Anti-Money Laundering and Counter-Terrorist Financing Measures in Luxembourg
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Executive Summary
This report evaluates Luxembourg’s compliance with international standards on anti-money laundering (AML) and counter-terrorist financing (CFT) measures from 2021 to 2022. The assessment identifies areas of improvement and provides recommendations for strengthening Luxembourg’s AML/CFT framework.
Key Findings
- Risk Assessment: Luxembourg has made significant progress in identifying and assessing terrorist financing (TF) risks but needs to improve its understanding of where these threats emanate.
- Enforcement Measures: The CSSF has used enforcement measures, but public statements on enforcement cases provide limited information, impacting effectiveness. Sanctions are not considered dissuasive for the REAs and notaries sectors.
- Transparency and Beneficial Ownership: Luxembourg has a good understanding of how legal persons can be misused for money laundering (ML) purposes but needs to improve its risk analysis focusing on higher-risk categories used by non-profit organizations (NPOs).
- International Cooperation: Luxembourg consistently provides constructive mutual legal assistance, extradition, and asset recovery, including repatriation. However, timeliness is an issue in some cases.
- Recommendations: Luxembourg should strengthen the detection, investigation, and prosecution of parallel ML investigations related to higher-risk predicate offenses, enhance the capacity of the Asset Recovery Office (ARO), Asset Management Office (AMO), and Office of the Investigative Judge, develop its understanding of TF risks and vulnerabilities, and ensure that all public and private stakeholders have a better understanding of TF risk.
Effectiveness Ratings
| Category | Rating |
|---|---|
| Risk Assessment | High (HE) |
| Enforcement Measures | Low (LE) |
| Transparency and Beneficial Ownership | Moderate (ME) |
| International Cooperation | High (HE) |
Technical Compliance Ratings
| Category | Rating |
|---|---|
| Legal Framework | Compliant (C) |
| Regulated Sector Supervision | Largely Compliant (LC) |
| Customer Due Diligence | Compliant (C) |
| Reporting Requirements | Compliant (C) |
Conclusion
Luxembourg’s AML/CFT framework requires improvement to effectively combat ML and TF threats. The report emphasizes the need for Luxembourg to address identified weaknesses and strengthen its capacity to detect, investigate, and prosecute parallel ML investigations related to higher-risk predicate offenses.