|
|
Sanctions:
As a member of the EU, the country is party to all EU Sanctions
as well as UN sanctions.
____________________________________________________
Offshore Jurisdiction Blacklists:
As a recognised offshore finance jurisdiction this country may fall
under various country offshore jurisdiction blacklists.
____________________________________________________
US State Department Money Laundering Report - 2012:
Despite its standing as the second-smallest member of the
European Union (EU), Luxembourg is one of the largest financial
centers in the world. It also operates as an offshore financial
center. Although there are a handful of domestic banks operating
in the country, 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.
Do Financial Institutions engage in currency transactions related
to international narcotics trafficking that include significant
amounts of US currency; currency derived from illegal sales in the
U.S.; or that otherwise significantly affect the U.S.: NO
Criminalization of Money Laundering:
“All serious crimes” approach or “list” approach to predicate
crimes: Combination of listed crimes and a penalty threshold
Legal persons covered: criminally: YES civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES
Domestic: NO
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 networks
operators; insurance brokers and providers; auditors,
accountants, notaries, and lawyers; casinos and gaming
establishments; real estate agents; and high value a goods
dealers
Suspicious Transaction Reporting (STR) Requirements:
Number of STRs received and time frame: 7,741 as of November
2011
Number of CTRs received and time frame: Not applicable
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 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 networks
operators; insurance brokers and providers; auditors,
accountants, notaries, and lawyers; casinos and gaming
establishments; real estate agents; and high value goods dealers
Money Laundering Criminal Prosecutions/Convictions:
Prosecutions: 127 as of November 2011
Convictions: 77 as of November 2011
Records exchange mechanism:
With U.S.: MLAT: YES Other mechanism: YES
With other governments/jurisdictions: YES
Luxembourg is a member of the Financial Action Task Force
(FATF). Its most recent mutual evaluation can be found here: http:
//www.fatf-gafi.org/infobycountry/0,3380,
en_32250379_32236963_1_70591_43383847_1_1,00.html
Enforcement and implementation issues and comments:
During 2011, competent authorities were busy implementing the
comprehensive package of legislative and administrative actions
that were put in place in 2010, notably the Law of October 27,
2010. This law introduces important changes to AML/CFT
provisions and prescribes changes to 20 existing pieces of
legislation. Most visibly, the financial intelligence unit (FIU)
expanded its capabilities through the hiring of additional analysts
and continued preparations for an enlargement of the FIU
premises. Nevertheless, state prosecution officials have called
publicly for further resources, notably more analysts. In response
to these requests, the Ministry of Justice has pledged to continue
supporting the state prosecution, and the FIU in particular, with
the level of resources needed to fulfill its responsibilities. In terms
of quantitative data, the number of transaction reports, money
laundering criminal prosecutions, and convictions has risen in
comparison to 2010 following the systematic implementation of the
new legislation.
____________________________________________________
US State Dept Narcotics Report 2011 (introduction):
No report available
____________________________________________________
US State Dept Trafficking in Persons Report 2011
(introduction):
(Tier 1)
Luxembourg is a destination country for women from Africa
(primarily Nigeria) as well as Kazakhstan, Bulgaria, Russia,
Ukraine, Brazil, France, and Belgium who are subjected to forced
prostitution. Authorities report that forced labor among foreign
migrants is likely also a hidden problem. According to local
experts, unaccompanied children who are asylum seekers or
refugees and without legal status are particularly vulnerable to
sexual exploitation. Adult victims of sex trafficking in Luxembourg
are sometimes recruited by agents in their home countries for
work in Luxembourg’s cabarets, and subsequently forced into
prostitution. According to a 2010 media report, women in
prostitution in Luxembourg are often controlled by pimps and
some of these women are likely trafficking victims; the majority of
women in street prostitution are Nigerian. According to a 2010
ECPAT report, exploitation of children in Luxembourg primarily
involves prostitution through illegal escort services, and in hotels,
parked cars, private houses, and in illegal private clubs in the
country.
The Government of Luxembourg fully complies with the minimum
standards for the elimination of trafficking. During the year, the
government prosecuted and convicted four trafficking offenders
and referred identified trafficking victims for basic services. The
government, however, failed to fully implement a March 2009 law
to formalize specialized and comprehensive assistance for
trafficking victims and it did not implement proactive identification
and referral procedures, a standing deficiency in Luxembourg.
