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Luxembourg Indirect Tax Authority publishes rules on appointing RR and RC for RAIFs

  • Luxembourg
  • Financial services and markets regulation
  • Fraud and financial crime
  • Investment funds and asset management

22-02-2021

Luxembourg Indirect Tax Authority publishes rules applicable to the appointment of RR and RC to Luxembourg RAIFs

In December 2020, the Luxembourg Indirect Tax Authority (Administration de l'enregistrement, des domaines et de la TVA) (the “AED”) published Frequently Asked Questions regarding persons involved in AML/CFT of Luxembourg reserved alternative investment funds (“RAIFs”) supervised by the AED for AML/CFT purposes (the “AED FAQ”).  

Background of the AED FAQ

Article 4(1) of the Luxembourg Law of 12 November 2004 on anti-money laundering (the “AML Law”) requires professional firms in its scope to appoint:

  1. a person responsible for compliance with professional obligations in respect of money laundering and terrorist financing (responsable du respect des obligations) (an “RR”), and;
  2. if the size and nature of its activities so require, a compliance office of appropriate seniority (responsable du controle du respect des obligations) (an “RC”).

On 25 November 2019, the Luxembourg Financial Supervisory Authority (the “CSSF”) issued Frequently Asked Questions regarding persons involved in AML/CFT of investment funds and investment fund managers subject to the CSSF for AML/CFT purposes (the “CSSF FAQ”) which requires all regulated funds and investment fund managers to appoint both an RR and an RC. As unregulated funds, RAIFs were excluded from the application of the CSSF FAQ.  

Given the similarities between RAIFs and their AML/CFT exposures and those of funds regulated by the CSSF, the AED decided to apply the same requirements to RAIFs.

An RR of a Luxembourg RAIF

The AED requires that an RR of a RAIF is either: (i) one member of the board of directors/managers of the RAIF or (ii)  the board of directors/managers of the RAIF as a whole.  An RR must:

  1. be able to demonstrate on request sufficient knowledge of AML/CFT laws and Luxembourg regulations;
  2. have appropriate knowledge of the investment and distribution strategy of the RAIF; and
  3. be immediately available on request of the Luxembourg AML/CFT competent authorities.

An RC of a Luxembourg RAIF

The AED requires that the RC of a RAIF is appointed by its board of directors/managers.  An RC can be either (i) a member of board of directors/mangers of the RAIF with the professional qualifications set out below, or (ii) a third party contactor (eg. an employee of the RAIF’s alternative investment fund manager).

A person appointed as an RC must:

  1. be available to perform their duties in person in Luxembourg;
  2. be able to demonstrate on request sufficient knowledge of AML/CFT laws and Luxembourg regulations;
  3. have appropriate knowledge of investment and distribution strategy of the RAIF;
  4. have access to all necessary internal documents and systems, and;
  5. be resident in Luxembourg (an RC who is an employee of an AIFM domiciled in another country may be exempted from this requirement).

The AED FAQs provide that an RR is responsible for the implementation of the RAIFs AML/CFT policies and has the power to suggest appropriate measures in that respect to the board of directors.  An RC must ensure the quality of the RAIFs AML/CFT controls and serve as the AED’s primary contact.

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