Financial Crime World

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CSSF Issues Circular on Anti-Money Laundering and Combating Terrorism Financing for Private Banking Professionals

The Commission de Surveillance du Secteur Financier (CSSF) has issued a circular (CSSF 18/702) providing guidelines on anti-money laundering and combating the financing of terrorism (AML/CFT) for private banking professionals in Luxembourg.

Main Points of the Circular

Risk Assessment

Private banks should conduct a thorough risk assessment to identify potential money laundering and terrorist financing risks. This includes:

  • Identifying potential risks associated with business relationships
  • Understanding the origin of funds and source of wealth
  • Documenting ultimate beneficial owners, shareholding or control structures, and rights of representation
  • Regular reassessment of business relationships

Mitigating Measures

Banks should implement effective mitigating measures to prevent money laundering and terrorist financing. These include:

  • Knowledge, critical appraisal, and documentation of the origin of funds and source of wealth
  • Documentation of ultimate beneficial owners, shareholding or control structures, and rights of representation
  • Regular reassessment of business relationships
  • Monitoring and analysis of suspicious transactions
  • Suspicious transaction reports (STRs) to be made in case of doubt
  • Involvement of group heads and coordination with head offices
  • Definition of risk appetite specific to high-risk components
  • Risk culture

Prudential Impacts

The CSSF will intervene if professionals accept risky High-Net-Worth Individuals (HNWIs) or if HNWIs seek to acquire holdings in these professionals, as this may harm the reputation of the Luxembourg financial centre.

Sanctions

Serious deficiencies will be penalized with significantly higher penalties, and sanctions will be published accordingly.

Conclusion

The circular emphasizes that private banking professionals should adopt an exemplary approach regarding AML/CFT and that the CSSF will continue to adapt its control programme to ensure compliance with regulations.