Luxembourg Risk Market Update: Recent Regulatory Developments by CSSF (2022-2023)

As the financial landscape continues to evolve, the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg has played a pivotal role in shaping regulatory standards. Significant changes have occurred between 2022 and 2023, with notable amendments to key regulations, particularly in the realm of anti-money laundering (AML), combating the financing of terrorism (CFT) and adjusting their MiFID II requirements.

The CSSF will adopt the Guidelines of the European Securities and Markets Authority (ESMA) on MiFID II product governance requirements from 3 October 2023 onwards. These Guidelines aim to promote supervisory convergence at the European level and provide clarity on specific aspects of MiFID II product governance requirements (Articles 9(3), 16(3), 16(6), 24(1), and 24(2) of MiFID II, as well as Articles 9 and 10 of the MiFID II Directive).

Article 4(4) of CSSF Regulation N° 12-02 has emerged as a fundamental focus, centred on the concept of ML/TF (Money Laundering/Terrorist Financing) Risk Appetite. This novel approach considers the level of risk that financial professionals are willing to accept and it is encapsulated within a comprehensive written statement outlining the entity’s operational framework.

Article 2-2(1) of the amended AML/CFT Law dated 12 November 2004, combined with Article 4(1) of the amended CSSF Regulation N° 12-02, establishes a legal framework reinforcing these regulatory shifts. Further underpinning these changes are the modifications introduced to Article 42(5) and (6) of the amended CSSF Regulation N° 12-02, focusing on effective customer due diligence (CDD) procedures.

Lately, the CSSF’s supervisory priorities in the field of sustainable finance aim to proactively support the transition of the financial sector towards a greener economy and cleaner funds. The CSSF will continue to monitor Investment Fund Managers’ (IFMs) compliance with the sustainability-related provisions as set forth under SFDR, the SFDR RTS and Regulation (EU) 2020/852 (the Taxonomy regulation). In so doing, the CSSF will take due consideration of the principles and guidance laid down in the ESMA Supervisory Briefing on Sustainability risks and disclosures in the area of investment management published on 31 May 2022.

The regulatory changes underscore the need for financial institutions to bolster their teams with professionals possessing expertise in Due Diligence, AML/CFT, MiFID II and ESG.


How Barclay Simpson is positioned to assist with these needs:

Barclay Simpson stay informed about CSSF regulations, advise on necessary adaptations, and offer ongoing support. We understand clients’ internal recruitment processes and align with their policies, recommending the right skills for the current market. Additionally, we collaborate with talent acquisition teams and hiring managers, expediting recruitment and ensuring smooth integration of new team members.


Association of the Luxembourg Fund Industry (ALFI)

In June, the Association for Risk Management (ALRIM) joined forces with the Association of the Luxembourg Fund Industry (ALFI) to host their annual Risk Management Conference. The event provided a platform to delve into several pivotal topics shaping the landscape of risk management professions within the Luxembourg financial sector.

Highlights included discussions on the role and value of risk managers in portfolio management oversight, as well as the contemporary challenges faced by Chief Risk Officers. Notably, the integration of the swing Pricing tool into risk controls and discussions on current risk factors, such as rising interest rates and energy prices, were key focal points.

In essence, the Risk Management Conference served as a beacon for risk professionals, shedding light on the industry’s current landscape and the strategies, discussions, and collaborations shaping its future.

Recruitment Trends: An In-depth Look at the Current Labor Risk Market in Luxembourg

The financial sector’s evolving landscape presents challenges and opportunities in the labour market. Recent surveys conducted using our data at Barclay Simpson indicate a challenge in finding suitable candidates, resulting in an extended hiring process compared to the pre-pandemic period. One key challenge is the scarcity of candidates with the necessary regulatory skills, as the financial industry requires professionals adept in navigating complex regulations.

Moreover, there has been a notable surge in employee mobility within the financial sector, resulting in annual salary increments and a cycle of wage inflation. Remote work policies are also influencing employee decisions.

In this dynamic environment, risk managers have taken centre stage, acquiring a broader range of technical skills.


Salary Ranges:

*These bandings are the upper and lower quartiles from market averages from our own proprietary data. 

This market update provides insights into the evolving risk landscape in Luxembourg, including demand trends, skill requirements, and compensation considerations. We are ready to engage in further discussions or address any inquiries you may have.