Clarification by the CSSF regarding eligible entities for the opening of cash accounts in relation to Luxembourg alternative investment funds
In its press release[1] dated 18 October 2022, the Luxembourg Commission de Surveillance du Secteur Financier (CSSF) clarified a few points regarding the eligibility of entities for the opening of cash accounts in relation to Luxembourg alternative investment funds (AIFs):
- the CSSF reminds that all cash of an AIF has to be booked in cash accounts opened with an entity as specified under article 19(7) of the law of 12 July 2013 (the AIFM Law) either (i) in the name of the relevant AIF, (ii) in the name of its alternative investment fund manager (AIFM) acting on behalf of the relevant AIF, or (iii) in the name of the depositary acting on behalf of the relevant AIF;
- if appointed as depositary, none of the relevant AIF’s cash can be held directly by a professional depositary of assets other than financial instruments under article 26-1 of the law of 5 April 1993 on the financial sector, as amended (PDAOFI);
- only central banks, EU authorised credit institutions and third country authorised banks may qualify as eligible entities (each an Eligible Entity) for the purpose of holding cash accounts in the relevant market; and
- any new AIF must ensure that cash accounts will be held by an Eligible Entity.
Consequently, the AIFM or the depositary of AIFs which have currently appointed an electronic money institution (EMI) or a payment institution (PI) to hold cash accounts should assess their structure and ensure that, by no later than 30 June 2023:
- a depositary within the meaning of article 19(3)(i) AIFM Law is appointed; and
- an Eligible Entity is appointed for the purpose of holding cash accounts for the relevant AIF.
In the meantime, the CSSF has clarified that no new sub-funds may be set up within AIFs for which cash accounts are currently held by an EMI or PI.
Although not specifically mentioned in the CSSF’s press release, one could interpret from the reference to the AIFM Law that AIFs managed by a registered AIFM are not concerned by such requirement (pending any future clarification).
Please feel free to reach out to our experts Aurélien Hollard, Benjamin Bada or Julien Robert if you have any further questions on this topic.
