Anti money laundering
Luxembourg was one of the first countries to pass legislation in support of the fight against money laundering. At first limited to the area of drug trafficking, the scope of legislation has been continually widened and today covers revenues generated by any illegal activity that is punishable by a prison sentence of more than six months, as well as the financing of terrorism. Legal measures in the fight against money laundering (AML) are not limited to the financial sector. The law of 17 July 2008, which transposed the European Directive in this area into national law, extended the scope of application of AML measures to include service providers, companies and fiduciary (trust) agents, insurance intermediaries and all traders engaging in cash transactions of 15,000 euros or more.
With three new laws adopted on 27 October 2010, followed by a Grand Ducal Regulation of 29 October 2010, Luxembourg updated its legal arsenal in the matter of AML and brought it into line with the rules of the Financial Action Task Force (FATF) Group.
The legislative mechanism is primarily one of prevention. Notably, it imposes on financial services companies the obligation of verifying the identity of the customer and the financial beneficiary before entering into a business relationship or executing a transaction. Throughout the relationship with the client they must monitor transactions, notably with respect to the source of funds, and on their own initiative bring to the attention of the Public Prosecutor any fact that could indicate the presence of money laundering or terrorist financing.
The Commission de surveillance du secteur financier (CSSF) and the Commissariat aux assurances (CAA) are responsible for monitoring compliance by financial sector professionals with obligations in the area of anti-money laundering and the prevention of terrorist financing.
Summary of the laws adopted on 27 October 2010