Financial Crime World

Luxembourg’s Financial Sector Exposed to Money Laundering Schemes

The Growing Concern of Money Laundering

Money laundering, a criminal offense that involves disguising the source of illegally obtained funds, has been a growing concern in Luxembourg’s financial sector. Like many other countries, Luxembourg has implemented measures to combat money laundering and terrorist financing.

Definition of Money Laundering

According to experts, money laundering is defined as an offense that consists of knowingly facilitating, by any means whatsoever, the misleading justification of the origin of the direct or indirect income of the perpetrator of a crime or an offense. This includes participating in transactions that disguise the source of funds or converting criminal proceeds into legitimate assets.

Methods Used to Launder Money

Criminals use various methods to launder money, including:

  • Introducing illegal funds into the financial system
  • Disguising the source of funds through complex financial transactions
  • Converting criminal proceeds into legitimate assets

To combat this threat, Luxembourg has imposed professional requirements on institutions in the financial sector, such as:

  • Identifying customers and monitoring transactions
  • Keeping records and establishing internal procedures to recognize and report suspicious activity
  • Implementing anti-money laundering (AML) and combating the financing of terrorism (CFT) measures

Consequences of Money Laundering

Money laundering is punishable by imprisonment and/or a fine. The offense can be committed even if the underlying crime was committed abroad. In addition to money laundering, Luxembourg has also criminalized terrorist financing, which involves providing funds or assets with the intention of supporting terrorist activities.

How Investors Can Protect Themselves

Investors may be directly exposed to fraud mechanisms, including:

  • IT frauds
  • Pyramidal schemes
  • CEO frauds

If an investor suffers a prejudice as a result of one of these mechanisms or a money laundering offense, they may lodge a complaint with:

  • The State Prosecutor
  • The investigating judge
  • Any police station
  • The General Police Directorate

Additional Resources

For more information on this topic, including examples of fraud mechanisms and how to file a complaint, please refer to our FAQs on AML/CFT.