Financial Crime World

Luxembourg Professionals Face Risk of Laundering Predicate Tax Offences

As Luxembourg’s Anti-Money Laundering (AML) law comes into effect, professionals operating in the country are under pressure to identify and report potential money laundering and predicate tax offences.

Key Requirements

According to a recent report by Loyens & Loeff, professionals subject to the AML Law must:

  • Inform the Financial Intelligence Unit (FIU) if they suspect or have reasonable grounds to suspect that money laundering, terrorism financing, or predicate tax offences are being committed.
  • Collaborate with competent authorities, including supervisory bodies and self-regulatory organizations.
  • Adhere to strict reporting requirements.

Consequences of Non-Compliance

The report highlights that there are no thresholds under which a breach of the AML Law will not be investigated or sanctioned. Even minor failures, such as:

  • Failing to establish and implement AML policies and procedures
  • Not appointing a compliance officer or person responsible for AML obligations at the level of authorized management or board of directors

can result in criminal charges.

Exemptions

Certain professionals trading in goods, art, and other activities may be exempt from the scope of application if their transactions are below specific thresholds.

Implementing an AML Compliance Program

The report emphasizes that implementing an AML compliance program is a regulatory requirement, covering aspects such as:

  • Internal policies
  • Customer due diligence
  • Record-keeping
  • Cooperation with authorities

Professionals must also appoint:

  • A compliance officer
  • A person responsible for AML obligations at the level of authorized management or board of directors

Customer Due Diligence Measures

Customer due diligence measures include:

  • Identifying customers and verifying their identity
  • Assessing the purpose of the business relationship
  • Conducting ongoing monitoring of transactions

Risks of Non-Compliance

Professionals who fail to comply with these requirements risk facing:

  • Criminal charges
  • Administrative sanctions
  • Reputational damage

It is essential for professionals operating in Luxembourg to understand and comply with the AML Law to avoid serious consequences.