KYC: From burden to competitive advantage

Luxembourg banks have recently been criticised regarding account openings. Is this a real issue?

Hélène Lange: First, it is important to emphasise that banks want to open accounts and continue to do so. The number of newly created companies clearly shows that. That said, this does not mean there is no issue. We know that account opening processes have become more administratively complex, and this additional burden can create bottlenecks.

Amandine Laurent: The contribution from Hélène Erftemeijer, Sector Coordinator AML/CFT and Sanctions at the Dutch Banking Association, highlighted that this challenge is not unique to Luxembourg. The Netherlands faces similar issues, and we hear the same concerns from colleagues across Europe. This is clearly a European, not a local, issue, and identifying the root causes remains difficult. What is certain, however, is that operational complexity is a major contributing factor.

What is driving this tension around account openings?

Hélène Lange: When policymakers and the entrepreneurial community raised these concerns, we did not remain passive. Together with our members, we identified three main challenges.

First, regulatory constraints, particularly those related to AML/CFT obligations, remain stringent and require significant effort from banks.

Second, the complexity of certain customer profiles or structures, such as specific investment funds, makes the process more demanding.

Third, the market sometimes has only a partial view of the range of support that banks can offer to entrepreneurs and international investors.

Has the ABBL put an action plan in place?

Amandine Laurent: Absolutely. Together with our stakeholders, we decided to act on all three fronts by playing a facilitation role between supply and demand, launching educational initiatives and strengthening dialogue with the authorities.

In practical terms, the ABBL compiled a list of specialised contact persons within banks and other service providers in Luxembourg who might be interested in supporting certain types of businesses.

We also developed vademecums for commercial companies and non-profits, in close collaboration with the main banks operating in Luxembourg and with the CSSF. These guides define a standard for the documentation and information required by banks, giving businesses a reliable resource to prepare effectively.

Importantly, all these actions were carried out within a structured and highly effective dialogue with the authorities, including the CSSF, the Ministry of Finance and the Ministry of Justice. This coordinated approach has strengthened the convergence of expectations and helps ensure that practical solutions are shaped jointly, with clarity and coherence for the wider ecosystem.

Hélène Lange: The feedback on these vademecums has been extremely positive. The House of Entrepreneurship, for example, reports that project owners who use them experience a much smoother account opening process.

What further improvements do you see?

Hélène Lange: Several avenues stand out. First, stronger cooperation between public authorities, the financial sector and businesses is essential. When everyone is aligned and information circulates smoothly, the whole process becomes more efficient.

Improving access to reliable public data is another key factor, as it would help institutions verify information more quickly and avoid repetitive checks. In this regard, the presentation by Yves Gonner, Director of the LBR, was very insightful. It gave participants a clearer picture of the registry’s challenges, projects and responsibilities, as well as the limits of those responsibilities.

We also need KYC practices that are more principles based and proportionate, so that low-risk clients are not subject to the same requirements as high-risk ones. This is at the heart of our ongoing discussions with the CSSF at national level and of our advocacy efforts at European level.

Ananda Kautz: Finally, broader use of shared digital tools, such as trusted digital identities or common KYC platforms, could significantly streamline onboarding and reduce unnecessary friction. Combined, these steps can make account opening both faster and more user-friendly without compromising compliance. Our final panel, “KYC 2.0 in practice”, brought together a range of solution providers and clearly showed that viable tools already exist on the market.

What are the key takeaways from the roundtable on practical solutions?

Ananda Kautz: Three main lessons stand out. First, the sheer diversity of available solutions. Second, these solutions address different parts of the value chain and therefore complement, rather than exclude, one another. Third, the number of collaborations already in place with the banking sector contradicts the criticism and shows that traditional banks are open to working with fintechs.