giving the investor the impression of a focus on governance, e.g. “governance”, “controversies”, etc.

Minimum investment threshold

All funds using ESG- or sustainability-related terms should meet an 80% minimum threshold in the proportion of investments used to meet environmental or social characteristics or sustainable investment objectives in accordance with the binding elements of the product investment strategy, as disclosed in the SFDR pre-contractual template (Annexes II and III of CDR (EU) 2022/1288).

Other requirements

In addition to the requirements outlined above, the following categories of ESG-related terms should comply with the following:

  • Funds using “Sustainable”-related terms should commit to investing meaningfully in sustainable investments referred to in Article 2(17) of the SFDR.
  • Funds using the term “Transition” should ensure that investments are on a clear and measurable path to social or environmental transition.
  • Fund names with the term “Impact” should ensure that investments are made with the intention of generating positive and measurable social or environmental impact alongside a financial return.

When a fund name combines several ESG-related terms, the Guideline requirements should apply cumulatively with the exception of terms used with “Transition” where only the CTB exclusions apply, as well as the requirement to have a clear and measurable path to social or environmental transition.

The Guidelines will apply three months after the date of their publication on ESMA’s website in all EU official languages. IFMs of any new funds created after the date of application of the Guidelines, should apply these Guidelines immediately in respect of those funds. IFMs of funds existing before the date of application of the Guidelines should comply with the Guidelines with respect to those funds at the latest six months after the date of application of the Guidelines.

24 May 2024: European Council approves CSDDD

The Council of the EU has approved the final text of the Corporate Sustainability Due Diligence Directive (CSDDD). The Directive introduces obligations for large companies regarding adverse impacts of their activities on human rights and environmental protection.

With this approval, the legislative process ends and as a next step, the final text will be published in the Official Journal of the EU. The Directive will enter into force twenty days later. It foresees a two years implementation time for Member States.

The Directive will apply, depending on the size of the companies following this timeline:

  • 3 years from the entry into force of the directive for companies with more than 5 000 employees and €1 500 million turnover;
  • 4 years from the entry into force for companies with more than 3 000 employees and €900 million turnover;
  • 5 years from the entry into force of the directive for companies with more than 1 000 employees and €450 million turnover.

27 May 2024: ESMA publishes report on application of MiFID II marketing requirements

ESMA has issued a combined report on its 2023 Common Supervisory Action (CSA) with National Competent Authorities (NCAs) on marketing disclosure rules under MiFID II. In the report, ESMA outlines several areas of improvement:

  • Marketing communications need to be clearly identifiable;
  • They need to contain a clear and balanced presentation of risks and benefit;
  • In cases where products and services are marketed as having ‘zero cost’, they should also include references to any additional fees.

ESMA further encourages NCAs to consider the use of sanctions in case of breaches. In view of the substantial role that marketing communications and advertisements can play in determining consumer behaviour and influencing investment decisions, ESMA and the NCAs will continue working on the topic.

27 May 2024: CSSF Communiqué on crypto-asset ATMs

The CSSF recommends that persons interested in conducting crypto-asset transactions on ATMs located in Luxembourg verify beforehand whether the providers operating these ATMs are registered as “Virtual Asset Service Provider” (“VASP”) with the CSSF. The list of VASPs is available in the application “Search Entities”. Furthermore, please be reminded that any provider wishing to operate such an ATM in Luxembourg must register with the CSSF as VASP beforehand. More information on the registration procedure is available on the CSSF website (Registration of a virtual asset service provider (VASP).

28 May 2024: C SSF communiqué on PRIIPS level 1 and level 2 regulation

The CSSF has issued a communiqué on PRIIPs level 1 and level 2 Regulation, which require “manufacturers” of packaged retail and insurance-based investment products (PRIIPs) to review the information contained in the key information document (KID) at least every twelve months following the date of its initial publication. With reference to existing guidance, the CSSF also reminded Luxembourg UCITS and UCITS management companies of the aforementioned review requirement for the year 2024.

30 May 2024: ESMA publishes report on application of MiFID II marketing requirements

ESMA has published a statement offering initial guidance to firms using Artificial Intelligence technologies (AI) when they provide investment services to retail clients.

The guidance analyses the risks inherent to the use of AI, such as:

  • Algorithmic biases and data quality issues;
  • Opaque decision-making by a firm’s staff members;
  • Overreliance on AI by both firms and clients for decision-making; and
  • Privacy and security concerns linked to the collection, storage, and processing of the large amount of data needed by AI systems.

The ESMA reiterates that when using AI, firms are expected to comply with relevant MiFID II requirements, particularly when it comes to organisational aspects, conduct of business, and their regulatory obligation to act in the best interest of the client.

30 May 2024: OJEU publishes a delegated act (DEA) related to DORA

The Official Journal of the European Union (OJEU) has published a delegated act supplementing the Digital Operational Resilience Act (DORA) Regulation (EU) 2022/2554 by specifying the criteria for the designation, by the European Supervisory Authorities (ESAs) of ICT third-party service providers as critical for financial entities.

The assessment process consists of two steps, aimed at determining whether an ICT third-party service provider that is critical for financial entities. The assessment considers:

  • The systemic impact of ICT third-party service providers on the stability, continuity or quality of the provision of financial services;
  • The systemic character and importance of the ICT services provided to financial entities;
  • The criticality or importance of the functions;
  • The degree of substitutability.

30 May 2024: OJEU publishes four delegated acts (DEAs) related to MiCA

The OJEU has published four delegated acts supplementing the Market in Crypto-Assets (MiCA) Regulation (EU) 2023/1114.

The first delegated act aims to specify the fees that the European Banking Authority charges to issuers of significant asset-referenced tokens and issuers of significant e-money tokens.

The second delegated act aims to specify the procedural rules for the European Banking Authority to impose fines or periodic penalty payments on issuers of significant asset-referenced tokens and significant e-money tokens.

The third delegated act determines the amount of oversight fees that the Lead Overseer will charge critical ICT third-party service providers and details how those fees are to be paid.

The forth delegated act specifies certain criteria for classifying asset-referenced tokens and e-money tokens as significant.


For further information, please contact:

Tobias Ettlin

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:


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