Luxembourg Enhances Enforcement of International Sanctions with New Financial Measures Checklist
Strengthening Implementation of Restrictive Measures
In a move aimed at strengthening its role in implementing international sanctions, Luxembourg has introduced a new law to enhance the enforcement of restrictive measures in financial matters within its territory. The Law of 19 December 2020 relating to the implementation of restrictive measures in financial matters came into force on 27 December 2020 and repeals the previous Law of 27 October 2010 which was limited to combating terrorist financing.
Key Provisions
The new law implements UN and EU-level sanctions against specific countries, individuals, entities, and groups, and requires:
- Luxembourg citizens and legal entities
- Other persons and entities operating in Luxembourg
to comply with these measures. Failure to do so may result in severe penalties, including:
- Imprisonment for up to five years
- Fines of up to EUR 5 million
Definition of Restrictive Measures
The law includes a comprehensive definition of “restrictive measures”, which includes:
- Prohibitions on providing financial services to sanctioned individuals or entities
- Freezing their funds, assets, or other economic resources
Supervision and Compliance
The law provides for supervision by supervisory authorities and self-regulatory bodies to ensure compliance with these measures. Designated restrictive measures are made through Grand Ducal regulations, either specifically or by reference to lists appended to UN or EU acts.
Time Limit for Implementation
The law sets a 60-day time limit for the implementation of Luxembourg-level sanctions before relevant sanctions are adopted at UN or EU level, unless an extension is granted due to special circumstances.
Obligations and Exemptions
Legal entities bound to execute these restrictive measures must inform the authorities of their execution. Certain legal entities may be exempt from professional secrecy obligations if they disclose confidential information in good faith to comply with the law.
Aims and Implications
The new law aims to strengthen Luxembourg’s role as a financial hub while also contributing to international efforts to combat terrorism, proliferation, and other threats. It is expected to have significant implications for businesses operating in Luxembourg and those dealing with sanctioned individuals or entities.