## 1.     Recommended Action Plan to Improve Compliance with the

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---

### Introduction
- Report type: Report on the Observance of Standards and Codes for the FATF 40 Recommendations for Anti-Money Laundering and 8 Special Recommendations Combating the Financing of Terrorism.
- Prepared by: team composed of staff of the International Monetary Fund and an expert not under the supervision of Fund staff (Independent AML/CFT expert).
- Assessment basis: information available at the time it was completed on November 30, 2003.
- Assessment reference: based on the 1996 version of the FATF Recommendations.

### Main findings—summary
- Luxembourg is an important international financial center with substantial cross-border business, notably in private banking, and is the second largest provider of funds management services in the world (after the US), and the largest provider to non-resident investors.
- Historical policy: From the early 1980s, authorities pursued a policy to attract international financial services based in part on a practice of strong bank secrecy; disclosure to appropriate authorities is permitted for suspected money laundering or other financial crime (tax offences excluded except when committed within a criminal organization).
- Principal vulnerability: greater risk at the layering stage when funds introduced abroad are transferred into the Luxembourg system; availability of corporate structures and service providers that can disguise beneficial ownership creates particular vulnerability.
- Overall: controls are broadly in line with the FATF 40+8 Recommendations, but implementation quality—particularly in private banking and funds management—is difficult to assess.

### A. Criminal justice measures and international cooperation
- Legislative basis:
  - Main AML/CFT law: law of April 05, 1993 on the Financial Sector (LoFS 93), amended subsequently.
  - Insurance sector law: Law of 1991 on Insurance Services (LoIS 91).
- Criminalization:
  - Money laundering criminalized by article 506-1 of the Penal Code.
  - Financing of terrorism criminalized by Article 135-5 and 135-6 of the Penal Code.
- Recent laws and draft legislation:
  - Two laws adopted in 2000 and 2001 streamlined mutual legal assistance and extradition procedures.
  - New draft law adopted in first reading by the Parliament was not taken into account in assessment (not yet in force); if adopted in present form it could fall short of revised FATF requirements regarding predicate offences, customer due diligence, and FIU operation.
- International instruments:
  - Luxembourg is party to main instruments addressing ML and FT except for the Palermo convention (signed but not ratified).
  - Criminal laws generally align with international obligations, except the scope of money laundering predicate offences is too limited.
- Confiscation and freezing:
  - Scope of confiscation is quite broad; effectiveness difficult to assess given low prosecution rates.
  - Recommendation: consider alleviating the burden of proof of origin of seized assets, as suggested by the Vienna, the Strasbourg and the Palermo conventions.
  - Implementation of UN asset-freezing obligations: circulars issued to financial institutions; less than half a dozen accounts identified as related to listed persons/entities.
  - EC regulations provide legal basis for freezing, but immediate-effect measures outside criminal investigations would require specific provisions to empower authorities.
- FIU (Financial Intelligence Unit):
  - Model: judicial model under supervision and operation of the Prosecutor’s office.
  - Experience: ten years of receiving suspicious transaction reports (STRs).
  - Main deficiencies: lacks a clear and transparent legal framework to operate as a distinct FIU, lacks sufficient means and IT equipment to handle rising STRs and to perform a substantive analysis function.
  - Recommendation: financing of terrorism should be added explicitly to money laundering as offences for which suspicion should be disclosed.
- Law enforcement and prosecution:
  - FIU and law enforcement/prosecution are the same; specialization provides efficiency in prosecutions.
  - Low number of prosecutions due to policy of forwarding to foreign authorities cases relating to persons or funds originating abroad.
  - Pro-active investigative techniques limited to wire tapping and related measures.
- International cooperation:
  - High volume of mutual legal assistance requests given assets managed/deposited by non-residents.
  - Past delays due to overload and procedures; law of August 08, 2000 simplified procedures and improved efficiency.
  - Law on extradition adopted June 20, 2001 completed framework for international cooperation.
  - Luxembourg is party to major instruments for judicial cooperation in criminal matters, apart from the Palermo convention.

