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Important clarifications for the Luxembourg fund industry on AML CFT requirements

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Schleimer Pierre
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Joanna Pecenik

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Ingallo Dara
Dara Ingallo

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02 December 2019

Taking into account the results of the Luxembourg national risk assessment which classifies the fund industry as high ML/FT risk, the CSSF clarifies that Luxembourg regulated funds, like Luxembourg investment fund managers (IFMs), are required to appoint two persons in charge of AML/CFT. 
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One is responsible for compliance with AML/CFT obligations at management level (RR) and the other one is responsible for controlling compliance with AML/CFT obligations at appropriate hierarchical level (RC). The role of RC may be delegated to third parties (e.g. IFMs) under certain conditions.

On 25 November 2019, the CSSF released a new FAQ on the persons involved in AML/CFT for Luxembourg regulated funds and IFMs. The FAQ applies to funds (i.e. UCITS, Part II UCIs, SICARs and SIFs) and IFMs (i.e. Chapter 15 and 16 management companies and AIFMs) supervised by the CSSF.

The CSSF reiterates that, pursuant to Article 4(1) of the AML Law, professionals (and therefore funds and IFMs) must appoint two persons to be in charge of AML/CFT, as follows:

  • one person at management level (i.e. the managing body of the relevant entity) responsible for compliance with AML/CFT obligations (referred to as an RR, from the French “responsable du respect”); and
  • one person at the appropriate hierarchical level responsible for controlling compliance with AML/CFT obligations (referred to as an RC, from the French “responsable du contrôle du respect”).

Despite the fact that the AML Law provides that the RC must be appointed only “if the size and nature of the activity so require”, the CSSF indicates that the investment funds sector has been assessed in the Luxembourg national risk assessment (available to professionals upon request here) as presenting a high ML/FT risk, precluding funds and IFMs from applying this principle of proportionality.

The CSSF provides guidelines on (i) the persons who may be appointed an RR and RC and (ii) the criteria for appointment as an RR and RC.