Luxembourg Newsletter - March 2014

AML

AML UPDATE

Mutual Evaluation - FATF: a new start for Luxembourg

In February 2014, the Financial Action Task Force ("FATF") reviewed the progress made by Luxembourg in addressing the deficiencies identified in its 2010 mutual evaluation report. Luxembourg was placed in the regular follow-up process as a result of non-compliant and partially compliant ratings for twelve of the core and key recommendations in its 2010 mutual evaluation report. The February 2014 follow-up report contains a detailed description and analysis of the actions taken by Luxembourg in respect of the 2010 mutual evaluation report.

Among the key measures taken by Luxembourg, FATF acknowledged the amendments made to the AML/CFT regime through the introduction of new legislation:

reinforcing the legal framework for AML/CFT (the three laws of October 27th 2010), addressing the deficiencies of the terrorist financing offence (law of December 26th 2012), introducing criminal liability for legal persons (law of March 3rd 2010) adopting Grand-Ducal Regulations (among others, the one of February 1st 2010 specifying some existing obligations provided for in the AML/CFT law of November 12th 2012), and other Regulations (the CSSF Regulation no. 12-02 of December 14th 2012 and the Commissariat aux Assurances Regulation no. 13/01 of December 23rd 2013) to implement the provisions of the AML/CFT Regime. FATF concluded that Luxembourg has addressed a significant number of material deficiencies under all core and key Recommendations and brought the level of technical compliance with these Recommendations to a level of compliance at least equivalent to largely compliant. Luxembourg has therefore taken sufficient measures to be removed from the regular follow-up process.

Within the framework of the FATF evaluations of February 2014, the Commission de Surveillance du Secteur Financier issued the CSSF circular no. 14/584 on February 17th 2014 regarding progresses made by some jurisdictions on implementation of FATF recommendations.

Guidance

The Basel Committee on Banking Supervision

On January 15th 2014, the Basel Committee on Banking Supervision issued a set of guidelines to describe how banks should include risks related to money laundering and financing of terrorism within their overall risk management framework. The guidelines include cross-references to FATF standards to help banks comply with national requirements based on those standards.

The Wolfsberg Group

The Wolfsberg Group of banks, which is an association of eleven global banks, aims to develop financial services industry standards, and related products, for Know Your Customer, Anti-Money Laundering and Counter Terrorist Financing policies. The Wolfsberg Group announced the publication of its Guidance Paper (on January 29th 2014) and revised AML Principles and Frequently Asked Questions (February 18th 2014).

A step towards the e-Filing of STR ?

The head of the Luxembourg Financial Intelligence Unit recently announced that the suspicious transactions report form would be revised during the Summer 2014 and that e-filing would be available to professionals subject to the AML laws and regulations.

BANKING & FINANCIAL SERVICES

APPROVAL PROCESS FOR HOLDERS OF KEY FUNCTIONS IN CREDIT INSTITUTIONS AND INVESTMENT FIRMS

In accordance with points 17 and 105 of Circular 12/552 relating to central administration, internal governance and risk management (the "Circular") of the Commission de Surveillance du Secteur Financier ("CSSF") as amended, the CSSF published details of the process (the "Process") to be followed by banks and investment firms supervised by the CSSF in requesting the approval of the appointment of any key function holders as well as the notification of their resignations or dismissals.

The Process applies to credit institutions and investments firms governed by Luxembourg law, including their branches, and to Luxembourg branches of credit institutions and investment firms originating outside the European Economic Area (the "Institutions").

The Process shall apply to the following key officers: directors, authorised managers, chief compliance officer, chief risk officer and chief internal auditor.

With regard to the approval by the CSSF of the appointment of any key function holder, point B of the Process sets out the documents and information that must be notified to the CSSF. In addition, the Institution must confirm in the cover letter attached to the application file that:

the appointment of the relevant person has been approved by the board of directors of the Institution, the appointment is...