CRD 6 now implemented in Luxembourg

Luxembourg has now finalised the transposition of the sixth Capital Requirements Directive (Directive (EU) 2024/1619, CRD 6¹) and the EMIR 3 package (Directive (EU) 2024/2994 and Regulation (EU) 2024/2987) with the Luxembourg law of 5 May 2026, adopted by the Parliament on 30 April 2026 and published in the Official Journal on 6 May 2026 (Law)².

Apart from minor edits, the Law was essentially passed in the form as initially deposited in Parliament, thus paving the way to a faithful EU-compliant transposition.

Key highlights of the legislative process

Third-country branches (TCB): “characteristic performance” test – Even though no specific reference is made thereto in the Law, it nevertheless remains that it has been vetted during the legislative process as an additional criterion when assessing whether a TCB licence is needed. Otherwise said, in their assessment, non-EU-based entities providing core banking services to Luxembourg-based clients may also avail themselves of such additional criterion (next to all other available exemptions under CRD 6³). If the core banking activities are then assessed, on such basis, as being carried out outside of Luxembourg, this will mean that no TCB licence will be required.

Such criteria, which has long been part of the Luxembourg administrative practice and have deep roots at EU prudential level⁴, shall consequently also be given weight going forward, pending further regulatory guidance on the subject matter.

Material (corporate) operations: The only deviating element to highlight here is the 20 business days deadline⁵, within which the CSSF is required to inform the financial stakeholders of an intragroup merger/division whether it intends to proceed with a prudential assessment. Although having been flagged by the ECB as potentially being able to compromise the ability of the competent supervisory authority to exercise its full prudential discretion because of such time limit, it has been maintained to ensure a timely (and thus also, sort of a business-friendly) supervisory process.

Enhanced internal governance – Here one should wish to point out that the new governance framework introduced by CRD 6 shall be further completed, in the weeks to come, with the pending release of the new EBA internal governance guidelines, all of which shall still require also a tidying up of the internal governance related CSSF circular 12-552. Given the impact of CRD 6 on the “fit and proper” (FAP) framework, the prudential procedure for the appointment of members of the management body (MB) and key function holders (KFH) shall also be subject to a similar updating process.

Since the Law largely corresponds to the bill of law originally submitted to Parliament, we invite you to have a detailed look at our previous newsflash “CRD 6 implementation in Luxembourg: the clock has started ticking!“⁶ for an overview of the main changes introduced into the Luxembourg regulatory framework.

The new Law closely aligns the Luxembourg framework with the EU framework, thus avoiding any gold-plating in the legislative implementation process.

Entry into force and key dates

The Law entered into force on 10 May 2026. The new TCB regime is generally applicable as of 11 January 2027, with two notable exceptions:

• The TCB reporting requirements (new LFS Articles 32-14 and 32-15) entered into force retroactively on 11 January 2026. Firms with existing TCB arrangements should therefore note that these reporting obligations have been in force since that date. Under the Law, Class 1 TCBs must report at least twice a year (with first report as of 30 June 2026) and Class 2 TCBs at least once a year; and
• The grandfathering provision for existing third-country firms agreements applies as of 11 July 2026.

What should you do now?

We recommend that credit institutions, investment firms and relevant third-country entities take the following steps promptly:

• TCB: Assess whether the new TCB regime applies, identify the relevant exemptions (see above), determine the likely classification (Class 1 or Class 2), and plan for licensing and compliance well ahead of 11 January 2027. Stay tuned to any upcoming guidance on the TCB regime.
• Governance and FAP: Review and update your FAP framework, draw up, maintain and update individual statements of roles and duties (for MB, senior management and KFH) and a mapping of duties, including reporting lines and lines of responsibility of members of governance arrangements (and watch out for pending regulatory guidance on these).
• ESG risks: Integrate ESG risk identification, assessment and management into governance, risk management and disclosure frameworks across short, medium and long-term horizons, and ensure alignment with SREP expectations.

[1] Almost all of CRD VI — the separate bill of law 8705, which aims to transpose CRD VI’s governance requirements applicable to supervisors, is still under discussion.

[2] Mémorial A, n° 227. The Law amends (i) the amended Law of 5 April 1993 on the financial sector (LFS), (ii) the amended Law of 17 December 2010 on UCIs, (iii) the amended Law of 18 December 2015 on the failure of credit institutions and certain investment firms, and (iv) the amended Law of 15 March 2016 on OTC derivatives, CCPs and trade repositories

[3] Namely, when core banking services are offered in an intragroup or interbank context, when being ancillary to e.g. MiFID investment services or finally when provided on reverse solicitation basis.

[4] The explanatory memorandum to the initial bill of law referred to an interpretative note on banking services issued by the EU Commission.

[5] Introduced by the Law under Article 53-53, paragraph 2, second subparagraph, of the LFS

[6] Newsflash available here.