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Luxembourg’s National Risk Assessment on Money Laundering and Terrorist Financing (ML/TF)

Executive Summary

This report provides an overview of Luxembourg’s National Risk Assessment (NRA) on Money Laundering and Terrorist Financing (ML/TF). The NRA assesses the risks of ML/TF in Luxembourg, which is considered a high-risk country due to its role as a large financial center.

Key Points

Threats

The main threats to Luxembourg are:

• Money laundering of foreign proceeds of crime
• Terrorism and terrorist financing: moderate overall risk

Vulnerabilities

The vulnerabilities that can be exploited by these threats include:

• Luxembourg’s economy and openness: a large financial center with an attractive economic model for legitimate businesses
• Its role as a large financial center: making it an attractive destination for illicit activities
• The economic model that makes it an attractive country for legitimate businesses

Risk Assessment

The NRA assesses the inherent risks in Luxembourg, which are then mitigated by various factors, such as regulations, supervisory bodies, and investigative authorities.

Classification of Risk

A classification of risk ranging from “very low” to “very high” is used, reflecting common practices. This rating should be understood as an assessment of relative risk within Luxembourg.

High-Risk Sectors

The NRA identifies the following sectors with a high risk of ML/TF:

• Money laundering: average ML threat
• Fraud and forgery
• Tax crimes
• Corruption and bribery
• Drug trafficking
• Participation in an organized criminal group & racketeering
• Sexual exploitation, including sexual exploitation of children
• Cybercrime
• Counterfeiting and piracy of products

Conclusion

The NRA provides a comprehensive overview of the risks of ML/TF in Luxembourg and identifies areas for improvement to strengthen the country’s AML/CFT regime.