Article Post on 13 May 2020

The Latest CSSF Communications to Regulated Entities Falling under its Supervision Regarding COVID-19

Updated: 13 May 2020.

_The CSSF has issued a COVID-19 FAQ matrix, which is updated on a regular basis and inclues its position on a range of regulatory issues. 

CSSF COVID-19 FAQ

The CSSF COVID-19 FAQ is available on CSSF website and updated on a daily basis.

CSSF Communications (updated 13.05.2020)


13 May 2020: Deadlines for the submission of certain documents by specialised PFS and changes made for the reporting of Early Warning on large redemptions (UCITS)

The CSSF decided that the deadline extensions for the submission of usual closing documents may, where appropriate, be exceptionally granted upon reasoned request to be sent by email to the usual contact person at the CSSF. Nevertheless, submission on time is encouraged, where the submission can be made within the usual time limits without compromising the quality of the submitted documents and in line with the health rules to contain the spread of Covid-19. As regards the management letter and the audit report of the réviseur d'entreprises agréé, prepared pursuant to CSSF Regulation N° 12-02 of 14 December 2012 on the fight against money laundering and terrorist financing, an extension of up to three months following the initial date of the ordinary general meeting is possible. (CSSF communication p.7)

Regarding the changes made for the reporting of Early Warning on large redemptions (UCITS) the CSSF released the following communication:

"The reporting Early Warning on large redemptions (UCITS), which is only relevant for a limited number of UCITS that have, in the past, been contacted directly by the CSSF, is suspended until further notice following the introduction of the “IFM Notification – Fund issues/Large redemptions." (CSSF communication p.23)

10 April 2020: Information request based on the Commission implementing Regulation (EU) 2018/1624 OF 23 October 2018 

Communication from the CSSF as resolution authority regarding the information request in accordance with Commission Implementing Regulation (EU) 2018/1624 of 23 October 2018.

9 April 2020: Launch of a weekly questionnaire to investment fund managers and communication regarding the approach to SFTR implementation 

Launch of a new weekly questionnaire to investment fund managers - updates on financial data and governance arrangements. 
More information

9 April 2020: Communication regarding the approach to SFTR implementation 

Communication regarding the approach to SFTR implementation.
More information (CSSF website)

2 April 2020: Postponement of reporting under Article 37 of the Money Market Funds Regulation

Postponement of the reporting under Article 37 of the Money Market Funds Regulation.
More information (CSSF website)

25 March 2020: Long Form Reports Communication

Given the impact of COVID-19 on audited entities and funds, as well as on the auditors, the CSSF has decided that where necessary the long form report may exceptionally be remitted up to four months after the annual general meeting of the audited entity or fund, excluding delays for such AGMs granted by the government through exceptional measures. 
Both delays shall not be applied cumulatively. Where the submission can be performed within the ordinary deadlines without compromising the quality of the audit work, a timely submission is encouraged. Please also note that the Committee of European Auditing Oversight Bodies (CEAOB) has published on 25 March 2020 a statement on the COVID-19 impact on audits of financial statements.

23 March 2020: Regulatory Reporting 

The CSSF asked supervised entities to perform the CSSF regulatory reporting when it is due. 

If, however, for operational reasons supervised entities experience difficulties to prepare or validate their CSSF reporting due to staff not being available, for example because they work remotely without having full access to all systems, then the supervised entities should contact the CSSF through their usual channels as soon as possible and ahead of reporting deadlines. The CSSF will not apply a strict enforcement policy with regards to reporting if delays are duly justified, during the COVID-19 crisis. The leeway applied by the CSSF will be closely coordinated with national authorities, the European Supervisory Authorities as well as the European Central Bank.

As at 22 March 2020, main topics covered by the Covid-19 FAQ are the following:

  • Minimum IT security conditions recommended for remote access;
  • Recommendation made to favour work from home in the framework of the regulated entities’ business continuity plan (also applicable to support PSF); 
  • Communication of ECB measures to alleviate the impacts of COVID-19 on Significant Institutions.

In addition, in its communication dated 22 March 2020, the CSSF urges all supervised entities to immediately review their current organisational setup so as to ensure that:

  • The least possible staff has to travel to, and work from, their usual workplace or backup site. The deployment of staff members to the usual workplace or backup site should be limited to vital functions that are essential to maintain the critical mission of supervised entities for them to remain operational provided that these functions cannot be performed remotely;
  • Where staff is not equipped with laptops or other mobile devices, entities implement as soon as possible virtual desktop and other remote access solutions, cloud based or not. 

