Financial Crime World

Luxembourg Cracks Down on Terrorist Financing with Stricter Compliance Measures

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The Commission de Surveillance du Secteur Financier (CSSF) has taken a firm stance against anti-terrorist financing (ATF) in Luxembourg, emphasizing the importance of compliance among financial sector professionals.

AML/CTF Compliance Obligations

As part of its statutory mission, the CSSF ensures that all supervised entities comply with professional obligations related to Anti-Money Laundering/Combating the Financing of Terrorism (AML/CTF). Financial sector professionals are required to fully cooperate with the CSSF and the Financial Intelligence Unit (FIU), exchanging information as necessary to perform their duties.

Risk-Based Approach

To achieve this goal, the CSSF adopts a risk-based approach, allocating resources and attention to customers and products that pose higher risks. The regulator takes steps to prevent individuals linked to organized crime from gaining control over supervised entities.

Supervision and Enforcement

The CSSF’s supervision is based on a risk-based approach, taking into account the money laundering and terrorist financing risks faced by supervised entities and sectors. This includes off-site and on-site supervision to ensure compliance.

  • The CSSF has broad powers under the Law of 12 November 2004 on the fight against money laundering and terrorist financing.
  • These powers include access to documents, summoning individuals, and carrying out inspections.
  • The regulator can also issue injunctions, administrative sanctions, warnings, reprimands, fines, or occupational prohibitions for non-compliance.

Obligations for Financial Sector Professionals

Financial sector professionals are obligated to comply with professional AML/CTF obligations, including:

  • Customer due diligence
  • Adequate internal management requirements
  • Cooperation with authorities

They must also adhere to Regulation (EU) 2015/847 on information accompanying transfers of funds, responding promptly to requests from competent authorities.

Importance of Compliance

The CSSF emphasizes the importance of compliance, stressing that failure to comply may result in administrative or criminal sanctions. The regulator encourages financial sector professionals to familiarize themselves with AML/CTF requirements and guidelines, available on its website.