AGEFI Luxembourg - juin 2025

Juin 2025 19 AGEFI Luxembourg Conseil / RSE I n the complexworldof financial services, pros- pectus reviewremains one of themost intricate and often challenging obliga- tions facing fund initiators, lawyers, and compliance professionals.With regula- tory requirements conti- nuously tighteningunder EU law, the pressure todeli- ver compliant, precise, and timelydocuments has never beengreater. But as many in the industry are learning,thesolutiontotheseesca- lating challenges may lie not in increased human effort, but in a smarter,technology-enabledpro- cess. This is precisely where Arendt’s latest initiative aims to make itsmark. TheRegulatoryBackdrop: FromManual Reviewto DigitalMandates Luxembourg’s Commission de Surveillance du Secteur Financier (CSSF) recently introduced a piv- otal procedural shift: e-identifica- tion of prospectuses via eDesk, replacingthelong-standing“visa” review procedure. This isn’t just an administrative change - it rep- resents a more profound evolu- tion in howregulatory bodies are aligning with broader digital transformationgoals. Traditionally, submitting a prospectus involved a labour- intensive workflow, with repeated manual validation steps between lawfirms, clients, and the CSSF. Under the visa regime, every draft prospectus was emailed to the CSSF for prior review, and vague disclo- sures or even non-material edits could trigger requests for clari- fication, bouncing documents back into reviewcycles for days, if not weeks. Now, under the CSSF’s e-identi- fication framework, every sub- mission must pass through a structured digital process and the CSSF has clarified its expec- tations: each prospectus filed digitallymust be compliantwith applicable laws and regulations, and the managing body of the fund is responsible for ensuring that compliance. Thisprocedural shift is creating a ripple effect, promptingfirms to reassess how they manage compliance and submissions fromend to end. Arendt’sResponse: EngineeringEfficiency intoCompliance Rather than treating today’s world of ever-changing require- ments as a compliance burden, Arendt has re-engineered its internal review process to turn the challenge into a value propo- sition.Itsnewlylaunchedpractice ofissuingacompliancecertificate before a prospectus is filed digi- tally is more than just a service upgrade - it is a systematic approach to enhance prospectus reviewthatmergeslegalexpertise with process automation and document intelligence. At the heart of Arendt’s solution is a semi-automated validation engine designed to detect regula- toryinconsistenciesandnon-com- pliance before submission. This isn’t generic automation, it is specifically tuned to detect dis- crepanciesacrossUCITS,compar- ingthemagainst,interalia,thelat- est Luxembourg and European legal framework. Legal teams upload the draft documents and deliver structured feedbackhigh- lighting areas of potential non- compliance or ambiguity. This shift towards “compliance engineering” does not eliminate the role of legal expertise; it enhances it. Lawyers are freed from low-value, repetitive checks andcaninsteadfocusonnuanced legal judgements. Meanwhile, clients benefit from faster turnaround times, and a smoother path tomarket. CoreCapabilities:What the EnhancedServiceOffers Arendt’s prospectus review ser- vice now encompasses several integrated features that reflect the investment fund industry’smove towards digitalisation: - Pre-Submission Diagnostics : The system enables diagnostic checks on draft prospectuses, flagging deviations from legal or regulatory requirements, includ- ingCSSFFAQs. For example, the reviewer will bemade aware if a disclosurelacksthedepthexpect- ed for certain asset classes as compared to Luxembourg mar- ket practice. -VersioningIntelligence: Integra- tedversion control is able to track changes across draft iterations, enablingmoretransparentcollab- oration between fund managers’ operational teams andArendt. -SmartTaggingandStructuring: The tool identifies key structural elements of the document (e.g. risk factors, investment policies) and ensures they align with the content generally expected by the CSSF. -Real-TimeRegulatoryUpdates: A built-in knowledge base upda- tesinsyncwiththelatestlegaland regulatory requirements. Digital Compliance, HumanOversight What sets Arendt’s solution apart from a purely automated workflow is its hybrid model. Rather than leavingusers todeci- pher output from a black-box algorithm, every automated review is followed by a compli- ance certificate issued by Arendt’sUCITS team. This “dig- ital plus legal” model ensures that context-sensitive issues— such as whether a disclosure on sustainability risks meets expec- tationsunder the SFDR—receive the expert attention they require. Training and EcosystemSupport Technology alone doesn’t solve regulatory challenges, people mustalsounderstandandtrustit. To support adoption, Arendt focuses on core aspects, covering: -Whichdisclosuresmay trigger a CSSF challenge - What kind of disclosure is requiredinaspecificsituationand the regulatory practice applicable inLuxembourg at the time The system is designed to inte- grate with clients’ existing doc- ument management platforms, with no need to overhaul inter- nal systems or processes with their legal counsel. The philoso- phy is one of augmentation, not disruption. TheBroader Implications: RegTech as Legal Infrastructure What Arendt has developed is emblematic of a larger shift in the compliance landscape: digitalisa- tion is becoming part of legal infrastructure. As regulations become more granular and less tolerant of ambiguity, law firms andserviceprovidersareincreas- ingly expected to offer scalable, tech-driven solutions. Arendt’s enhanced review pro- cessillustrateshowsuchsolutions can be rolled out without com- promising legal rigour. Rather than treating technology as an add-on, we have embedded it directly into the legal service chain. This positions clients to both meet today’s regulatory demands and future-proof their compliance operations in an increasingly digitised ecosystem. Conclusion: