Financial Crime World

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Risk Assessment Review Sparks Re-Evaluation of Compliance Measures

Luxembourg’s financial sector is undergoing a significant review of its anti-money laundering (AML) and counter-terrorist financing (CFT) compliance measures, following the release of new guidelines by the Commission de Surveillance du Secteur Financier (CSSF).

Emphasis on Risk Assessment

The CSSF has emphasized the importance of ensuring that professionals in the financial industry identify and assess the risks associated with their customers, entities, and transactions. This includes monitoring for suspicious activity and implementing robust due diligence procedures.

Identification of Politically Exposed Persons

One key area of focus is the identification of politically exposed persons (PEPs) during business relationships. Professionals are now required to carry out this assessment at least every six months, rather than just once upon initial contact.

Outsourcing Arrangements and Agency Relationships

The guidelines also stress the importance of outsourcing arrangements and agency relationships. In order to ensure compliance with AML regulations, professionals must include detailed clauses in their contracts specifying roles and responsibilities, as well as conditions for the transmission of information.

Regular Monitoring of Third-Party Delegates

The CSSF has also highlighted the need for regular monitoring of third-party delegates, such as transfer agents and portfolio managers. This includes on-site visits and sampling to verify compliance obligations.

Non-Face-to-Face Business Relationships

In addition, the guidelines emphasize the importance of taking additional measures when conducting non-face-to-face business relationships, where electronic identification means or other secure verification processes are not available.

Clarification of Roles and Responsibilities

The review has also led to a re-evaluation of the role of the “person responsible for compliance” (RR) and the “compliance officer” (RC). The RR is now required to be a member of the board of directors or authorized management, while the RC must implement AML/CFT procedures and may delegate their functions to employees with sufficient experience and knowledge.

Key Takeaways

  • Professionals must assess the risks associated with their customers, entities, and transactions
  • Politically exposed persons must be identified at least every six months
  • Outsourcing arrangements and agency relationships must include detailed clauses specifying roles and responsibilities
  • Regular monitoring of third-party delegates is required
  • Additional measures are necessary for non-face-to-face business relationships
  • The role of the “person responsible for compliance” (RR) and the “compliance officer” (RC) has been clarified

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