Anti-money laundering laws in Luxembourg: a strict regulatory framework
Rudolphe ABEN
Luxembourg takes the fight against money laundering and terrorist financing very seriously. The country has established a strict regulatory framework to prevent and combat these illegal activities. In the real estate sector, professionals are responsible for complying with these regulations in order to ensure the transparency and security of transactions. This article outlines the main obligations imposed by Luxembourg's anti-money laundering legislation and the consequences of non-compliance.
Luxembourg Anti-Money Laundering Legislation
Luxembourg's anti-money laundering legislation is mainly based on European Directive (EU) 2015/849, also known as the 4th Anti-Money Laundering Directive (4AMLD). This Directive was transposed into national law by the Law of 13 February 2018 on obligations relating to anti-money laundering and the financing of terrorism. The law applies to real estate professionals, who are considered key players in the prevention of money laundering.
Obligations of real estate professionals
The obligations imposed by this legislation include
a) Customer identification and verification
Real estate professionals must obtain information on the identity of their clients (buyers and sellers) and verify this information with official documents. This includes verification of natural persons, legal representatives and beneficial owners.
b) Risk assessment
Professionals must assess the money laundering and terrorist financing risks associated with their clients and the transactions they carry out. This assessment must be based on objective criteria and documented.
c) Ongoing monitoring of business relationships
Real Estate Professionals must monitor their client relationships on an ongoing basis and regularly review the information gathered.
d) Reporting of suspicious transactions
In the event of a suspicion of money laundering or terrorist financing, the professionals are obliged to report these operations to the competent authorities, without informing the clients concerned.
e) Preservation of documents
Professionals must keep documents relating to the identification of clients and transactions for at least five years after the end of the business relationship or the completion of the transaction.
Consequences of non-compliance
Failure to comply with these obligations may result in administrative and criminal sanctions, including fines and imprisonment. The Luxembourg authorities, such as the Financial Sector Supervisory Commission (CSSF) and the Customs and Excise Administration, are responsible for monitoring and enforcing these regulations.
It is therefore essential for property professionals in Luxembourg to comply with these regulations and to cooperate actively in the fight against money laundering and terrorist financing. By complying with legal obligations and implementing effective internal procedures, real estate professionals contribute to the protection of market integrity and the prevention of criminal activities.
To ensure compliance, property professionals may wish to consider:
- Implementing an anti-money laundering and counter-terrorist financing policy, including internal control procedures and staff training.
- Appointing a compliance officer to oversee and implement anti-money laundering measures.
- Working closely with the relevant authorities and reporting suspicious transactions.
In conclusion, Luxembourg's anti-money laundering laws are designed to create a safe and transparent environment in the real estate sector. Real estate professionals have a key role to play in the fight against money laundering and terrorist financing and must take their responsibilities seriously by complying with the strict regulatory framework in place. By being proactive and implementing effective compliance measures, real estate professionals will help protect the integrity of the market and prevent illegal activities.