### B. Preventive measures for financial institutions
- Supervisory framework:
  - CSSF is the competent authority for banks, funds management, and a range of financial sector professionals.
  - AML law supplemented by 60 circulars issued by the CSSF (and predecessors) providing guidance (not direct force of law).
  - Culture of strong bank secrecy exists, but mechanisms permit access to information needed by foreign and national supervisory authorities.
- Customer identification and account practices:
  - Anonymous accounts prohibited.
  - Customer identification procedures mandated by law for customers without distinction between natural and legal persons; CSSF Circulars provide detailed guidance.
  - Numbered accounts used extensively, particularly in private banking; treated the same as nominative accounts for customer identification, with access confined to those needing to know.
  - Identification of beneficial owners is a legal requirement; practitioners report difficulties in some cases.
  - No legal requirement to include originator information in wire transfers; banks report internal procedures address this issue in line with international standards.
- Non-resident business and due diligence:
  - Most banking and financial professional business relates to nonresidents and is subject to same AML/CFT controls as resident business.
  - No legal requirement for enhanced due diligence for nonresident business to accord with best international practice.
  - No specific guidance relating to the use of corporate vehicles, despite their importance and associated risks.
  - Acceptance of customer due diligence performed by a regulated entity in Luxembourg or in other countries is permitted; scale of this exemption in Luxembourg could create reputational risks in complex or obscure ownership cases.
- Recordkeeping and reporting:
  - Records of customer identification and transactions must be maintained for at least five years.
  - Legal provisions on reporting STRs largely in line with the standard.
  - Assessment difficulty: uncertain whether financial professionals fully accept reporting obligations; Banking Association indicates reluctance partly due to concern about potential self-incrimination.
- Internal controls and supervision:
  - Banks must establish adequate internal control procedures under LoFS 93; CSSF requires submission of procedures manual and performs regular onsite inspections including AML/CFT coverage.
  - Inspections have identified significant procedural and implementation weaknesses requiring remedial action.
- Insurance sector:
  - AML/CFT measures currently limited to life insurance products.
  - Competent authority: Commissariat aux Assurances (CaA).
  - Life assurance business on behalf of non-residents is a very significant component of the Luxembourg financial services market.
  - Customer identification requirements similar to banks with exemptions for low-value business.

### C. Summary assessment against the FATF Recommendations
- Overall position: Luxembourg has a solid criminal legal framework and supervisory system broadly in line with international standards, but with specific gaps and implementation challenges, particularly:
  - Limited scope of predicate offences for money laundering.
  - FIU lacks distinct legal framework, resources, and IT capacity for analysis.
  - Low prosecution rates and policy of forwarding many cases to foreign authorities.
  - Lack of enhanced due diligence requirements for non-resident business and limited guidance on corporate vehicles.
  - Potential reputational risks from widespread acceptance of third-country customer due diligence.

*Source: IMF assessment completed on November 30, 2003.*

---

### 22. Luxembourg is broadly compliant with almost all of the FATF Recommendations. As

### Overall assessment and key gaps
- Luxembourg is broadly compliant with almost all of the FATF Recommendations.
- Main areas requiring further attention:
  - Limited scope of predicate offences and for reporting of suspicions of FT.
  - Lack of a distinct legal framework for the FIU.
  - Low level of local prosecution of money laundering cases investigated in the country.
  - Need for more regular substantive guidance from the FIU and regulatory authorities on implementation of AML/CFT laws, including on trends and techniques.
- Assessors included technical and general suggestions in Table 2 to further strengthen areas already meeting FATF standards.

