Following the on-site visit for mutual evaluation of Luxembourg made by the Financial Action Task Force (FATF) from 2 November 2022 to 18 November 2022, the FATF has published on 27 September 2023 its report on anti-money laundering and counter-terrorist financing (AML/CFT) measures in the country.
The report indicates that Luxembourg possesses overall a strong framework against money laundering and terrorist financing and that it is well-acquainted with its AML/CFT risks and it effectively collaborates with international partners. Being a major international financial hub, the country has successfully identified tax crimes, corruption and fraud as primary money laundering threats. While the banking and investment management sectors are all vulnerable to these threats, the country's financial supervisor, the Commission de Surveillance du Secteur Financier (CSSF), is highly efficient in its supervision of these sectors.
Luxembourg showcases particular strength in its domestic co-operation and international collaboration. The authorities can promptly access crucial ownership details and maintain excellent international relationships. The country's Financial Intelligence Unit, the CRF, provides comprehensive financial intelligence and collaborates seamlessly with global partners. According to the report, the response of Luxembourg's authorities to international requests, especially those concerning assets linked to overseas crimes, is commendable.
Nonetheless, the FATF suggests that Luxembourg should intensify its efforts in money laundering investigations, asset recovery, and supervision of certain non-financial sectors.
The report points out that there is a need for stronger supervision in non-financial sectors such as real estate and non-profits, which are especially vulnerable to money laundering. Enhancing strategies for detecting and addressing complex money laundering schemes is also essential. The FATF evaluation indicates that the nation should enlighten both public and private sectors about the potential misuse of its status as a global financial hub for extensive terrorist funding.
There is also a need for Luxembourg to emphasise domestic asset recovery and even though Luxembourg actively pursues terrorist financing activities, the outcomes have yet to culminated in legal actions or convictions, which is most likely due to the nation's risk disposition and other countermeasures.
To conclude the FATF's evaluation of Luxembourg's financial systems offers a largely positive outlook on the nation's efforts against money laundering and terrorist financing. The feedback serves as a constructive roadmap for Luxembourg to further bolster its standing as a responsible global financial hub and could lead to regulatory adjustments that could have implications for entities operating within Luxembourg's financial sectors.
Our dedicated teams are ready to offer guidance, insights, and support in understanding these developments and ensuring that our clients' operations remain compliant and optimised in light of any forthcoming regulatory shifts.
The full report can be accessed here.
