Implementation of the 4th Anti-Money Laundering Directive

The law of February 13^th 2018 (“AMLD Law”) which entered into force on February 18^th 2018 has now implemented most of the outstanding provisions of the 4^th Anti-Money Laundering Directive (“4th AML Directive”) into Luxembourg Law. This law introduces amendments to the Luxembourg Law of November 12^th 2004 on the fight against money laundering and terrorist financing. The law will have immediate effect without a transitional period. In addition to implementing the provisions of the 4^th AML Directive, certain additional recommendations of the Financial Action Task Force have also been included.

Key definitions are now provided and/or extended. The definition of “beneficial owner” for corporate entities has been extended so as to include situations where it is not possible to identify a beneficial owner as per 2004 Law criteria; in such case the natural persons who hold the position of senior manager are to be considered as the beneficial owner. In relation to trusts, the AMLD Law now requires all parties to a trust be identified. The definition of “Politically exposed persons” has been extended to include members and directors of the board of an international organisation and also brothers and sisters in the definition of ‘family members’.

The 4^th AMLD Law also creates new obligations in relation to internal procedures. Professionals must ensure that they follow an appropriate risk management procedure as well as risk assessment systems.

In relation to due diligence, there is a simplified requirement if the transaction meets the criteria of Annex II of the 4^th AML Directive. In contrast, there is an enhanced due diligence requirement with regard to relationships which have a high AML/CTF risk, such as business relationships with a person in a third country.

The 2004 Law now also has wider scope, adding gambling services (including internet gambling) in the category of professionals subject to the law.

It is necessary to implement training programmes for employees in order to ensure they can identify indications of money laundering and also whistleblowing measures must be provided for staff.

Furthermore, professionals must inform clients about their data protection rights and keep detailed records. In some specific cases, the competent authorities may demand to retain information and documents for an additional five-year period (compared to the initial five-year period).

The Financial Intelligence Unit and the various supervisory authorities shall closely cooperate and are authorised to exchange information.

Finally, administrative penalties are relatively increased through the reinforcement of the sanctioning powers of the financial authorities. The Commission de surveillance du Secteur Financier (CSSF), the Commissariat aux Assurances (CAA) and the Administration de l’enregistrement et des domains (AED) are now specifically listed as supervisory authorities. Sanctions which can no longer be challenged before court shall be published on their website. In addition, criminal fines have been increased from a range of €1,250-€1,250,000 up to €12,500-€5,000,000.