On 12 June 2018, the law of 17 December 2010 relating to undertakings for collective investment (the "2010 Law", available here in French and here in English) and the law of 12 July 2013 on alternative investment fund managers (the "2013 Law", available here in French and here in English) were lastly amended. In particular, Articles 5 to 19 of the 2013 Law lay down the legal conditions, which must be met to be granted authorisation as alternative investment fund manager ("AIFM") by the CSSF. The Commission delegated regulation (EU) No 231/2013 of 19 December 2012 (the "Delegated Regulation", available here) further details how certain Articles of the 2013 Law shall be applied.
On 25 July 2018, the CSSF urged fund management companies (e.g., AIFMs and UCITS fund managers) to submit their Brexit-related applications as soon as possible (the "Press Release 18/25", available here).
Taking into account the rapid evolution of the EU and Luxembourg legislation concerning AIFs and the latest supervisory market practices, the CSSF has worked on a new circular to replace and extend the scope of the Circular 12/546 to "Investment Fund Managers" ("IFMs" or "gestionnaires de fonds d'investssement"), including UCITS management companies and AIFMs.
Who is concerned?
On 23 August 2018, the CSSF issued the circular 18/698 concerning the (i) authorisation and organisation of IFMs incorporated under Luxembourg law and (ii) specific provisions on the fight against money laundering and terrorist financing applicable to IFMs and entities carrying out the activity of registrar agent (the "Circular 18/698").
In this context, the Circular 18/698 applies to the following IFMs:
The CSSF notes that the Circular 18/698 also applies to branches and representative offices ("bureaux de representation"), as the case may be, which have been established by an IFM in Luxembourg and/or abroad.
However, the CSSF highlights that the Circular 18/698 does not apply to IFMs subject to Chapter 18 of the 2010 Law and entities that are subject to Article 3 of the 2013 Law and not mentioned in the above list of IFMs.
The main purpose of the Circular 18/698 is to define the conditions for obtaining and maintaining the authorization for all IFMs presented within one single document. In addition, the Circular 18/698 aims at providing further clarifications on certain conditions for authorization, more particularly in the area of the shareholder structure, own fund requirements, management bodies of the IFM, arrangements concerning the central administration and governance, and rules of delegation.
With regards to the activity of registrar agent, credit institutions, investment firms, professionals of the financial sectors, and IFMs incorporated under Luxembourg law, as well as Luxembourg branches of foreign establishments shall refer to the Sub-Chapter 5.4. of the Circular 18/698 entitled "Organisation of the fight against money laundering and terrorist financing", most notably point 304 on page 48.
Besides, the Circular 18/698 incorporates, with reference to the CSSF Regulation N° 10-04 (available here) and the Delegated Regulation, the rules concerning the compliance and internal audit functions, as previously laid down in the CSSF Circulars 04/155 (available here) and IML 98/143 (available here).
The Circular 18/698 consists of the following 9 Parts and 3 Annexes:
The Circular 18/698 is available here (only in French at the time of this publication).
The Circular 18/698 enters into force on 23 August 2018 and repeals the Circular 12/546 from this date.
Final provisions of the Circular 18/698 also amend certain provisions of other CSSF circulars (e.g., CSSF Circular 11/512 on risk management, available here, or CSSF Circular 17/671 on the out-of-court resolution of complaints, available here only in French, as described under points 619 and 620 of the Circular 18/698).
The CSSF notes that the Circulars 04/155 and IML 98/143 are no longer applicable for IFMs in scope of the Circular 18/698.
Existing authorised IFMs and companies applying for any IFM authorisation should carefully consider the content and new requirements introduced by the Circular 18/698.
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