Luxembourg Strengthens Bank Secrecy Laws to Boost Outsourcing

New Regulations Aim to Enhance Financial Sector’s Competitive Edge

In a move aimed at promoting the growth of the financial sector in Luxembourg, the country has revised its bank secrecy laws. The overhaul is designed to boost the use of outsourcing solutions by institutions operating within its borders.

Key Amendments to Bank Secrecy Laws

The changes were introduced through Article 41 of the Law on the Financial Sector, which came into effect last year. Substantial amendments made in February 2018 have lifted certain restrictions on the transfer of confidential information between financial institutions and their service providers.

• Professional Secrecy Obligation: Financial sector institutions and their employees are required to maintain professional secrecy regarding confidential information shared with them as part of their professional activities.
• Criminal Sanctions for Breach: Entities outsourcing services must be subject to a professional secrecy obligation and face criminal sanctions for breach.
• Client Consent Required: When outsourcing activities to entities not supervised by the CSSF, European Central Bank, or Commissariat aux Assurances, financial institutions are required to obtain client consent before transferring confidential information.

Impact on Insurance Companies and Payment Service Providers

The new regulations also apply to insurance companies and payment service providers operating within Luxembourg. These entities are now subject to similar professional secrecy obligations and are required to adhere to the same standards for outsourcing activities.

Experts Predict Boost in Outsourcing Solutions

Experts believe that the changes will help increase the use of outsourcing solutions by financial institutions in Luxembourg, which will ultimately benefit the local economy. The revised bank secrecy laws are seen as a step towards enhancing the competitiveness of the financial sector in Luxembourg.