As of 22 July 2022, China and Australian regimes will be deemed ‘equivalent’ for regulatory purposes to those of EU member states for financial services offerings in the grand duchy. Photo: Ira Sokolovskaya/Shutterstock

As of 22 July 2022, China and Australian regimes will be deemed ‘equivalent’ for regulatory purposes to those of EU member states for financial services offerings in the grand duchy. Photo: Ira Sokolovskaya/Shutterstock

Luxembourg has granted far-flung countries China and Australia the right to offer financial services in the grand duchy as part of its efforts to hold its international position as a global hub for investor services.

The East Asian and Antipodean countries join Canada, Switzerland, the US, Japan, Hong Kong, Singapore, and the UK as third countries or territories deemed equivalent to European Union member states for the purposes of investment services or investment activities in Luxembourg, according to the Luxembourg financial regulator CSSF.

The move is a positive one, said Attilio Veneziano, founder of regulatory advisory Veneziano & Partners. “Businesses [in China and Australia] can now offer services to Luxembourg-based clients,” he told Delano.

However, he cautioned that services are restricted to Luxembourg and do not extend to the rest of Europe. “It’s not a passport to Europe,” he said.

Since 1979, seven Chinese banks have set up their EU hubs in Luxembourg, according to financial development institution Luxembourg for Finance. These are Bank of China, Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, China Merchants Bank, Bank of Communications and China Everbright, with Banque Internationale à Luxembourg and Hauck & Aufhauser owned by Chinese shareholders.

These Chinese banks serve China-based clients that wish to invest in Europe, as well as European clients that need financing for their activities in China, according to the .

“In addition to corporate banking services, the banks have expanded into capital market activities in Europe alongside asset and wealth management, thereby serving as a bridge connecting Europe and China,” the website reads.

Meanwhile, the National Bank of Australia has debt securities admitted to trading on the Luxembourg Stock Exchange and is subject to the supervision of the CSSF.

In 2020, Luxembourg was one of the first countries to offer the UK third-country equivalence following its departure from the European Union. The move allowed companies in the UK with clients in Luxembourg to continue providing client services despite the restrictions of Brexit.

The UK operates a similar scheme but on an exemption basis. “The UK automatically offers third countries equivalence for investment services and activities without the need to apply,” said Veneziano. “The UK has always shown this openness.”

South Korea, which is , was absent from the CSSF list. “It’s not clear whether the CSSF intend to continue widening the third-country list,” said Veneziano.

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