Luxembourg’s Financial Sector Embraces Best Practices in Anti-Money Laundering Efforts
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The Commission de Surveillance du Secteur Financier (CSSF), Luxembourg’s financial regulator, is committed to ensuring that the country’s financial institutions adhere to best practices in anti-money laundering (AML) and combating the financing of terrorism (CFT).
Oversight and Supervision
According to the CSSF, it is responsible for overseeing the implementation of AML/CFT obligations by all entities subject to its supervision, authorization or registration. To achieve this, the CSSF adopts a risk-based approach, ensuring that financial institutions allocate sufficient resources to mitigate higher-risk customers and products.
Cooperation with Authorities
Financial Intelligence Unit (FIU)
The regulator also emphasizes the importance of cooperation between itself and other authorities, including the Financial Intelligence Unit (FIU). The CSSF has the power to exchange information with other AML/CFT competent authorities on both national and international levels.
Supervision and Enforcement
In its exercise of duties, the CSSF is empowered to conduct off-site and on-site supervision, using a risk-based approach that takes into account the money laundering and terrorist financing risks faced by supervised entities and sectors. The regulator has access to any necessary documents and can request information from persons subject to its supervision.
Consequences for Non-Compliance
Warning or Administrative Fine
Should an entity fail to comply with AML/CFT provisions, the CSSF may issue a warning or administrative fine, and in extreme cases, impose occupational prohibitions. Additionally, criminal courts may impose sanctions for deliberate violations of the law.
Professional Obligations
Financial sector professionals are expected to adhere to professional obligations arising from AML/CFT texts, including:
- Customer due diligence
- Adequate internal management
- Cooperation with authorities
They must also comply with Regulation (EU) 2015/847 on information accompanying transfers of funds.
Support Initiatives
The CSSF has launched several initiatives to support the financial sector in implementing best practices in AML/CFT, including:
- Creation of an Anti-Money Laundering Committee
- Expert working groups focused on private banking, AML OPC, and specialized PFS
The regulator encourages professionals to refer to its FAQs on AML/CFT and applicable texts for further information.
Conclusion
By prioritizing AML/CFT efforts, Luxembourg aims to maintain a secure and trustworthy financial environment, protecting both the country’s reputation and the integrity of its financial institutions.