For full report click here
____________________________________________________
US State Dept Terrorism Report 2009
No report available
____________________________________________________
AML News / Updates / Relevant Info
AML information update and economic overview extracted from
IMF Report on Luxembourg
Read Extract (internal link)
Links:
Worldwide AML Legislation (International Bar Association)
Cellule de Renseignement Financier (FIU-LUX)
As a member of the EU, the country is party to all EU Sanctions
as well as UN sanctions.
____________________________________________________
Offshore Jurisdiction Blacklists:
As a recognised offshore finance jurisdiction this country may fall
under various country offshore jurisdiction blacklists.
____________________________________________________
US State Department Money Laundering Report - 2012:
Despite its standing as the second-smallest member of the
European Union (EU), Luxembourg is one of the largest financial
centers in the world. It also operates as an offshore financial
center. Although there are a handful of domestic banks operating
in the country, 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.
Do Financial Institutions engage in currency transactions related
to international narcotics trafficking that include significant
amounts of US currency; currency derived from illegal sales in the
U.S.; or that otherwise significantly affect the U.S.: NO
Criminalization of Money Laundering:
“All serious crimes” approach or “list” approach to predicate
crimes: Combination of listed crimes and a penalty threshold
Legal persons covered: criminally: YES civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES
Domestic: NO
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 networks
operators; insurance brokers and providers; auditors,
accountants, notaries, and lawyers; casinos and gaming
establishments; real estate agents; and high value a goods
dealers
Suspicious Transaction Reporting (STR) Requirements:
Number of STRs received and time frame: 7,741 as of November
2011
Number of CTRs received and time frame: Not applicable
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 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 networks
operators; insurance brokers and providers; auditors,
accountants, notaries, and lawyers; casinos and gaming
establishments; real estate agents; and high value goods dealers
Money Laundering Criminal Prosecutions/Convictions:
Prosecutions: 127 as of November 2011
Convictions: 77 as of November 2011
Records exchange mechanism:
With U.S.: MLAT: YES Other mechanism: YES
With other governments/jurisdictions: YES
Luxembourg is a member of the Financial Action Task Force
(FATF). Its most recent mutual evaluation can be found here: http:
//www.fatf-gafi.org/infobycountry/0,3380,
en_32250379_32236963_1_70591_43383847_1_1,00.html
Enforcement and implementation issues and comments:
During 2011, competent authorities were busy implementing the
comprehensive package of legislative and administrative actions
that were put in place in 2010, notably the Law of October 27,
2010. This law introduces important changes to AML/CFT
provisions and prescribes changes to 20 existing pieces of
legislation. Most visibly, the financial intelligence unit (FIU)
expanded its capabilities through the hiring of additional analysts
and continued preparations for an enlargement of the FIU
premises. Nevertheless, state prosecution officials have called
publicly for further resources, notably more analysts. In response
to these requests, the Ministry of Justice has pledged to continue
supporting the state prosecution, and the FIU in particular, with
the level of resources needed to fulfill its responsibilities. In terms
of quantitative data, the number of transaction reports, money
laundering criminal prosecutions, and convictions has risen in
comparison to 2010 following the systematic implementation of the
new legislation.
____________________________________________________
US State Dept Narcotics Report 2011 (introduction):
No report available
____________________________________________________
US State Dept Trafficking in Persons Report 2011
(introduction):
(Tier 1)
Luxembourg is a destination country for women from Africa
(primarily Nigeria) as well as Kazakhstan, Bulgaria, Russia,
Ukraine, Brazil, France, and Belgium who are subjected to forced
prostitution. Authorities report that forced labor among foreign
migrants is likely also a hidden problem. According to local
experts, unaccompanied children who are asylum seekers or
refugees and without legal status are particularly vulnerable to
sexual exploitation. Adult victims of sex trafficking in Luxembourg
are sometimes recruited by agents in their home countries for
work in Luxembourg’s cabarets, and subsequently forced into
prostitution. According to a 2010 media report, women in
prostitution in Luxembourg are often controlled by pimps and
some of these women are likely trafficking victims; the majority of
women in street prostitution are Nigerian. According to a 2010
ECPAT report, exploitation of children in Luxembourg primarily
involves prostitution through illegal escort services, and in hotels,
parked cars, private houses, and in illegal private clubs in the
country.
