To comply with anti-money laundering and counterterrorism financing (AML/CTF) obligations, LFSPs must identify the USFM and its ultimate beneficial owners (UBOs”). The USFM must provide the LFSP with e.g. structure charts, proof of identity and incorporation documents.
The SCSp is subject to the same identification obligations in respect of its limited partners (LPs) and their UBOs prior to admitting LPs. SCSps usually outsource these tasks to an LFSP. The LFSP reports to the SCSp’s Luxembourg general partner (GP) on the completion of the identification. The Luxembourg indirect tax authorities (AED) are the supervisory authority for AML/CFT compliance by unregulated SCSps. The AED can impose publicly disclosed fines for non-compliance.
The GP’s board of managers (Board) must secure a proper internal organization and relevant policies and procedures to accommodate compliance with the AML/CTF obligations. The Board must appoint itself or one of its members as responsible for the overall AML/CFT compliance (RR) and must also appoint an AML/CTF compliance officer (RC). The RR and RC must have sufficient knowledge about AML/CFT and must be notified to the AED. The RC is usually an expert provided by an LFSP and is often also on the Board. The RC should in principle be based in Luxembourg. In essence a USFM can fully rely on external parties for its AML/CFT functions; there is no need to hire own Luxembourg AML/CTF staff.
The RC is responsible for the execution of the AML/CTF policy, procedures, and risk appetite statement (Program). The Program provides an internal framework for compliance with the AML/CTF rules and the analysis of the SCSp’s AML/CTF risks. Pursuant to the Program, eligible LPs are labeled as low, medium, or high-risk. High-risk cases come with more frequent and in-depth diligence and RR approval procedures, vice versa for low risk.
The RC monitors that the LFSP conducts the AML/CTF functions in compliance with the AML/CTF law and the Program. The RC reports its finding to the Board and ensures that the Board completes regular AML/CFT trainings. The RC is the AED’s main point of contact and must cooperate with the AED when requested. LP and UBO information must be stored for at least 5 years after the SCSp is wound down.
As USFMs are not always familiar with Luxembourg AML/CFT rules, the rules may cause friction between the USFM and the LFSP. As from Aug 1, 2026, USFMs will become subject to a similar set of US AML/CTF rules. This may mean that USFMs will be more aware and understanding of the requirements involved with the EU AML/CTF rules.
Part 2 of this Snippet will cover AML/CTF diligence in relation to the SCSp‘s assets.
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