Financial Crime World

Luxembourg Takes a Proactive Approach to Anti-Money Laundering with Risk-Based Strategy

Strengthening Efforts Against Money Laundering and Terrorist Financing

Luxembourg has published a new law implementing key provisions of the 4th EU anti-money laundering directive (4th AML Directive), marking a significant step forward in its commitment to combating financial crime. The legislation comes into effect on February 18, introducing a range of measures designed to enhance the country’s risk-based approach to anti-money laundering (AML).

Key Provisions and Measures

  • New Definitions: The law introduces new definitions related to AML, including those for beneficial ownership, fiduciary arrangements, and other relevant concepts.
  • Expanded Professional Obligations: Financial institutions and professionals are now required to implement additional measures to prevent money laundering and terrorist financing.
  • Increased Transparency Requirements: The law enhances transparency requirements, making it easier to identify and report suspicious transactions.
  • Strengthened Cooperation Framework: The cooperation framework between Financial Intelligence Units (FIUs) is strengthened, enabling more effective sharing of information and coordination in AML efforts.
  • Enhanced Sanctioning Powers: Relevant authorities have increased sanctioning powers to deter and punish financial crimes.

Going Beyond the Minimum Requirements

Luxembourg has opted to go beyond the minimum requirements set out in the 4th AML Directive, incorporating recommendations from the Financial Action Task Force (FATF) not included in the directive. This proactive approach demonstrates the country’s commitment to maintaining its reputation as a secure and reliable financial hub.

Central Registers for Beneficial Owners and Fiduciary Arrangements

The law sets the stage for the establishment of two central registers:

  • Beneficial Owners of Corporate Entities: A register providing valuable insights into the ownership structures of companies operating in Luxembourg.
  • Fiduciary Arrangements: A register enabling authorities to track and monitor fiduciary arrangements, such as trusts and foundations.

Expert Insights

In a forthcoming publication, experts at [firm name] will provide a detailed overview of this new law’s key provisions and their impact on businesses operating in Luxembourg.