How to comply with article VI.2 of CSSF 18/698?

Question

I need to bring my Luxembourg organisation into compliance with article VI.2 of CSSF 18/698 (CSSF 18/698). What are the concrete requirements, the sanctions, and how can Luxgap support me?

Accepted Answer

The classic trapArticle VI.2 covers branches of third-country investment fund managers (IFM) falling under chapter 17 of the 2010 Law. The trap: assuming that branch status, lacking legal personality, lightens the obligations. It is the opposite. The CSSF requires the branch to comply with the entirety of circular 18/698 (part VI.1 or part II as applicable), just like a locally authorised IFM. CSSF reviews specifically target branches that apply the foreign head office's governance and internal control frameworks without adapting them to the Luxembourg regime.What the CSSF checks on a chapter 17 branchPrior CSSF authorisation under article 127(1) of the 2010 Law, before any start of collective portfolio management activity.Full alignment with the authorisation rules applicable to an IFM under articles 125-1 or 125-2 of chapter 16.Effective transposition of governance, risk management and internal control arrangements to the Luxembourg perimeter, despite the absence of legal personality.Appointment of directors and control functions locally responsible and reachable by the CSSF.Evidence that functions outsourced to the third-country head office remain auditable and documented from Luxembourg.Consistency between group procedures and the specific requirements of the circular (parts VI.1 and II).How Luxgap automates this riskOur Luxgap Branch Compliance Mapper makes the third-country branch blind spot impossible: it automatically maps every circular 18/698 requirement applicable to your chapter 17 branch and confronts your actual procedures with the CSSF framework. The tool ingests your internal policies (SharePoint M365, Odoo DMS, Confluence) and a specialised LLM agent identifies clause by clause the provisions of part VI.1 and part II that remain uncovered given the absence of legal personality.Automatically detects head office procedures imported without adaptation to the Luxembourg regime through analysis of your connected document repositories.Classifies each circular requirement by its applicability to a branch and flags provisions with no local responsible owner.Verifies coverage of the article 127(1) authorisation rules by reference to the requirements of articles 125-1 and 125-2 of chapter 16.Alerts in real time whenever a control function or responsible director is no longer identified or reachable in Luxembourg.Produces a timestamped and sealed PDF report, enforceable before the CSSF during a review, demonstrating full coverage of the relevant provisions.Available as a complement to a Luxgap CISO or DPO mandate or as a dedicated SaaS module depending on your perimeter. Request a tailored quote and our teams will prepare a demonstration on your real perimeter, with a free blind audit within 48h to measure your exposure before any commitment.

Chapitre 2 - : Le GFI régi par le chapitre 17 de la Loi

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