New Alternatives to Quickly Open a Bank Account in Luxembourg

December 21, 2022 | Publication

This publication was drafted by the LPEA committee "Financings in Private Equity of the LPEA" under the coordination of Delphine Gomes (AKD) and Ana Bramao (Elvinger Hoss Prussen).


Anti-money laundering (AML) and know-your-customer (KYC) policies and processes have been slowing-down the opening of bank accounts in Luxembourg (from a few weeks to several months) and are therefore not adapted to the pace of private equity deals where time is of the essence.

Traditional banks generally streamline their onboarding procedures across their entire client portfolio. Such standardised processes are sometimes not suited for specific entities such as securitisation vehicles, alternative investment funds but also more and more plain vanilla holding companies.

In this demanding context, alternative banking platforms have developed a specific offer ensuring to open bank accounts in a shorter timeframe (approximatively 10 days). These new actors are operating as electronic money institutions (EMI) directly from their headquarters located in the United Kingdom or in a European Union Member State or through Luxembourg branches and do not (yet) hold a banking licence in Luxembourg. The funds stored on the e-money accounts opened in the name of the account holders with the platform are in fact held on a main collection account opened with an authorised credit institution (which may be located in Luxembourg or abroad).

The EMI should therefore ensure that the funds belonging to one specific holder are safeguarded and segregated from those of any other clients but also from the monies of the EMI itself, in particular in the event of insolvency or claim against the EMI.

This dual structure raises questions as to the granting of pledges over such e-money accounts. Which of the EMI or the authorised credit institution should be considered as the account bank? Which law shall govern the pledge? Should it be the law applicable to the collection account or to the e-money account? How to determine which law is applicable to a bank account? We will give insights on those interesting questions in the next newsflash on this hot topic.

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