Banking regulation—Luxembourg—Q&A guide

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • Banking regulation—Luxembourg—Q&A guide
  • 1. What are the principal governmental and regulatory policies that govern the banking sector?
  • 2. What are the defining characteristics of a bank to be caught by the banking laws and regulations? Is non-bank fintech regulated differently?
  • 3. Do the rules vary depending on the size or complexity of the banking institution?
  • 4. Summarise the primary statutes and regulations that govern the banking industry.
  • 5. Which regulatory authorities are primarily responsible for overseeing banks?
  • 6. Describe the extent to which deposits are insured by the government. Describe the extent to which the government has taken an ownership interest in the banking sector and intends to maintain, increase or decrease that interest.
  • 7. Which legal and regulatory limitations apply to transactions between a bank and its affiliates? What constitutes an ‘affiliate’ for this purpose? Briefly describe the range of permissible and prohibited activities for financial institutions and whether there have been any changes to how those activities are classified.
  • 8. What are the principal regulatory challenges facing the banking industry?
  • 9. Are banks subject to consumer protection rules?
  • More...

Banking regulation—Luxembourg—Q&A guide

This Practice Note contains a jurisdiction-specific Q&A guide to banking regulation in Luxembourg published as part of the Lexology Getting the Deal Through series by Law Business Research (published: January 2021).

Authors: Loyens & Loeff—Michael Schweiger; Adrien Pierre

1. What are the principal governmental and regulatory policies that govern the banking sector?

Luxembourg is a major financial centre, and the development of the financial sector is therefore an important policy consideration. The Ministry of Finance works together with Luxembourg for Finance, the Luxembourg agency for the development of the financial centre, to promote, develop and diversify the Luxembourg financial centre and identify new opportunities. Current priorities include digitalisation, sustainable finance and financial education. Policies are being adjusted as needed to address the covid-19 pandemic to which the sector has been quite resilient.

2. What are the defining characteristics of a bank to be caught by the banking laws and regulations? Is non-bank fintech regulated differently?

Credit institutions or banks are defined in the Law of 5 April 1993 on the financial sector, as amended, as legal persons whose activity consists in receiving deposits or other repayable funds from the public and granting credits for their own account. Any person performing these two activities qualifies as a bank and falls within the scope of banking laws and regulations and must obtain an authorisation.

There is no dedicated legal framework

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