ANOTHER REGISTER IS BORN: THE REGISTER OF FIDUCIES AND TRUSTS

The new law creating a register of fiducies and trusts (“RFT Register”) placed under the supervision of the Administration de l’Enregistrement et des Domaines (AED) was adopted on 10 July 2020 by the Luxembourg Parliament and will enter into force on 17 July 2020 (“RFT Law”) ( http://data.legilux.public.lu/eli/etat/leg/loi/2020/07/10/a581/jo). The RFT Law implements certain provisons of the EU Directive 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purpose of money laundering or terrorist financing  ( https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32015L0849&from=EN) and certain provisions of Directive 2018/843 of the European Parliament and of the Council of 30 May 2018 (https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2018.156.01.0043.01.ENG ) . It also repeals the Law of 10 August 2018 on the information to be obtained and held by Luxembourg fiducies, whose relevant provisions are now included in the RFT Law.

Scope

The RFT Law is applicable to :

• All domestic or foreign fiducies and express trusts for which a fiduciaire or trustee is established or domiciled in the Grand Duchy of Luxembourg (“GDL”);
• All fiducies and express trusts for which the fiduciaire or trustee is established in a third country, where the fiduciaire or trustee (“Agents”) enters into a business relationship in the GDL with a professional or acquires real estate in the GDL on behalf of such fiducie or trust;
• All legal arrangements structured or functioning like a fiducie or trust

Following persons qualify as Agents:

• All fiduciaries of fiducies as defined in the Law of 27 July 2003 on trusts and fiduciary arrangements as amended and also trustees of trusts as defined in the Hague Convention of 1 July 1985 on the law applicable to trusts and on their recognition;
• All persons having similar position to a trustee or fiduciaire in legal arrangements similar to those of a fiducie or a trust;
• All persons occupying an similar function as a fiduciaire /trustee in legal arrangements out of the scope of the RFT Law but which are structured and function in a similar way as fiducies or trusts.

Key features

All Agents shall:

• register with the RFT Register except those also being established in another member State in addition to the Grand Duchy of Luxembourg and Agents who enter into several relationships in other Member States and submit to the Administration de l’enregistrement et des domaines evidence of registration in a register of such Member State;
• obtain and keep in an internal file information on:
  • the ultimate beneficial owners ( “BO”) of any express trust administered in the GDL and of any trust for which they act as trustee or fiduciary, being understood that such data comprises information on the settlor(s), the trustee or trustees, the protector(s) if any, beneficiaries or class of beneficiaries and any other natural person exercising effective control over the trust).
  • other professionals and foreign law entities which, if their registered office were located in the GDL, would be considered as professionals, which provide services to the trust or trust or which enter into a business relationship with the trust or trust
• upon request provide to the authorities (e.g. the Public Prosecutor, the Commission de Surveillance du Secteur Financier (CSSF) or the Commissariat aux Assurances (CAA) the Administration de l’Enregistrement et des Domaines (AED), Cellule de Renseignement Financier (CRF)) and the information described above ;
• upon request provide to professionals for the sole purpose of implementing their obligation of vigilance under the amended law of 12 November 2004 on the fight against money laundering and the financing of terrorism (“AML Law”) , information on the assets of the trust and the assets of trusts held or managed within the framework of the relevant business relationship;

BOs shall comply with any request of information emanating from the CSSF, CAA, CRF or AED.

Access to the RFT Register

• full unrestricted access is granted to national supervisory authorities (CSSF, CAA, AED, Public Prosecutor) self-regulatory bodies (e.g. the Luxembourg Bar Association, Chamber of Notaries) within their AML obligations and credit institutions, insurance-reinsurance companies cf AML Law.
• limited access is granted to any person having a legitimate interest as part of the AML-CTF framework; the motivated request is to be addressed to the AED.
• very restricted access is granted to any BO who has the possibility, under very exceptional circumstances, to address to AED a request tending to restrict access to its information registered with the Register, where such access would expose the BO to a disproportionate risk of fraud, kidnapping, blackmail, harassment, etc. or where the BO is a minor or an incapable person).

Sanctions

Not complying with the RFT Law can cost an Agent from EUR 1,250 up to EUR 1,250,000 administrative fine. The fine is imposed by either the CSSF or CAA, or if the fiduciaire or trustee are not under any supervision, the AED.
Any person using the information for other purposes than according with the RFT Law incur the same administrative fines.

A Grand Ducal Regulation for the application of the RFT Law is expected to be released shortly.

Should you need assistance in complying with the new obligations imposed by the RFT Law, feel free to contact us. Our team will be pleased to provide you with the best solutions for your business.