Fight Against Money Laundering
Luxembourg was one of the first countries to equip itself with an anti money-laundering law. Initially limited to the proceeds of drug trafficking, the field of application has been continually widened so that it now targets all income from any crime punishable by more than six months in prison. This includes terrorist financing.
By money laundering, the law specifies any process by which money obtained through criminal activity is rendered legal. This could be by reinvestment in the financial system, for example, to obscure any trace of a link to the criminal source of the funds.
Following recommendations from the OECD’s Financial Action Task Force (FATF), Luxembourg conducted a fundamental reform of its legislation in this area with three new laws dated 27 October 2010 and a Grand Ducal regulation (29 October 2010). The FATF subsequently agreed that the Luxembourg legal regime now conforms to its anti money-laundering rules and standards.
Among other things, the law of 27 October 2010 widened the definition of money laundering, as well as the list of primary infringements and the types of professionals concerned. Professional obligations were also reinforced. Thus, anti money-laundering rules are not just limited to banks, but are applicable to all participants in the financial sector including service providers (such as public notaries, auditors, lawyers, financial and economic advisors), casinos, real estate agents and retailers of high value goods.
This regime is primarily preventive in nature. It obliges financial actors to check the identity of their clients or the beneficial owners of an asset before a business relationship is established or a transaction made. Throughout the period of a client relationship, they must examine transactions, particularly regarding the source of funds and must report any sign of laundering to the public prosecutor’s financial information unit.
It should be noted that banking secrecy laws are not a applicable during money laundering prosecutions.