Luxembourg Updates AML Laws for Verification of Beneficial Ownership

Luxembourg has amended its Anti-Money Laundering regulation requiring practitioners to identify beneficial owners in accordance with FATF standards.

In January 2022, Luxembourg introduced an AML law that states that money laundering offenses carried out by a practitioner in their professional life will be treated as a matter of concern, leading to severe criminal sanctions.

The recently passed legislation makes it clear that practitioners must perform Customer Due Diligence (CDD) on new clients regardless of the results of risk assessments, although the degree of CDD will depend on the assessment’s findings. In order to identify inaccuracies, discrepancies, missing information, or non-registration, they must also check the Register of Beneficial Owners (RBO) or the Register of Trusts or Fiduciaries (RFT) before beginning a commercial connection or carrying out a transaction for a customer.

In addition to keeping a reference to these documents, they must also maintain a copy of all records, data, and information required to meet customer due diligence requirements.

By replacing the undefined concept of services provided “by way of business” with “by way of a business relationship,” the new law also modifies the legal definitions of professionals who offer services subject to laws. Thus, any individual natural or legal, who renders any of the services stated in the regulations to a third party through a commercial partnership is referred to as a Trust and Company Service Provider (TCSP).

A practitioner is now referred to as a TCSP if they carry out the duties of a company director or secretary, or if they provide a registered office, business address, communication address, administrative address, or business space in the context of a business relationship. Other Additions to the Luxembourg Law include, lawyers who hold bearer share deposits are liable to the AML requirements as per FATF recommendations.

According to the FATF recommendation 12, professionals should have proper risk-management procedures in place to establish whether the client, the person claiming to represent the client, or the beneficial owner is a politically exposed person.

Luxembourg’s competent authorities may accede to a legitimate request from a foreign counterpart authority to conduct an investigation or inspection on location, in addition to requesting that their foreign counterpart authorities conduct such an investigation on their own territory.

Following any changes, trustees and fiduciaries have a maximum of one month to update the information in the RBO.

Suggested Read: EU Proposes New AML Agency For Addressing Money Laundering