Key facts and figures

Sustainable finance

• Entry into force, on 10 March 2021, of the level 1 requirements regarding the pre-contractual information required under Regulation (EU) 2019/2088 on sustainability‐related disclosures in the financial services sector (SFDR)
  • Publication of several communiqués providing guidance for the implementation of the SFDR.
  • Implementation of two fast-track procedures to facilitate the submission of UCITS prospectus updates and amended offering documents of alternative investment fund managers.
• Publication of a communiqué drawing, proactively, the attention of issuers on the phased-in implementation of Article 8 of the Taxonomy Regulation as from 1 January 2022.
• Review of the 2020 non-financial reporting of issuers subject to the requirements of the Non-Financial Reporting Directive (NFRD) and publication of a review on the evolution of non-financial information reported by issuers on environmental and climate-related issues.
• Publication of Circular CSSF 21/773 on the management of climate-related and environmental risks in the banking sector.

Virtual assets and financial innovation

• Increased interest of consumers for crypto-assets and multiplication of industry projects related to tokenisation and Securities Token Offerings (STO).
• Publication of a guidance on virtual assets, as well as Questions/Answers on the use of virtual assets in the UCI and banking sectors.
• Publication in January 2022 of a white paper on the Distributed Ledger Technology (DLT).
• Registration of the first six virtual asset service providers.
• Launch of a questionnaire on the use of artificial intelligence in collaboration with the BCL.

Authorisation procedure

• Entry into force of the Law of 21 July 2021 : henceforth the CSSF is competent for granting authorisation, refusing applications for authorisation as well as withdrawing authorisation for entities under its supervision.

Fight against money laundering and terrorist financing (AML/CFT)

• Setting-up of AML/CFT colleges.
• Implementation of the register of payment and banking accounts identified by an IBAN number.
• Organisation of different AML/CFT awareness-raising conferences.
• Regulatory developments
  • Amendments to the Law of 12 November 2004 relating to AML/CFT, Regulation CSSF No 12-02 of 14 December 2012 relating to AML/CFT and Grand-ducal Regulation of 1 February 2010 specifying certain provisions of the 2004 Law.
  • Entry into force of the Law of 19 December 2020 on the implementation of restrictive measures in financial matters. Strengthening of the CSSF’s role and of its powers to impose sanctions with respect to international financial sanctions.
  • Publication of the AML package by the European Commission aiming at strengthening and harmonising AML/CFT regulations and supervision.
  • Publication of Circular CSSF 21/788 regarding the formalisation of AML/CFT work of réviseurs d'entreprises agréés (approved statutory auditors) of Luxembourg investment fund managers (including registered managers) and Luxembourg investment funds.
• Evolution of the sector’s practices
  • Adaptation of the processes of entering into a business relationship or client identification in response to the situation arising from the COVID-19 pandemic.Increased use of the remote identification modes, or use of robotic systems.
  • Investments in AI analysis tools, notably for the follow-up and analysis of transactional behaviours of customers.
  • As a response to the clarifications brought about by Regulation CSSF No 20-05, strengthening at the banking level of the control environment in terms of AML/CFT and formalisation of a specific AML/CFT risk appetite.
  • Improvement of the screening arrangements relating to international financial sanctions.
  • Better consideration of tax risk.

Banks

• Good resilience of Luxembourg banks during the COVID-19 pandemic crisis period.
• Monitoring of credit risk. Confirmation of adequate management by the banks and low level of non-performing loans.
• Positive effects of the introduction of loan-to-value maximum limits for new credits relating to residential immovable property located in Luxembourg.
• Start of the work relating to the reform of the long form report.
• Work on the amendment of the regulatory framework of prudential requirements applicable to credit institutions (CRR3/CRD VI).
• Introduction, through the entry into force of CRR2, of the minimum requirements for the Net Stable Funding Ratio (NSFR) (100%) and of the binding Basel III Leverage Ratio set at a minimum of 3%.

Resolution

• Adoption by the Single Resolution Board (SRB) of resolution plans of several banking groups including Luxembourg banking subsidiaries and of resolution plans of Luxembourg banking groups or systemic banks. Drafting of resolution plans for less significant banks under the direct responsibility of the Resolution Board.
• Chairing of four cross-border resolution colleges.

