The Act of 10 July 2020 ("the Act") transposes into Luxembourg law the last part of the fourth Anti-money Laundering Directive (2015/849) as amended by the fifth Anti-money Laundering Directive (2018/843) on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing. The establishment of a register of fiducies and trusts follows on the heels of the Act of 13 January 2019, which established a register of beneficial owners of Luxembourg companies (see our newsletter of 24th January 2019).
Scope of application
All fiducies and trusts with a fiduciaire or trustee established or domiciled in the Grand Duchy of Luxembourg must be registered. If the fiduciaires or trustees are established or domiciled in several Member States, a certificate proving registration with an equivalent register set up by another Member State or a certificate from the register of beneficial owners shall be sufficient to fulfil the registration obligation.
The Act applies to fiducies and express trusts with a fiduciaire or trustee established in a third country if the fiduciaire or trustee enters into a business relationship with a professional, i.e. entities within the meaning of Article 2 of the Anti-money Laundering Act of 12 November 2004 ("the AML Act"), or acquires real estate in Luxembourg. For this purpose, professionals include, for example, credit institutions, professionals of the financial sector, notaries and real estate agents.
In addition, all legal arrangements having a structure or function similar to that of a fiducie or trust fall within the scope of the Act.
Obligation to obtain and hold adequate, accurate and up-to-date information on the trust's beneficial ownership
All trustees and fiduciaires covered by the Act must obtain and hold information regarding the identity of the beneficial owners of the trust or fiducie. The following are considered beneficial owners:
- the settlor(s);
- the trustee(s) or fiduciaire(s);
- the protector(s) (if any);
- the beneficiaries or class of beneficiaries; and
- any other natural person exercising effective control over the trust or fiducie.
Upon request, the trustee or fiduciaire must make information about the identity of the beneficial owners available to national competent authorities or professionals, within the meaning of the AML Act, with which they have entered into a business relationship.
With regard to the information to be obtained and held by fiduciaires, please note that the Act of 10 August 2018 has been incorporated into the Act and therefore repealed.
Obligation to register with the central register of fiducies and trust
The Act sets up a central register of fiducies and trusts under the supervision of the Administration de l’Enregistrement, des Domaines et la TVA ("ADR"). In principle, all trusts and fiducies must be registered with this central register. In addition to the identification number of the trust or fiducie, information relating to each beneficial owner must be submitted to the register, such as the name and address for natural persons and the company name and identification number for legal entities. Moreover, for each beneficial owner, the nature and extent of the interest effectively held must be described.
Access to the register
Unrestricted access to the register is reserved to national authorities, self-regulatory bodies exercising their supervisory role with regard to the fight against money laundering and the financing of terrorism and professionals within the meaning of the AML Act.
Limited access to certain information in the register may be granted to any natural or legal person that can demonstrate a legitimate interest in preventing the use of the financial system for purposes of money laundering or terrorist financing. In this case a substantiated request must be submitted to the ADR.
Sanctions
A number of administrative sanctions, including a fine of up to EUR 1,250,000, can be imposed for violation of the Act.
