Responsable du Contrôle (RC) & Responsable du Respect (RR)

Key Role of « RC » in the Luxembourg Compliance Framework

What is an RC ?
In the Luxembourg compliance framework, "RC" stands for "Responsable du Contrôle” de la conformité en matière de lutte contre le blanchiment d’argent which can be translated as "Person Responsible for Control" of compliance as regard to anti-money laundering.

The RC plays a key role in the Luxembourg compliance framework and is often required in regulated entities such as financial institutions, investment funds, and service providers under the supervision of the Commission de Surveillance du Secteur Financier (CSSF) or other regulatory bodies.

The RC’s main responsibilities are to oversee the entity's compliance with Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) laws and regulations in the financial sector, and to ensure that robust controls are in place.

The RC also has specific reporting duties to regulators, the board of directors, and management board, serving as the primary contact for regulators, especially for AML/CFT-related matters.

When and why might one require an RC
Entities under the supervision of the CSSF or other regulatory authorities, such as the CAA (Commissariat aux Assurances) or the AED (Administration de l’Enregistrement, des Domaines et de la TVA), must appoint an RC.

These entities typically include :
• Investment Funds (UCITS and AIFs including RAIFs)
• Management Companies (ManCos) and Alternative Investment Fund Managers (AIFM)
• Banks and Credit Institutions
• Electronic Money Institutions (EMIs) and Payment Institutions (PIs)
• Professionals of the Financial Sector (PSFs):
• Insurance and Reinsurance Undertakings
• And some Special Purpose Vehicles (SPVs) such as Securitization vehicles in specific cases.

Unregulated structures, such as holding companies (SOPARFIs), do not generally require an RC unless their activities fall under AML/CFT obligations.

What are the primary distinctions and relationship between the role of RC and other risk/compliance positions ?

RR (Responsable du Respect des obligations professionnelles en matière de lutte contre le blanchiment - person Responsible for Respect/compliance) 
The RC is responsible for implementing a robust compliance framework as regards to Anti-Money Laundering and Counter-Terrorism Financing (AML-CTF), while the RR ensures that the entity complies with laws, regulations, and professional standards on the same topics. In other words, the RR's role is to implement preventive measures and to ensure employee compliance with regulatory obligations, while the RC focuses on oversight and control.

The RC and RR roles are distinct but complementary. They work together to ensure regulatory compliance through a holistic structure.

CCO (Chief Compliance Officer)
The Compliance Officer is a broader, non-specific role responsible for an organization's overall compliance framework across multiple regulatory domains. In smaller organizations, the RC and the Compliance Officer roles might be held by the same person. In larger organizations, the RC is typically a distinct role within the compliance function.

The CCO conducts monitoring activities, ensures that employees follow compliance policies, and prepares reports. In doing so, the CCO supports both the RC and the RR by managing day-to-day compliance tasks.

Internal Audit
Often referred to as the “third line of defence”, internal audit provides an independent and critical evaluation of the compliance framework and risk management processes in place, distinct from the RC and RR and other internal control functions.

Board of directors/managers
The board bears the ultimate responsibility for ensuring that the organization complies with all regulatory and legal requirements.

Who can be RC ?
Contrary to the RR, which can be a committee (such as the board itself), the RC must be an individual. An RC must possess the following qualities:

✓ Relevant experience and understanding, particularly in the areas of compliance and financial sector.
✓ Independence and authority to execute their duties effectively.
✓ Sufficient time and resources to fulfil their responsibilities.

The appointment of an RC in the financial sector typically requires the CSSF’s approval.

Given that only entities with complex activities require a full-time RC, most RC roles are usually part-time. Outsourcing to external experts is therefore a viable option, as it provides access to the necessary expertise and experience without the need of permanent recruitment.

How can Osmia Consulting help you ?

With extensive experience in Luxembourg’s regulatory landscape, Osmia Consulting offers a diverse pool of candidates who can act as your company’s RCs, ensuring efficient and expert management of your compliance requirements