LUXEMBOURG Law and Practice Contributed by: Andreas Heinzmann, Valerio Scollo and Angela Permunian, GSK Stockmann
5. Payment Processors 5.1 Payment Processors’ Use of Payment Rails Payment processors can either use existing payment rails or create their own payment rails. However, in the latter case, specific licensing requirements apply. 5.2 Regulation of Cross-Border Payments and Remittances Luxembourg is part of the Single Euro Payments Area (SEPA), which aims to create a single euro payments area in which all scriptural (book) payments are con - sidered domestic – ie, without any distinction between national and cross-border payments. With regard to large-value transactions, these are currently pro - cessed through the T2 system, which settles cross- border payments in euros in real time. When it comes to the regulation of cross-border pay - ments, Luxembourg has implemented the Cross- Border Payment Regulation (CBPR2), Directive (EU) 2015/2366 on payment services (PSD2) (see 11.1 Regulation of Open Banking ) and the SEPA Regula - tion. These rules integrate the EU payment market, enhancing the security of payment transactions and the regulation of cross-border payments. Additionally, AML/CFT standards require companies to verify iden - tities, detect suspicious activities, ensure the legiti - macy, monitoring of cross-border transactions, and sanction screenings. 6. Marketplaces, Exchanges and Trading Platforms 6.1 Permissible Trading Platforms In accordance with MiFIR/MiFID II rules, as transposed into national law, trading venues in Luxembourg can be divided into three categories: regulated markets, multilateral trading facilities (MTFs) and organised trading facilities (OTFs). Operators of a regulated market, an MTF or an OTF are subject to the authori - sation and supervision of the CSSF. The only entity authorised to operate the business of a trading venue in Luxembourg is the Luxembourg Stock Exchange, which operates the regulated market named Bourse
must be provided with a signed copy of the agree - ment. 4.3 Sources of Funds for Fiat Currency Loans Fiat loans may be funded from a variety of different sources, and, depending on the source of funds, different licensing requirements apply. Only entities authorised as credit institutions may receive deposits or other receivables from the public and grant credits for their own account. Other alternative sources of funds for fiat loans include securitisation and crowd - funding. Securitisation Luxembourg is one of the leading European centres for securitisation with a comprehensive and market- friendly legal framework. Although securitisation vehi - cles are exempt from the requirement to be author - ised as professionals performing lending operations, authorisation by the CSSF is required if the securiti - sation vehicle funds its activities by issuing financial instruments to the public on a continuous basis. Crowdfunding Crowdfunding can be a source of fiat loans, particu - larly through peer-to-peer lending. Loans funded through lending-based crowdfunding platforms ben - efit from the newly established legal framework. The EU Crowdfunding Regulation provides a harmonised EU framework for crowdfunding services provided to non-consumer project owners relating to offers for an amount of up to EUR5 million calculated over a period of 12 months per project owner. The provision of crowdfunding services is subject to a licence as a European Crowdfunding Service Provider (ECSP) and prudential supervision by the CSSF. 4.4 Syndication of Fiat Currency Loans Syndication of fiat currency loans provided by fintech companies is currently not market practice in Luxem - bourg. Loan syndication is typically used to finance larger-scale projects such as company takeovers, property projects or significant investment projects. These extensive and complex financings typically involve legacy players.
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