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One of the key principles of Luxembourg financial regulation is the obligation of professional secrecy ("banking secrecy") laid down in Article 41(1) of the 1993 Financial Sector Act (a similar obligation exists for insurance companies). Outsourcing arrangements and especially IT outsourcing operations which can lead to the disclosure of confidential data and thus to a potential breach of the "banking secrecy", are subject to rather strict conditions.
Article 41(5) of the 1993 Financial Sector Act provides for an explicit exception to the banking secrecy on the basis of which outsourcing for financial service providers can in principle only be carried out by credit institutions and duly authorised "support" financial service providers under a service agreement. A...
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