AML in Luxembourg

Luxembourg boasts a robust legal infrastructure designed to combat money laundering and the financing of terrorism. Enterprises are obligated to adhere to the regulations established within this legal structure. Institutions found in breach of these regulations may face substantial punitive measures.

Consequently, businesses operating in Luxembourg are infrequently susceptible to such risks. However, a handful of instances involving corruption and money laundering have necessitated the concerted attention of both the private and public sectors to address substantial challenges. Consequently, businesses shoulder substantial responsibilities to align with legal directives and proactively mitigate the occurrence of money laundering.

Luxembourg has held its status as a FATF member since 1990.

According to the FATF’s latest Mutual Assessment Report published in 2010, assessing the implementation of anti-money laundering and counter-terrorism financing standards in Luxembourg, the country has achieved a high degree of compatibility and substantial compliance with 9 out of the total FATF 40 + 9 Recommendations. For 5 of the recommendations, it received a classification of Partially Compliant or Incompatible, encompassing 6 of the standards.

Furthermore, FATF stated in a communication issued in February 2014 that Luxembourg has taken noteworthy strides in addressing the deficiencies highlighted in the mutual assessment report of February 2010. Consequently, it was decided that Luxembourg should no longer be subjected to the routine follow-up process.

Luxembourg has enacted a range of laws and regulations aimed at combating money laundering and terrorist financing. The pivotal regulatory body overseeing these efforts is the Commission de Surveillance du Secteur Financier (CSSF), responsible for supervising lending institutions, investment firms, fund entities, and all other aspects of financial regulations.

Additionally, Luxembourg’s financial sector regulations draw extensively from EU directives, forming the basis of its primary Anti-Money Laundering (AML) and terrorist financing legislation. Originally promulgated on 7 July 1989, this law underwent two subsequent updates in 1998 and 2004. It encompasses an extensive list of predicate offenses indicative of money laundering and terrorist financing.

Another legislative instrument in Luxembourg’s anti-money laundering arsenal is the Financial Sector Act (LoFS). Designed to prevent the misuse of financial systems for money laundering activities, this law regulates whether organizations employ their financial infrastructure for such purposes.

Within the Luxembourg Ministry of Justice, the Cellule de Renseignement Financier (CRF), known as the Luxembourg Financial Intelligence Unit, was established. It is obligatory for all entities subject to regulatory compliance to generate Suspicious Transaction Reports for any transactions bearing the risk of money laundering and subsequently report them to the Cellule de Renseignement Financier (CRF).