Financial Crime World

Illicit Trade and Financial Flows: A Growing Concern in Luxembourg

Introduction

The Commission de Regulation du Secteur Financier (CRF) has released its 2020 Annual Report, revealing a significant increase in illicit trade and financial flows in the country. The report highlights the growing concern of money laundering through various channels.

Blocking Measures on the Rise

  • In 2020, the CRF took 291 blocking measures, a significant increase from 89 in 2019.
  • The majority of these measures were linked to fraud cases, with 87 instructions issued compared to 48 in 2019.
  • The total amount blocked was EUR 223,924,013.

Banks and Virtual Asset Service Providers Under Scrutiny

  • The number of declarations received from traditional banks decreased slightly in 2020, while the number of declarations from virtual asset service providers (VASPs) increased significantly.
  • VASPs have been added to the list of professionals subject to the AML Law, and the CRF has received declarations from institutions active in virtual currencies since 2016.

Corruption and Criminal Tax Offenses on the Rise

  • Corruption declarations continued to increase in 2020, with 210 reports filed compared to 82 in 2018.
  • The significant growth can be attributed to negative press articles and increased vigilance among professionals regarding suspicious transactions.
  • Criminal tax offenses also remained a major concern, with 222 suspicious transaction reports filed in 2020.
  • The CRF noted that criminal tax offenses are at the top of the list of primary reported offenses, highlighting sound awareness of this risk.

Referral to Prosecution

  • In 2020, the CRF sent 197 spontaneous reports to prosecution teams, a decrease from 219 reports in 2019.
  • However, the report does not provide insights into how many of those reports led to successful prosecutions.

Conclusion

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The CRF’s 2020 Annual Report highlights the growing concern of illicit trade and financial flows in Luxembourg. While there has been a decrease in the total number of reports, criminal tax offenses and fraud remain areas where banks and insurers have reported the highest number of reports. The addition of VASPs to the list of professionals subject to the AML Law is expected to lead to further growth in this area.

Accessing the Report

The full 2020 CRF Annual Report can be accessed here.