 

Dedicated Articles (updated 20.04.2020)

Luxembourg Commercial Banks Moratorium

Six Luxembourg commercial banks (BCEE, BGL BNP Paribas, BIL, Banque de Luxembourg, ING and Raiffeisen) in coordination with the ABBL have implemented measures in order to support the economy and their professional clients in the context of the current COVID-19 crisis. The professionals may apply for a moratorium on business loans granted to Luxembourg companies before 18 mars 2020. The maximum duration of the moratorium is 6 months and the moratorium must take effect before the 30 June 2020. 

Are eligible non-financial companies, self-employed, agricultural companies and non-profit associations, based in Luxembourg, where they are in current business relation with a participating bank and that the COVID-19 pandemic has a negative impact on their short term liquidity. 

The request may concern any loan or leasing transaction. Albeit, are excluded loans in connection with which, on 18 March 2020, repayment difficulties were already noted and  loans granted to property developers for the purchase, the sale or the development phases.

This regime complements the new guarantee scheme in favor Luxembourg economy established in the context of the current COVID-19 pandemic. 


COVID-19 Luxembourg State Guarantee Scheme

On 18 April 2020, the bill of law 7545/00, has been voted, establishing a EUR 2,5 billion state-backed guarantee scheme in favor of the Luxembourg economy in the context of the COVID-19 pandemic.
 
The purpose of the scheme is to facilitate the granting of new loans to companies facing temporary difficulties  as a consequence of the COVID-19 crisis and to sustain the Luxembourg economy in these challenging period.
 
New loans granted by the participating banks (BCEE, BGL BNP Paribas, BIL, Banque de Luxembourg, ING and Raiffeisen),during the period from 18 March 2020 to 31 December 2020 will  benefit of the state guarantee system. The system will be supported at 85% by the State and 15% by the participating banks. 
 
The guarantee scheme may not be cumulated for the same loan with other State guarantees.
 
The guarantee scheme will concern new loans having a maturity of a maximum six years.  All type of bank loans may benefit of the guarantee but leasing is excluded.
 
Are eligible to such state-backed guarantee scheme, Luxembourg based, commercial enterprises, self-employed exercising liberal professions and cooperative companies which are facing temporary financial difficulties as a consequence of COVID-19 pandemic.
 
Are not eligible, property developers, companies whose the main object is the holding of participations and companies which were already facing financial difficulties before 18 March 2020.
 
The maximum amount of the eligible loans to the scheme are 25% of the turnover of the company for the year 2019 (or of the last year available). Albeit, other particular conditions are applied for young innovative companies.


10 April 2020 - Circular CSSF 20/740 related to Finance crime and AML/CFT implications during the COVID-19 pandemic. 

The CSSF has issued a new Circular CSSF 20/740 relating to Financial crime and AML/CFT implications arising from the COVID-19 pandemic.

The purpose of this circular is to provide guidance to all professionals subject to anti-money laundering and counter-terrorism financing (AML/CFT) supervision of the CSSF in relation to the money laundering and terrorism financing (ML/TF) risks and AML/CFT implications of the COVID-19 pandemic. 

The CSSF noted that, as many economies experience a downturn, financial flows are likely to diminish. However, experience from past crises suggests that in many cases illicit financial flows will continue, and criminals and terrorists may seek to exploit temporary weaknesses in AML/CFT controls.

The CSSF therefore requires that supervised professionals to maintain effective systems and controls to ensure that Luxembourg’s financial system is not abused for ML/TF purposes.

The CSSF guidance under such circular is structured as follows:

New and emerging ML/TF threats resulting from COVID-19. 

They include:

  • those crimes that represent both a significant operational risk for financial institutions and a ML/TF threat – namely:
    • cybercrime i.e. phishing and email scam campaigns; and 
    • ​​fraud i.e. CEO and Business E-Mail Compromise (BEC) fraud.
  • those crimes where the risk to financial institutions is primarily related to the laundering of illicit proceeds – namely:
    • bribery and corruption i.e. abuse of governmental stimulus packages to support local businesses such as direct grants, tax advantages, advance, payments, state guarantees for loans taken from banks, subsidised public loans;
    • trafficking in counterfeit goods i.e. distribution of counterfeit and/or sub-standard goods in relation to the COVID-19 pandemic. This includes specific activities related to personal protective equipment (PPE), pharmaceutical products, and other healthcare products, including the distribution of fake COVID-19 home testing kits;
    • robbery or theft i.e. “Faking and entering” scams; and
    • insider trading and market manipulation i.e. the unusual channels that information is being transmitted on issuers and securities due to the COVID-19 pandemic may result in a higher number of employees and other categories of persons having access to insider information (and therefore increase the risk of abuse)).

