20 July 2022



 ESG deadline: On 1 August, the following delegated acts will go into effect:


Specifically, this impacts management companies and AIFMs and how they integrate sustainability risks in their management process.

Luxembourg Market Update:

The aggregate assets of Luxembourg-domiciled investment funds – UCITS and Part II funds, SIFs and SICARs – declined in May 2022, totalling €5.37bn at the end of the month compared with €5.48bn a month earlier. The total remains higher from a year ago. The CSSF says May's €109.3bn decline in assets stemmed from net outflows of €17.35bn and a drop of €91.91bn in the market value of funds' investments. During the month funds were impacted by rising inflation, war in Ukraine and the impact of Covid-19 lockdowns in China on global supply chains, the regulator says.

Regulatory Developments in and beyond Luxembourg:

31 May 2022: Luxembourg finalises its first vertical risk assessment on terrorist financing

The CSSF has published an update of its ML/FT Risk Analysis on the Collective Investment Sector. The assessment details observed best practices, common findings from supervision, and makes targeted recommendations for the private sector.

31 May 2022: ESMA report on UCITS costs and fees

ESMA has published its report on the Common Supervisory Action ("CSA") on costs and fees of UCITS that was carried out with national competent authorities ("NCAs") (including the CSSF) in 2021.

The report sets out ESMA's analysis and conclusions on the CSA and presents ESMA’s views on the various findings, including on the process of the setting and the reviewing of fees, the notion of undue costs, the issues stemming from related party transactions and EPM techniques, as well as the follow-up actions envisaged by NCAs and the main lessons learnt.


21 June 2022: Luxembourg finalises its first vertical risk assessment on terrorist financing

Luxembourg has finalised its first vertical risk assessment on terrorist financing. This vertical risk assessment was carried out under the guidance of the Ministry of Justice and the results were adopted on 17 May 2022 by the Anti-Money Laundering and Terrorist Financing Prevention Committee (BC/TF Prevention Committee). It complements the National Risk Assessment updated in December 2020 (ENR 2020).

22 June 2022: Circular CSSF 22/815 on FATF high risk countries

The CSSF has published updated FATF statements concerning: 1) high-risk jurisdictions on which enhanced due diligence and, where appropriate, counter-measures are imposed; and 2) jurisdictions under increased monitoring of the FATF.

24 June 2022: PRIIPs update

On 24 June 2022, the EU Commission finalised the last step necessary to align the end date of the exemption for UCITS funds to produce a PRIIPs KID i.e.  31 December 2022 ("UCITS Exemption"). Due to several previous postponements, the date of application of the PRIIPs Level 2 measures as amended by the Regulation (EU) 2021/2268  ("PRIIPs RTS") was not aligned with the end of the UCITS exemption. The Delegated Regulation (EU) 2022/975 published on 24 June 2022 provides that the new RTS PRIIPs will apply on 1 January 2023.

Therefore, as of 1  January 2023, UCITS funds will have to produce a PRIIPs KID and comply with the new PRIIPs RTS.

24 June 2022: ESMA issues results of call for evidence on ESG ratings

ESMA has published a letter to the European Commission containing the findings from a call for evidence on ESG ratings.


Based on 154 responses, ESMA stated that 59 ESG rating providers are currently active in the EU and noted the following findings:

  • The structure of the market among providers is split between a small number of very large non-EU entities on one hand, and a large number of significantly smaller EU entities on the other. The EU entities providing ESG ratings can largely be characterised as small or medium sized enterprises. While the legal entities of respondents were spread out across almost half of the EU Member States, a large number of these were clustered in only three Member States. The predominant business model is investor-pays, however, provision of ESG ratings on an issuer-pays basis is more prevalent than anticipated and was indicated in around a third of responses from providers;
  • The majority of users of ESG ratings are typically contracting for these products from several providers simultaneously. Their reasons for selecting more than one provider are most notably to increase coverage, either by asset class or geographically, or in order to receive different types of ESG assessments. A majority of users contract with a small number of the same rating providers, indicating a degree of concentration in the market. The most common shortcomings identified by the users were a lack of coverage of a specific industry or a type of entity and insufficient granularity of data. Complexity and lack of transparency around methodologies were also cited as an issue;
  • entities covered by these products are required to dedicate at least some level of resourcing to their interactions with ESG rating providers, although the amount is largely dependent on the size of the rated entity itself. Most of these entities highlighted some degree of shortcoming in their interactions with the rating providers, most notably on the level of transparency as to the basis for the rating, the timing of feedback or the correction of errors.

ESMA acknowledged that the feedback received is indicative of an immature but growing market.

