Financial Crime World

Luxembourg Financial Intelligence Unit Crucial in Fight Against Money Laundering and Terrorist Financing

Luxembourg has made significant strides in its anti-money laundering (AML) and counter-terrorist financing (CFT) efforts, according to a recent assessment by the Financial Action Task Force (FATF). The report highlights the country’s robust domestic cooperation and coordination, but also identifies areas where improvement is needed.

Key Strengths

  • Luxembourg’s Financial Intelligence Unit (CRF-FIU) produces high-quality financial intelligence products, with timely access to beneficial ownership information and extensive international cooperation.
  • The country has taken proactive steps to identify and investigate terrorist financing activity alongside terrorism-related investigations.

Areas for Improvement

Money Laundering Investigations and Prosecutions

  • Luxembourg needs to improve its money laundering investigations and prosecutions, particularly in complex cases.
  • Further work is needed to develop risk-based supervision of non-financial sectors such as trust and company services, real estate, and notaries.

Asset Recovery

  • The country should focus on domestic asset recovery and develop measures to remedy gaps in its targeted financial sanctions regime.

Supervision of Non-Profit Organizations and Certain Non-Financial Sectors

  • Luxembourg needs to improve the detection, investigation, and prosecution of more complex money laundering cases.
  • A risk-based approach is required for oversight of non-profit organizations, including through outreach to increase this sector’s poor understanding of terrorist financing risk.

Vulnerabilities in Banking and Investment Sectors

  • As a major international financial hub, Luxembourg is vulnerable to money laundering threats, particularly in its banking and investment sectors.
  • The country’s financial supervisor has focused on these sectors using a risk-based approach that includes off-site supervision and monitoring through on-site inspections.

Conclusion

While Luxembourg has made significant progress in its AML/CFT efforts, there are still areas where improvement is needed. By addressing these vulnerabilities and continuing to develop its Financial Intelligence Unit, the country can further strengthen its fight against money laundering and terrorist financing.