Financial Crime World

Luxembourg’s Financial Sector Under Fire for Fraudulent Activities

The “OpenLux” investigation, conducted by Süddeutsche Zeitung, Le Monde, and the Organized Crime and Corruption Reporting Project (OCCRP), has revealed that Luxembourg is being used as a hub for fraudulent activities. The investigation claims that Luxembourg’s lax anti-money laundering laws have made it a paradise for illicit funds.

A Hub for Illicit Funds

The investigation found that nearly 90% of registered companies in Luxembourg are controlled by non-Luxembourgers, with ownership spread across 157 countries. Some of the biggest global names, including Tiger Woods, Christiano Ronaldo, Shakira, and the King of Bahrain, were mentioned in the preliminary results. Hundreds of multinationals, such as Pfizer, Amazon, Altice, and Kering, also have a presence in Luxembourg through subsidiaries.

Tax Haven and Anti-Money Laundering Flaws

The investigation suggests that Luxembourg is operating as a tax haven, with serious anti-money laundering flaws and a majority of registered businesses being nothing more than shell companies. The country’s government has refuted the allegations, claiming it is “fully in line and compliant with all EU and international regulations and transparency standards.”

However, the investigators found that the country’s financial sector is poorly equipped to handle the volume of business it attracts. There are only 59 employees responsible for declaring the actual beneficiaries of over 100,000 entities. The Financial Sector Supervisory Commission (CSSF) has only 900 employees despite accounting for 25% of the country’s economy.

Factors Attracting Fraudulent Activities

Luxembourg’s reputation as a stable financial center and its lucrative tax policies are seen as major factors in attracting fraudulent activities. The country is also home to more than 279 billionaires listed in Forbes, making it a magnet for illicit funds.

Reactions and Concerns

The investigation has sparked outrage among anti-money laundering advocates, with German Green MEP Sven Giegold saying that Luxembourg’s continued status as a tax haven “borders on outrageous.” The findings have also raised concerns about the country’s ability to maintain effective control over financial flows and its commitment to transparency and regulatory compliance.

Key Findings

  • Nearly 90% of registered companies in Luxembourg are controlled by non-Luxembourgers
  • Ownership spread across 157 countries
  • Hundreds of multinationals have a presence in Luxembourg through subsidiaries
  • Only 59 employees responsible for declaring actual beneficiaries of over 100,000 entities
  • Financial Sector Supervisory Commission (CSSF) has only 900 employees despite accounting for 25% of the country’s economy

Quotes

  • “Luxembourg’s continued status as a tax haven borders on outrageous.” - German Green MEP Sven Giegold