Luxembourg has a comprehensive and extensive anti-money laundering and countering the financing of terrorism (AML&CFT) legal, regulatory and institutional framework based for the most part on EU instruments and FATF standards.
In Luxembourg the Financial Supervisory Authority (“Commission de Surveillance du Secteur Financier”, CSSF) issues the applicable AML/CFT laws for the financial sector.
The main AML&CFT law is the Law of 12 November 2004 (as amended) (here named “AML Law”), reinforced with the Law of 27 October 2010, the FSA Regulation 12-02 and the FSA Circular 17/650 (on predicate tax offences). The bill of law n.7128 implementing the IV AML Directive has been voted on 6 February 2018 and should soon become law.
The AML Law, although addressed to the financial sector, is the law which is used as a ‘source of inspiration’ to issue AML legal framework also for the other entities and/or professionals which are not under the supervision of the CSSF (i.e. notaries, lawyers…).
In practice identification is done for the direct shareholders and parent companies / ultimate beneficial owners (UBOs) and includes obtaining supporting documents as relevant for individuals/legal entities. The AML law settles the threshold to define UBOs at 25 per cent or more of the shares (direct/indirect ownership) and voting rights in that legal entity. Where no individual can be identified to meet the 25 per cent threshold, it might be that the entity’s senior managing officials will be considered as UBOs.
Non-compliance with any AML&CFT professional obligations, committed knowingly, may lead to criminal sanctions (a fine between EUR 1,250 to EUR 1,250,000 and/or up to five years’ imprisonment), even in the absence of a money-laundering or terrorist financing offence. Aggravated tax fraud and the tax swindle are now punishable by imprisonment (up to five years) and a fine of between EUR 25,000 and 10 times the amount of tax defrauded or fraudulently reimbursed.