Luxembourg Financial Sector Supervisory Commission (CSSF)

31% of whistleblowing tips to CSSF involve criminal offences

The 2022 annual report from Luxembourg’s financial regulator CSSF disclosed that a total of 380 whistleblowing reports had been received since September 2014. Archive photo: Romain Gamba / Maison Moderne

The 2022 annual report from Luxembourg’s financial regulator CSSF disclosed that a total of 380 whistleblowing reports had been received since September 2014. Archive photo: Romain Gamba / Maison Moderne

Luxembourg’s financial regulator recorded a slight uptick in the number of whistleblower reports in 2022, but relatively fewer of them were made anonymously.

Luxembourg’s financial regulator received 77 whistleblowing reports from finance sector staffers last year.

Approximately 31% of these reports flagged potential criminal activities like money laundering, swindling and tax fraud, according to the 2022 annual report from the Luxembourg Financial Sector Supervisory Commission (CSSF). The regulator said that 8% of criminal allegations were subsequently referred to the public prosecutor’s office.

Whistleblowing channels

Beginning in September 2014, the CSSF had set up a specific electronic form and an email address ([email protected]) for the benefit of whistleblowers. These channels allowed individuals, especially those in the financial sector, to confidentially and securely report suspected violations of financial regulations.

The CSSF ensured that the identity of the whistleblower, as well as the details of the reported activities, were kept strictly confidential, with the aim of creating a trustworthy atmosphere that encouraged people to come forward without fear of reprisals.

Although the CSSF was bound by professional confidentiality, preventing it from sharing the results of its investigations to individual whistleblowers, it did make public any sanctions or measures levied against financial institutions, even when these were a result of whistleblowing.

Rising public confidence

The CSSF’s 2022 annual report disclosed the receipt of 77 new whistleblower reports during that year, indicative of heightened public involvement in flagging possible irregularities in Luxembourg’s financial sector.

Notably, more than a quarter (27%) of these reports were submitted by individuals currently or previously employed by the entity being reported.

The CSSF also recorded a decrease in anonymous submissions, interpreting this as a positive signal of growing confidence in its whistleblowing procedures.

Types of reports and follow-up actions

Roughly 23% of the received reports were related to governance concerns in entities supervised by the CSSF, like potential conflicts of interest or organisational shortcomings. Other prevalent issues included transparency, risk management and portfolio management, which accounted for 12% of the reports.

Of great concern were 11% of the reports were related to anti-money laundering and counter-terrorist financing (AML/CTF), and an additional 20% possibly involved other criminal offences like fraud and swindling. Combined, these categories made up 31% of all submissions, indicating whistleblowers have a tendancy to focus on potential criminal activities.

The CSSF emphasised that it lacks the jurisdiction to address these criminal matters and suggested that such allegations be directed to the state prosecutor’s office.

Concerning actions taken, the CSSF, constrained by professional secrecy, could not disclose to whistleblowers the results of its analyses or any resulting actions. However, it claimed that each report was thoroughly assessed to decide on the most fitting response.

The CSSF revealed that half of the reports could not be pursued further due to either falling outside the CSSF’s authority (22%), lacking sufficient information for investigation (14%) or containing claims that could neither be confirmed nor refuted (14%). On a more actionable note, 12% of the reports were useful for ongoing supervisory activities, 8% were referred to the Prosecutor General’s Office and another 8% led to new investigations. A mere 1% of the reports resulted in the CSSF issuing a public warning.