Financial Crime World

Luxembourg Faces Scrutiny for Money Laundering Schemes

Weaknesses in Combatting Money Laundering and Terrorist Financing Revealed

A recent Mutual Evaluation Report conducted by the Financial Action Task Force (FATF) and the Asia-Pacific Group on Money Laundering (APG) has highlighted several areas of concern regarding Luxembourg’s efforts to combat money laundering and terrorist financing.

Weaknesses Identified in Risk Assessment and Monitoring Procedures

  • Luxembourg has a good understanding of its money laundering risks, but lacks a comprehensive approach to addressing these risks.
  • Authorities focus more on disrupting predicate crimes rather than targeting the laundering of criminal proceeds and their confiscation.

Quality Financial Intelligence Not Always Leading to Investigations

  • While Luxembourg develops good quality financial intelligence, it does not always lead to ML/TF investigations.
  • Internal controls and foreign branches and subsidiaries require improvement.

Enhanced Follow-up Process Underway

Luxembourg is currently undergoing an enhanced follow-up process to address technical compliance deficiencies identified in the report. However, this process does not assess the effectiveness of the country’s actions to combat money laundering and terrorist financing.

Urgent Action Required by FATF

The FATF has urged Luxembourg to take further action in several areas, including:

  • Enhancing its risk assessment and monitoring procedures
  • Improving internal controls and foreign branches and subsidiaries
  • Increasing cooperation with other countries to combat money laundering and terrorist financing

Concerns About Effectiveness of Anti-Money Laundering Measures

The report’s findings have raised concerns about the country’s ability to prevent and detect money laundering schemes. The government has promised to address these issues, but the effectiveness of its efforts remains to be seen.

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