Luxembourg has finalised its first assessment of the risks of money laundering and terrorist financing.
As part of the 4th round of mutual evaluations by the Financial Action Task Force (FATF), member countries, including Luxembourg, were assessed on technical compliance with the 40 FATF Recommendations as well as on the effectiveness of their control mechanisms against money laundering and terrorist financing. A first evaluation of Luxembourg according to this new methodology will take place in 2020 with an on-site visit, whilst the FATF plenary discussion of the related report is scheduled for 2021.
In preparation and in response to the FATF's first recommendation, Luxembourg has just finalised its national risk assessment in this area in which all national stakeholders have been involved over the past two years. This collective effort allowed the authorities to collect a wide range of data, both quantitative and qualitative, from a variety of public and private sources to be supplemented by expert opinions, thus making it possible to identify the main risks facing Luxembourg.
These risks were identified as money laundering from criminal activities carried out abroad, although with regard to the inherent vulnerabilities, only private banking and foreign trusts represent a very high risk. The majority of the sectors examined were considered to be high inherent risk sectors, even though the support and security sectors and gambling activities were considered low risk. Two sectors present an average inherent risk, namely the insurance and luxury goods sector.
The fight against money laundering and the financing of terrorism also requires continued and coordinated action by the authorities and a shared understanding of these risks in the public and private sectors. As such, the supervisory authorities will organise an awareness campaign to share the conclusions of the assessment targeting the sectors and professionals concerned.
Finally, it should be noted that since 2009, Luxembourg has implemented a series of legal and institutional reforms in order to adapt to the evolving risks of money laundering/terrorism financing and stricter international standards. Such amendments have also helped to support the role of the competent national authorities. In addition, Luxembourg has already started work on the transposition of the 5th anti-money laundering directive.
