Financial Crime World

Anti-Money Laundering and Counter-Terrorist Financing Measures in Luxembourg

Executive Summary

Assessment of Risk, Co-ordination and Policy Setting (Chapter 2; IO.1; R.1, 2, 33 & 34)

Luxembourg has taken significant steps to increase its national understanding of money laundering (ML) and terrorist financing (TF) risks since its last Mutual Evaluation Report (MER). The country’s first National Risk Assessment (NRA) in 2018 was followed by an update in 2020, providing a solid basis for risk understanding. These assessments led to additional topic-focused risk assessments on TF, virtual assets (VA)/VASPs, and legal persons and arrangements.

Key Strengths

  • Luxembourg has engaged with various authorities and private sector representatives, using both top-down and bottom-up approaches.
  • The risk assessments have informed national AML/CFT policies and activities, leading to multiple national and agency-level action plans over the past four years.
  • The country has implemented measures such as further harmonization of supervision, access to beneficial ownership information registers by law enforcement agencies (LEAs), and the establishment of an asset recovery office.

Areas for Improvement

  • Prioritization of action items has not been well-communicated to some government stakeholders critical to their implementation.
  • The fast-paced implementation of successive action plans required diverting resources from non-AML/CFT priorities, raising concerns about sustainability.
  • The comprehensive findings of the 2022 TF VRA have not been adequately disseminated across all authorities and the private sector.

Future Directions

To address these areas for improvement, Luxembourg should focus on:

  1. Enhancing communication among government stakeholders to ensure prioritization and effective implementation of action items.
  2. Ensuring sustainable resource allocation by balancing AML/CFT priorities with other national objectives.
  3. Widening dissemination of comprehensive findings from risk assessments across all authorities and the private sector.

By addressing these challenges, Luxembourg can further strengthen its anti-money laundering and counter-terrorist financing measures, maintaining its position as an international financial center while ensuring a safe and secure environment for its citizens and businesses.