New CSSF Circular on AML

Amendment to the Luxembourg AML Law: a summary of the most important points for professionals of the financial sector

The Commission de Surveillance du Secteur Financier (CSSF) published on 4 May 2020 the Circular 20/742 (the "Circular") regarding the Luxembourg law of 25 March 2020 which entered into force on 30 March 2020 and partially implements the EU Directive 2018/843 (the 5th AML Directive) and notably amends the law of 12 November 2004 on the fight against money laundering and terrorism financing, as amended (the "AML Law").

The Circular is addressed to professionals of the financial sector subject to the AML Law in order to raise awareness of the main amendments to current legislation on the fight against AML/CTF. The Circular provides guidance and clarifications on the main changes to the AML Law and the CSSF has also made a consolidated version of the AML Law available on its website.

1. Main amendments to the AML Law

The main amendments to the AML law are the following:

• New definitions are included, such as virtual currency (monnaie virtuelle) or virtual asset (actif virtuel). Some other definitions have been amended and developed, like financial institution (établissement financier) and beneficial owner (bénéficiaire effectif);

• The scope of the AML Law is expanded and it is binding on a wider group of professionals and the scope of supervision of the CSSF is extended;

• The obligation of professionals to perform risk assessment is amended, in order to include the obligation to update the risk assessment process as established by the national and EU authorities from time to time;

• Amendments to the surveillance obligations vis-à-vis the clients are included, as for example the identification of clients through certain electronic processes;

• Regarding professionals who work in groups, the procedures and politics must be implemented in the whole group in order to have a closer control of branches and subsidiaries; and

• Finally, the protection of whistle-blowers is amplified, by ensuring protection of employees who report suspicious transactions.

2. Central electronic search system of data concerning IBAN accounts and safe-deposit boxes

A new section is included in the AML Law dealing in particular with the special provisions applicable to virtual asset services providers and the regime of registration and supervision for AML/CFT purposes of such entities by the CSSF.

Also, a new section is included in the AML Law concerning the special provisions applicable to providers of services to companies and trusts which must henceforth register with their competent authority, including the CSSF for professionals falling within the scope of CSSF supervision who would provide services to companies and trusts (fiducies).

Lastly, it is announced that a new CSSF Circular dedicated to central electronic search system of data concerning IBAN accounts and safe-deposit boxes and providing details on the technical requirements for the implementation of this system will be published. We will provide an update once this becomes available.