Financial Crime World

Luxembourg Cracks Down on Money Laundering and Terrorist Financing: A Comprehensive Overview

Strengthened Anti-Money Laundering and Counter-Terrorist Financing Framework

In a bid to combat money laundering and terrorist financing, Luxembourg has significantly strengthened its anti-money laundering and counter-terrorist financing (AML/CFT) framework. According to the latest National Risk Assessment (NRA), the country faces significant threats from abroad, particularly in relation to the laundering of proceeds from predicate offences committed outside the Grand Duchy.

International Financial Centre: A High-Risk Environment

The NRA highlights that Luxembourg’s international financial centre, characterized by a large number of institutions and cross-border flows, poses inherent risks. However, the national framework has implemented mitigating factors to reduce these risks to a residual level.

  • The financial sector has a good understanding of the risks and applies AML/CFT measures consistently.
  • Supervisors have conducted over 250 on-site inspections in 2019, applying corrective measures to address approximately 300 cases of non-compliance.

International Cooperation: A Key Aspect

Luxembourg has received 1,701 requests for international mutual assistance between 2017-2019, with 362 related to money laundering. Seizures made based on these requests totalled approximately €311.5 million, compared to approximately €92.1 million seized in domestic cases.

  • The most common predicate offences linked to money laundering are fraud and forgery, tax evasion, corruption, and drug trafficking.
  • Worldwide, these four categories account for more than 70% of criminal proceeds, while at the national level, they comprise approximately 57% of CRIs received between 2017-2019 and around 45% of seizures made.

AML/CFT Measures: Effective Implementation

Holding companies, investment companies, and investment vehicles are subject to AML/CFT legislation. Professionals advising on their creation must conduct due diligence, identify beneficial owners, and report suspicious transactions.

  • The country has a comprehensive AML/CFT system, covering prevention, detection, prosecution, and asset recovery.
  • The Law of 12 November 2004 on the fight against money laundering and terrorist financing is the cornerstone of this framework, which has been continuously adapted to evolving ML/TF risks and international standards.

Financial Intelligence Unit: A Key Player

The country’s Financial Intelligence Unit (CRF) receives and analyses suspicious transaction reports, disseminating results to competent national authorities and foreign counterparts. The CRF operates a secure portal, goAML, to communicate with regulated professionals and certain authorities, has access to databases, and can freeze assets for an indefinite period or up to three months in the case of cash transport.

  • With these measures in place, Luxembourg is well-equipped to combat money laundering and terrorist financing, ensuring the integrity of its financial system.