Clarification by the CSSF regarding eligible entities for the opening of cash accounts in relation to Luxembourg alternative investment funds (AIFs)
The CSSF has recently observed that, for a certain number of AIFs, notably AIFs that have appointed 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) as their single-depositary, the AIF or the depositary uses – or intends to use – the services of an electronic money institution (EMI) or a payment institution (PI) governed by the Law of 10 November 2009 on payment services or by the Directive (EU) 2015/2366 on payment services in the internal market, for the purpose of holding the cash accounts of such AIFs.
The CSSF hereby reminds you that all cash of an AIF has to be booked in cash accounts opened in the name of the relevant AIF, in the name of their Alternative Investment Fund Manager (AIFM) acting on behalf of the relevant AIF, or in the name of the depositary acting on behalf of the relevant AIF with an entity as specified under Article 19(7) of the Law of 12 July 2013 (the “AIFM Law”) (implementing Article 21(7) of the Directive 2011/61/EU (the “AIFMD”)). As a reminder, in relation to AIFs that have appointed a PDAOFI, none of the AIF’s cash can be held directly by the PDAOFI itself. Reference is made in this respect to CSSF FAQ on the AIFM Law under 10.J, last paragraph and point 18 of Circular CSSF 18/697.
Having regard to Article 19(7) of the AIFM Law, only central banks, EU authorised credit institutions as well as third country authorised banks (each an “Eligible Entity”), as further clarified in Article 86(a) of the Commission Delegated Regulation (EU) 231/2013 and in points (a), (b) and (c) of Article 18(1) of the Directive 2006/73/EC which it refers to, may qualify as Eligible Entities for the purpose of holding cash accounts in the relevant market where cash accounts are required for the purposes of the AIF’s operations.
In light of the above, for AIFs for which an EMI or a PI has been appointed to hold cash accounts, their designated AIFM or the appointed depositary should analyse the cash account set-up in order to ensure that as soon as possible and by no later than 30 June 2023:
- a depositary within the meaning of Article 19(3)(i) is appointed; and
- an Eligible Entity as defined above is appointed in relation to the opening of cash accounts for such AIFs.
For the avoidance of doubt, any new AIF must ensure that the cash accounts will be held by an Eligible Entity. No new sub-funds can be set up within AIFs for which the cash accounts are currently held by an EMI or a PI.