Financial Crime World

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Luxembourg to Strengthen Anti-Money Laundering Measures

In an effort to combat money laundering and terrorist financing, Luxembourg is set to introduce additional legally enforceable requirements.

Enhanced AML/CFT Framework

According to FATF Recommendation 20-21, countries with insufficient anti-money laundering (AML) measures must be addressed. To comply, Luxembourg will:

  • Introduce specific requirements for business relationships with countries that do not have adequate systems in place
  • Further integrate the Financial Intelligence Unit (FIU) and law enforcement team
  • Equip the FIU with modern IT equipment necessary to run a database

Regulatory Enhancements

Regulatory authorities are expected to:

  • Provide a firm and continuing legal basis for circulars issued to ensure effective implementation of FATF Recommendations
  • Increase onsite monitoring using a risk-based approach, focusing on entities at risk from opaque corporate structures
  • Introduce specific customer due diligence requirements for trusts and other entities
  • Reassess Know-Your-Customer (KYC) and reputational risks arising from international distribution networks in the funds area

Investigations and Enforcement

Luxembourg is expected to:

  • Introduce a legal basis for wider-ranging investigations, including monitoring bank accounts and controlled deliveries in drug trafficking, money laundering, and financing of terrorism matters
  • Equip specialized law enforcement agencies with sufficient human and technological means to carry out their functions

Enhanced Cooperation on Money Laundering Issues

Luxembourg is set to strengthen its cooperation on money laundering issues by:

  • Introducing a legal basis for wider-ranging investigations, including monitoring bank accounts and controlled deliveries in drug trafficking, money laundering, and financing of terrorism matters
  • Improving mutual assistance on money laundering issues, with a focus on local prosecution of offenses even when some elements have been committed abroad

Freezing and Confiscating Terrorist Assets

To combat terrorist financing, Luxembourg is expected to:

  • Adopt a law providing adequate legal power to freeze accounts in application of UN resolutions
  • Ensure that a reporting requirement for suspicious transactions related to terrorism is included in the law

Other Recommended Actions

Luxembourg is set to:

  • Introduce requirements for inclusion of originator information on wire transfers
  • Require financial institutions and payment service providers (PSFs) to implement special measures when receiving wire transfers without such information
  • Consider introducing legal provisions to alleviate the burden of proof of the knowledge element of money laundering offenses
  • Ease the burden of proof as to the property or assets belonging to persons convicted for money laundering and/or predicate offenses

Conclusion

Luxembourg is taking steps to strengthen its anti-money laundering measures, enhance cooperation on money laundering issues, and combat terrorist financing. The country’s authorities are working towards implementing FATF Recommendations to ensure a solid legal framework and effective implementation of AML/CFT measures.

Source: Luxembourg Authorities’ Response to the Report on Observance of Standards and Codes (ROSC), October 15, 2004.