Luxembourg

New Documents

The Commission de Surveillance du Secteur Financier of Luxembourg published Circular CSSF 20/744, which complements Circular CSSF 17/650 on the application of the anti-money laundering and counterterrorist financing regulation to predicate tax offenses.

Luxembourg’s Commission de Surveillance du Secteur Financier issued a notice concerning the addition of two terrorist groups to its sanctions list following updates made by the United Nations Security Council to the sanctions established under Resolutions 1267 (1999), 1989 (2011) and 2253 (2015).

News

Enforcement Actions

The Commission de Surveillance du Secteur Financier of Luxembourg issued an administrative fine of €170,000 against the Geneva, Switzerland-based bank for violations of the anti-money laundering and counterterrorist financing rules.

Luxembourg’s financial regulator, Commission de Surveillance du Secteur Financier, issued a warning to the Luxembourg City, Luxembourg-based investment fund manager under Article 2-1, paragraph (1) and Article 8-4, paragraphs (1) and (2) of the amended money laundering and terrorist financing law.


Important Facts

  • The U.S. Department of State labels Luxembourg as a jurisdiction of primary concern. Despite being the second-smallest member of the EU, Luxembourg is one of the largest financial centers in the world. It also operates as an offshore financial center. The majority of banks registered in Luxembourg are foreign subsidiaries of banks in Germany, Belgium, France, Italy and Switzerland. While Luxembourg is not a major hub for illicit narcotics distribution, the size and sophistication of its financial sector create opportunities for money laundering, tax evasion and other financial crimes. Hundreds of well-known multinationals have secured deals in Luxembourg that allow them to legally slash their taxes in their home countries. In some cases the Luxembourg subsidiaries of multinationals, that on paper handle hundreds of millions of dollars in business, maintain only a token presence or a simple front address. The Luxembourg Freeport is a highly secure warehouse adjacent to Luxembourg Findel Airport. It offers a variety of tax advantages because the goods warehoused are technically in transit. The Freeport is often used to store art and other valuable items without having to pay customs or sales tax. The services and confidentiality make the Freeport similar to an offshore financial center. With the Law of 24 July 2015, the licensed operators of the Luxembourg Freeport are now subject to the same know-your-customer obligations that apply to other covered entities. The licensed operators of the Luxembourg Freeport are supervised by the Luxembourg Administration for Indirect Taxation for their anti-money laundering and counterterrorist financing obligations.
  • KYC covered entities:Banks and payment institutions; investment, tax, and economic advisers; brokers, custodians, and underwriters of financial instruments; commission agents, private portfolio managers, and market makers; managers and distributors of units/shares in undertakings for collective investments (UCIs); financial intermediation firms, registrar agents, management companies, trust and company service providers, and operators of a regulated market authorized in Luxembourg; foreign exchange cash operations; debt recovery and lending operations; pension funds and mutual savings fund administrators; corporate domiciliation agents, company formation and management services, client communication agents, and financial sector administrative agents; primary and secondary financial sector IT systems and communication network operators; insurance brokers and providers; management companies for reinsurance undertakings or insurance captives, run-off management companies, actuarial service providers, insurance portfolio managers, governance service providers, and insurance claim handlers; auditors, accountants, notaries, and lawyers; casinos and gaming establishments; real estate agents; high-value goods dealers; and the licensed operators of the Luxembourg Freeport
  • STR covered entities:Banks and payment institutions; investment, tax, and economic advisers; brokers, custodians, and underwriters of financial instruments; commission agents, private portfolio managers, and market makers; managers and distributors of units/shares in UCIs; financial intermediation firms, registrar agents, management companies, trust and company service providers, and operators of a regulated market authorized in Luxembourg; foreign exchange cash operations; debt recovery and lending operations; pension funds and mutual savings fund administrators; corporate domiciliation agents, company formation and management services, client communication agents, and financial sector administrative agents; primary and secondary financial sector IT systems and communication network operators; insurance brokers and providers; management companies for reinsurance undertakings or insurance captives, run-off management companies, actuarial service providers, insurance portfolio managers, governance service providers, and insurance claim handlers; auditors, accountants, notaries, and lawyers; casinos and gaming establishments; real estate agents; high-value goods dealers; and the licensed operators of the Luxembourg Freeport
  • Enhanced due diligence procedures for PEPs:Foreign:YesDomestic:No
  • Money laundering criminal Prosecutions/Convictions: Prosecutions:486: (Jan.1 – Nov. 30, 2015; Convictions:257: Jan. 1 – Nov. 30, 2015
-Source: 2016 International Narcotics Control Strategy Report (INCSR)

Rankings

FATF i

Technical Effectiveness
Compliant : 1 High :
Largely Compliant : 9 Substantial :
Partially Compliant : 30 Moderate :
Non-Compliant : 9 Low :

BASEL i

Rank : 92/141
Score : 4.74/10

TRANSPARENCY INTERNATIONAL i

Rank : 9/180
Score : 80/100

Tax Justice Network i

Rank : 6/133
Score : 55/100