Financial Crime World

Luxembourg’s Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) Efforts

Overview

Luxembourg has made significant efforts to combat money laundering and terrorist financing, with a strong focus on compliance and effectiveness.

Key Findings

  • Limited Land-Based Casinos: Luxembourg has only one land-based casino.
  • Main Money Laundering Threats: The main ML threat identified by Luxembourg comes from foreign predicate offences, including fraud and forgery, tax crimes, corruption and bribery, and drug trafficking.

Level of Compliance and Effectiveness

Luxembourg has strong technical compliance with the Financial Action Task Force (FATF) standards, but some reforms are too recent or require more time to become operational. While the overall effectiveness of the system is improving, changes implemented earlier have led to a greater increase in effectiveness than more recent changes.

Risk Assessment and Coordination

Luxembourg has taken steps to improve its national ML/TF risk understanding, including:

  • Conducting risk assessments and updating its National Risk Assessment (NRA)
  • Employing a sound methodology for the TF Vertical Risk Assessment
  • Triggering additional topic-focused risk assessments on terrorism financing (TF), virtual assets (VA)/VASPs, and legal persons and legal arrangements

Policy Setting and Coordination

The risk assessments informed national AML/CFT policies and activities, resulting in multiple national and agency-level action plans over the past four years. However, prioritization of action items has not been well-communicated to some government stakeholders critical to their implementation.

Key Strengths

  • Strong Domestic Coordination: Strong domestic coordination and cooperation on AML/CFT issues at both policy and operational levels.
  • Effective Risk Communication: Results of risk assessments are extensively communicated to financial institutions (FIs), designated non-financial business and professions (DNFBPs), and virtual asset service providers (VASPs) in a proactive and consistent manner.