What law applies to money laundering?
If you're looking to buy, sell, or rent a home in Luxembourg, you can expect to be asked some unexpected questions by your realtor. Not only will they question you on your identity, but also on your wealth, income, and line of work. In fact, it's crucial to understand that the AML (anti-money laundering) law strictly governs the collection and use of this data in the context of the fight against money laundering.
What the legislation in Luxembourg says about combating money laundering
The prevention of money laundering and the financing of terrorism are the subjects of a first law enacted on November 12, 2004. One further law was passed on October 27, 2010, to further fortify the existing legal framework in this area. Last but not least, the law enacted on August 10, 2018, addresses the information that trustees must collect and maintain for the purpose of thwarting money laundering and the financing of terrorism.
“Money laundering is the process of trying to hide the true origin of money or other valuables”.
All those working in the financial industry need to take preventative measures in a concerted effort to thwart these illicit activities. Not only do banks have to cope with the necessity to take measures, but so do accountants, notaries, gaming operators, and real estate salespeople. Because of this, you may need to provide a variety of paperwork before beginning your real estate project.
So, what exactly do real estate brokers have to do to comply with the AML law?
For purposes of the AML law, all real estate brokers are required to do client due diligence by asking a series of questions (previously, the work was only done by banks and notaries).
To that end, it is only reasonable to request that you submit a number of records explicating the nature and scope of your project (financial, family, professional, patrimonial).
Included in the required documentation is a government-issued photo ID, a recent utility bill or bank statement showing your current address, and any relevant documentation for your line of work (such as an employment contract or proof of activity for self-employed professionals).
All reports of suspicious transactions in Luxembourg that may include money laundering or terrorist financing are handled by the FIU (Financial Intelligence Unit), an independent and autonomous body.
“The Financial Intelligence Unit (FIU) is an autonomous organization responsible for handling all reports of potentially fraudulent financial activity”.
For the record, professionals who "suspect or have reasonable grounds to suspect" a money laundering transaction are obligated to decline the transaction and report it immediately to the Financial Intelligence Unit (FIU). Since real estate agents' responsibilities can be called upon at any time, it's only natural that they take safeguards; if they request full documentation, don't panic, and feel free to ask them any queries you have; they'll be happy to provide an explanation.