Ukrainian refugees: what proof of identity for client onboarding purposes?

The CSSF firstly wishes to emphasise the importance of applying the risk-based approach as recalled in article 3 (2a) of the Law of 12 November 2004 on the fight against money laundering and terrorism financing (“ML/TF”), further described with regard to clients’ risks in articles 4 to 7 of CSSF Regulation N°12-02 on the fight against ML/TF. Having taken into consideration the aforementioned provisions, the level of risk of each customer must be assessed according to a coherent combination of risk factors defined by each professional according to its activity, additionally being inherent to the following risk categories:

1. Type of customers (including the customer, proxy, beneficial owner)
2. Countries and geographical areas (of relevance here)
3. Products, services, and transactions (also of relevance)
4. Delivery channels

Abiding to the risk-based approach makes it possible for professionals to adjust or even simplify their due diligence measures should they identify lower ML/TF risks. One may wish to refer to article 26a of CSSF Regulation N°12-02 as well as to CSSF Circular 21/782 (adopting the EBA Guidelines on ML/TF risks factors) to be provided with examples of simplified due diligence measures.

As regards the acceptance of the certificate of beneficiary of temporary protection issued by the Ministry of Foreign and European Affairs (Luxembourg), even if the certificate expressly states that it does not constitute a document attesting the identity of the person concerned1, it is nonetheless subject to specific conditions which have been verified by the competent authorities. According to a confirmation made by the Ministry of Foreign and European Affairs, this certificate serves as an official document (i.e., a “valid authentic official identification document issued by a public authority” if one was to refer to the wording of article 18 of CSSF Regulation N°12-02).

The CSSF therefore considers that the certificate of beneficiary of temporary protection, even if not being considered as a formal identification document, could be used for customers’ identification purposes in the absence of other official documents of identification, with a view to open a bank account to such Ukrainian refugees.

Reference could be made to article 26a of CSSF Regulation N°12-02 (in case of a justified low AML/CFT risk) referring to “the exceptional acceptance of other types of ID documents which meet the criteria of reliable and independent sources, for example a letter addressed to the customer by a governmental body or other reliable public body, where the customer cannot provide the usual identification documents and, insofar as there are no grounds for suspicion”.

Vis-à-vis the type of account to be opened, Directive 2014/92/EU2 provides that a payment account with basic features, i.e., offering the necessary services for daily life, should be opened to consumers while respecting the AML/CFT requirements. Notwithstanding this right to an account with basic features, the services that can be offered in this context would therefore be limited and present a low risk in terms of products, services and transactions.

As to the question of the address and the tax residence to be retained, without prejudice to any guidance of the “Administration des Contributions Directes” in this regard, the CSSF deems essential that the credit institution can contact the account holder at the Luxembourg address at which s/he resides (e.g., household, stay in a private home), even if only temporarily, in addition to his/her official address in Ukraine.

To establish the tax residence, and the impact of the address to be used, kindly note that:

• the usual criteria for determining whether Ukrainian refugees would be tax residents in Luxembourg (for instance, a home/habitual residence in Luxembourg, 6 months of material presence) are currently not met, but this will vary according to the length of their stay
• to obtain the certificate of beneficiary of temporary protection, individuals must prove their residence in Ukraine or their family ties.

It is being reminded that all customer due diligence measures, especially those pertaining to the identification and the verification of customers’ identity are being clearly summarised in part 2, chapter 2 of the ABBL handbook on AML/CFT.

Shall a credit institution have carried out its own risk assessment and set-up the appropriate mitigation measures3, the CSSF does not object to the opening of a payment account with basic features based on the certificate of beneficiary of temporary protection for Ukrainian refugees arriving in Luxembourg without an official identification document but benefiting from a temporary protection status.

By Julien Leroy, Senior Legal Adviser