Highlights:

The CSSF has announced 19 February 2024 as the start date of its annual AML/CTF survey. The 2023 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 final submission to the survey questions will have to be completed through the CSSF eDesk Portal by 1 April 2024.

The CSSF has also updated its technical guidance on periodic SFDR disclosures under Article 8 or Article 9 of SFDR. Please note that the information cannot be provided to the CSSF simply by uploading the SFDR disclosures of the fund’s annual report, but must be submitted by answering a (very granular) questionnaire at sub-fund level.

Luxembourg Market Update:

The aggregate net assets under management of Luxembourg-domiciled private debt funds amounted to €404bn at the end of June, up 51% from a year earlier, according to a survey of 12 depositaries that service 1,495 funds or sub-funds conducted by Luxembourg fund industry group ALFI and KPMG Luxembourg. The report's authors say regulated funds account for 55% of the market segment, although the proportion that are indirectly supervised has grown from 40% in 2020. The proportion of private debt vehicles that are specialised investment funds has decreased from 67% in 2020 to 38% this year, while that of indirectly regulated reserved alternative investment funds has increased from 28% of the total to 53% - a small number are Part II funds and SICARs.

Regulatory Developments in and beyond Luxembourg:

2 October 2023: ESMA publishes analysis on ESG fund names and claims

The European Securities and Markets Authority (ESMA) has released a report on trends, risks and vulnerabilities containing a risk analysis with regard to ESG names and claims in the EU fund industry. ESMA finds, among others, that the share of EU UCITS investment funds with ESG words in their name has increased from less than 3% in 2013 to 14% in 2023. ESMA further states that fund managers tend to prefer using generic language (‘ESG’, ‘Sustainable’) rather than more specific words, which can make it more difficult for investors to verify that the fund portfolio is in line with the name.

The results of the analysis also point to differences between the document types (i.e. regulatory document vs. marketing material), suggesting that fund managers adapt their communication based on the expected types of readers. ESMA further states that a number of extensions to this work can be envisaged. Background to this report are ESMA’s efforts to monitor greenwashing risks.

5 October 2023: ESMA issues second consultation package under the Markets in Crypto-Assets Regulation (MiCA)

ESMA has published the second pack of consultation under the Markets in Crypto-Assets Regulation (MiCA).

In this consultation, ESMA is seeking input on five sets of proposed rules to compose the upcoming RTS and ITS, covering:

• Sustainability indicators for distributed ledgers;
• Disclosures of inside information;
• Technical requirements for white papers;
• Trade transparency measures; and
• Record-keeping and business continuity requirements for crypto-asset service providers.

As next steps, ESMA plans to publish a third consultation package with the remaining 18-month mandates in the first quarter of 2024. On the basis of feedback received, ESMA will submit the draft technical standards to the European Commission for endorsement by 30 June 2024.

20 October 2023: EU Commission issues Notice on Taxonomy

The European Commission (EC) has published a notice in the form of an FAQ on the interpretation of the Disclosures Delegated Act under Article 8 of the EU Taxonomy Regulation. This notice is aimed at non-financial undertakings starting their reporting of Taxonomy Key Performance Indicators (KPIs) as of 1 January 2023. It provides answers to several questions related to scope, reporting, and disclosures.

The FAQ is presented as a complementary piece to the three sets of guidance on the content of the Disclosures Delegated Act already published by the EC, namely:

• A Commission staff document Frequently Asked Questions’ (FAQs) on ‘What is the EU Taxonomy Article 8 delegated act and how will it work in practice?’;
• A Commission staff document ‘Frequently Asked Questions’ (FAQs) on how financial and non-financial undertakings should report their taxonomy-eligible economic activities and assets in accordance with the Disclosures Delegated Act;
• A Commission Notice on the interpretation of certain legal provisions of the Disclosures Delegated Act on the reporting of taxonomy-eligible economic activities.

23 October 2023: ESMA publishes guidelines for reporting under EMIR

ESMA has published guidelines for reporting under EMIR. These guidelines will apply as of 29 April 2024 with respect to the application of the new reporting framework. In summary, the guidelines provide clarifications on the following aspects:

• Determining the number of reportable derivatives (3.2);
• Intragroup exemption from reporting (3.3);
• Allocation of responsibility for reporting (3.4);
• Delegation of reporting (3.5);
• Reporting of lifecycle events (3.6);
• Reporting of FX swaps and forwards (4.4);
• EMIR Tables of fields (5.0).

