AML: Luxembourg approves law on the register of fiducies and trusts

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AML: Luxembourg approves law on the register of fiducies and trusts

8 July 2020

Regulatory News Alert

Context and objectives

On 1 July 2020, the Luxembourg parliament unanimously approved the law on the creation of a register of fiducies and trusts. This law is in line with European regulations on the prevention of the use of the financial system for the purpose of money laundering or terrorist financing.

Under Directive 2018/843 of the European Parliament and the Council of 30 May 2018 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (the Fifth AML Directive), Member States are required to maintain inter-connected and publicly available national ultimate beneficial owner (UBO) registries. Following the adoption of the law of 13 January 2019 (the “RBE Law”) establishing a register of beneficial owners of Luxembourg entities, Luxembourg is fully translating the Fifth AML Directive into national law by establishing a register of fiducies and trusts (the “RFT Law”). The RFT Law repeals the law of 10 August 2018 on the information that Luxembourg fiducies must obtain and hold, as its relevant provisions have been directly incorporated into the RFT Law.

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The law has several components:

  1. Obliged entities: all fiducies (including foreign) and express trusts for which a fiduciaire or a trustee is established or domiciled in Luxembourg, as well as all fiducies and express trusts for which the fiduciaire or trustee is established in a third country, where the fiduciaire or trustee enters into a business relationship in Luxembourg with a professional subject to the AML Law of 12 November 2004.
  2. Obligation for trustees and fiduciaires to obtain and keep data relating to beneficial owners:  trusts or fiducies will need to be transparent about all the parties involved in these particular structures, including the person who set up the fiducies/trust, the fiduciaire/trustee, and the beneficiaries the assets belong to. Failing to comply with the new law could lead to fines of up to €1.250 million. Trusts/fiducies can apply for exemptions if the beneficiaries are at risk of fraud, kidnapping, blackmail, extortion, harassment, violence or intimidation, or if the beneficial owner is a minor or legally incapable.
  3. Administration of the register of fiducies and trusts: the Administration of Registration, Domains and VAT (AED) will oversee the register wherein the trustees and fiduciaires will have to enter certain information they are obliged to collect.
  4. Access to the register of fiducies and trusts: in principle, access to the register will be reserved for national authorities; self-regulatory bodies exercising their supervisory role in the fight against money laundering and the financing of terrorism; and for professionals in the context of applying customer due diligence measures. However, the law leaves the door open to any natural or legal person who demonstrates a legitimate interest in the prevention of the use of the financial system for the purpose of money laundering or terrorist financing.
  5. Cooperation: the Financial Intelligence Unit (FIU), supervisory authorities, and self-regulatory bodies will be able to cooperate closely and exchange any information obtained, which is necessary to fulfill their respective missions in the fight against money laundering and the financing of terrorism. In addition, the supervisory authorities will be able to cooperate with their foreign counterpart authorities.

 

Next steps

The law will enter into force after its publication in the Official Journal. The deadline for the obliged entities to disclose their information to the register has not yet been made public.

As the law aims to frame European cooperation, the AED has been given the power to connect the register of fiducies and trusts with the registers set up by the other Member States through the European central platform. Luxembourg has until March 2021 to connect the register to a central platform for the exchange of information with other EU countries.
 

How can Deloitte help?

Deloitte’s advisory specialists and dedicated services can help you design and implement your business strategy in light of the evolution of regulatory frameworks and market trends.

Deloitte’s anti-money laundering (AML) and counter terrorist financing (CTF) advisory specialists and dedicated services can also help you design and implement your renewed business strategy in light of the future evolution of the AML/CFT framework.

Key Deloitte AML services include:

  • AML/KYC remediation plan.
  • AML/CTF training.
  • AML/CTF policy, procedure, and process design or review.
  • Assistance in risk assessment drafting regarding money laundering/terrorist financing.
  • DKYC: externalizing KYC processes.

Deloitte’s Regulatory Watch Kaleidoscope service helps you stay ahead of the regulatory curve to better manage and plan upcoming regulations.

Contacts

Subject matter specialists

Pascal Eber
Partner – Consulting Banking, Insurance and Non FSI Leader
Tel : +352 45145 2649
peber@deloitte.lu

Eric Collard
Partner – Forensic & AML, Restructuring
Tel : +352 45145 4985
ecollard@deloitte.lu

Bastien Collette
Director – Advisory & Consulting (AML/CTF)
Tel : +352 45145 3372
bacollette@deloitte.lu

Maxime Heckel
Director – Forensic & AML, Restructuring
Tel : +352 45145 2837
mheckel@deloitte.lu

Alice Lehnert
Director – Advisory & Consulting 
Tel : +352 45145 2605
alehnert@deloitte.lu


Regulatory Watch Kaleidoscope service

Simon Ramos
Partner – IM Advisory & Consulting Leader
Tel : +352 45145 2702
siramos@deloitte.lu

Jean-Philippe Peters
Partner – Risk Advisory
Tel : +352 45145 2276
jppeters@deloitte.lu

Benoit Sauvage
Director – RegWatch, Risk Advisory
Tel : +352 45145 4220
bsauvage@deloitte.lu

Marijana Vuksic
Manager – Regulatory & Consulting
Tel : +352 45145 2311
mvuksic@deloitte.lu

 

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