Financial Crime World

Luxembourg Takes a Stand Against Terrorist Financing

In an effort to combat the growing threat of terrorist financing, Luxembourg has established a robust framework to prevent and detect such activities. At the forefront of this initiative is the Directorate for Combating Money Laundering and the Financing of Terrorism (AML/CFT Directorate), a department within the Ministry of Justice.

A Key Player in International Cooperation

As a member of the Financial Action Task Force (FATF), Luxembourg actively participates in global efforts to develop international standards on combating money laundering and terrorist financing. The AML/CFT Directorate also leads and coordinates the preparatory work for mutual evaluations, ensuring that Luxembourg meets its obligations under FATF regulations.

Key International Initiatives

  • FATF Membership: Luxembourg is an active member of the Financial Action Task Force (FATF), a global intergovernmental organization that sets standards and promotes effective implementation of legal, regulatory, and operational measures for combating money laundering and terrorist financing.
  • Mutual Evaluations: The AML/CFT Directorate leads and coordinates the preparatory work for mutual evaluations, ensuring that Luxembourg meets its obligations under FATF regulations.

National Coordination and Risk Assessment

At the national level, the AML/CFT Directorate acts as the Executive Secretariat of the Committee for the Prevention of Money Laundering and Terrorist Financing and the Inter-ministerial Steering Committee for the Fight Against Money Laundering and Terrorist Financing. It also leads and coordinates the work of updating the national AML/CFT risk assessment, conducting “vertical” risk assessments on specific topics.

National Coordination

  • Committee for the Prevention of Money Laundering and Terrorist Financing: The AML/CFT Directorate acts as the Executive Secretariat of this committee, which oversees the implementation of Luxembourg’s anti-money laundering and counter-terrorism financing (AML/CFT) framework.
  • Inter-ministerial Steering Committee for the Fight Against Money Laundering and Terrorist Financing: The AML/CFT Directorate leads and coordinates the work of this committee, which brings together representatives from various government departments to address AML/CFT issues.

Legislative Framework

The AML/CFT Directorate contributes to the legislative texts concerning the fight against money laundering and terrorist financing, including the transposition of relevant directives from the European Union. It participates in the negotiation of regulations and directives forming the “anti-money laundering and anti-terrorist financing package” proposed by the Commission.

Legislative Contributions

  • Transposition of EU Directives: The AML/CFT Directorate contributes to the implementation of EU directives related to AML/CFT, ensuring that Luxembourg’s legislation is in line with European standards.
  • Negotiation of Regulations and Directives: The AML/CFT Directorate participates in the negotiation of regulations and directives forming the “anti-money laundering and anti-terrorist financing package” proposed by the Commission.

Publications and Guidelines

The AML/CFT Directorate publishes a range of documents, including risk assessments, guidelines, and best practices, to support the fight against money laundering and terrorist financing. These publications are available in both English and French.

Notable Publications

  • National Risk Assessment of Money Laundering and Terrorist Financing 2020 (NRA 2020): This report provides an overview of the main risks related to money laundering and terrorist financing in Luxembourg.
  • Vertical Risk Assessment on Terrorist Financing 2022 (VRA TF 2022): This report focuses specifically on the risk of terrorist financing in Luxembourg, identifying potential vulnerabilities and areas for improvement.

EU and FATF Reports

The AML/CFT Directorate also provides access to EU and FATF reports, including:

EU and FATF Resources

  • Report on the Assessment of ML/TF Risks Affecting the Internal Market and Relating to Cross-Border Activities: This report assesses the risks related to money laundering and terrorist financing in the European Union.
  • Press Release: Beating Financial Crime: Commission Reforms AML/CFT Rules: This press release provides an overview of the European Commission’s efforts to strengthen the EU’s AML/CFT framework.
  • FATF Recommendations: The FATF recommends a set of measures for countries to implement in order to combat money laundering and terrorist financing.
  • Methodology for Assessing Technical Compliance with the FATF Recommendations and the Effectiveness of AML/CFT Systems: This methodology provides guidance on how to assess compliance with FATF recommendations and the effectiveness of AML/CFT systems.
  • Procedures for the FATF Fourth Round of AML/CFT Mutual Evaluations: These procedures outline the steps involved in conducting mutual evaluations under the fourth round of AML/CFT assessments.

By implementing these measures, Luxembourg demonstrates its commitment to combating terrorist financing and protecting the integrity of its financial system.