Description of possible areas of particular vulnerability for the financial sector. 

These include: 

  • online payment services;
  • clients in financial distress;
  • mortgages and other forms of collateralised lending;
  • credit backed by government guarantees;
  • distressed investment products; and
  • delivery of aid through nonprofit organisations.

Description of mitigating actions that require particular focus for supervised professionals

In order to adapt to the changing nature of the ML/TF risk created by the pandemic, the CSSF stresses several areas that require particular focus for supervised professionals. These are: 

  • AML/CFT business continuity;
  • transaction monitoring;
  • customer due diligence (CDD);
  • ML/TF risk assessment; and 
  • cooperation with authorities. 

CSSF also encourages professionals to consult the CRF’s (Cellule de Renseignement Financier) recent guidance on COVID-19 typologies, which includes several indicators of suspicious activity.

The CSSF’s approach to AML/CFT supervision during this period. 

In that respect, the CSSF:

  • remains committed to combatting ML/TF and ensuring that the risks arising from and within the Luxembourg financial sector are effectively managed and mitigated;
  • remains fully operational and has implemented several measures to ensure it meets the operational challenges associated with AML/CFT supervision during this time; 
  • will continue AML/CFT supervisory activities during this period. AML/CFT on-site inspections that have already commenced will be completed and the CSSF will also commence inspections on a remote basis during this period. Off-site supervisory activities are also continuing ;. 
  • continues to communicate with supervised professionals in relation to AML/CFT throughout this period. Communications can be made in the following way:
    • all communications should be done either through the eDesk for those who have registered, or by e-mail rather than regular mail;
    • all outgoing communications from the CSSF will be done by e-mail, carrying no handwritten signature from the CSSF; and 
    • the CSSF remains available for meetings by telephone or videoconference.

The CSSF will also continue to cooperate closely and exchange information with other national authorities in order to maintain and further strengthen Luxembourg’s national AML/CFT regime.


Disclosure of  Information by Issuers of  Securities under the Transparency Law 

The CSSF will not take any administrative measures or sanctions in relation to issuers’ failure to comply with the upcoming deadlines for the publication of periodic information required by Articles 3, 4 and 5 of the Law of 11 January 2008 on transparency requirements for issuers (the “Transparency Law”).

Issuers may make use of additional two months, if they feel it appropriate to do so, to publish the above mentioned upcoming periodic information. This temporary measure applies to issuers for which Luxembourg is the home Member State pursuant to the Transparency Law for reporting periods ending on 31 December 2019 or after that date but before 1 April 2020.

Although the CSSF temporary relief will permit issuers that need additional time to provide comprehensive and high quality financial information, the CSSF expects that issuers take all necessary and reasonable measures in order to publish periodic information within, or as near as possible to, the deadlines set by the Transparency Law.

In order to ensure investor protection and preserve integrity of markets, the CSSF also considers that:

  • Issuers reasonably anticipating their financial reports to be delayed should inform the market thereof; and

  • Issuers and holders of securities shall pay particular attention to compliance with ongoing disclosure requirements set by the Transparency Law and by Regulation (EU) No 596/2014 on market abuse (“MAR”). This notably concerns issuers’ requirements to disclose inside information (Article 17 of MAR), the requirement to notify and publish major holdings (in case thresholds provided in Article 8(1) of the Transparency Law are reached or passed) as well as the requirement to notify and publish managers’ transactions (Article 19 of MAR).

Issuers anticipating their financial reports to be delayed should also inform the CSSF thereof (via transparency@cssf.lu) as soon as possible and in any case before the expiry of the legal deadline in question and indicate the reasons leading to the delay as well as, insofar possible, the expected publication date.

The CSSF acknowledges that delays granted by national governments through exceptional measures in the context of COVID-19 might not always match with the above mentioned delays. Where appropriate in the securities markets framework, the CSSF will take this into account in its assessment.

Please also note that the European Securities and Markets Authority (ESMA) has published a statement on actions to mitigate the impact of COVID-19 on the EU financial markets regarding publication deadlines under the Transparency Directive.

 

Wildgen is following the CSSF communication on a daily basis. For any specific queries, please feel free to contact our Banking and Finance team (Michel Bulach, Michael Mbayi, Giuseppe Cafiero) or through the email address covid19@wildgen.lu.

All such communications are available on the CSSF website.

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