FINANCIAL REGULATORS DEMAND STRONGER DUE DILIGENCE OVER ASSETS
Luxembourg’s financial regulatory authorities are taking a tougher stance on companies’ due diligence practices, particularly in the areas of asset management and investments. The move aims to combat money laundering and terrorist financing (ML/TF) by requiring firms to implement robust risk appetite statements, conduct thorough ML/TF risk analyses, and perform targeted financial sanctions controls.
Mandatory Risk Assessments
According to Luxembourg Financial Regulator’s circular 19/732, all companies involved in investment activities must assess the ML/TF risks associated with each asset type. This includes:
- Performing due diligence on all types of assets, such as:
- Securities
- Structured products
- Derivatives
- Conducting thorough ML/TF risk analyses for each asset type
- Taking proportionate measures to mitigate those risks
Compliance Requirements
To ensure compliance with these regulations, companies must:
- Maintain accurate records of their AML/CFT due diligence controls
- Report any suspicious activity or transactions to the relevant authorities
- Establish a written annual AML/CTF risk analysis report detailing the results of their due diligence activities
- Review and update the report annually in response to changes in operations or market conditions
EY’s Support Services
To help companies meet these demands, EY has launched a range of services designed to strengthen AML/CFT frameworks. These include:
- Review of AML frameworks
- Gap analysis
- Remediation support
- Staff training
- Review of specific relationships
- Onboarding assistance
- Tax services
“We urge companies to be aware of the ML/TF risks associated with their investments and take proactive steps to mitigate those risks,” said [Name], Partner at EY. “Our team has extensive experience in helping companies develop robust AML/CFT frameworks and can provide support every step of the way.”
Identifying Ultimate Beneficial Owners
Regulators have also emphasized the importance of identifying Ultimate Beneficial Owners (UBOs) and assessing whether individuals are exercising control over a company through other means.
To learn more about how EY can help your company navigate these regulatory requirements, please contact [Name] at [Email] or [Phone].