Luxembourg Introduces New Definitions for Credit Institutions and Financial Entities
New Law Enhances Transparency and Regulatory Oversight
Luxembourg, [Date] - The Luxembourg government has issued a new law that introduces revised definitions for credit institutions and financial entities in the country.
Revised Definitions
According to the law, a “credit institution” is defined as any entity that meets the requirements set out in Article 4(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council, including branches thereof, regardless of whether its head office is situated within the European Union or in a third country.
A “financial institution” is defined as any entity that carries out one or more of the activities listed in Annex I, such as:
- Insurance undertakings
- Investment firms
- Collective investment undertakings
- Insurance intermediaries
This definition applies to entities with their head office situated in Luxembourg or in another Member State.
New Concept: Beneficial Owner
The law introduces a new concept of “beneficial owner”, which refers to any natural person who ultimately owns or controls a customer or entity. The beneficial owner may include individuals who own or control corporate entities through direct or indirect ownership, as well as those who hold positions such as senior managing officials.
Improved Transparency and Regulatory Oversight
The revised definitions aim to improve transparency and regulatory oversight in the financial sector, particularly with regards to money laundering and terrorist financing.
New criteria for determining control over an entity include:
- Direct or indirect exercise of voting rights
- Majority appointment of administrative bodies
- Dominant influence through contracts or statutory clauses
Enhanced Compliance with International Standards
The Luxembourg government has stated that the revised definitions are intended to enhance the country’s compliance with international standards on financial transparency and regulatory oversight.
By introducing these revised definitions, the Luxembourg government aims to strengthen its financial sector and maintain a high level of trust among investors and consumers.