Financial Crime World

Luxembourg’s Financial Watchdog Warns of New Risk-Based Approach to Combat Financial Crime

The Commission de Surveillance du Secteur Financier (CSSF) has issued a stern warning to all entities and individuals under its anti-money laundering and combating the financing of terrorism (AML/CFT) supervision, emphasizing the importance of adopting a revised risk-based approach to combat financial crime.

Revised Risk-Based Approach Guidelines

On October 26th, the Financial Action Task Force (FATF) released new guidelines for the securities sector aimed at supporting the effective implementation of the 2012 FATF Recommendations. The revised guidelines provide a framework for securities providers and their supervisors to design and implement a risk-based approach.

Key Takeaways

  • The revised guidelines stress the importance of considering specific risk factors and indicators of suspicious activity when conducting customer due diligence.
  • Securities providers must understand whether their customers are acting on their own behalf or as intermediaries for underlying customers, assess the risk of such intermediaries, and apply the required level of due diligence.

Importance of Risk-Based Approach

The CSSF emphasizes that a risk-based approach is crucial in the fight against financial crime. This approach is also reflected in the 4th European AML Directive implemented through Luxembourg’s Law on the fight against money laundering and terrorist financing.

Regulatory Framework

The revised FATF guidance complements Luxembourg’s existing legal and regulatory AML/CFT framework, including:

  • Article 3 of the CSSF Regulation 12-02
  • Circulars 18/698 and 17/661

It is essential to read the guidelines in conjunction with these regulations.

Accessing the Revised Guidelines

The full text of the revised FATF guidance can be accessed at http://www.fatf-gafi.org/media/fatf/documents/recommendations/pdfs/RBA-Securities-Sector.pdf.

Implementation

The CSSF urges all entities and individuals under its supervision to familiarize themselves with the new guidelines and implement them accordingly.