On 1 July 2020, the Luxembourg parliament approved the bill of law n°7216B transposing Article 31 of EU Directive 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, as amended and establishing a register of fiducies and trusts (the “Law”). The Law further repeals the law of 10 August 2018 relating to the information to be obtained and maintained by fiduciaries as the provisions of the law of 10 August 2018 have been included in the Law. The Law was published in the Official Journal on 13 July 2020 and will enter into force on 17 July 2020.
The Law introduces two main features: (i) the obligation for trustees[1] and fiduciaires[2] to obtain and maintain information on the beneficial owners of trusts[3] and fiducies[4] and (ii) the obligation to register certain information with a register of trusts and fiducies (the “Register”) such as briefly analysed below.
1. Scope of the Law
The Law applies to:
- express trusts and fiducies where the trustee or fiduciaire is established or domiciled in the Grand Duchy of Luxembourg;
- express trusts and fiducies where the trustees or fiduciaires are established outside of the EU that enter, on behalf of the trust or the fiducie, into business relationships in the Grand Duchy of Luxembourg with professionals, i.e. professionals which fall within the scope of application of the amended law of 12 November 2004 on the fight against money laundering and terrorist financing (the “2004 Law”) or that acquire, on behalf of the trust or the fiducie, real estate located in the Grand Duchy of Luxembourg.
Furthermore, any legal arrangement with a structure or functions similar to that of a trust or a fiducie (in accordance with the criteria set forth under Art. 1(2) of the Law) are considered as an express trust or fiducie and thus fall under the scope of the Law.
2. Internal record-keeping obligations
The trustees of express trusts administered in Luxembourg are required to obtain and maintain records of information on the beneficial owner(s) of the trust for which they act as trustees at the place of administration of the express trust. Such information includes information on the identity of:
- the settlor(s);
- the trustee(s);
- the protector(s) as the case may be;
- the beneficiaries or categories of beneficiaries of the trust; and
- any other natural person having effective control over the trust.
Fiduciaires are subject to the same aforementioned obligation for any fiducie for which they act as fiduciaire.
The trustees or fiduciaires will further need to obtain and maintain records of basic information on other professionals and foreign entities that, if their registered office had been located in the Grand Duchy of Luxembourg, would have been considered, under Luxembourg law, as professionals providing services to the trust or the fiducie or that enter into a business relationship with the trust or the fiducie.
These record-keeping obligations shall be complied with on an ongoing basis.
3. Creation of a fiducies and trust register
The Law establishes a register of express trusts and fiducies for which the relevant trustee or fiduciaire is established or domiciled in the Grand Duchy of Luxembourg.
In case the fiduciaires of a fiducie or the trustees of an express trust are established or domiciled in different Member States, the relevant fiduciaire or trustee will merely be required to provide the relevant authority with proof of registration in an equivalent register implemented by another Member State or with an extract from the information relating to the beneficial owners maintained in such register. Such fiduciaire or trustee will therefore not be required to register with the Register.
The Administration de l’enregistrement, des domaines et de la TVA (the “AED”) is responsible for the management of the Register.
a. Information to be registered
Trustees and fiduciaires of express trusts and fiducies subject to the registration requirement will need to provide the following information in relation to the relevant trust or fiducie:
- identification number;
- name of the express trust or of the fiducie;
- date of the creation of the express trust or the fiducie;
- information on their beneficial owner(s):
- for natural persons, name and surname, nationality, date and place of birth, country of residence, private or professional address, the national identification number or foreign identification number, the nature of his/her involvement in the express trust or the fiducie and the extent of his/her effective interests;
- for legal persons registered in the Register, the name as well as the abbreviation and commercial sign used as the case may be, the exact address of the head office, the Luxembourgbusiness register registration number or the foreign business register’s name and registration number, as the case may be, the nature of its involvement in the express trust or the fiducie and the extent of its effective interests.
- whether the trust or the fiducie holds a direct or indirect controlling interest in a company or other legal entity, notably by way of bearer shares or any other means of control.
The registration is made electronically within the month at the latest of the event which renders the registration necessary.
b. Access to the Register
National authorities, national self-regulatory bodies in the exercise of their supervisory mission in relation to the fight against money laundering and terrorism financing and professionals falling under the scope of the 2004 Law in the context of the carrying out of their customer due diligence obligations have access to the information maintained in the Register.
Furthermore, a natural or legal person demonstrating a legitimate interest in the context of the fight against money laundering and terrorism financing may request access to certain information maintained in the Register. Access will be granted after the AED has examined the request on a case-by-case basis.
c. Exemption
In case of exceptional circumstances, the beneficial owner(s) or its(their) representative(s) of an express trust or of a fiducie may request that the access to information maintained in the Register be restricted in whole or in part to the sole national authorities, national self-regulatory bodies, credit institutions and other financial institutions, bailiffs and notaries acting in their capacity as public officer.
Restriction of access will be granted in case access to information maintained in the Register would expose the beneficial owner(s) to a disproportionate risk, a risk of fraud, kidnapping, blackmail, extorsion, harassment, violence or intimidation or where the beneficial owner is a minor or otherwise incapable. The existence of the aforementioned exceptional circumstances will need to be documented.
Restriction of access will be granted by the AED after detailed assessment of the exceptional nature of the circumstances by the AED and only for the duration of the circumstances which justify such restriction without exceeding a maximum period of three years. This decision may be renewed upon request from the beneficial owner.
For any questions regarding the above, please do not hesitate to contact our specialists.
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[1] Trustees: The Law defines trustees by referring to the Hague Convention of 1 July 1985, which was approved by the amended Luxembourg law of 27 July 2003 relating to trusts and fiduciary contracts.
[2] Fiduciaires: The Law defines the fiduciaire as the person who, in accordance with the terms of the fiducie and with the obligations provided by the parties, becomes the owner of the goods forming the fiduciary estate.
[3] Trusts: The Law defines trusts by referring to the Hague Convention of 1 July 1985, which was approved by the amended Luxembourg law of 27 July 2003 relating to trusts and fiduciary contracts (the “2003 Law”).
[4] Fiducies: The Law defines fiducies as a fiduciary contract subject to the amended law of 27 July 2003 Law relating to trusts and fiduciary contracts.
