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Luxembourg Credit Institutions and PFS Face New Rules on Disclosure of Confidential Information

In a move to increase transparency and cooperation with regulators, Luxembourg’s credit institutions and payment and securities services (PFS) are now allowed to disclose confidential information to service providers not supervised by the Commission de Surveillance du Secteur Financier (CSSF), European Central Bank (ECB), or Commissariat aux Assurances (CAA), as long as certain conditions are met.

Disclosure of Confidential Information

Under the new rules, credit institutions and PFS can outsource services to third-party providers without written consent from customers, provided that:

• The customer has accepted the outsourcing of services and the type of information to be disclosed in accordance with the law or contractual conditions.
• The service provider is subject to a professional secrecy obligation or bound by a confidentiality agreement with the credit institution or PFS.

Intra-Group Disclosure

The new rules also ease restrictions on intra-group disclosure of information, allowing credit institutions and PFS to communicate sensitive information to their parent companies or shareholders having a qualifying holding for the purpose of:

• Ensuring sound and prudent management
• Risk assessment
• Resolution planning

Outsourcing Agreements

Furthermore, credit institutions and PFS can now disclose confidential information to service providers in case of outsourcing agreements, without the need for prior approval from regulatory authorities. This development aims to facilitate the recovery and resolution of financial institutions, as well as improve cooperation with regulators.

Key Takeaways

• Credit institutions and PFS can outsource services to third-party providers without written consent from customers.
• Service providers must be subject to professional secrecy obligations or confidentiality agreements.
• Intra-group disclosure of information is now allowed for purposes of sound and prudent management, risk assessment, and resolution planning.
• The exception to banking secrecy in case of outsourcing has been extended to include transactions with entities that do not belong to the same group as the credit institution or PFS.

Conclusion

The new rules on disclosure of confidential information by Luxembourg’s credit institutions and PFS aim to increase transparency and cooperation with regulators, while also enhancing the recovery and resolution of financial institutions. As the financial sector continues to evolve, these changes are likely to have a significant impact on the way credit institutions and PFS operate in the Grand Duchy.