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Luxembourg Bar Association Clarifies Financial Sanctions Implementation

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Contact Information

In the wake of recent international sanctions, the Luxembourg Bar Association has issued a clarification on the implementation and application of financial sanctions in the Grand Duchy.

Key Takeaways

  • Financial sanctions are binding standards for Member States.
  • The designation of States, natural and legal persons, entities or groups appearing on a list annexed to an act of the European Union or of the United Nations is made automatically by reference to that list.
  • EU Regulations, laws and Grand- Ducal Regulations have no retroactive effect.

Implementation of Financial Sanctions

Financial sanctions are imposed to prevent and counter terrorism financing, proliferation of weapons of mass destruction and other serious threats to international peace and security. The Luxembourg Bar Association clarifies that these sanctions are binding on citizens of the EU and/or natural or legal persons residing, having their registered office in the EU or operating in or from EU territory.

UNSC Resolutions and CFSP Decisions

The Luxembourg Bar Association reminds that UNSC resolutions and CFSP decisions are binding standards for Member States. These designations shall be made automatically by reference to the lists annexed to these acts.

EU Regulations, Laws and Grand-Ducal Regulations

An EU Regulation is a rule that is binding on citizens of the EU and/or natural or legal persons residing, having their registered office in the EU or operating in or from EU territory. An EU Regulation is binding in its entirety and directly applicable in all Member States without need for transposition into national law by the national authorities.

The Luxembourg Bar Association clarifies that laws and Grand- Ducal Regulations issued to implement a law become effective following their publication in the Official Gazette. These regulations can be consulted on the website of the Ministry of Finance and the CSSF.

No Retroactivity

EU Regulations, laws and Grand-Ducal Regulations have no retroactive effect.

Territoriality Clause of EU Regulations

EU Regulations should apply only in situations where links exist with the EU. The European Union will refrain from adopting legislative instruments that having extra-territorial application would be in breach of international law. In general, EU Regulations shall apply:

  • Within the territory of the European Union, including its airspace.
  • On board of any aircraft or any vessel under the jurisdiction of a Member State.

Conclusion

The Luxembourg Bar Association reminds financial institutions and professionals that it is essential to respect the binding nature of financial sanctions and to implement them correctly. Any breach of these sanctions may lead to severe consequences and reputational damage.