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Luxembourg’s Fight Against Money Laundering: A Comprehensive Overview

Luxembourg has taken a robust approach to combating money laundering by implementing a comprehensive legal framework that criminalizes various aspects of this financial crime.

Definition of Money Laundering

According to Article 506-1 of the Criminal Code and Article 8-1 of the Drug Act, money laundering is defined as knowingly facilitating, by any means, the false justification of the nature, origin, location, disposition, movement or ownership of criminal property.

Prosecution of Natural and Legal Persons

Both natural and legal persons can be prosecuted for money laundering. Legal persons can be held criminally liable where a crime or misdemeanor is committed on their behalf and in their interest. Additionally, legal persons may also be held criminally liable where a lack of supervision or control by one of their representatives makes possible the commission of a crime or misdemeanor.

Material and Moral Element

The offence of money laundering requires both a material and moral element. The material element is established by the realization of a transaction on criminal property, which is the direct or indirect proceeds of a predicate offence listed in the Criminal Code or Drug Act. Meanwhile, the moral element requires that the offender be aware of the fraudulent origin of the property.

Predicate Offences

Any asset being the object or proceeds of a predicate offence can form the basis of a money laundering offence, including pecuniary advantages deriving from the offence and revenues generated by these assets themselves. Predicate offences include acts of terrorism, weapons or illegal substances trafficking, certain tax offenses, among others.

Sanctions

Money laundering is sanctioned by imprisonment up to five years and a fine ranging between €1,250 and €1,250,000. Other possible sanctions include the confiscation of criminal property, professional prohibitions, and the closing of business.

Financial Intelligence Unit (FIU)

The FIU plays a crucial role in identifying suspicious transactions and transmitting such information to competent or judicial authorities. The FIU may also order the blocking of suspicious transactions and seize property that is believed to be connected to money laundering.

Investigations

In addition, the investigating judge can order the release or partial release of seized property at any time during an investigation. If a person is convicted, the seized property may then be confiscated and returned to the victim of the offence.

Limitation Period

Money laundering prosecutions are subject to a five-year limitation period, which commences from the date of commission of the act. However, this period can be postponed in cases where the predicate offence was committed clandestinely until the discovery of the offence.

Extraterritorial Reach

Luxembourg’s money laundering laws have extraterritorial reach, allowing authorities to prosecute money laundering against Luxembourg nationals, regardless of where the crime is committed, and anyone found in Luxembourg who commits the crime outside of the country. However, for predicate offences committed in a foreign country, it is necessary that the predicate offence is also incriminated in such foreign country for the money laundering offence to be prosecuted.

Future Developments

A bill implementing Directive (UE) 2018/1673 (AMLD VI) is currently under discussion at the Luxembourg Parliament and may affect the above answer.