New CSSF FAQ clarifying AML/CFT asset due diligence obligations

On 13 December 2024, the CSSF published a new FAQ on AML/CFT asset due diligence obligations (CSSF FAQ) in relation to the implementation of Article 34(2) of CSSF Regulation 12-02.

The objective of the CSSF FAQ is to provide additional guidance and new clarifications to professionals subject to CSSF supervision and within the scope of CSSF Regulation 12-02 (Professionals), including Luxembourg investment fund managers and investment funds supervised by the CSSF for AML/CFT purposes, on the scope and frequency of the ML/TF risk assessment (RA) and related AML/CFT due diligence measures (DD) to be conducted depending on the assets invested, in particular when they are considered as less exposed to ML/TF risks.

The CSSF position and new clarifications conveyed through the CSSF FAQ are the following:

1. ML/TF RA and AML/CFT DD general principle: The CSSF reminds the responsibility of each Professional to conduct its own ML/TF risk assessments and implement necessary AML/CFT DD to mitigate identified threats and vulnerabilities.
2. New clarification for ML/TF RA and AML/CFT DD on Listed Assets: For securities admitted to trading on a regulated market (Listed Assets), the CSSF FAQ provides that such assets are less exposed to ML/TF risks due to existing market disclosures and controls. Accordingly, in order to comply with the risk assessment and mitigation obligations, the CSSF confirms that it is sufficient for Professionals in that case to demonstrate, upon request, that such assets are indeed admitted to trading on a regulated market.
3. New clarification for ML/TF RA and AML/CFT DD on Unlisted Assets: For assets not admitted to trading on a regulated market (Unlisted Assets), the CSSF reminds that the initial ML/TF RA should guide the extent of the AML/CFT DD to be performed by the Professionals. However, the CSSF indicates that no annual renewal of the ML/TF RA of those Unlisted Assets is required if there is no relevant change on these assets during the year. The CSSF FAQ further clarifies that AML/CFT DD will have to be performed by the Professionals (i) when operations occur on the Unlisted Assets (e.g. purchase, transfer, sale), and/or (ii) when a change in the assets resulted in a higher ML/TF risk.
4. International financial restrictive measures: For the avoidance of doubt, the CSSF FAQ is without prejudice to the obligation for Professionals to take appropriate measures to comply with international financial restrictive measures (e.g. in terms of screening of the assets and their related parties against targeted financial sanctions lists).