2 November 2023: Circular CSSF 23/844 on reporting obligations for AIFMs (repeal of Circular CSSF 14/581)

The CSSF has issued Circular CSSF 23/844 which aims to clarify the technical details that AIFMs need to fulfil their reporting obligations. Information regarding the operational issues on this reporting as for instance the reporting frequency, the reporting periods, the first reporting period for existing, registered and authorised AIFMs can be found either in the final ESMA report or in the AIFM FAQ on the CSSF website.

14 November 2023: Circular CSSF 23/845 on the long form report and statutory audit mandate

The purpose of the circular is to amend Circular CSSF 22/821 on the long form report with the aim to include clarifications based on the feedback from the industry and to further align the content of the self-assessment questionnaire with supervisory points of focus and Circular CSSF 22/826 on the practical rules concerning the statutory audit mandate of the réviseurs d’entreprises agréés (approved statutory auditors). In particular, the submission deadline for the management letter is adapted in order to ensure a better alignment with the submission deadline foreseen for the reports to be established by the REA pursuant to Circular CSSF 22/821.

15 November 2023: CSSF issues Communiqué on reporting according to Annex IV of AIFMD – Addition of new rules and updates of ESMA’s AIFMD Q&As

Following the implementation in November 2023 of the revised IT technical guidance introduced in ESMA’s AIFMD Reporting Technical Guidance – revision 6 document, the CSSF has updated the corresponding document AIFM Reporting – Technical Guidance – CSSF on its website. The CSSF document describes the different feedback files that the senders of AIFM reporting receive and the CSSF’s checks on the reporting files. We would like to point out that the changes make certain fields mandatory.

The document is available at: https://www.cssf.lu/en/periodic-and-non-periodic-transmission-of-information-aifms/.

Each AIFM must receive at least three positive feedback files until the necessary controls have been completed. This does not exclude the possibility that the CSSF may contact the AIFM again at a later stage regarding the content of the reporting file(s). In case the AIFM encounters problems with the feedback files and/or error messages, they are invited to inform their service provider and/or to contact the CSSF exclusively at aifm_reporting@cssf.lu.

Furthermore, the CSSF draws the attention of all AIFMs to the latest update of ESMA updates AIFMD Q&As (in particular Section VII), which clarifies the rules on how to consider the leverage effect of exposures associated with financial structures controlled by AIFs that do not pursue a private equity strategy.

15 November 2023: CSSF Communiqué on UCITS marketing notifications

Following the publication of Circular CSSF 22/810 on 12 May 2022, the CSSF informs Luxembourg UCITS wishing to notify or de-notify arrangements for marketing of shares in another Member State in accordance with Article 6 of the 2010 Law, that they must comply with the marketing notification and de-notification procedures, which will be available via the eDesk Portal as of 2 January 2024. Circular CSSF 11/509 will therefore be repealed on this date.

The eDesk Portal can be accessed on the CSSF eDesk. The relevant procedure is the “Cross-border Marketing Notifications Tool”, which is already available for AIFMs’ marketing notifications and de-notifications. It will also be possible to use an API solution (S3 technology) to submit the packages for the entities concerned.

More details will be provided in December with the publication of a new version of the user guide.

15 November 2023: CSSF Communiqué on reports under Circulars CSSF 21/788, 21/789 and 21/790, applicable as from year-end 31 December 2023

On 22 December 2021, the CSSF published Circulars CSSF 21/788, 21/789 and 21/790 which introduced new reports in order to improve the risk-based supervision of the CSSF, both for prudential and AML/CFT purposes, concerning investment fund managers (IFMs) and undertakings for collective investment (UCIs). The new reports (self-assessment questionnaire, separate report and CSSF AML/CFT external report) were made available as of 10 January 2022, respectively 31 March 2022, in the module “Collective Investment Sector Reporting Tool” (CISERO) on the CSSF eDesk Portal to allow entities to prepare and file the reports with the CSSF.

In this context, the purpose of this communiqué is to inform that as from 15 November 2023, the reports for IFMs and UCIs with a financial year-end 31 December 2023 and 31 January 2024, are available in the CISERO module. The reports with a financial year-end after 31 January 2024, will be made available three months before the respective year-end.

