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Financial Crimes Reporting in Luxembourg Needs Improvement, Says Global Watchdog

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A report by the Financial Action Task Force (FATF) has highlighted areas where Luxembourg needs to improve its efforts to combat money laundering and terrorist financing. While the Grand Duchy of Luxembourg has made significant progress in implementing anti-money laundering and counter-terrorist financing measures, there are still some gaps that need to be addressed.

Luxembourg’s Financial Sector: A Major Hub for International Transactions

Luxembourg’s financial sector is a major hub for international transactions, making it vulnerable to money laundering and terrorist financing. The country has identified foreign predicate offences such as tax crimes, corruption, and fraud as its main money laundering threat.

Supervision and Regulation: Room for Improvement

While Luxembourg’s financial supervisor, the Commission de Surveillance du Secteur Financier (CSSF), has made good progress in supervising the banking and investment sectors, there is a need for more effective supervision of non-financial sectors such as real estate and notaries. Additionally, the country’s Financial Intelligence Unit, CRF-FIU, needs to ensure that it can continue to produce high-quality financial intelligence products despite limited resources.

Improving Detection, Investigation, and Prosecution

The report highlights the importance of improving detection, investigation, and prosecution of money laundering cases, particularly in complex cases. It also calls for more effective oversight of non-profit organizations and a risk-based approach to supervision of these sectors.

Combating Terrorist Financing: Areas for Improvement

Luxembourg has made significant progress in identifying and investigating terrorist financing activity alongside terrorism-related investigations, but there is still a need to improve asset recovery and the implementation of targeted financial sanctions.

Conclusion

The report concludes that Luxembourg’s authorities make good use of financial intelligence and cooperate effectively with international counterparts, but there is still more work to be done to tackle money laundering and terrorist financing. The country needs to focus on improving its domestic efforts to combat these threats, particularly in sectors that are exposed to significant risk.

Recommendations

• Improve detection, investigation, and prosecution of money laundering cases, particularly in complex cases
• Enhance supervision of non-financial sectors such as real estate and notaries
• Increase effective oversight of non-profit organizations
• Implement a risk-based approach to supervision of these sectors
• Improve asset recovery and targeted financial sanctions in combating terrorist financing