Financial Crime World

Luxembourg Takes a Risk-Based Approach to Anti-Money Laundering, Cracks Down on Financial Crime

The Commission de Surveillance du Secteur Financier (CSSF), Luxembourg’s financial regulator, is taking a tough stance against money laundering and terrorist financing by adopting a risk-based approach to anti-money laundering (AML) and combating the financing of terrorism (CFT).

A Risk-Based Approach to Anti-Money Laundering

Under the CSSF’s supervision, financial institutions are required to implement a risk-based approach to allocate resources effectively against higher-risk customers and products. This means:

  • Identifying and mitigating risks associated with money laundering and terrorist financing
  • Cooperating fully with the Financial Intelligence Unit (FIU) and other competent authorities

The CSSF has the necessary powers to enforce AML/CFT compliance, including:

  • Access to documents
  • Information requests
  • On-site inspections
  • Injunctions

If financial institutions fail to comply with regulations, the CSSF can impose administrative sanctions, which may include:

  • Fines
  • Warnings
  • Occupational prohibitions

In addition, criminal courts may impose criminal penalties, including imprisonment and fines.

Professional Obligations for Financial Sector Professionals

Financial sector professionals are obligated to adhere to professional AML/CFT obligations, including:

  • Customer due diligence
  • Internal management requirements
  • Cooperation with authorities

They must also comply with EU Regulation 2015/847 on information accompanying transfers of funds, which came into effect in June 2017.

Prioritizing Efforts Against Significant Risks

The CSSF’s risk-based approach is designed to prioritize efforts against the most significant AML/CFT risks, ensuring that Luxembourg’s financial sector remains a safe and secure environment for both customers and investors. The regulator’s commitment to combating financial crime is a testament to its dedication to protecting the integrity of the industry and maintaining public trust.

By adopting a risk-based approach to anti-money laundering, Luxembourg’s CSSF is sending a strong message that it will not tolerate financial crime in the country’s financial sector. This commitment to compliance and enforcement will help to maintain public trust and ensure the integrity of the industry.