Financial Crime World

Strengthened AML Due Diligence Measures Mandatory for Securitization Vehicles

Luxembourg Regulatory Authorities Emphasize Robust AML/CFT Measures

The Luxembourg regulatory authorities have stressed the importance of implementing robust anti-money laundering (AML) and combating the financing of terrorism (CFT) measures for regulated securitization vehicles (SVs). Recent guidelines require SVs to conduct thorough due diligence on assets, including securities, structured products, and derivatives, to mitigate ML/TF risks.

Guidelines and Requirements

  • Conduct risk appetite statement in line with exposure to ML/TF risks
  • Perform targeted financial sanctions and proliferation financing (TFS/PF) controls on all assets and relevant parties connected to transactions
  • Maintain records of AML/CFT due diligence controls and report any suspicious activity or transaction to the relevant authorities

Annual AML/CFT Risk Analysis Reports

  • Article 34 of the RCSSF 12-02, as amended, emphasizes the importance of conducting annual AML/CFT risk analysis reports, including the results of due diligence conducted on assets
  • Due diligence must be performed with specific consideration given to what is owned and for which purpose (services, investors, investments)

Onboarding and Due Diligence Checks

  • Perform adequate checks during onboarding, including identifying ultimate beneficial owners (UBOs) on a case-by-case basis
  • Consider the following issues for customer due diligence procedures:
    • Purpose and intended nature of business
    • Beneficial ownership structures
    • Source of wealth and funds

Compliance Officer Appointment and Internal Controls

  • Appoint a compliance officer to oversee AML/CTF matters
  • Senior management must implement appropriate internal controls and governance, be aware of ML/TF risks, and define mitigating measures

EY Services for Securitization Vehicles

EY offers a range of services to help SVs comply with AML/CFT regulations, including: + Review of the AML framework or gap analysis + AML/CTF remediation support + Staff and director training + Onboarding assistance