The Government of Luxembourg fully complies with the minimum
standards for the elimination of trafficking. During the year, the
government prosecuted and convicted four trafficking offenders
and referred identified trafficking victims for basic services. The
government, however, failed to fully implement a March 2009 law
to formalize specialized and comprehensive assistance for
trafficking victims and it did not implement proactive identification
and referral procedures, a standing deficiency in Luxembourg.
For full report click here
____________________________________________________
US State Dept Terrorism Report 2009
No report available
____________________________________________________
AML News / Updates / Relevant Info
AML information update and economic overview extracted from
IMF Report on Luxembourg
Read Extract (internal link)
Links:
Worldwide AML Legislation (International Bar Association)
Cellule de Renseignement Financier (FIU-LUX)
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| Further Tables |
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*Please note that FATF deems that a country has significant aml deficiencies if any
of the 'Core' Recommendations, R1, R5, R10, R13, SRII, or SRIV are rated either
Partially of Non-Compliant. These are marked in red.
For FATF to remove a country from the regular follow-up process, it has to be rated
Compliant or Largely Compliant in the above mentioned Core Recommendations
and the following Key Recommendations: -
R3, R4, R23, R26, R35, R36, R40, SRI, SRIII, SRV
Please also note that any risk assessment should take into consideration all
follow-up reports.
of the 'Core' Recommendations, R1, R5, R10, R13, SRII, or SRIV are rated either
Partially of Non-Compliant. These are marked in red.
For FATF to remove a country from the regular follow-up process, it has to be rated
Compliant or Largely Compliant in the above mentioned Core Recommendations
and the following Key Recommendations: -
R3, R4, R23, R26, R35, R36, R40, SRI, SRIII, SRV
Please also note that any risk assessment should take into consideration all
follow-up reports.
| LUXEMBOURG |
| KnowYourCountry |
|
|
Key Findings from last Mutual Evaluation Report
Luxembourg is one of the most important financial centres in Europe and
worldwide; it ranks second in the world for investment fund activities and
is the most important centre for wealth management in the euro zone.
Financial services occupy a very important place in the economy,
accounting for around 25% of gross domestic product.
The crime of money laundering is defined technically in a manner largely
consistent with international standards. However, legal persons are not
subject to criminal sanctions. Moreover, practical implementation of the
offence is very ineffective, so that sanctions (the level of which is
generally low) have been imposed in only eight cases since 2003. The
criminalisation of terrorist financing does not cover all the elements
called for by international standards and does not include the financing
of individual terrorists or terrorist groups other than as related to the
commission of terrorist acts. Finally, the notion of a terrorist group
applies only to associations of more than two persons.
The confiscation mechanism in place is relatively satisfactory, despite
some limitations that reduce its scope, particularly regarding confiscation
of property held by a third party. Provisional measures that may be
implemented in this context are inadequate and confiscation cases are
rare in terms of ML and relate to secondary instrumentalities (i.e. not
cash or high value assets). Terrorist assets may be frozen by the
Financial Intelligence Unit (FIU), but this measure is limited to three
months and is conditional upon the filing of a suspicious transaction
report (STR), which does not ensure timely freezing and applies only to
financial assets. In general, the procedure for freezing terrorist assets is
confusing and falls short of international standards.
The FIU was created in 2004 within the office of the Public Prosecutor of
Luxembourg (the Parquet). At the time of the on-site visit it comprised six
persons responsible for operational tasks, an inadequate staffing level in
light of the steadily rising number of STRs filed. The FIU is not bound by
any “speciality rule” but has jurisdiction over all offences detected in
STRs. Among the cases that it “disseminates”, few cite the crime of
money laundering. Prosecution authorities also focus their efforts on the
predicate offence; the number of laundering investigations is low (there
had never been an investigation into terrorist financing at the time of the
on-site visit).
Luxembourg’s AML/CFT prevention mechanism is based on [European]
Community instruments. It applies to the great majority of financial
institutions that should be covered according to FATF rules, as well as
designated non-financial businesses and professions (DNFBPs), and it
has been extended to other professions. However, Luxembourg has not
conducted an assessment of the ML/TFTF risks facing its financial
institutions DNFBPs, and the approach adopted authorises, in many
situations, an exemption from any due diligence measure.
Financial sector supervisory authorities conduct few on-site AML/CFT
inspections, and those inspections cover only accounts, to the exclusion
of the AML/CFT policies and procedures implemented by institutions.
