Luxembourg Finalizes Vertical Risk Assessment on Terrorist Financing
Strengthening Defenses Against Illicit Activities
Luxembourg has completed its first-ever vertical risk assessment on terrorist financing, a significant step in enhancing the country’s defenses against illicit activities. The assessment was conducted under the guidance of the Ministry of Justice and adopted by the Anti-Money Laundering and Terrorist Financing Prevention Committee (BC/TF Prevention Committee) on May 17, 2022.
Complementing National Risk Assessment
The vertical risk assessment complements the National Risk Assessment updated in December 2020, which concluded that threats from terrorism and terrorist financing are generally moderate. While the national risk assessment addresses both money laundering and terrorist financing risks, this vertical assessment focuses specifically on TF (Terrorist Financing).
Key Findings of the Report
- The starting point for assessing TF risk is terrorism itself: its different actors, their funding needs, and the geographical scope of their actions.
- International terrorist organizations have high financial needs.
- Non-profit organizations (NPOs) conducting development and humanitarian projects abroad present the highest level of risk.
- Retail and merchant banks, and money or securities transfer services are also vulnerable to TF.
- Private banking and investment sectors are considered less vulnerable to TF.
BC/TF Framework
The BC/TF framework is built on five pillars:
- National Strategy and Coordination: Establishing a national strategy for combating terrorist financing.
- Prevention and Supervision: Implementing measures to prevent terrorist financing and supervising financial institutions.
- Detection: Identifying suspicious transactions and activities related to terrorist financing.
- Prosecution, Investigation, and Recovery: Prosecuting individuals involved in terrorist financing, investigating their assets, and recovering any illicit funds.
- International Cooperation: Collaborating with other countries to share intelligence and best practices for combating terrorist financing.
Conclusion
The completion of the vertical risk assessment marks an important milestone in Luxembourg’s efforts to prevent terrorist financing. The report will inform future efforts to strengthen the country’s defenses against illicit activities, ensuring that Luxembourg remains a safe and secure place for its citizens and visitors.