Financial Crime World

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LUXEMBOURG: Money Laundering Typologies and Enforcement

Luxembourg, a financial hub in Europe, has been increasingly scrutinized for its role in international money laundering schemes. Despite efforts to strengthen anti-money laundering (AML) laws, the country remains vulnerable to various typologies of money laundering.

Predicate Offenses

The Luxembourg Criminal Code lists several predicate offenses that can give rise to a money laundering charge, including:

  • Terrorism
  • Weapons or illegal substance trafficking
  • Certain tax offenses

A proposed bill aims to expand this list to include any crime or misdemeanor.

Money Laundering Typologies

Luxembourg authorities have identified several common money laundering typologies:

Cash-based Transactions

The use of cash to conceal the origin of funds is a significant concern in Luxembourg.

Complex Financial Structures

The use of complex financial instruments, such as trusts and shell companies, to obscure the ownership and control of assets.

Cross-border Transactions

Money laundering schemes often involve transactions between multiple countries, making it difficult for authorities to track the flow of funds.

Enforcement

The Financial Intelligence Unit (FIU) is responsible for receiving and analyzing suspicious reports related to money laundering offenses. The FIU works closely with:

  • Public prosecutor’s office
  • Police
  • Supervisory authorities

to investigate and prosecute money laundering cases.

Sanctions and Forfeiture

Money laundering is punishable by:

  • Imprisonment of up to five years
  • A fine ranging from €1,250 to €1,250,000 In addition, confiscated property can be seized and forfeited, and individuals convicted of money laundering may face:
  • Professional prohibitions
  • Business closures

Limitation Periods

The statute of limitations for money laundering offenses is five years, starting from the date of the offense or its discovery, whichever is later.

Extraterritorial Reach

Luxembourg’s AML laws have extraterritorial reach, allowing authorities to prosecute:

  • Money laundering committed by Luxembourg nationals abroad
  • Individuals found in Luxembourg who commit money laundering abroad

The proposed bill implementing Directive (UE) 2018/1673 (AMLD VI) aims to strengthen Luxembourg’s AML laws and improve international cooperation in combating money laundering.