### Table 1 — Recommended Action Plan to Improve Compliance with the FATF Recommendations
- General framework of the Recommendations (FATF 1-3)
  - The barrier to transfer of personal customer data for international financial services groups from Luxembourg operations needs to be addressed.
  - Authorities should proceed as soon as possible with plans for a legislative amendment to the bank secrecy provisions to permit transfer to the auditors of international financial services groups of customer details in Luxembourg subsidiaries or branches of foreign banks or other financial professionals.
- Scope of the criminal offense of money laundering (FATF 4-6)
  - The scope of predicate offences should expand to cover all serious profit-generating crimes.
- Customer identification and record-keeping rules (FATF 10-13)
  - The principle of the identification of legal entities should be explicitly required by law.
  - There should be a specific requirement for the personal identification of all persons authorized to operate accounts in the name of corporate entities.
  - Attention to high risk areas such as products and structures designed to hide the purpose and true identity of the beneficial owner, whether developed within Luxembourg or elsewhere.
  - CSSF should target in its supervision the opening and operation of accounts involving complex structures where identification of the beneficial owner presents particular difficulties.
  - Controls for accounts opened by correspondence and through the internet should be reviewed; if effective measures cannot be achieved, opening of accounts electronically would not meet the requirements of the law.
- Increased diligence of financial institutions (FATF 14-19)
  - Specific provisions for record-keeping of unusual transactions should be set by law or other enforceable means.
  - Authorities need to act further to ensure that all financial professionals accept their statutory reporting obligations to the FIU and CSSF and do not seek to frustrate AML/CFT implementation.
  - Preferable to include requirements for internal audit and the designation of a compliance officer or function in the law, as circulars lack direct force of law and cannot create additional legally enforceable requirements.
- Measures to cope with countries with insufficient AML measures (FATF 20-21)
  - Add in the law the specific requirements with regard to business relationships with countries which do not have adequate systems in place.
- Other measures (FATF 22-25)
  - A law should be adopted to provide a clear framework for the operation of the FIU.
  - The FIU and the law enforcement team which supports it should be further integrated and be given adequate means to fulfill their functions.
  - The FIU should be urgently equipped with the IT equipment necessary to run a modern database.
- Implementation & role of regulatory and other administrative authorities (FATF 26-29)
  - Authorities should provide a firm and continuing legal basis for circulars issued to ensure effective implementation of the FATF Recommendations.
  - The FIU and CSSF should issue circulars and guidance on a regular basis to clarify aspects of law implementation.
  - Consider development of specific requirements and guidance highlighting various forms of corporate vehicle and the ML and FT risks they entail, covering all categories of professionals (including inter alia lawyers and accountants).
  - CSSF should increase onsite monitoring for financial professionals under its supervision using a risk-based approach, focusing on entities at risk from opaque corporate structures.
  - Particular attention to private banking sector practices; test assumptions about bankers’ awareness of purpose and ownership of entities they transact with.
  - Authorities should introduce specific customer due diligence requirements for trusts and other such entities, in line with international requirement.
  - Authorities should reassess KYC and reputational risks from international distribution networks in the funds area; consider onsite inspections for funds, including for AML/CFT (may require additional resources).
  - CaA should consider increasing frequency of its on-site inspection work.
- Other forms of cooperation – Focus of improved mutual assistance on money laundering issues (FATF 36-40)
  - There should be a legal basis for a wider range of investigations, including at least monitoring bank accounts and controlled deliveries in drug trafficking, money laundering and financing of terrorism matters.
  - Specialized law enforcement agencies, such as the anti-money laundering Section of the Judicial Police, should be equipped with sufficient human and technological means.
  - More emphasis should be given to local prosecution of offences even when some elements have been committed abroad.

### Special Recommendations on Terrorist Financing (8 Special recommendations)
- III. Freezing and confiscating terrorist assets
  - A law should be adopted to provide adequate legal power to freeze accounts in application of UN resolutions taken as part of the powers of the Security Council.
- IV. Reporting suspicious transactions related to terrorism
  - Authorities should ensure that a reporting requirement for suspicions relating to FT is included in the law, as proposed.
- VII. Wire transfers
  - Authorities should proceed to introduce the planned requirements for inclusion of originator information on wire transfers, within the time frame indicated by the FATF.
  - Require financial institutions and PSFs to implement special measures when receiving wire transfers which do not contain originator information.

