New reporting and management letter requirements relating to Luxembourg investment fund managers and undertakings for collective investment
The CSSF published three circulars on 22 December 2021 on new reports and management letters to be completed on the CSSF’s eDesk platform by Luxembourg investment fund managers (IFMs), undertakings for collective investment supervised by the CSSF for AML/CFT purposes (UCIs) and their approved statutory auditors (réviseurs d’entreprises agréé, REA).
Circular CSSF 21/788
Circular CSSF 21/788 clarifies the content of the new report that must be drawn-up by an approved statutory auditor (réviseur d’entreprises agréé, REA) since regulation 20/05 came into force in August 2020 regarding the compliance with the legal and regulatory AML/CFT obligations and provisions (the AML/CFT External Report) by all Luxembourg investment fund managers (IFMs). The Circular clarifies the scope of entities subject to such obligation notably with respect to sub-threshold IFMs and all undertakings for collective investment supervised by the CSSF for AML/CFT purposes supervised by the CSSF for AML/CFT purposes (UCIs).
The AML/CFT External Report will comprise two sections: the first one will be dedicated to the corroboration of the answers given by the IFMs and UCIs in the context of the CSSF annual AML/CFT online survey and the second to sample testing or specific work to be performed by the REA, who must answer the questions determined by the CSSF.
The AML/CFT External Report must be submitted on eDesk exclusively by (i) the “Responsable du Contrôle du respect des obligations professionnelles en matière de lutte contre le blanchiment et contre le financement du terrorisme” (RC), (ii) the “Responsable du Respect des obligations professionnelles en matière de lutte contre le blanchiment et contre le financement du terrorisme” (RR) or (iii) a member of the board of directors or managers of the IFM or UCI.
In-scope IFMs and UCIs subject to the legal obligation to appoint a REA for the purpose of the audit of their annual accounts shall also appoint this REA to prepare the AML/CFT External Report. The entities which are not subject to the obligation to appoint a REA must mandate one for the specific purpose of preparing the AML/CFT External Report.
The AML/CFT External Report must be submitted on an annual basis within six months after the end of the financial year of the relevant IFM or UCI for the financial years ending after 31 December 2021.
The deadline is extended by three months for the reports to be prepared for the financial year ending on 31 December 2021, which must be filed before the end of September 2022.
Circulars CSSF 21/789 and 21/790
Circular CSSF 21/789 (for all authorised IFMs, investment companies which did not designate a management company within the meaning of Article 27 of the 2010 Law (SIAGs) and internally managed alternative investment funds (FIAAGs) as well as branches and representative offices which an IFM has established in Luxembourg and/or abroad) and Circular CSSF 21/790 (for undertaking for collective investment in transferable securities (UCITS), undertakings for collective investment governed by Part II of the law of 17 December 2010, as amended (Part II UCI), specialised investment funds (SIFs) and investment companies in risk capital (SICARs, and together with the authorised IFMS, SIAGs, FIAAGs, UCITS, Part II UCI, SIFs and SICARs, the In-Scope Entities)) introduce the following requirements:
Self-Assessment Questionnaire (SAQ)
In-Scope Entities will be required to complete a SAQ on an annual basis. The SAQ will be adjusted depending on the licenses held by the relevant entities in order to carry out a self-assessment of their compliance with the applicable legal and regulatory requirements. The conducting officers of the fund managers and the directors or managers of the investment funds must review and validate the content of the SAQ before submission to the CSSF on the eDesk platform.
The SAQ must be submitted on an annual basis within the following deadlines:
Review of the SAQ by the REA
The REA is required to review on an annual basis certain questions of the SAQ and to complete on that basis a separate report (the SAQ Report) on eDesk within the following deadlines:
REA management letters
A form of management letter to be completed by the REA on an annual basis will be available on eDesk. Once prepared by the REAs, In-Scope Entities must submit the management letter to the CSSF via the eDesk portal within seven months following the end of the relevant financial year.
REA modified audit opinions
The reports and the type of information to be communicated to the CSSF if an REA issues a modified audit opinion (i.e. refuses to issue an audit opinion or issues an adverse or qualified opinion) for a regulated UCI as per Circular CSSF 21/790 will be made available on the CSSF eDesk platform and the CSSF website by 31 March 2022 at the latest.
New eDesk module
A new module “Collective Investment Sector Reporting Tool” for preparing and filing the reports required by Circulars CSSF 21/789 (SAQ IFMs) and CSSF 21/788 (AML/CFT External Report) will be available as of 10 January 2022 on the CSSF eDesk platform in the section “Investment funds and vehicles/Investment fund managers”.
Contact Loyens & Loeff if you require assistance.
Actions to be taken
Fund managers and investment funds should assess their current situation in order to determine (i) whether they are in the scope of the new CSSF circulars and (ii) the deadlines that will apply to them for these new reporting requirements.
If their entities fall within the scope of the new CSSF circulars, the conducting officers of the fund managers and the directors or managers of the investment funds must implement adequate procedures in order to gather the information required to answer the SAQ.
They should also ensure that the persons who will upload the documents or fill-in the questionnaires on the CSSF eDesk portal on behalf of the fund managers or investment funds get a LuxTrust certificate and create an eDesk user account.
For additional information, please see Publication of Circulars CSSF 21/788, 21/789 and 21/790 concerning IFMs and UCIs – CSSF. If you have any questions, please contact your trusted Loyens & Loeff adviser.
Jérôme MullmaierPartner Attorney at law / Avocat à la Cour
Jérôme Mullmaier, partner, is a member of the Investment Management Practice Group in our Luxembourg office. His practice covers fund formation with a focus on alternative strategies (private equity, real estate, infrastructure and debt).T: +352 466 230 269 M: +352 691 963 158 E: [email protected]
Veronica AroutiunianPartner Attorney at law / Avocat à la Cour
Veronica Aroutiunian, partner, is a member of the Investment Management practice group in our Luxembourg office. She focuses on structuring and formation of alternative investment funds, particularly within the real assets sector. She is also a member of the Real Estate Industry focus team and the Regional Team France.T: +352 466 230 386 M: +352 691 963 167 E: [email protected]
Christophe BoyerPartner Attorney at law
Christophe Boyer, partner, is a member of the Investment Management Practice Group in our Luxembourg office. He focuses on fund structuring and alternative funds, such as hedge funds, and on private equity funds and new innovative fund products.T: +352 466 230 442 E: [email protected]