Luxembourg Strengthens Whistleblower Protections Amid Ongoing Corruption Scandals
Promoting Transparency and Accountability in Luxembourg’s Financial Sector
In a significant move to combat corruption and promote transparency, Luxembourg has adopted soft law measures to protect whistleblowers who report serious and legitimate concerns regarding internal governance within the credit institution, investment firm, and loan agreement sectors. These new rules guarantee professionals in these sectors the right to highlight potential irregularities without fear of reprisal.
Self-Reporting: A New Era of Cooperation
While self-reporting is not a common practice in Luxembourg, the country’s laws do provide for plea agreements. This new approach to cooperation between organizations and authorities marks a significant shift towards greater transparency and accountability.
Key Features of the New Measures
- Confidentiality will be maintained for reports made in good faith.
- Whistleblowers will not face liability for reporting potential irregularities.
- Professionals are guaranteed the right to report concerns without fear of reprisal.
Dispute Resolution and Risk Management
Luxembourg’s judicial system allows for pre-court settlements through plea bargaining or settlement agreements, which can reduce the burden on courts and promote more efficient dispute resolution. In cases of anti-corruption violations, there are no exceptions to liability, except for hospitality payments to government officials.
Compliance Procedures and Policies
Companies operating in Luxembourg must establish clear compliance policies and procedures to guarantee employees’ rights to report potential offenses. A dedicated group or service should be responsible for compliance, with record-keeping and reporting obligations also in place.
Record Keeping and Reporting
Luxembourg companies are required to submit annual accounts to the Companies Register, while Article 15 of the Commercial Code mandates a complete inventory of assets, debts, and commitments annually. Record-keeping requirements vary depending on the sector, but generally, documents must be kept for at least 10 years.
Reporting Violations: A Duty to Inform
According to Article 140 of the Criminal Code, anyone aware of a crime that could be averted must inform the authorities or risk imprisonment and a fine. Employees suspecting corruption within their company must report it to the proper authorities, as any profit gained through corruption falls under anti-money laundering regulations.
Penalties for Corruption Violations
Individuals found guilty of corruption violations may face imprisonment and fines ranging from €500 to €187,000, while companies or organizations can be subject to fines, confiscation, disqualification from public tenders, and dissolution.
Date: September 30, 2016