On Monday 26 May 2025, Luxembourg's Ministry of Justice reported that the Grand Duchy has updated its national money laundering risk assessment.

Luxembourg has just finalised the update of its national money laundering risk assessment (ENR / NRA 2025). The NRA 2025 was commissioned by the Anti-Money Laundering and Terrorist Financing Prevention Committee (ML/TF Prevention Committee). Conducted under the leadership and coordination of the Ministry of Justice, it is the result of a collective effort at the national level, bringing together a significant number of stakeholders from the public, private and non-profit sectors.

Luxembourg's first national money laundering and terrorist financing risk assessment was adopted in September 2018 (NRA 2018) and updated during 2020 (NRA 2020). The latest update (NRA 2025) specifically assesses the money laundering risk at the national level and reflects the situation at the end of 2023. This NRA is the result of joint work by all members of the ML/TF Prevention Committe, comprising both public and private sector stakeholders.

The fight against money laundering and terrorist financing (AML/CFT) is based on a common legal framework. However, money laundering and terrorist financing have their own specificities. The Justice Ministry added that, in order to better address these, it was decided to analyse them separately within the framework of specific national risk assessments.

In light of the above, the update of Luxembourg's 2020 NRA takes the form of two separate national assessments:

- the money laundering risk assessment was carried out based on data for the years 2020 to 2023. The ML/TF Prevention Committee approved its publication on 28 April 2025;

- the 2022 terrorist financing risk assessment will soon be updated and will reflect the situation for the years 2021 to 2024.

The ultimate objective of these exercises is to adapt these assessments in line with evolving risks and the emergence of emerging risks. The ministry said this will ensure that the national and collective understanding of ML/FT risks is aligned with the reality of the risks, and also enable the implementation of a risk-based approach at all levels. This approach is said to allow the State, supervisory authorities and self-regulatory organisations to efficiently allocate resources dedicated to AML/CFT. It is also expected to ensure that the Luxembourg AML/CFT regime adequately addresses risks, particularly in higher-risk sectors, while allowing, under certain conditions, the simplification of certain measures when the identified risks are lower.

This update also aims to be a working tool for professionals subject to AML/CFT obligations. On the one hand, it informs them of the results of the exercise conducted by stakeholders at the national level and, on the other, it serves as a basis for developing their own ML risk assessments. Thus, the 2025 NRA proposes a risk assessment methodology that can be adapted to the needs and specificities of the professional. The findings of previously conducted vertical risk assessments are also incorporated. The ministry noted that this document thus provides a comprehensive overview of money laundering risks at the national level. The 2025 NRA also incorporates about 20 new practical case studies, as well as thematic boxes where the topic merits special attention.

Generally speaking, the 2025 NRA follows the same methodological approach as previous NRAs. It consists of first assessing the inherent risk resulting from the main money laundering threats to which Luxembourg is exposed and the vulnerabilities of professionals subject to AML/CFT obligations. The measures in place (including private sector preventive controls, supervisory oversight, detection of suspicious transactions or activities, criminal prosecutions and asset recovery) to mitigate these threats and vulnerabilities are then examined to determine the residual risk level.

The main findings of the 2025 NRA are as follows:

- money laundering threats to Luxembourg come mainly from the proceeds of predicate offences committed abroad, given its position as an international financial centre. Fraud and forgery, criminal tax offences and corruption remain the main external threats;

- exposure to domestic money laundering, originating from the proceeds of predicate offences committed in Luxembourg, is significantly lower given the country's low crime rate. Fraud and forgery, theft (simple and aggravated) as well as drug trafficking are the main threats at the domestic level;

- vulnerabilities stem from sectors that may be exposed to abuse or misappropriation for money laundering purposes (financial sector, non-financial sector, legal entities and legal arrangements): in the financial sector, banks, investment firms, electronic money institutions, payment institutions, specialised financial sector professionals, virtual asset service providers and the life insurance subsector have been assessed as presenting a "high" inherent risk level. The mitigation measures in place are said to reduce the residual risk level of these subsectors to "medium"; in the non-financial sector, the inherent risk level of legal and accounting professions remains "high", with the exception of audit professionals and bailiffs, which have been assessed as presenting a "medium" inherent risk. The mitigation measures in place reduce the risk level of these subsectors to "medium", with the exception of audit professionals, whose residual risk is assessed as "low".

Regarding legal entities and legal arrangements, the 2025 NRA builds on the approach and findings of the vertical risk assessment conducted in 2022. Legal arrangements were assessed as presenting the highest inherent and residual risk, followed by commercial companies.

Following the Financial Action Task Force's (FATF) fourth round mutual evaluation of Luxembourg, the FATF published its Mutual Evaluation Report of Luxembourg on 27 September 2023, recognising that Luxembourg has "a robust anti-money laundering and countering the financing of terrorism framework and a good understanding of the risks associated with money laundering and countering the financing of terrorism." The 2025 NRA illustrates Luxembourg's ongoing commitment to updating and refining its understanding of risks in order to remain at the forefront of AML/CFT.

The 2025 NRA is available in English (among other languages) on the Ministry of Justice website: https://mj.gouvernement.lu/en/dossiers/2020/lutte-blanchiment.html.