Financial Crime World

Money Laundering Definition and Examples in Luxembourg: What You Need to Know

Money laundering is a serious offense in Luxembourg that involves knowingly facilitating the misleading justification of the origin of income generated from criminal activities. This process makes it seem like the funds are legitimate, when in fact they are the result of illegal activity.

The Money Laundering Offence

In Luxembourg, the money laundering offence includes participating in transactions related to property that is the direct or indirect proceeds of a predicate offence. A predicate offence refers to crimes such as:

  • Drug trafficking
  • Terrorism
  • Corruption
  • Fraud
  • Weapons trafficking

Anyone who acquires, holds, or uses this property knowing it originated from criminal activities can be punished for money laundering.

Prevention Measures in Luxembourg’s Financial Sector

Professionals in the financial sector in Luxembourg are required to take measures to prevent money laundering. These measures include:

  • Identifying customers
  • Performing continued monitoring
  • Keeping records
  • Establishing internal procedures to recognize and report signs of money laundering

These measures aim to prevent criminals from using the financial system to launder their illegal profits and ensure the stability and reputation of the financial sector.

Understanding Predicate Offences in Luxembourg

In Luxembourg, any crime punishable by at least six months in prison is considered a predicate offence. This means that if you are found guilty of a crime such as drug trafficking or fraud, you can be charged with money laundering if you use the proceeds of that crime to acquire property or assets.

Terrorist Financing: What You Need to Know

Terrorist financing refers to the unlawful provision of funds or assets with the intention of using them for terrorist activities. This includes providing funds that have not been used for terrorism but are intended to be used for this purpose.

Fraud Mechanisms to Watch Out For

Investors may be exposed to various fraud mechanisms, including:

  • IT frauds
  • Pyramidal schemes
  • CEO frauds

If you suffer a loss due to one of these fraud mechanisms or a money laundering offence, you can file a complaint with the State Prosecutor or the investigating judge.

Where to File a Complaint

Complaints can be filed at:

  • The Tribunal d’arrondissement (District Court) in Luxembourg or Diekirch
  • Directly with the investigating judge
  • Any police station
  • The General Police Directorate

For more information on money laundering and fraud mechanisms, please refer to our FAQs on AML/CFT.