Luxembourg Adopts New Framework for Financial Institution Security Measures
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The Grand Duchy of Luxembourg has implemented a new law aimed at strengthening financial institution security measures by restricting financial transactions with certain states, persons, entities, and groups. The Law of December 19, 2020, which entered into force on December 27, 2020, brings Luxembourg in line with international sanctions adopted by the United Nations and the European Union.
Key Provisions
- Comprehensive Definition: The law includes a comprehensive definition of “restrictive measures,” prohibiting financial institutions from providing services to sanctioned individuals and entities, as well as freezing their assets.
- Monitoring Compliance: Supervisory authorities and self-regulatory bodies are empowered to monitor compliance with restrictive measures, granting them broad powers similar to those provided under Luxembourg’s anti-money laundering (AML) law.
Implementation
- Grand Ducal Regulations: Restrictive measures will be implemented through Grand Ducal regulations, which must be complied with by all financial institutions operating in Luxembourg.
- Timelines: Financial institutions must apply restrictive measures within 60 days of their adoption, unless extended for an additional 30 days in exceptional circumstances.
Disclosure and Confidentiality
- Information Sharing: Financial institutions are required to inform authorities of their execution of restrictive measures and may disclose confidential information in good faith to comply with the law.
- Exception to Professional Secrecy: The new framework introduces a new exception to professional secrecy obligations for certain legal entities, allowing them to disclose confidential information for compliance purposes.
Sanctions
- Severe Consequences: Failure to comply with the law may result in severe sanctions, including imprisonment and fines of up to €5 million.
- Individual or Joint Imposition: Sanctions can be imposed individually or jointly.
For more information on this development, please contact ELVINGER HOSS PRUSSEN at www.elvingerhoss.lu or consult their website. The information provided is not intended to be a comprehensive study or legal advice and should not be treated as a substitute for specific legal advice concerning particular situations.