Fonds de garantie des dépôts Luxembourg (FGDL)

• Cooperation agreement between the CSSF, the FGDL and the Dutch deposit guarantee scheme in order to resolve operational issues of cross-border reimbursement of depositors of branches.
• Mandate given to two Luxembourg banks to set up a syndicated credit line for the FGDL.

Investment funds

• Reform of the long form report for investment funds and investment fund managers and the external AML/CFT report.
• Launch by ESMA of a Common Supervisory Action on the supervision of costs and fees of UCITS across the EU with a view to promoting supervisory convergence.
• Work on the issue of liquidity risk management within UCITS.
• Transposition into Luxembourg law of Directive (EU) 2019/1160 with regard to cross-border distribution of collective investment undertakings.
• Adoption by the European Commission, in the framework of the Capital Markets Union, of a set of measures aiming to ensure better access of investors to data on undertakings and transactions, which notably includes the following proposals:
  • European Single Access Point (ESAP).
  • Review of the European Long-Term Investment Funds (ELTIFs) Regulation.
  • Review of Directive 2011/61/EU on Alternative Investment Fund Managers.
  • Review of the European Markets in Financial Instruments Regulation (MiFIR).

Investment firms

• Introduction of a new legal framework applicable to investment firms:
  • Entry into force of Regulation (EU) 2019/2033 on the prudential requirements applicable to investment firms (IFR).
  • Transposition of Directive (EU) 2019/2034 on the prudential supervision of investment firms (IFD) into the Law of 5 April 1993 on the financial sector (Law of 21 July 2021).
  • Implementation of new uniform European reporting requirements for the prudential supervision and publication of a Reporting Handbook.
  • Phased-in adaptation of the regulatory framework applicable to investment firms of the relevant EBA Guidelines.
• ESMA Peer review on supervision of cross-border activities of investment firms.

Supervision of information systems

• Replacement of the prior authorisation obligation by a prior notification obligation in the case of material IT outsourcing (Circular CSSF 21/785).
• Follow-up on EU work on digital resilience, including negotiations concerning the Digital Operational Resilience Act (DORA).
• Joint adoption with the BCL of a testing framework for controlled cyber-attacks, called TIBER-LU (Threat Intelligence-Based Ethical Red-Teaming).
• Analysis and monitoring of the compliance of payment service providers with PSD2 and related regulations and guidelines.

Support PFS

• Survey of support PFS activities and classification based on risks.
• Recast of the prudential supervisory framework of support PFS (enhancement of the risk-based supervisory approach, update of the governance requirements).

Payments

• Significant growth of the payment institution and electronic money institution sector.
• Finalisation of the authorisation process for Central Securities Depositories (CSDs) and implementation of the CSDR supervision for authorised CSDs.

Remuneration and governance

• Continuation of the regulatory work with respect to remuneration and governance for credit institutions and investment firms following the publication of the CRR2/CRD V and IFD/IFR packages.

Financial markets

• Implementation of the e-Prospectus portal.
• ESMA Peer review of the review and approval process of prospectuses for securities.

On-site inspections

• 144 on-site inspections in off-site mode (cf. impact of the COVID-19 pandemic).
• Review of the organisational processes by means of the lean management methodology.

Financial education (Lëtzfin initiative)

• Launch with the different stakeholders of the senior webbanking training cycle (Ech kann dat och).
• Increasing number of public awareness-raising initiatives (strengthening of the presence on social media, partnership with a public radio station, production of videos, etc.).

Transformation strategy CSSF 4.0

• Digitalisation:
  • Improvement of the processes through the introduction of new data exchange platforms (e-Prospectus for the supervision of financial markets; eDesk AML/CFT Market Entry Form) and development of existing platforms.
  • New scoring and analysis tools for the processing of Big Data, as well as risk assessment.
• Training:
  • 25,770 ongoing training sessions, i.e. 27.53 hours per agent on average.
• Process review, efficiency:
  • Certification of 26 agents as Lean Experts.
  • 67 Kaizen projects leading to about 700 improvement actions.
  • Implementation of Visual Management and Dynamic Team Meetings tools.