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Luxembourg’s Struggle Against Money Laundering: Experts Call for Improvements
Luxembourg’s anti-money laundering and counter-terrorism financing framework has been deemed solid by international authorities, but the country still needs to address several areas of concern. According to a recent assessment by the Financial Action Task Force (FATF), Luxembourg must focus more on money laundering investigations and prosecutions, asset recovery, and supervision of non-profit organizations and certain non-financial sectors.
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, the Commission de Surveillance du Secteur Financier (CSSF), has prioritized risk-based supervision in these areas, but experts argue that more needs to be done to address vulnerabilities in other sectors.
Strengths and Weaknesses
One of Luxembourg’s strengths is its robust domestic cooperation and coordination, as well as timely access to beneficial ownership information. However, the country’s Financial Intelligence Unit (CRF-FIU) faces challenges in maintaining its level of human resources and adapting to increasingly complex financial intelligence products.
Recommendations for Improvement
Experts recommend that Luxembourg focus more on high-risk sectors such as:
- Real estate
- Professionals offering trust and company services
Additionally, the country should improve its detection, investigation, and prosecution of complex money laundering cases. While some authorities demonstrate a good understanding of terrorist financing risk, others argue that the country must further develop and communicate its approach to mitigating this threat.
Prioritizing Domestic Asset Recovery and Non-Profit Organization Oversight
Luxembourg also needs to prioritize domestic asset recovery, although it has shown effectiveness in responding to foreign requests for assistance. Furthermore, experts suggest that the country should take a more targeted approach to oversight of non-profit organizations, including outreach to increase awareness of terrorist financing risks.
Commitment to Combating Money Laundering and Terrorist Financing
Despite these challenges, Luxembourg remains committed to combating money laundering and terrorist financing. Proactive efforts to identify and investigate terrorist financing activity are underway, although no prosecutions or convictions have yet resulted from these investigations.