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Luxembourg’s New Law on Outsourcing Services: What You Need to Know
Effective from [date of implementation], Luxembourg has introduced new laws regarding outsourcing services by credit institutions and financial services providers (PFS). The changes aim to provide more flexibility while maintaining the protection of banking secrecy.
Disclosure of Information
According to the new law, credit institutions and PFS can disclose information to service providers who are subject to a professional secrecy obligation or bound by a confidentiality agreement. This disclosure is only permitted if it is strictly necessary for:
- The sound and prudent management of the institution or PSF
- Ensuring the integrity of financial transactions
Intra-Group Disclosure
The law allows credit institutions and PFS to communicate information to their parent company or shareholders having a qualifying holding, not only for ensuring sound and prudent management but also for:
- Risk assessment on a consolidated basis
- Calculation of consolidated prudential ratios
The disclosure must be strictly necessary for these purposes.
Interaction with Data Protection Legislation
The new law clarifies that the rules on banking secrecy do not prejudice the law on data protection. Credit institutions and PFS are still required to ensure they comply with the data protection legislation when outsourcing services.
Country of Establishment
All service providers mentioned in this article are subject to the laws and regulations of their country of establishment, including those related to:
- Professional secrecy
- Confidentiality agreements
Conclusion
Luxembourg’s new law on outsourcing services provides more flexibility for credit institutions and PFS while maintaining the protection of banking secrecy. It is essential for these entities to ensure they comply with the new rules and regulations when disclosing information to service providers or shareholders.