Luxembourg Toughens Enforcement of International Sanctions

Strengthening Commitment to Implementation

The Grand Duchy of Luxembourg has strengthened its commitment to enforcing international sanctions adopted at national, European, and international levels. A new law, which came into effect on December 27, 2020, aims to ensure that restrictive measures are implemented in the country’s financial sector.

Replacing the Previous Law

The Law of 19 December 2020 relating to the implementation of restrictive measures in financial matters replaces the previous Law of 27 October 2010, which was limited to combating terrorist financing. Under the new law, international sanctions resulting from UN and EU restrictive measures will be implemented through Grand Ducal regulations.

Key Provisions

• A comprehensive definition of “restrictive measures”, which prohibits providing financial services to sanctioned individuals and freezing their assets or economic resources. • Grants supervisory authorities and self-regulatory bodies broad powers to monitor compliance with restrictive measures, including on-site inspections and access to documents. • Designates specific restrictive measures by Grand Ducal regulation, either individually or through reference to a list appended to a UN or EU act.

Compliance Requirements

The law requires all Luxembourg citizens and legal entities, as well as other persons and entities operating in the country, to comply with these restrictions. Failure to do so may result in severe penalties, including imprisonment and fines.

Obligations Under the Law

• Legal entities bound to execute restrictive measures must inform the authorities of their execution. • Financial institutions are exempt from professional secrecy obligations if disclosure is made in good faith for compliance purposes.

Impact on Businesses

The law aims to enhance Luxembourg’s reputation as a reliable and compliant international financial center, and its implementation is expected to have far-reaching implications for businesses operating in the country. As such, it is essential that companies take steps to ensure they are fully aware of their obligations under the new law.

Original article published by Elvinger Hoss, March 2021

Note: This is a rewritten version of the original article and not an actual media publication.