Sarah Verlende
Managing Associate | Legal
Luxembourg Legal Services
Managing Associate
Luxembourg Legal Services
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In the aftermath of the obligation to create a register of beneficial owners as enacted by the Law of 23 January 2019 (the RBO Law) (please see our previous briefing here), the Luxembourg legislator has now established a register of fiducies and trusts.
By passing the law of 10 July 2020 creating a register of fiducies and trust (the RFT Law), Luxembourg has completed the transposition of the 5th anti-money laundering directive[1], by implementing a series of measures, enhancing the transparency of beneficial ownership of trusts, fiducies (fiduciary agreements) and similar legal constructs.
The RFT Law is complementary to the register of beneficial owners as set out under the RBO Law so is applicable to all legal entities registered in the Luxembourg Trade and Companies Register. It addresses two different topics: (i) the information on beneficial owners to be obtained and maintained by the trustees/ fiduciaries (chapter 2 of the RFT Law)[2] and (ii) the creation of the register of fiducies and trusts (chapter 3 to 5 of the RFT Law).
The RFT Law applies to (i) all (including foreign) fiducies (fiduciary agreements) and express trusts for which a fiduciaire or a trustee is established or domiciled in the Grand Duchy of Luxembourg, and (ii) all fiducies and express trusts for which the fiduciaire (fiduciary agent) or trustee is established in a third country, where the fiduciaire or trustee enters into a business relationship in the Grand Duchy of Luxembourg with a professional[3], i.e. an entity subject to the law of 12 November 2004 on the fight against money laundering and terrorism financing (the AML Law) or acquires real estate located in the Grand Duchy of Luxembourg on behalf of such fiducie or trust and (iii) all legal constructs that have a structure or functions that are similar to those of a fiducie or a trust according to the criteria as set out in the RFT Law.
All fiduciaries of fiducies and trustees of express trusts administered in the Grand Duchy of Luxembourg need to set up an internal file on their beneficial owners.
The respective fiduciary agent(s) or trustee(s) must, in respect of the entities that fall under the scope of the RFT Law:
Who must register?
Much in line with the RBO Law, the RFT Law creates a new register of fiducies and trust (the RFT Register) which is administered by the Administration de l'Enregistrement et Domaines et de la TVA (the AED). The registration with the RFT Register is mandatory for all entities that fall under the scope of the RFT Law (please see above).
The following exceptions apply:
These exceptions will be considered as having complied with the registration obligation under the RFT law when submitting a certificate of registration of another register of fiducies and trust enacted by another member state of the European Union or submitting an extract containing the information of the beneficial owners kept with such equivalent register.
It is to be noted that the obligation to register a trust or a fiducie in the RFT Register lies with the trustees and fiducaires.[6] The RFT Law does not apply to a foreign trust acting as shareholder of a Luxembourg entity.
There is a one month filing deadline from the event triggering the registration obligation.
What information needs to be registered?
The information to be filed in respect to the fiducies and trust includes the following[7]:
The RFT Law further clarifies that in the case that the beneficiaries are designated by a characteristic or category, the registration must contain this specific category as set out under the fiduciary contract or the constituting document of the trust.
The AED has been empowered to supervise the compliance with the RFT Law and can take administrative measures or even impose sanctions (also against the members of their management body and any other person that is responsible for the non-compliance of the RFT Law) in case of failure to register the required information or the provision of inaccurate and outdated information.
The RFT law set outs the different access rights to RFT Register. Unrestricted access has been granted to the national authorities (for exercising their supervisory duties like the public prosecutor, the CSSF and the CAA) and self-regulated bodies, (when exercising their supervisory role in the context of money laundering and CTF, i.e. for example the bar association or the notary chamber), as well as the professionals under the AML Law when carrying out their due diligence checks.
Limited access is granted to any person demonstrating a legitimate interest in preventing the use of the financial system for money laundering or the financing of terrorism. Such persons must demonstrate a legitimate interest and they can be granted access to limited information on the basis of the duly motivated request addressed to the AED alongside any supporting documentation submitted with their request.
The access procedures will be further regulated in grand ducal regulations.
A beneficial owner may in certain exceptional conditions as set out in the RFT Law request to restrict the access to its information registered with the RTF Register (for example where there is a risk of fraud, kidnapping, extortion or if the beneficial owner is a minor).
Noncompliance with the RTF Law can be subject to sanctions including an administrative sanction (e.g. a warning, a reprimand), and administrative fines amounting to twice the benefit derived from the non-compliance with the RTF Law with a cap of EUR 1,250,000.
The RFT Law does not provide for a transition period, and came into force as from 17 July 2020.
[1] Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing.
[2] Fiducie means a fiduciary contract subject to the law of 27 July 2003 on trust and fiduciary contracts;
Fiducaires means a person, who within a fiducies, and under obligations as determined by the parties becomes the owner of the asset forming the fiduciary estate;
[3] These professionals include for example credit institutions, real estate agents, professionals of the financial sector and notaries.
[4] Commissariat aux assurances
[5] L'Administration de l'Enregistrement et Domaines et de la TVA
[6] These are defined by the RFT Law to be: (i) all fiduciaries of fiducies that fall under the scope of the Luxembourg law of 27 July 2003 on trusts and fiduciary arrangements and trustees of trust within the meaning of the Hague Convention of 1 July 1985, and approved by the law of 27 July 2003, (ii) all persons having a similar position to that of a fiducaire or trustee in legal arrangements that have structure or function similar to those.
[7] Art 14
Sarah Verlende
Managing Associate | Legal
Luxembourg Legal Services
Managing Associate
Luxembourg Legal Services
Bertrand Géradin
Partner | Legal
Luxembourg Legal Services
Partner
Luxembourg Legal Services
Ogier is a professional services firm with the knowledge and expertise to handle the most demanding and complex transactions and provide expert, efficient and cost-effective services to all our clients. We regularly win awards for the quality of our client service, our work and our people.
This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.
Regulatory information can be found under Legal Notice
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