On 23 December 2022, the Commission de Surveillance du Secteur Financier (the CSSF) published a new circular CSSF 22/827 to update the Circular CSSF 07/325, as amended. This new circular regards provisions relating to credit institutions and investment firms of EU origin established in Luxembourg by way of branches or exercising activities in Luxembourg by way of free provision of services (the Circular).
Scope and purpose of the Circular
The Circular provides clarifications for credit institutions and investment firms established in another Member State regarding – among other things - periodic reports of transactions on financial instruments. The CSSF specifies in the Circular that the relevant credit institutions and investment firms must report transactions executed through their branches established in Luxembourg to the competent authority of their home Member State. In its turn, the CSSF will receive these transaction reports from the competent authorities concerned.
Furthermore, in the Circular the CSSF underlines that each branch of a credit institution or investment firm established in Luxembourg must have a local administrative structure. In this context, all accounting and all transaction-related documents must be available at the branch. This means that, for instance, recordings of telephone conversations or electronic communication must be available at the location of the administrative structure of the branch:
- relating to, at least, transactions concluded when dealing for its own account and the provision of client order services that relate to the reception, transmission and execution of client orders; and
- that are intended to result in such transactions (even if those conversations or communications do not result in the conclusion of such transactions or in the provision of client order services).
The Circular additionally introduces a self-assessment questionnaire to be filled in annually by Luxembourg branches of credit institutions whose head office is in another Member State (the SAQ). The SAQ, reviewed and electronically signed by the authorised management of the company, must be submitted to the CSSF via the CSSF eDesk portal within six months after the closure of each financial year.
In conclusion, the Circular states that the statutory auditor (réviseur d’entreprises agréé) of a credit institution or investment firm (within the scope of the Circular) must prepare a report each year on the compliance with the rules on:
- the prevention of money laundering and the fight against terrorism (AML/CFT), and
- the applicable conduct of business rules when providing investment services/activities as well as ancillary services to clients.
If you have specific questions and/or requests on this topic, feel free to contact our experts: Jasper Verhoog & Peggy Muck.
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