Luxembourg National Risk Assessment: Methodology and Key Findings
Methodology
The Luxembourg National Risk Assessment identifies inherent risks stemming from the country’s economy, openness, and other structural factors. The assessment classifies risks ranging from “very low” to “very high,” reflecting common practices. It also considers the effectiveness of mitigating factors in place to determine residual risks.
- Threats: Individuals or groups with the potential to cause harm to society.
- Vulnerabilities: Things that can be exploited by threats.
- The assessment classifies inherent risks through a risk classification ranging from “very low” to “very high.”
- The effectiveness of mitigating factors in place is also considered to determine residual risks.
Key Findings
The Luxembourg National Risk Assessment identifies several key findings regarding the country’s exposure to Money Laundering (ML) and Terrorism Financing (TF) threats:
Primary Threats
- Money laundering: Foreign proceeds of crime, with domestic exposure being significantly smaller.
- Terrorism and terrorist financing: Assessed as moderate overall threats.
Exposure to ML/TF Threats at the Level of Predicate Offences
| Designated Predicate Offence | External Exposure | Domestic Exposure | Overall Threat Level |
|---|---|---|---|
| Money laundering | Very high | Medium | Very high |
| Fraud and forgery | Very high | High | Very high |
| Tax crimes | Very high | Medium | Very high |
| Corruption and bribery | Very high | Medium | Very high |
| Drug trafficking | High | Medium | High |
| Participation in an organized criminal group & racketeering | High | Medium | High |
| Sexual exploitation, including sexual exploitation of children | High | Medium | High |
| Cybercrime | High | Medium | High |
| Counterfeiting and piracy of products | High | Low | High |
| Smuggling | High | Low | High |
| Robbery or theft | Medium | High | Medium |
| Trafficking in human beings and migrant smuggling | Medium | Medium | Medium |
| Illicit arms trafficking | Medium | Low | Medium |
| Insider trading and market manipulation | Medium | Low | Medium |
| Illicit trafficking in stolen and other goods | Medium | Low | Medium |
| Extortion | Low | Medium | Low |
| Environmental crimes | Low | Low | Low |
| Murder, grievous bodily injury | Low | Very low | Low |
| Kidnapping, illegal restraint, and hostage taking | Low | Very low | Low |
| Counterfeiting currency | Low | Very low | Low |
| Piracy | Low | Very low | Low |
These findings suggest that Luxembourg is vulnerable to various ML/TF threats, particularly those related to money laundering of foreign proceeds of crime.