Financial Crime World

Luxembourg Takes Steps to Enhance Financial Crime Fighting Measures

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The Grand Duchy of Luxembourg has taken a significant step forward in its efforts to combat money laundering and terrorist financing (ML/TF) by publishing the revised law on restrictive measures in financial matters. This move comes after concerns were raised about the draft’s superfluous content, including insufficient protection for civil servants, ambiguity regarding sanctions, and data privacy issues.

Luxembourg’s AML/CTF Framework

In December 2016, Luxembourg enacted a law aimed at preventing tax crime, which led to the expansion of the list of predicate offenses for money laundering. The country has also published circulars listing indicators of possible tax crime for the banking and investment fund industry.

Key Developments

  • Luxembourg was evaluated by the Financial Action Task Force (FATF) in November 2022 as part of its fourth evaluation round.
  • The outcome of the evaluation and related measures for Luxembourg are expected to be announced later this year.

EU AML/CTF Package

The European Commission presented a package of four legislative proposals in July 2021 aimed at strengthening the EU’s AML/CTF framework. Three draft legislations were recently adopted by the EU, including:

Key Provisions

  • The EU “single rulebook” regulation includes provisions on conducting due diligence on customers, exchanging information on beneficial ownership, and lowering cash payment limits.
  • The 6th EU AML/CTF Directive focuses on financial intelligence units, cooperation with law enforcement agencies, and aggregating information on ownership of goods.
  • The regulation establishing the European Anti-Money Laundering Authority (AMLA) aims to monitor risks and threats within and outside the EU.

Legislative Proposals

  • The fourth legislative proposal aims to revise the Regulation on Transfers of Funds to include transfers of crypto-assets.

Outlook

Money laundering and terrorist financing are significant cross-border problems that require a coordinated effort from governments and financial institutions. Luxembourg’s efforts to strengthen its AML/CTF framework are seen as a positive step towards combating organized crime.

Key Takeaways

  • Regulatory requirements evolve, it is essential for EU member states to ensure that their national legislation aligns with EU Directives and regulations.
  • The development of EU regulations on ML/TF would provide an immediate binding character for all EU member states, reducing the risk of loopholes and inconsistencies.
  • The fight against financial crime remains a key priority for the EU, and it will be exciting to see how these developments unfold in the coming months.