LUXEMBOURG Trends and Developments Contributed by: Baptiste Aubry, Carole Schmidt and Adam Obadia, A&O Shearman
Conclusion The digitalisation of Luxembourg’s banking sector offers transformative opportunities, from streamlined processes to enhanced customer experiences. However, this shift also brings complex legal and regulatory implications and increased exposure to cyberattack risks for supervised entities. The CSSF plays a critical role in guiding supervised entities through this transformation, using tools like the financial innovation hub and close supervision to foster innovation while mitigating risks. As digital transformation continues, Luxem - bourg’s legal framework must evolve in tan - dem, balancing innovation with appropriate safeguards to ensure clients’ protection and the stability of the financial sector. The regulatory guidance and insights provided by the CSSF will be essential for Luxembourg-supervised entities as they navigate the challenges and opportuni - ties of a digital future. By adhering to the regu - lator’s expectations, the Luxembourg financial sector can thrive in the digital age, bolstering its position as a secure and innovative financial hub within the EU.
law currently being discussed before the Luxem - bourg Parliament to designate the CSSF as the competent authority for MiCAR compliance, the CSSF’s supervisory approach in this field will likely evolve in the coming months. EU legislative initiatives in the financial sector Several EU proposals impacting the financial sector are currently under discussion at the EU level. Notably, the new EU payments package and the Financial Data Access Act will introduce new obligations applicable to payment service providers regarding third-party access to cli - ent payment data and a new regime for third- party access to client financial data (other than payments data) respectively. In very simplified terms, both sets of rules require secure commu - nication channels between actors of the financial sector and third parties, as well as a permission dashboard for clients to monitor and manage third-party access to their data. In this case, digi - talisation will be mandated by regulatory require - ments rather than chosen by supervised entities. Given the risks associated with increased exchanges of client data between actors of the financial sector (in particular, potential data breaches or leakages), the proper implementa - tion of these new obligations will undoubtedly attract the regulator’s attention.
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