A significant proportion of Luxembourg regulations in the financial sector is derived from EU directives and regulations. In many respects, therefore, Luxembourg’s domestic legislation and rules simply give effect to pan-European legal requirements. However, as European directives are aimed at harmonizing the European legislations, the way in which they are implemented across Europe can vary. Directives contain mandatory rules but also rules that can be implemented at the discretion of the member state.

That said, there are key areas that are not harmonized, such as the legal framework of funds. The different regulatory regimes applying in particular to alternative investment funds have been adopted at the level of the Luxembourg parliament and present a vast tool box for funds set-up.

The Law of 5 April 1993 on the Financial Sector, as amended (“Law on the Financial Sector”), is the main framework law for banking and financial services in Luxembourg. The core regulation for the insurance business in Luxembourg is set out by the Law of 7 December 2015 on the Insurance Sector, as amended. With regard to electronic money institutions and payment services, the Law of 10 November 2009 on Payment Services, as amended, lays down the specific rules for these financial service providers. A large number of Grand-ducal Regulations and CSSF and CAA Regulations complete the regulatory framework of financial services in Luxembourg.