For some months there had been palpable concern about the conclusions the Financial Action Task Force would draw from its visits to Luxembourg in recent months to assess the effectiveness of the measures taken to combat money laundering and terrorist financing, and their compliance with previous FATF recommendations.
The report was due in 2020--ten years after the previous assessment--but was delayed because of the covid-19 pandemic. The plenary on Friday finally concluded that Luxembourg had achieved a high level of technical compliance with the FATF’s requirements and that its anti-money laundering and combating the financing of terrorism measures are performing well.
Within minutes of the announcement, the ministries of justice and finance welcomed the conclusions in an official statement.
Room for improvement
“Luxembourg has achieved a good understanding of the money laundering and terrorist financing risks it faces, which is particularly important given its status as a regional and international financial centre,” said the current FATF president, T. Raja Kumar, during a press conference.
“The country has achieved strong internal cooperation and coordination at both political and operational levels, including in the use of financial intelligence and access to beneficial owner information, as well as constructive cooperation with its international counterparts.”
He called on the country to focus on strengthening its measures in certain areas, including improving the detection, investigation and prosecution of more complex money laundering cases, in line with the country’s risk profile.
Non-financial sector a weakness
Luxembourg should also strengthen risk-based supervision of its non-financial sector, further develop and disseminate its understanding of terrorist financing risks to the public and private sectors, and apply proportionate and dissuasive sanctions for non-compliance in its financial and non-financial sectors.
The message has already been heard at the ministry of justice: at the beginning of June, Catherine Bourin was appointed head of a new department to combat money laundering and the financing of terrorism.
The adoption of Luxembourg’s mutual evaluation report is the penultimate stage in the process of evaluating the country as part of the FATF’s fourth round of mutual evaluations on the fight against money laundering and terrorist financing.
In accordance with FATF procedures, the report will undergo a post-planning quality and consistency process and will be shared with all members of the FATF and FATF-style regional bodies. At the end of this process, which will take several weeks, the report will be considered final.