Furthermore, the CSSF draws the attention to the following elements:

• Based on the reports submitted to the CSSF, the feedback received from the industry (also through the CISERO mailbox cisero@cssf.lu) as well as the applicable regulatory requirements, the CSSF did proceed to some limited updates of the questionnaires included in the respective reports for IFMs and UCIs. The main aim of these updates is to clarify certain questions and to complement, in view of the applicable regulatory requirements, certain topics of the reports. The updates of the different reports for IFMs and UCIs can be consulted under “Download empty forms as PDF” in the CISERO Dashboard.
• Following the feedback received from the industry and in line with the priorities of the CSSF, a short AML/CFT section has been added in the Separate Report for UCIs that fall under the scope of Circular CSSF 21/790 and which have designated an IFM outside of Luxembourg.
• An IT solution optimising the filling in of the self-assessment questionnaire for the UCIs within the scope of Circular CSSF 21/790 is available as from 15 November 2023. This solution, which can already be used for the reports with a financial year-end 31 December 2023, allows to fill in the questionnaire through a structured file transmitted to the CSSF via S3 (“simple storage service”) protocol. This file will then prefill the questionnaire available on the CSSF eDesk Portal. The UCI will still be able to manually update in eDesk the data prefilled through S3. The manual input of the responses directly in the eDesk SAQ online form remains possible. For further details regarding the modalities on how to use this new solution, please refer to the dedicated user guide.

17 November 2023: CSSF FAQs concerning SIFs and SICARs that do not qualify as AIFs

The CSSF has updated its FAQs concerning SIFs and SICARs that do not qualify as AIFs. The only change related to the replacement of the terms “central administration” by “UCI administrator” in line with CSSF Circular 22/811 (question 2).

22 November 2023: CSSF announces 2024 AML survey

The CSSF will start the annual online survey for the year 2023 on 19 February 2024. The 2023 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. Specifically, please take advance notice that the Country List has been modified with the addition of Palestine (ISO Code PS) so that you can anticipate the modification of related data extracts. The final submission to the survey questions will have to be completed through the CSSF eDesk Portal by 1 April 2024 (at the latest).

Please note that for the 2023 Financial Crime survey campaign, the CSSF will make available a new Application Programming Interface (“API”) solution allowing to pre-populate the survey in order to ease the process. The API solution is based on the use of a structured exchange file (json format) to be transmitted to the CSSF via the S3 (“simple storage service”) protocol. This file will then pre-fill the survey available on the CSSF eDesk platform. The entity will also be able to update directly in eDesk the data prefilled through S3. The manual input of the responses directly in the eDesk online form remains possible. A dedicated user guide will soon be made available. It will include technical details (json schema, naming convention) as well as the enrollment process. The enrollment at CSSF will only be required once entities are ready to test the developments.

The survey must still be completed within the CSSF eDesk Portal by:

• the compliance officer in charge of the control of compliance with the professional obligations (“responsable du contrôle du respect des obligations professionnelles” (“RC”)), or
• the person responsible for compliance with the professional obligations2 (“responsable du respect des obligations professionnelles” (“RR”)).

The completion of the survey, however, may be assigned within the CSSF eDesk Portal to another employee of the entity or third party, while bearing in mind that the ultimate responsibility for the adequate completion of the survey shall remain with the “RC” or the “RR”.

30 November 2023: CSSF guidance on data collection exercise on periodic SFDR disclosures

The CSSF has updated its technical guidance on periodic SFDR disclosures under Article 8 or Article 9 of SFDR. The purpose of the data collection exercise is for the CSSF to collect information in relation to the disclosures in periodic reports in accordance with the financial year-end of financial products. Please note that the information is to be submitted by answering a (very granular) questionnaire at sub-fund level.

The data collection is mandatory for all (sub-)funds of a UCITS/AIF/IORP disclosing under Article 8 or Article 9 of SFDR and must be submitted according to the following deadlines:

• For periodic reports issued, in accordance with the legal deadline to publish the annual report or to make it available to investors, between 1 January 2023 and 31 December 2023, information shall be provided to the CSSF by 31 January 2024 at the latest.
• For periodic reports issued as from 1 January 2024, information shall be provided to the CSSF, at the latest, one month after the legal deadline to publish the annual report or to make it available to investors.
• Accordingly, the aforementioned information shall be submitted to the CSSF, at the latest, 5 months after financial year-end for UCITS, respectively 7 months for AIFs and IORPs.

30 November 2023: CSSF FAQ on the Law of 17 December 2010 on UCITS – version 16

The CSSF has updated its FAQs on UCITS. Questions 1.14 and 1.15 on ancillary assets have been updated.

30 November 2023: CSSF FAQ on the submission of closing documents and financial information by managers

The CSSF has published its FAQs on the submission of closing documents and financial information by managers in English. The FAQs specify which documents should be submitted depending on the scope of a manager’s authorisation, and what procedures should be followed for transmitting closing documents.

For further information, please contact:

Tobias Ettlin #ONEteam
‍#onewithyou

‍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/