{"id":"circulars/cssf-19-732","title":"Circular CSSF 19/732","type":"circular","date":"2019-12-20","kind":"circular","html":"

Circular CSSF 19/732 is a CSSF circular, published 20 December 2019. Subject: Prevention of Money Laundering and Terrorist Financing: Clarifications on the Identification and Verification of the Identity of the Ultimate Beneficial Owner(s).

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Relevant for: AIFMs, AISPs, Central Securities Depositories (CSDs), Credit institutions, Credit servicers, Data Reporting Service Providers (DRSPs), E-money institutions, Investment firms, Investment fund managers, Management companies - Chapter 15, Management companies - Chapter 16, Payment institutions, Payment institutions/electronic money institutions/AISPs, Specialised PFS, Support PFS, Virtual asset service providers (VASPs).

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Main topic: Financial crime. Keywords: AML/CFT.

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Amended by Circular CSSF 24/861.

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Text

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Prevention of Money Laundering and Terrorist Financing: Clarifications on the Identification and Verification of the Identity of the Ultimate Beneficial Owner(s)

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Prevention of Money Laundering and Terrorist Financing: Clarifications on the Identification and Verification of the Identity of the Ultimate Beneficial Owner(s) To all professionals under AML/CFT supervision of the CSSF

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Luxembourg, 20 December 2019 Ladies and Gentlemen,

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  1. The purpose of this circular is to provide guidance to all professionals subject to AML/CFT supervision of the CSSF in relation to the legal requirements applicable to the identification and verification of the identity of the ultimate beneficial owner with a view to enhancing financial transparency. 2. The concept of ultimate beneficial ownership 1 (hereinafter referred to also as “UBO”) is not novel as the term “beneficial owner” already appeared in the first anti-money laundering directive dating from 1991. 2 Yet, said first anti-money laundering directive did not define the concept of beneficial owner and contained little detail on the relevant procedures with regard to customer identification and verification obligations including of beneficial owners (know your customer). This gap was filled with the adoption of the third anti-money laundering directive as a definition of what constitutes a beneficial owner was provided for in Article 3(6). 3 The fourth anti-money laundering directive 4 (hereinafter “4AMLD”) has provided significant clarifications 5 in view of the concrete implementation of the beneficial owner concept while simultaneously taking into account the 2012 FATF Recommendations, particularly Recommendations 10, 24, 25, its interpretive notes, as well as immediate outcomes 4 and 5 described in the FATF Methodology for assessing the effectiveness of AML/CFT systems.
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1 The French equivalent is bénéficiaire effectif. The terms bénéficiaires économiques and bénéficiaires réels have equally been used in the past but are however no longer applicable. 2 Council Directive 91/308/EEC of 10 June 1991 on prevention of the use of the financial system for the purpose of money laundering. 3 Directive (EU) 2005/60 EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing. 4 Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC. 5

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Articles 30 and 31.

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  1. As the practical implementation of these FATF Recommendations has proved challenging for professionals, FATF has equally developed a guidance paper 6 on transparency and beneficial ownership 7 in 2014 and continues to provide guidance on the topic with the aim of creating an effective system that prevents i.a. the misuse of legal persons and legal arrangements for criminal purposes. 8 The latest document of the FATF in that respect containing practical guidance is the paper on Best Practices on beneficial ownership for legal persons of October 2019. 9 4. Several provisions of the 4AMLD have to be read in conjunction to identify the ultimate beneficial owner, notably Article 3(6) and 3(12) which contain definitions, Article 13 with regard to customer due diligence obligations and Articles 30 and 31 concerning the establishment of a central register on beneficial ownership information. To be noted that Article 30 has been modified pursuant to the fifth anti-money laundering directive10 (hereinafter “5AMLD”).
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The text above is the opening of the document; the PDF carries the whole.

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Document page, PDF. Source: Commission de Surveillance du Secteur Financier (CSSF), reproduced with the CSSF's consent. The French text prevails.

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