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Anti-Money Laundering and Counter-Terrorist Financing Measures in Luxembourg
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This report summarizes the key findings and recommendations from the International Monetary Fund (IMF) on anti-money laundering and counter-terrorist financing measures in Luxembourg, as part of its Financial Sector Assessment Program (FSAP).
Enforcement Measures
The Commission de Surveillance du Secteur Financier (CSSF), which oversees the financial sector, has taken dissuasive measures to address non-compliance. However, public statements on enforcement cases provide limited information.
- The Commissariat aux Assurances (CAA) has made limited use of its sanctioning power.
- Sanctions are not considered sufficiently dissuasive or effective for high-risk sectors such as real estate agents and notaries.
Transparency and Beneficial Ownership
Luxembourg requires all legal persons to register basic information in the Trade and Company Register (RCS) and beneficial ownership (BO) information in the Register of Beneficial Owners (RBE), with some exceptions. Competent authorities have demonstrated an effective use of a multi-pronged approach to verify BO information, but there is a need to improve understanding of where terrorist financing threats emanate from.
International Cooperation
Luxembourg has consistently provided constructive and good-quality mutual legal assistance, extradition, and asset recovery, including asset repatriation. However, timeliness is an issue in some cases, with approximately 30% of incoming MLA requests requiring coercive measures executed by Luxembourg in a timeframe longer than seven months.
Recommendations
The report identifies several priority actions for Luxembourg:
Strengthen the Detection, Investigation, and Prosecution of Parallel Money Laundering Investigations Related to All Higher-Risk Predicate Offenses
- Improve the effectiveness of parallel money laundering investigations related to all higher-risk predicate offenses.
- Enhance the capacity of the Asset Recovery Office (ARO), the Asset Management Office (AMO), and the Office of the Investigative Judge.
Further Develop and Disseminate Its Understanding of Terrorist Financing Risks and Vulnerabilities
- Further develop its understanding of terrorist financing risks and vulnerabilities, including misuse of legal persons for TF purposes.
- Ensure that the Ministry of Foreign Affairs develops and implements procedures to apply a risk-based approach to its oversight of the non-profit organization sector.
Effectiveness and Technical Compliance Ratings
The report assigns effectiveness ratings (HE, SE, ME, or LE) and technical compliance ratings (C, PC, LC, or NC) for each of the 12 recommendations under the International Cooperation and Technical Compliance chapters.