### Table 2 — Other Recommended Actions
- Legal Issues
  - Luxembourg should become party to the Palermo Convention on Transnational Organized Crime.
  - Authorities should consider introducing legal provisions to alleviate the burden of proof of the knowledge element (mens rea) of the offence, respecting general principles such as presumption of innocence.
  - Authorities should consider easing the burden of proof as to the property or assets belonging to persons convicted for money laundering and/or the predicate offences.
  - Authorities could consider a provision opening the possibility of rendering void transactions during a “suspicious period” before conviction, unless the transaction has been conducted in good faith.
  - For offences of violations of duties by financial businesses and other professionals, the law should distinguish between negligent and fraudulent violations, with proportionate and dissuasive sanctions.
- Customer Due Diligence Issues
  - Authorities should consider whether the continued availability of numbered accounts is warranted, or at minimum pay particular attention to proper management and control of numbered accounts during onsite inspections.
  - Issue further guidance highlighting particular risk factors of non resident business as part of KYC requirements.
  - Examine client funds held in accounts of lawyers and other professionals to ensure more effective measures to avoid misuse; the legal profession should take internal measures to prevent abuse in ML and FT schemes.
  - CSSF should ensure outstanding work to re-verify old accounts is expedited.
  - Creation of a central database of bank accounts would greatly enhance efficiency in fighting money laundering and financing of terrorism.

### Authorities’ Response to the ROSC (October 15, 2004)
- Luxembourg authorities welcome the main findings summarized by the conclusion that “Luxembourg has in place a solid criminal legal framework and supervisory system to address the significant challenge of money laundering faced by this important international financial center.”
- Authorities appreciate the detailed recommendations and are committed to take them into account when formulating future legislation and regulation, in particular when transposing the EU’s third anti-money laundering draft directive now being discussed.
- Authorities note that, to remain fully compliant with the FATF recommendations, national legislation will have to evolve in line with those recommendations and their interpretation.

*Source: _cr04399 - 22. Luxembourg is broadly compliant with almost all of the FATF Recommendations. As (PDF).*

### 1.     Recommended Action Plan to Improve Compliance with the

### _cr04399 - 1.     Recommended Action Plan to Improve Compliance with the

### Introduction
- Report type: Report on the Observance of Standards and Codes for the FATF 40 Recommendations for Anti-Money Laundering and 8 Special Recommendations Combating the Financing of Terrorism.
- Prepared by: team composed of staff of the International Monetary Fund and an expert not under the supervision of Fund staff (Independent AML/CFT expert).
- Assessment basis: information available at the time it was completed on November 30, 2003.
- Assessment reference: based on the 1996 version of the FATF Recommendations.

### Main findings—summary
- Luxembourg is an important international financial center with substantial cross-border business, notably in private banking, and is the second largest provider of funds management services in the world (after the US), and the largest provider to non-resident investors.
- Historical policy: From the early 1980s, authorities pursued a policy to attract international financial services based in part on a practice of strong bank secrecy; disclosure to appropriate authorities is permitted for suspected money laundering or other financial crime (tax offences excluded except when committed within a criminal organization).
- Principal vulnerability: greater risk at the layering stage when funds introduced abroad are transferred into the Luxembourg system; availability of corporate structures and service providers that can disguise beneficial ownership creates particular vulnerability.
- Overall: controls are broadly in line with the FATF 40+8 Recommendations, but implementation quality—particularly in private banking and funds management—is difficult to assess.

