Luxembourg Cross-Border Private Banking Regulatory Framework
A Luxembourg private bank may be authorised in Luxembourg, but that does not mean it can offer the same services to every client in every country. In cross-border private banking, the client’s country of residence tells the bank which foreign rules it must check before acting.
The Luxembourg law of 5 April 1993 on the financial sector, as amended (the “1993 Law”), is the core Luxembourg statute for credit institutions and investment firms. This matters because private banking is not limited to deposits and account services. It often includes investment advice, portfolio management and securities orders, which may be provided either by a credit institution or, where properly authorised, by an investment firm.
Cross-border private banking and the EEA passport
For European Economic Area (“EEA“) business, Article 34 of the 1993 Law separates the passporting mechanics. A Luxembourg credit institution must notify the Commission de surveillance du secteur financier (“CSSF“) before first-time EEA service provision. A Luxembourg investment firm must notify the CSSF before first-time service provision and before changing the range of services or activities already notified; that change requires at least one month’s written notice before implementation.
The EEA passport gives access, not a blank cheque. It removes the need for a separate full licence in each EEA country for the notified services. It does not remove the need to check how the bank may approach clients, provide advice, discuss products, send marketing material and evidence the decision in the file.
The CSSF’s Private Banking Sub-Sector Risk Assessment 2023 confirms why this matters: around eighty per cent of Luxembourg private-banking clients have their fiscal residence outside Luxembourg.
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