Moreover, at the time of the on-site visit some categories of institutions
had never undergone any form of inspection. The sanctions regime is
unsatisfactory and in fact no penalty has ever been imposed in AML/CFT
matters. Among the non-financial businesses and professions, only the
legal and accounting professions are organised and supervised, and
they have never been subjected to AML/CFT sanctions.
Luxembourg has a system for registering legal persons, including non-
profit organisations (NPOs). The register is readily accessible, including
on-line, without charge. However, it does not reveal the beneficial
owners. Some corporations can issue bearer shares; Luxembourg has
not taken any steps to prevent their illicit use.
When it comes to international co-operation, the powers of the
authorities are the same as those in domestic matters. However, in most
cases, dual criminality is required, and the capacity to co-operate is thus
constrained by the gaps identified in the criminalisation of money
laundering and terrorist financing.
Luxembourg is one of the most important financial centres in Europe and
worldwide; it ranks second in the world for investment fund activities and
is the most important centre for wealth management in the euro zone.
Financial services occupy a very important place in the economy,
accounting for around 25% of gross domestic product.
The crime of money laundering is defined technically in a manner largely
consistent with international standards. However, legal persons are not
subject to criminal sanctions. Moreover, practical implementation of the
offence is very ineffective, so that sanctions (the level of which is
generally low) have been imposed in only eight cases since 2003. The
criminalisation of terrorist financing does not cover all the elements
called for by international standards and does not include the financing
of individual terrorists or terrorist groups other than as related to the
commission of terrorist acts. Finally, the notion of a terrorist group
applies only to associations of more than two persons.
The confiscation mechanism in place is relatively satisfactory, despite
some limitations that reduce its scope, particularly regarding confiscation
of property held by a third party. Provisional measures that may be
implemented in this context are inadequate and confiscation cases are
rare in terms of ML and relate to secondary instrumentalities (i.e. not
cash or high value assets). Terrorist assets may be frozen by the
Financial Intelligence Unit (FIU), but this measure is limited to three
months and is conditional upon the filing of a suspicious transaction
report (STR), which does not ensure timely freezing and applies only to
financial assets. In general, the procedure for freezing terrorist assets is
confusing and falls short of international standards.
The FIU was created in 2004 within the office of the Public Prosecutor of
Luxembourg (the Parquet). At the time of the on-site visit it comprised six
persons responsible for operational tasks, an inadequate staffing level in
light of the steadily rising number of STRs filed. The FIU is not bound by
any “speciality rule” but has jurisdiction over all offences detected in
STRs. Among the cases that it “disseminates”, few cite the crime of
money laundering. Prosecution authorities also focus their efforts on the
predicate offence; the number of laundering investigations is low (there
had never been an investigation into terrorist financing at the time of the
on-site visit).
Luxembourg’s AML/CFT prevention mechanism is based on [European]
Community instruments. It applies to the great majority of financial
institutions that should be covered according to FATF rules, as well as
designated non-financial businesses and professions (DNFBPs), and it
has been extended to other professions. However, Luxembourg has not
conducted an assessment of the ML/TFTF risks facing its financial
institutions DNFBPs, and the approach adopted authorises, in many
situations, an exemption from any due diligence measure.
Financial sector supervisory authorities conduct few on-site AML/CFT
inspections, and those inspections cover only accounts, to the exclusion
of the AML/CFT policies and procedures implemented by institutions.
Moreover, at the time of the on-site visit some categories of institutions
had never undergone any form of inspection. The sanctions regime is
unsatisfactory and in fact no penalty has ever been imposed in AML/CFT
matters. Among the non-financial businesses and professions, only the
legal and accounting professions are organised and supervised, and
they have never been subjected to AML/CFT sanctions.
Luxembourg has a system for registering legal persons, including non-
profit organisations (NPOs). The register is readily accessible, including
on-line, without charge. However, it does not reveal the beneficial
owners. Some corporations can issue bearer shares; Luxembourg has
not taken any steps to prevent their illicit use.
When it comes to international co-operation, the powers of the
authorities are the same as those in domestic matters. However, in most
cases, dual criminality is required, and the capacity to co-operate is thus
constrained by the gaps identified in the criminalisation of money
laundering and terrorist financing.
| Last Updated: 16 April 2012 |