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Luxembourg - New regulatory requirements for Investment Fund Managers and Investment Funds Circulars CSSF 21/788, 21/789 and 21/790

20/01/22

In brief

On the 22nd of December 2021, the CSSF issued three circulars to enhance the prudential supervision of the Investment Fund Managers (IFM) and Investment Funds, including Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF):

  • Circular CSSF 21/788 introduces a new AML/CFT external report to be prepared by the Réviseur d’Entreprises Agréé (REA) applicable for year end as from the 31st of December 2021 for all Luxembourg investment fund managers and Luxembourg investment funds that have not appointed an IFM supervised by the CSSF for AML/CFT purposes;
  • Circular CSSF 21/789 and Circular CSSF 21/790 introduce new requirements and regulatory framework respectively for Investment Fund Managers (IFMs) applicable for year end as from the 31st of December 2021 and for Investment Funds supervised by the CSSF for year end as from the 30th of June 2022: a Self-Assessment Questionnaire (SAQ) to be completed annually, a questionnaire to be completed by the REA in a Separate Report (SR) and a new format for the Management Letter to be completed by the REA, all of which are included in the CSSF’s eDesk platform.
  • Circular CSSF 02/81 on Guidelines concerning the task of the REA of undertakings for collective investments, including Long Form Report (LFR) and Management Letter will be repealed as of the 30th of June 2022 by Circular 21/790.

For further information, the Circulars are available here : Circular CSSF 21/788 (in English), Circular CSSF 21/789 (in French) and Circular CSSF 21/790 (in French).

In more details

Circulars CSSF 21/788 and 21/789 

The requirements of the Circulars CSSF 21/788 and 21/789 are applicable as of the financial years ending on the 31st of December 2021.

Regulatory reporting Scope of the Circulars Changes Deadlines
Management Letter All audited IFMs (no change in the scope)

The free format is replaced by an eDesk form with a predetermined format:

  • Description of the issue;
  • Questionnaire to be completed by the REA;
  • Implication/Potential impact;
  • Recommendations;
  • Response from the Management of the IFM.

 

  • For 31/12/2021 closing: 31 July 2022
  • After 31/12/2021: 7 months after closing date

 

SAQ/SR
  • Management company subject to Chapter 15 of the 2010 Law;
  • Authorized AIFM subject to the 2013 Law;
  • Self-managed SICAV and AIF (above thresholds);
  • IFMs originating from outside of Luxembourg and providing management company services via a branch in Luxembourg.

 

  • A SAQ to be completed by the IFMs annually;

  • Selected answers from the SAQ will be subject to testing by the REA in a Separate Report (SR)

The above questionnaires will be completed in the eDesk platform of the CSSF.

Main themes of the SAQ: Internal organisation / IFM Bodies / Permanent risk management function / Compliance function / Internal audit function / Procedures and Policies / Delegation / IT requirement / Other key functions / Other Requirements

For 31/12/2021 closings:

  • SAQ: 30 June 2022
  • SR: 30 September 2022

 

After 31/12/2021:

  • SAQ: 4 months after closing date
  • SR: 7 months after closing date

 

AML/CFT
  • Management company subject to Chapter 15 of the 2010 Law;
  • Management company subject to Chapter 16 of the 2010 Law;
  • AIFM subject to the 2013 Law (including registered and authorized AIFM);
  • Self-managed SICAV and AIF.

WARNING : Registered IFMs will need to appoint a REA for this new AML/CTF external report.

Annual AML survey sent by the CSSF completed by the IFMs to be supplemented by:

  • An AML/CFT external report to be completed by the REA. The REA will be asked to corroborate the answers given in the annual AML questionnaire and perform sample testing using a risk-based approach.

The above report is to be completed in the eDesk platform of the CSSF.

Themes: AML/CTF Policies and Procedures / Risk based approach / Investment Fund Due Diligence / Distribution / Discretionary Portfolio Management (depending on IMFs license) / Transfer Agency (if performed in-house) / AML on Investments / Sanction-Name Screening / Delegate Oversight / Oversight over Branches (where applicable) / Cooperation with Authorities 

  • For 31/12/2021 closings: 30 September 2022
  • After 31/12/2021: 6 months after closing date

 

Circular CSSF 21/790

The new requirements of the Circular CSSF 21/790 are applicable as of the financial years ending on the 30th of June 2022, with the exception of the Separate Report for SIF and SICAR, which will be applicable as of the financial years ending on the 30th of June 2023.

Regulatory reporting Scope of the Circulars Changes  Deadlines

Management Letter

 

No change in the scope :

  • Part I & Part II Funds of the 2010 Law
  • SIF
  • SICAR

 

The free format is replaced by an eDesk form with a predetermined format:

  • Description of the issue;
  • Allocation of issue to predefined theme;
  •  Questionnaire to be completed by the REA;
  • Implication/Potential impact;
  • Recommendations;
  • Response from the Management of the Fund.
  • Part I of 2010 Law: 4 months after closing date
  • Part II of 2010 Law, SIF and SICAR: 6 months after closing date

 

LFR - SAQ/SR
  • Part I & Part II Funds of 2010 Law

  • SIF (new)

  • SICAR (new)

The current LFR is replaced by:

  • A SAQ to be completed by the Fund annually;
  • Selected answers from the SAQ will be subject to testing by the REA in a Separate Report (SR), including AML questions;

The above questionnaires will be completed in the eDesk platform of the CSSF.

Themes of the SAQ: General information / Organisation of the Fund / Investment compliance / Valuation / NAV determination / Expenses & income / Relationship with Depositary

SAQ

  • Part I of 2010 Law: 3 months after closing date
  • Part II of 2010 Law, SIF and SICAR: 4 months after closing date

Separate Report

  • Part I of 2010 Law: 5 months after closing date
  • Part II of 2010 Law, SIF and SICAR: 6 months after closing date

In conclusion

These circulars reinforce the regulatory requirements for Luxembourg investment fund managers and investment funds supervised by the CSSF in the areas of governance and internal controls, as well as AML/CTF. They also harmonise the obligations for the REA. 

IFMs and investment funds should carefully consider the content and requirements introduced by Circulars 21/788, 21/789 and 21/790 and be prepared for complying with them. 

Our Governance and AML experts would be delighted to support you in ensuring that these requirements are fully understood and help you get prepared. 

We have the pleasure to invite our clients for more detailed information sessions in February and March 2022. A separate communication will be sent soon.

Contact us

Isabelle Dauvergne

Alternatives Assurance Leader, PwC Luxembourg

Tel: +352 49 48 48 2435

Michael Delano

AWM Assurance Leader, Partner, PwC Luxembourg

Tel: +352 49 48 48 2109

Laurence Demelenne

IRE Alternatives Commission Leader, Partner, PwC Luxembourg

Tel: +352 49 48 48 2244

Birgit Goldak

AML Services Partner, Asset and Wealth Management, PwC Luxembourg

Tel: +352 49 48 48 5687

Aurélie Batrel

Alternatives Assurance Partner, PwC Luxembourg

Tel: +352 49 48 48 2429

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