Luxembourg is stepping up its game in the fight against money laundering.

Following parliamentary approval, the country is setting up a special anti-money laundering (AML) unit within its tax administration. This move aims to protect Luxembourg’s reputation as a banking and financial hub.

New AML Unit

The new AML unit will be part of the Registration Duties, Estates, and VAT Authority. It addresses international concerns about Luxembourg’s AML measures. Finance Minister Gilles Roth emphasizes the importance of this step for the country’s financial reputation.

FATF Recommendations

The Financial Action Task Force (FATF) highlighted the need for Luxembourg to better supervise the non-financial sector. It advised more scrutiny on real estate firms, trust companies, notaries, and service firms.

Boosting Resources

Around 20 new positions will be created in the AML unit. Roth believes the financial costs are worth it to protect Luxembourg’s financial center. The unit will oversee controls against money laundering, terrorism financing, and international financial sanctions.

Strengthening CRF

In another move, lawmakers approved hiring nearly 100 magistrates for the financial crime unit, Cellule de Renseignement Financier (CRF). The FATF had pointed out capacity problems at the CRF, especially with the rise in reports on money laundering and terrorist financing.

Need for Modern Tech in AML

A recent PwC Luxembourg survey found that many financial services firms are reluctant to adopt new technologies to fight money laundering. Only 53% of AML teams are considering artificial intelligence, compared to 81% across Europe. Claude Marx, director-general of CSSF, noted that many institutions still use outdated systems.

Competitiveness Matters

PwC Luxembourg stressed the importance of adopting effective AML measures to keep Luxembourg competitive in the international asset and wealth management sector. This should be considers as an opportunity for Luxembourg to distinguish itself. Luxembourg is making significant strides in combating financial crime. These steps are crucial to maintaining its status as a top financial center.

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