Luxembourg Reports Ongoing Progress in Combating Financial Crime
Regulatory Framework and Supervision
Luxembourg has implemented comprehensive measures to combat money laundering and terrorist financing, with the Administration de l’enregistrement, des domaines et de la TVA (AED) playing a crucial role in supervising non-financial sectors. The AED’s Financial Crime Division, staffed by 17 professionals (p.259), focuses on prevention through guidance, conferences, document reviews, and on-site inspections of professionals under its supervision. Luxembourg also maintains a registry of trusts and fiduciary arrangements in accordance with the law of July 10, 2020, providing transparency regarding beneficial owners.
Compliance Activities and Statistics
In 2024, the AED conducted 74 on-site inspections across various sectors (p.263), including accounting professionals, business centers, automotive dealers, precious metals traders, real estate agents, and Freeport operators. Compliance rates for anti-money laundering questionnaires were impressively high across supervised sectors: 94% for accountants, 96% for specialized financial sector professionals (PSSF), and 92% for real estate professionals. The agency took decisive administrative actions against non-compliant entities, issuing 40 injunctions, 5 fines, 4 reprimands, and 12 warnings (p.263).
International Cooperation and FATF Implementation
Luxembourg has been actively working to address recommendations from the Financial Action Task Force (FATF) evaluation. The AED maintains close cooperation with judicial authorities and actively participates in working groups organized by the AML/CFT Prevention Committee to implement FATF recommendations. The agency regularly updates its anti-money laundering portal with prevention and awareness information, technical documents, and international financial sanctions, with 83 publications available to guide professionals (p.260).
Cross-Border Collaboration
The country demonstrates strong international engagement in anti-money laundering efforts. In 2024, Luxembourg received 143 assistance requests from other EU member states related to anti-fraud efforts, while sending 57 assistance requests and 10 spontaneous information exchanges involving cross-border transactions (p.232). Luxembourg’s customs administration (ADA) contributes to identifying fraud areas and developing common risk criteria for equivalent customs controls across the EU.
Challenges and Ongoing Efforts
Despite its robust framework, Luxembourg faces challenges in combating money laundering, particularly in its financial sector which has been involved in various fraud schemes, including intra-Community VAT fraud and margin scheme fraud in the automotive sector. The country is actively updating its National Risk Assessment, Terrorist Financing Vertical Risk Assessment, and Legal Persons and Legal Arrangements Vertical Risk Assessment. Additionally, Luxembourg participated in an audit by the European Court of Auditors regarding the effectiveness of the framework against unfair tax competition, with results published in November 2024 in Special Report 27/2024 (p.155).
Digital Transformation
Luxembourg is implementing digital transformation initiatives to improve efficiency in customs operations and enhance cooperation with national and international partners in the fight against money laundering. These technological advancements aim to strengthen the country’s ability to detect and prevent financial crimes while maintaining its position as a compliant international financial center.
Dive deeper
- AED ¦ Rapport d’activité 2024 ¦ Link