### A. Criminal justice measures and international cooperation
- Legislative basis:
  - Main AML/CFT law: law of April 05, 1993 on the Financial Sector (LoFS 93), amended subsequently.
  - Insurance sector law: Law of 1991 on Insurance Services (LoIS 91).
- Criminalization:
  - Money laundering criminalized by article 506-1 of the Penal Code.
  - Financing of terrorism criminalized by Article 135-5 and 135-6 of the Penal Code.
- Recent laws and draft legislation:
  - Two laws adopted in 2000 and 2001 streamlined mutual legal assistance and extradition procedures.
  - New draft law adopted in first reading by the Parliament was not taken into account in assessment (not yet in force); if adopted in present form it could fall short of revised FATF requirements regarding predicate offences, customer due diligence, and FIU operation.
- International instruments:
  - Luxembourg is party to main instruments addressing ML and FT except for the Palermo convention (signed but not ratified).
  - Criminal laws generally align with international obligations, except the scope of money laundering predicate offences is too limited.
- Confiscation and freezing:
  - Scope of confiscation is quite broad; effectiveness difficult to assess given low prosecution rates.
  - Recommendation: consider alleviating the burden of proof of origin of seized assets, as suggested by the Vienna, the Strasbourg and the Palermo conventions.
  - Implementation of UN asset-freezing obligations: circulars issued to financial institutions; less than half a dozen accounts identified as related to listed persons/entities.
  - EC regulations provide legal basis for freezing, but immediate-effect measures outside criminal investigations would require specific provisions to empower authorities.
- FIU (Financial Intelligence Unit):
  - Model: judicial model under supervision and operation of the Prosecutor’s office.
  - Experience: ten years of receiving suspicious transaction reports (STRs).
  - Main deficiencies: lacks a clear and transparent legal framework to operate as a distinct FIU, lacks sufficient means and IT equipment to handle rising STRs and to perform a substantive analysis function.
  - Recommendation: financing of terrorism should be added explicitly to money laundering as offences for which suspicion should be disclosed.
- Law enforcement and prosecution:
  - FIU and law enforcement/prosecution are the same; specialization provides efficiency in prosecutions.
  - Low number of prosecutions due to policy of forwarding to foreign authorities cases relating to persons or funds originating abroad.
  - Pro-active investigative techniques limited to wire tapping and related measures.
- International cooperation:
  - High volume of mutual legal assistance requests given assets managed/deposited by non-residents.
  - Past delays due to overload and procedures; law of August 08, 2000 simplified procedures and improved efficiency.
  - Law on extradition adopted June 20, 2001 completed framework for international cooperation.
  - Luxembourg is party to major instruments for judicial cooperation in criminal matters, apart from the Palermo convention.

### B. Preventive measures for financial institutions
- Supervisory framework:
  - CSSF is the competent authority for banks, funds management, and a range of financial sector professionals.
  - AML law supplemented by 60 circulars issued by the CSSF (and predecessors) providing guidance (not direct force of law).
  - Culture of strong bank secrecy exists, but mechanisms permit access to information needed by foreign and national supervisory authorities.
- Customer identification and account practices:
  - Anonymous accounts prohibited.
  - Customer identification procedures mandated by law for customers without distinction between natural and legal persons; CSSF Circulars provide detailed guidance.
  - Numbered accounts used extensively, particularly in private banking; treated the same as nominative accounts for customer identification, with access confined to those needing to know.
  - Identification of beneficial owners is a legal requirement; practitioners report difficulties in some cases.
  - No legal requirement to include originator information in wire transfers; banks report internal procedures address this issue in line with international standards.
- Non-resident business and due diligence:
  - Most banking and financial professional business relates to nonresidents and is subject to same AML/CFT controls as resident business.
  - No legal requirement for enhanced due diligence for nonresident business to accord with best international practice.
  - No specific guidance relating to the use of corporate vehicles, despite their importance and associated risks.
  - Acceptance of customer due diligence performed by a regulated entity in Luxembourg or in other countries is permitted; scale of this exemption in Luxembourg could create reputational risks in complex or obscure ownership cases.
- Recordkeeping and reporting:
  - Records of customer identification and transactions must be maintained for at least five years.
  - Legal provisions on reporting STRs largely in line with the standard.
  - Assessment difficulty: uncertain whether financial professionals fully accept reporting obligations; Banking Association indicates reluctance partly due to concern about potential self-incrimination.
- Internal controls and supervision:
  - Banks must establish adequate internal control procedures under LoFS 93; CSSF requires submission of procedures manual and performs regular onsite inspections including AML/CFT coverage.
  - Inspections have identified significant procedural and implementation weaknesses requiring remedial action.
- Insurance sector:
  - AML/CFT measures currently limited to life insurance products.
  - Competent authority: Commissariat aux Assurances (CaA).
  - Life assurance business on behalf of non-residents is a very significant component of the Luxembourg financial services market.
  - Customer identification requirements similar to banks with exemptions for low-value business.

