Financial Crime World

Luxembourg Needs to Step Up Fight Against Money Laundering and Terrorist Financing, Says FATF

Introduction

Luxembourg has been commended for its solid anti-money laundering (AML) and counter-terrorist financing (CFT) framework, as well as its good understanding of money laundering and terrorist financing risks. However, the country still faces challenges in combating these financial crimes.

Assessment by the Financial Action Task Force (FATF)

According to a recent assessment by FATF, Luxembourg needs to focus more on:

  • Money laundering investigations and prosecutions
  • Asset recovery
  • Supervision of non-profit organizations and some non-financial sectors

Key Strengths

Luxembourg’s financial supervisor, the Commission de Surveillance du Secteur Financier (CSSF), has prioritized its efforts on the banking and investment sectors using a risk-based approach. The country also has:

  • A robust domestic co-operation and coordination
  • Timely access to beneficial ownership information
  • Extensive cooperation with international counterparts

Areas for Improvement

Luxembourg should focus more on sectors exposed to significant money laundering risk, including:

  • Real estate
  • Professionals offering trust and company services

The country also needs to improve the detection, investigation, and prosecution of complex money laundering cases. Additionally, while some authorities demonstrate a good understanding of terrorist financing risk, more needs to be done to develop and communicate strategies for combating this threat.

Recommendations

To further strengthen its AML/CFT framework, Luxembourg should:

  • Take a risk-based approach to its oversight of non-profit organizations
  • Improve domestic asset recovery
  • Increase awareness of terrorist financing risks within the sector

By implementing these recommendations, Luxembourg can reduce the risk of financial crime and improve its reputation as an international financial hub.

Conclusion

Despite some progress, Luxembourg still faces challenges in combating money laundering and terrorist financing. By addressing these areas for improvement, the country can further strengthen its AML/CFT framework and reduce the risk of financial crime.