Luxembourg Fails to Meet Timely Sanctions Amid Financial Transparency Concerns
Luxembourg, a prominent international financial hub, has been criticized for its slow pace in imposing sanctions and maintaining lists of members and registers of shares. A recent report highlights several concerns regarding the country’s anti-money laundering (AML) and counter-terrorist financing (CFT) measures.
Timeliness Issues
According to the report, Luxembourg has consistently provided good-quality mutual legal assistance, extradition, and asset recovery over the review period. However, timeliness is an issue, with approximately 30% of incoming MLA requests requiring coercive measures taking longer than seven months to execute.
Limited Enforcement
The report also notes that limited criminal fines have been imposed for non-compliance with regulations regarding lists of members or registers of shares. This lack of enforcement has raised concerns about the effectiveness of Luxembourg’s AML/CFT measures.
Priority Actions
To strengthen its AML/CFT framework, Luxembourg must take the following priority actions:
- Strengthen Detection and Investigation: Substantially improve the detection, investigation, and prosecution of parallel money laundering investigations related to higher-risk predicate offenses.
- Enhance International Cooperation: Improve the capacity of the Asset Recovery Office, Asset Management Office, and Office of the Investigative Judge to better carry out their mandates on asset investigations and international cooperation.
- Develop Understanding of Terrorist Financing Risks: Further develop and disseminate its understanding of terrorist financing risks and vulnerabilities.
Supervision and Delays
The report also emphasizes the need for Luxembourg to:
- Improve Supervision of DNFBPs: Enhance supervision of designated non-financial businesses and professions (DNFBPs).
- Reduce Execution Delays: Take effective steps to reduce delays in executing incoming MLA requests.
Effectiveness Ratings
Luxembourg’s ratings range from Substantial to Moderate across various areas, including risk assessment, international cooperation, and preventive measures. However, the country’s technical compliance ratings are more mixed, with some areas receiving a Low rating.
Call to Action
The report calls on Luxembourg to take immediate action to address these concerns and improve its AML/CFT framework. Failure to do so could result in reputational damage and increased regulatory scrutiny from international organizations and financial institutions.