BCL Circular 2002/172 of 28 June 2002 — Protection of Payment and Securities Settlement Systems against Crime and Terrorism

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Luxembourg, 28 June 2002
To operators and technical agents of payment and securities settlement systems

BCL CIRCULAR 2002/172
Protection of Payment and Securities Settlement Systems against Crime and Terrorism

Ladies and Gentlemen,

1. Since the Law of 12 January 2001, the Central Bank has been the supervisory authority for payment and securities settlement systems to which it participates in Luxembourg.

Strict compliance with the rules applicable in the respective areas of money laundering, financial sanctions measures, and counter-terrorism is an important element of systemic risk prevention. It is necessary to ensure that systems in Luxembourg are effectively protected against these legal and prudential risks and are shielded from the effects of contamination.

2. The Central Bank wishes to ensure that the recipients of this circular, who are subject to its supervision, respect the general obligations imposed by legislation on all financial intermediaries.

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3. The Central Bank contributes to the activities of the competent authorities. It cooperates with the relevant national authorities, in particular the Luxembourg District Court Prosecutor's Office and the Commission de Surveillance du Secteur Financier (CSSF).

4. Recipients are required to communicate to the Central Bank a detailed description of the procedures implemented and followed to comply with the legislative provisions mentioned in the annex.

5. Recipients must ensure the "traceability" of operations carried out by the system, that is to say, enable the ordering participants and the beneficiary participants of transfers to be identified if necessary.

For the purposes of this circular, "traceability" means:
The ability to retrace the path of transfer orders and, through this, to identify the participant ordering the transfer as well as the participant receiving the transfers, the transfer orders relating both to a sum of money and to the ownership of securities or the right to securities.

6. To the extent that participants in the systems are exclusively credit institutions or other financial sector professionals duly subject to compliance with prudential rules in the European Community, the Central Bank will not impose additional control measures on the recipients of this circular.

In the current state of legislation, this circular does not impose additional obligations on participants from the European Community, insofar as they comply with the rules in this matter.

When participants are credit institutions or other financial sector professionals not subject to Community law, recipients must require that ordering participants apply rules equivalent to those laid down by Community law regarding client identification. Failing this, the status of participant in the systems cannot be granted.

7. Recipients must make available to the competent authorities the information available regarding the entry and exit of orders. They must ensure that the Central Bank is informed of any possible incident or problems with the application of the provisions.

8. Recipients must draw the attention of participants to the need to complete and correctly fill in the messages used for transfer orders, including data relating to the order giver. Responsibility for both the completeness and accuracy of the content of the messages, as well as the legality of the orders, remains with the participants.

9. Recipients of this circular must ensure that the information contained in the messages remains unaltered within the framework of operations carried out by the systems.

10. The Central Bank applies the information, verification, control, and sanction regime at its disposal for the execution of these provisions within the framework of its legal supervisory mission.

11. The annex to this circular contains information on the legislation applicable in the Grand Duchy of Luxembourg. This annex, of an informative nature, is intended to be regularly updated and supplemented as necessary with specific information. It can be consulted on the Central Bank's website: www.bcl.lu.

Please accept, Ladies and Gentlemen, the assurance of our most distinguished sentiments.

CENTRAL BANK OF LUXEMBOURG
The Management

Serge KOLB Andrée BILLON Yves MERSCH
Annex: 1