Financial Crime World

Luxembourg’s Efforts to Combat Money Laundering Face FATF Scrutiny

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A recent report by the Financial Action Task Force (FATF) has evaluated Luxembourg’s efforts to combat money laundering and terrorist financing, highlighting several areas where improvement is needed.

Progress Made

The report acknowledges that Luxembourg has made significant progress in understanding its money laundering risks and coordinating domestically to address them. However, it was found that the authorities focus more on disrupting predicate crimes rather than targeting the laundering of their proceeds.

Challenges Ahead

  • While Australia develops good quality financial intelligence, it does not always lead to more investigations into money laundering and terrorist financing.
  • Luxembourg’s efforts to combat money laundering are hindered by a lack of focus on targeting the laundering of criminal proceeds.

FATF Recommendations

The report emphasizes several areas where Luxembourg needs to take further action to improve its compliance with international standards. These include:

Key Areas for Improvement

  • Assessing risk and applying a risk-based approach
  • National cooperation and coordination
  • Definition of money laundering and confiscation
  • Targeted financial sanctions related to terrorism and proliferation
  • Regulation and supervision of financial institutions
  • Correspondent banking, wire transfers, and reliance on third parties

Enhanced Follow-up Process

Luxembourg is now in an enhanced follow-up process, which requires regular reporting on its progress in addressing technical compliance deficiencies. However, it will not face re-evaluation until the 5th round of mutual evaluations.

FATF Vice President’s Comments

“We seek to encourage further actions in a number of areas highlighted in this report,” said Je-Yoon Shin, FATF Vice President.

Conclusion

While Luxembourg has made significant progress in combating money laundering and terrorist financing, the FATF recommendations highlight several key areas where improvement is needed. The country must continue to work towards effective prevention and combating of these illegal activities.