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Luxembourg National Risk Assessment (NRA) on Money Laundering and Terrorist Financing
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Executive Summary
This report presents the key findings of the Luxembourg National Risk Assessment (NRA) on Money Laundering and Terrorist Financing (ML/TF). The NRA was conducted in collaboration with various agencies, including financial supervisory authorities, self-regulated bodies, investigative authorities, prosecution authorities, and the Financial Intelligence Unit.
Key Findings
Threats
- Money laundering of foreign proceeds of crime: This is considered a very high-risk threat.
- Domestic exposure to money laundering: The risk assessment for domestic exposure is medium.
- Terrorism and terrorist financing: The overall threat level for terrorism and terrorist financing is moderate.
Assessment Methodology
The NRA assesses the level of inherent ML/TF risks in Luxembourg as a factor of threats and vulnerabilities. The effectiveness of mitigating factors in place is considered to determine residual risks (i.e., after mitigating factors were considered). Finally, the strategic implications for improving the AML/CFT regime in place are determined by prioritizing strategic actions and resource allocations.
Predicate Offences
The following table presents the designated predicate offences, their external exposure, domestic exposure, and overall threat level:
| Designated Predicate Offence | External Exposure | Domestic Exposure | Overall Threat Level |
|---|---|---|---|
| Money Laundering (average ML threat) | Very High | Medium | Very High |
| Fraud and Forgery | Very High | High | Very High |
| Tax Crimes | Very High | Medium | Very High |
| Corruption and Bribery | Very High | Medium | Very High |
| Drug Trafficking | High | Medium | High |
| Participation in an Organised Criminal Group & Racketeering | High | Medium | High |
| Sexual Exploitation, including Sexual Exploitation of Children | High | Medium | High |
| Cybercrime | High | Medium | High |
| Counterfeiting and Piracy of Products | High | Low | High |
| Smuggling | High | Low | High |
| Robbery or Theft | Medium | High | Medium |
| Trafficking in Human Beings and Migrant Smuggling | Medium | Medium | Medium |
| Illicit Arms Trafficking | Medium | Low | Medium |
| Insider Trading and Market Manipulation | Medium | Low | Medium |
| Illicit Trafficking in Stolen and Other Goods | Medium | Low | Medium |
| Extortion | Low | Medium | Low |
| Environmental Crimes | Low | Low | Low |
| Murder, Grievous Bodily Injury | Low | Very Low | Low |
| Kidnapping, Illegal Restraint, and Hostage Taking | Low | Very Low | Low |
| Counterfeiting Currency | Low | Very Low | Low |
| Piracy | Low | Very Low | Low |
Conclusion
The NRA concludes that Luxembourg’s ML/TF threats are primarily driven by money laundering of foreign proceeds of crime, with a very high risk assessment. The domestic exposure to money laundering is significantly smaller, with a medium risk assessment. The threats of terrorism and terrorist financing are assessed as moderate overall.
To address these risks, the NRA recommends prioritizing strategic actions and resource allocations to improve the AML/CFT regime in place. This includes enhancing the effectiveness of mitigating factors, such as customer due diligence, transaction monitoring, and reporting suspicious transactions. The NRA also emphasizes the importance of international cooperation and information sharing to combat ML/TF threats effectively.