### C. Summary assessment against the FATF Recommendations
- Overall position: Luxembourg has a solid criminal legal framework and supervisory system broadly in line with international standards, but with specific gaps and implementation challenges, particularly:
  - Limited scope of predicate offences for money laundering.
  - FIU lacks distinct legal framework, resources, and IT capacity for analysis.
  - Low prosecution rates and policy of forwarding many cases to foreign authorities.
  - Lack of enhanced due diligence requirements for non-resident business and limited guidance on corporate vehicles.
  - Potential reputational risks from widespread acceptance of third-country customer due diligence.

*Source: IMF assessment completed on November 30, 2003.*

### 22. Luxembourg is broadly compliant with almost all of the FATF Recommendations. As

### _cr04399 - 22. Luxembourg is broadly compliant with almost all of the FATF Recommendations. As

### Overall assessment and key gaps
- Luxembourg is broadly compliant with almost all of the FATF Recommendations.
- Main areas requiring further attention:
  - Limited scope of predicate offences and for reporting of suspicions of FT.
  - Lack of a distinct legal framework for the FIU.
  - Low level of local prosecution of money laundering cases investigated in the country.
  - Need for more regular substantive guidance from the FIU and regulatory authorities on implementation of AML/CFT laws, including on trends and techniques.
- Assessors included technical and general suggestions in Table 2 to further strengthen areas already meeting FATF standards.

### Table 1 — Recommended Action Plan to Improve Compliance with the FATF Recommendations

- General framework of the Recommendations (FATF 1-3)
  - The barrier to transfer of personal customer data for international financial services groups from Luxembourg operations needs to be addressed.
  - Authorities should proceed as soon as possible with plans for a legislative amendment to the bank secrecy provisions to permit transfer to the auditors of international financial services groups of customer details in Luxembourg subsidiaries or branches of foreign banks or other financial professionals.

- Scope of the criminal offense of money laundering (FATF 4-6)
  - The scope of predicate offences should expand to cover all serious profit-generating crimes.

- Customer identification and record-keeping rules (FATF 10-13)
  - The principle of the identification of legal entities should be explicitly required by law.
  - There should be a specific requirement for the personal identification of all persons authorized to operate accounts in the name of corporate entities.
  - Attention to high risk areas such as products and structures designed to hide the purpose and true identity of the beneficial owner, whether developed within Luxembourg or elsewhere.
  - CSSF should target in its supervision the opening and operation of accounts involving complex structures where identification of the beneficial owner presents particular difficulties.
  - Controls for accounts opened by correspondence and through the internet should be reviewed; if effective measures cannot be achieved, opening of accounts electronically would not meet the requirements of the law.

- Increased diligence of financial institutions (FATF 14-19)
  - Specific provisions for record-keeping of unusual transactions should be set by law or other enforceable means.
  - Authorities need to act further to ensure that all financial professionals accept their statutory reporting obligations to the FIU and CSSF and do not seek to frustrate AML/CFT implementation.
  - Preferable to include requirements for internal audit and the designation of a compliance officer or function in the law, as circulars lack direct force of law and cannot create additional legally enforceable requirements.

- Measures to cope with countries with insufficient AML measures (FATF 20-21)
  - Add in the law the specific requirements with regard to business relationships with countries which do not have adequate systems in place.

- Other measures (FATF 22-25)
  - A law should be adopted to provide a clear framework for the operation of the FIU.
  - The FIU and the law enforcement team which supports it should be further integrated and be given adequate means to fulfill their functions.
  - The FIU should be urgently equipped with the IT equipment necessary to run a modern database.