Compliance as aCompetitiveAdvantage Byreimagininghowprospectuses arereviewed,Arendtisrethinking how legal compliance is approached in Luxembourg and beyond. This enhanced service offersablueprint:onewheretech- nology amplifies human exper- tise, where compliance becomes faster and more reliable, and where being “ready for review” is no longer a mad rush, but a structured, auditable process. In a financial environment defined by speed, complexity, andever-changing rules, the abil- ity to “crack the code” of regula- torycompliancewillmakethedif- ference going forward. CorinnePRINZ, Partner,Arendt&Medernach YannFIHEY, Partner,ArendtRegulatory&Consulting XavierMANGEARD, Counsel,Arendt&Medernach Pierre-YvesMAUCHARD, SeniorAssociate,Arendt&Medernach Cracking the Code: Transforming Prospectus ReviewThrough Regulatory Tech at Arendt O n 20May 2025, theABBL andALFI co-hosted a high-level event in part- nershipwith the Commission de Surveillance du Secteur Financier (CSSF) and the Banque centrale du Luxembourg (BCL), dedicated to exploring the use of artificial in- telligence (AI) across Luxem- bourg’s financial industry. Held at the Chambre de Commerce, the event brought together over 300 profes- sionals from banking, investment firms, fund management, and payments, and markedthereleaseofthesecondthematic AI report by theCSSF and the BCL. Key findings fromthe CSSF/BCLAI survey Basedonabroadandrepresentativesam- ple of over 460 financial institutions, the 2024surveyhighlightstheevolutionofAI adoption since the last edition in 2021. 1. Strong participation and maturing practices The strong response rate underlines the growing strategic relevance of AI, with a clear trend towards operational maturity, especiallyamonglargerbanksandgroup- level structures. 2.AI adoption is accelerating AIisincreasinglybeingadoptedacrossen- tities, with a notable increase in live or near-production use cases. Banks in par- ticular are leveraging AI in development orexperimentation,oftendrawingoncen- tralisedgroup expertise. 3. Generative AI surpassing traditional ML GenerativeAI (GenAI) has overtaken tra- ditionalmachinelearning(ML)intermsof reporteduse cases and institutional atten- tion. While GenAI dominates in experi- mentation and internal use, ML remains the more mature approach for risk, com- pliance, and regulatory applications. 4. Strong investmentmomentum 2024 saw a rise in investments inAI and distributed ledger technologies (DLT), withAI clearly leading the trend—espe- cially at group level. Investment plans for 2025–2026suggestcontinuedgrowth,par- ticularly inGenAI applications. 5. Use cases focused on internal effi- ciency ThevastmajorityofAIusecasesareforin- ternal optimisation rather than client-fac- ing tools. Top categories include: - Search and summarisation - Process automation - Virtual assistants and chatbots - Text content generation - aTranslation 6. LimitedGenAI governance Despite64%ofinstitutionsallowingaccess topublicGenAItools,only40%haveafor- malpolicyinplace.Creditinstitutionstend tobemorerestrictive,withoverhalfdeny- ing access to such tools entirely. 7.AIorganisationandtrainingontherise Manyinstitutions,especiallylargerbanks, have now established dedicated data sci- ence teams, mainly at group level. 84%of respondents either offer or plan to imple- ment AI-related training, though smaller entities may still face challenges in up- skilling. 8. Progress on trustworthiness The survey shows improvements in bias detection, human oversight, and cyberse- curity. Auditability and explainability, however, remain key areas to address — particularly for complexGenAImodels. 9. Data remains the primary challenge As in 2021, data remains themost signifi- cant hurdle. Respondents cited: - Data quality - Data protection -Datagovernanceasthetopthreebarriers to successfulAI deployment. 10.Awareness of regulation is growing TheAIAct isbroadlyacknowledged, but there is still a need for greater regulatory clarity, especially among non-bank insti- tutions that may lack the resources to fully engage with evolving compliance requirements. Insights from the panel discussion Adistinguishedpanelofindustryexperts shared practical insights on the realities of AI implementation. Discussions fo- cused on: Regulation, governance and culture Howto balance innovationwith compli- ance, and how to embed the right skills andmindset to scaleAI responsibly. AI literacywas also highlighted as a crit- ical element. While the vast majority of survey respondents have either already implemented or plan to implement a rangeofAItrainingprogrammesfortheir employees—particularly in view of the AI literacy obligations introduced by the AIAct—it remains unclearwhat specific expectations exist around the scope and depth of such training. Nevertheless, a general culture of AI awareness within institutions was seen as essential to support the safe and ef- fective development and internal use of AI tools. Data, technology anduse cases From legacy integration to cybersecurity, the panellists emphasised the need for: - Cross-functional collaboration -Arobust data governance framework - Trust inAI across teams -Cleaningandstructuringdataearlyinthe project lifecycle - Exploring the future impact of agentic models -Modelexchangebetweeninstitutionsfor trainingpurposes Future outlook and strategic priorities To beAI-ready, institutionsmust: - Continue investing in data quality and infrastructure - Strengthengovernance andoversight - Collaborate across the ecosystem— in- cluding regulators andvendors - Embrace a culture of experimentation and responsible innovation ABBL andAI: Strategic engagement The ABBL actively contributes to AI-re- lated developments at national and EU level. Its efforts include: -AdedicatedAI Task Force - Organising thematic conferences and workshops - Participating inEU-level consultations - Supporting digital skills development through strategic projects -ConductingstudiesonAIapplicationsin finance Download the full AI report (CSSF/BCL) : http://urlr.me/TAJqfD Source : ABBL The use of AI across Luxembourg’s financial industry