Circular CSSF 25/897
Executive Summary
Circular CSSF 25/897 updates Circular CSSF 22/821 on the Long Form Report (LFR) for credit institutions, further aligning the self-assessment questionnaire (SAQ) with current supervisory priorities such as ML/FT risks and organizational aspects. This matters because it refines reporting to reduce redundancies, enhance transparency in REA assessments, and reflect evolving prudential focuses since prior amendments via Circulars CSSF 23/845 and 24/865, ensuring institutions' reports better support CSSF oversight. #
What Changed
- - Introduces new modules in the revised SAQ to align with supervisory points of focus, building on prior expansions (e.g., credit/counterparty risk, liquidity risk, climate-related risks from CSSF 23/845).
- Emphasizes REA's independent assessment in the AML/CFT report, requiring exhaustive, transparent evaluations of ML/FT risks across institutions, branches, majority-owned subsidiaries abroad, and tied agents; prohibits vague language (e.g., no "no ser
- REA must verify and amend descriptive elements provided by management for the Financial Instruments and Funds Report and AML/CFT report, including quantitative metrics like pending file ratios.
- Confirms the three-part LFR framework: institution-completed SAQ, REA's client assets protection report (per Article 7 of Grand-ducal Regulation of 30 May 2018), and REA's AML/CFT report; no Agreed Upon Procedures (AUP) reports remain, as eliminated
- Enhances REA responsibilities for collateral arrangements and client fund protections under relevant laws.
Suggested Considerations
- Complete and submit revised SAQ annually, incorporating new modules on supervisory focuses like ML/FT risks and providing detailed data to REA.
- Authorized management: Supply accurate descriptive information to REA for reports, covering client protections, collateral, and AML/CFT procedures across group entities.
- REA: Independently assess and report on ML/FT risks and client assets with transparency, quantitative details, and verified management inputs; avoid imprecise language.
- Ensure AML/CFT report details methodologies (e.g., sampling techniques) and covers branches/subsidiaries/tied agents.
- Review prior LFR submissions against this update to align with suppressed redundancies and new emphases.
Key Dates
Compliance Impact
Urgency: High - Institutions face immediate refinement needs for 2025 year-end reporting (e.g., SAQ due ~Q1 2026), with stricter REA scrutiny on AML/CFT transparency risking supervisory findings or enforcement if vague assessments persist; aligns with ongoing CSSF push for risk-focused oversight amid regulatory evolution.
Who is Affected
References
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Summary
Update of Circular CSSF 22/821 on the Long Form Report, as amended by Circulars CSSF 23/845 and CSSF 24/865