- Implementation & role of regulatory and other administrative authorities (FATF 26-29)
  - Authorities should provide a firm and continuing legal basis for circulars issued to ensure effective implementation of the FATF Recommendations.
  - The FIU and CSSF should issue circulars and guidance on a regular basis to clarify aspects of law implementation.
  - Consider development of specific requirements and guidance highlighting various forms of corporate vehicle and the ML and FT risks they entail, covering all categories of professionals (including inter alia lawyers and accountants).
  - CSSF should increase onsite monitoring for financial professionals under its supervision using a risk-based approach, focusing on entities at risk from opaque corporate structures.
  - Particular attention to private banking sector practices; test assumptions about bankers’ awareness of purpose and ownership of entities they transact with.
  - Authorities should introduce specific customer due diligence requirements for trusts and other such entities, in line with international requirement.
  - Authorities should reassess KYC and reputational risks from international distribution networks in the funds area; consider onsite inspections for funds, including for AML/CFT (may require additional resources).
  - CaA should consider increasing frequency of its on-site inspection work.

- Other forms of cooperation – Focus of improved mutual assistance on money laundering issues (FATF 36-40)
  - There should be a legal basis for a wider range of investigations, including at least monitoring bank accounts and controlled deliveries in drug trafficking, money laundering and financing of terrorism matters.
  - Specialized law enforcement agencies, such as the anti-money laundering Section of the Judicial Police, should be equipped with sufficient human and technological means.
  - More emphasis should be given to local prosecution of offences even when some elements have been committed abroad.

### Special Recommendations on Terrorist Financing (8 Special recommendations)
- III. Freezing and confiscating terrorist assets
  - A law should be adopted to provide adequate legal power to freeze accounts in application of UN resolutions taken as part of the powers of the Security Council.

- IV. Reporting suspicious transactions related to terrorism
  - Authorities should ensure that a reporting requirement for suspicions relating to FT is included in the law, as proposed.

- VII. Wire transfers
  - Authorities should proceed to introduce the planned requirements for inclusion of originator information on wire transfers, within the time frame indicated by the FATF.
  - Require financial institutions and PSFs to implement special measures when receiving wire transfers which do not contain originator information.

### Table 2 — Other Recommended Actions

- Legal Issues
  - Luxembourg should become party to the Palermo Convention on Transnational Organized Crime.
  - Authorities should consider introducing legal provisions to alleviate the burden of proof of the knowledge element (mens rea) of the offence, respecting general principles such as presumption of innocence.
  - Authorities should consider easing the burden of proof as to the property or assets belonging to persons convicted for money laundering and/or the predicate offences.
  - Authorities could consider a provision opening the possibility of rendering void transactions during a “suspicious period” before conviction, unless the transaction has been conducted in good faith.
  - For offences of violations of duties by financial businesses and other professionals, the law should distinguish between negligent and fraudulent violations, with proportionate and dissuasive sanctions.

- Customer Due Diligence Issues
  - Authorities should consider whether the continued availability of numbered accounts is warranted, or at minimum pay particular attention to proper management and control of numbered accounts during onsite inspections.
  - Issue further guidance highlighting particular risk factors of non resident business as part of KYC requirements.
  - Examine client funds held in accounts of lawyers and other professionals to ensure more effective measures to avoid misuse; the legal profession should take internal measures to prevent abuse in ML and FT schemes.
  - CSSF should ensure outstanding work to re-verify old accounts is expedited.
  - Creation of a central database of bank accounts would greatly enhance efficiency in fighting money laundering and financing of terrorism.

### Authorities’ Response to the ROSC (October 15, 2004)
- Luxembourg authorities welcome the main findings summarized by the conclusion that “Luxembourg has in place a solid criminal legal framework and supervisory system to address the significant challenge of money laundering faced by this important international financial center.”
- Authorities appreciate the detailed recommendations and are committed to take them into account when formulating future legislation and regulation, in particular when transposing the EU’s third anti-money laundering draft directive now being discussed.
- Authorities note that, to remain fully compliant with the FATF recommendations, national legislation will have to evolve in line with those recommendations and their interpretation.

*Source: _cr04399 - 22. Luxembourg is broadly compliant with almost all of the FATF Recommendations. As (PDF).*

---


_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2004/_cr04399.pdf_