27 June 2022: CSSF releases Circular 22/817 integrating ESMA Guidelines on MiFID II appropriateness and execution-only requirement

The CSSF published Circular 22/817 informing the market that the CSSF will apply the ESMA Guidelines ESMA) on the MiFID II appropriateness and execution-only requirements - ESMA35-43-3006 – (dated 12 April 2022) (the “Guidelines”) from 12 October 2022 onwards.

The Guidelines cover the following aspects:

  • Information to clients about the purpose of the appropriateness assessment and execution-only;
  • Know your client and know your product;
  • Matching clients with appropriate products;
  • Other related requirements.

29 June 2022: CSSF publishes Circular 22/818 integrating the latest version of ESMA Guidelines on stress test scenarios under the MMFR

On 29 June 2022, the CSSF published Circular 22/818 which integrates the latest version of the ESMA Guidelines on stress test scenarios under the Money Market Fund Regulation (MMFR) in its administrative practice. In accordance with Article 28 of the MMFR, the ESMA Guidelines are to be updated at least every year in relation to the common reference parameters of the stress test scenarios taking into account the latest market developments. The 2021 Guidelines concern the topics summarised in Section I of Circular 22/818.

The Circular replaces Circular CSSF 21/780 which integrated the 2020 version of the ESMA Guidelines (Ref. ESMA/34-49-2). The CSSF informs that it expects all entities falling under the scope of Circular 22/818 to apply the 2021 Guidelines for the preparation of the required MMF reporting as from the reporting date 30 September 2022 onwards. The 2020 version of the Guidelines, with the related calibration, will still be applied for the reporting date 30 June 2022.

30 June 2022: CSSF updates FAQ document on SICARs

The CSSF has updated its FAQ document on Luxembourg investment companies in risk capital (SICARs). Note that Question 7 (Which requirements regarding prudential reporting does the SICAR have to comply with?) has been revised. The answer now includes specific information on monthly financial information to be drawn up; the management letter from the réviseur d’entreprises agréérelating to the statutory audit of the SICAR’s accounts; and specificities concerning the self-assessment questionnaire for each year or period in respect of which a statutory audit was carried out.

1 July 2022: Reporting Handbook for Investment Firms

The CSSF has released a Reporting Handbook for Investment Firms.

In accordance with the regulatory framework applicable to investment firms, composed of the Investment Firm Directive (“IFD”) and the Investment Firm Regulation (“IFR”), investment firms are categorized into three different classes.  The IFD package applies to small and non-interconnected investment firms (or “Class 3 IF”) and investment firms other than small and non-interconnected investment firms (“Class 2 IF”), together referred to as the “investment firms under IFR” or “IFR IF”, and subjects them to a harmonized European reporting framework. In accordance with the principle of proportionality, Class 3 IF are subject to a lighter reporting framework than Class 2 IF.  Large investment firms, that are systemically important or are exposed to the same types of risks as credit institutions, designated as “Class 1 IF”, continue to fall under the scope of the CRR and CRD. Consequently, they are subject to the corresponding supervisory reporting requirements of the CRR.

1 July 2022: Communiqué related to the notification template for outsourcing a critical or important business process (BPO)

The CSSF has published a notification template to be used as of 1 July 2022 by In-Scope Entities when outsourcing a critical or important business process (Business Process Outsourcing or BPO) in accordance with points 59 and 60 of the Circular CSSF 22/806 on outsourcing arrangements. Significant credit institutions shall also use this template to notify the ECB to the extent that no ECB specific notification template is available yet.

Notification template for outsourcing a critical or important business process (BPO)

A BPO is an outsourcing whose outcome is primarily of a business nature, even in the case where the outsourced service is delivered by the service provider on IT systems used or managed by the same service provider. This is by opposition to a “pure” ICT outsourcing where the outcome is exclusively of an ICT nature (e.g. data storage, hosting services, system administration, etc.).
This template shall not be used to notify the following outsourcing arrangements:

  • critical or important outsourcing of operational tasks of UCI administration; and
  • critical or important ICT outsourcing.

For such critical or important outsourcing arrangements, dedicated templates will be made available on the CSSF website or updated soon. In the meantime, In-Scope Entities shall use the existing templates which are available on the CSSF website:

Application in case of outsourcing of administration tasks for UCI
Notification for outsourcing of material IT activities

In-Scope Entities shall not introduce prior notifications to the CSSF for existing material BPO arrangements that have already been approved under the previous prior-authorisation regime. Where material BPO arrangements have previously been submitted to, and are currently being assessed by, the CSSF, In-Scope Entities may not implement these arrangements before receiving the prior authorisation from the CSSF.


For further information, please contact:

Tobias Ettlin

m: +352 691 111 931

Disclaimer: This regulatory update has been prepared for clients of ONE group solutions and its subsidiaries for informational purposes and is not intended to be relied upon as professional advice. Please visit:


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