Luxembourg Struggles with Anti-Terrorist Financing Compliance
Combating Money Laundering and Terrorist Financing: A Daunting Task
Luxembourg has taken significant measures to ensure compliance with anti-terrorist financing regulations, but the country still faces significant risks from abroad.
National Risk Assessment Highlights Vulnerabilities
According to the latest National Risk Assessment (NRA), Luxembourg’s international financial center and open economy make it vulnerable to money laundering and terrorist financing. The report highlights that the country receives a large number of international letters rogatory aimed at seizing assets derived from predicate offenses committed abroad.
International Cooperation is Key
In 2017-2019, the judicial authorities received over 1,700 requests for international mutual assistance, with 362 related to money laundering. Seizures made based on these requests amounted to approximately €311.5 million, compared to approximately €92.1 million seized in domestic cases.
Most Frequent Predicate Offenses
The most frequent predicate offenses relate to:
- Fraud and forgery
- Tax offenses
- Corruption
- Drug trafficking
These offenses account for over 70% of criminal proceeds worldwide.
Comprehensive System to Combat Money Laundering and Terrorist Financing
Luxembourg has implemented a comprehensive system covering:
- Prevention: Identification of high-risk customers, transactions, and activities
- Detection: Monitoring of transactions and reporting of suspicious activity
- Prosecution: Criminal prosecution of money laundering and terrorist financing offenses
- Asset Recovery: Seizure and freezing of assets derived from predicate offenses
Role of the Financial Intelligence Unit (CRF)
The CRF plays a crucial role in combating money laundering and terrorist financing. It receives and analyzes suspicious transaction reports (STRs) and other information, disseminating the results of its analyses to competent national authorities and foreign counterparts.
Convictions and Asset Freezes
In 2019, 361 people were convicted for money laundering, with 217 receiving prison sentences. The CRF also has the power to freeze assets for an indefinite period of time and can freeze cash for up to three months upon request of the Customs and Excise Administration (ADA).
Challenges Remain
Despite these efforts, Luxembourg still faces significant challenges in combating money laundering and terrorist financing. The country’s financial sector supervisors have increased their level of engagement with professionals, conducting over 250 on-site inspections and applying corrective measures to address non-compliance.
Conclusion
As the country continues to grapple with these issues, it remains to be seen whether its efforts will be sufficient in preventing and prosecuting money laundering and terrorist financing offenses.