Administrative sanction of 25 March 2022 for non-compliance

with professional obligations regarding the prevention of

money laundering and terrorist financing

Luxembourg, 4 April 2025

Administrative decision

On 25 March 2022, the CSSF imposed an administrative fine of EUR 283,000 (in words: two-hundred

eighty-three thousand euros) on ****************** GmbH, Zweigniederlassung Luxembourg

(hereinafter the ”Luxembourg Branch”) for non-compliance with several professional obligations

regarding the prevention of money laundering and terrorist financing, as identified by the CSSF

during its on-site inspection.

The Luxembourg Branch is registered in Luxembourg, as a branch of a management company

authorised in another EU Member State, in accordance with Article 17 of Directive 2009/65/EC of

the European Parliament and of the Council of 13 July 2009 on the coordination of Laws, regulations

and administrative provisions relating to undertakings for collective investment in transferable

securities (UCITS) and, as a branch of an alternative investment fund manager authorised in another

EU Member State, in accordance with Article 33 of Directive 2011/61/EU of the European Parliament

and of the Council of 8 June 2011 amending Directives 2003/41/EC and 2009/65/EC and Regulations

(EC) No 1060/2009 and (EU) No 1095/2010.

An appeal had been lodged with the Luxembourg Administrative Court against the administrative

decision of the CSSF. The latter finally confirmed all aspects of the administrative decision of the

CSSF in a judgment of 7 February 2025.

Legal framework/motivation

The administrative fine was imposed by the CSSF, pursuant to Article 2-1(1) and Article 8-4(1), (2)

and (3)a) of the amended Law of 12 November 2004 on the fight against money laundering and

terrorist financing (hereinafter the “AML/CFT Law”).

Based on the observations made during the CSSF on-site inspection and considering the additional

replies and information provided by the Luxembourg Branch, the CSSF ultimately concluded that, at

the time of the on-site inspection, the Luxembourg Branch did not comply with several legal and

regulatory requirements, as provided for in the following acts:

•

AML/CFT Law, and

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•

CSSF Regulation No 12-02, on the fight against money laundering and terrorist financing,

which constitutes an implementing measure of the AML/CFT Law, as applicable at the time

of the on-site inspection and meanwhile amended (the "CSSF Regulation 12-02").

To determine the type and level of the administrative sanction, the CSSF duly considered all the

legal and factual elements set out, as well as the type, gravity and duration of the observed breaches

and the financial situation of the Luxembourg Branch at the time of the on-site inspection but also

the level of cooperation as well as the level of reactivity (or its lack of reactivity) regarding the

corrective measures to be put in place, in accordance with the provisions of Article 8-5(1) of the

AML/CFT Law.

According to the Luxembourg Branch the corrective measures have since been fully implemented.

Legal basis for the publication

This publication is made pursuant to the provisions of Article 8-6(1) of the AML/CFT Law on a

nominative basis, the CSSF having considered – after an assessment of the proportionality of the

publication and taking into account the Luxembourg Branch’s arguments – that none of the legal

exceptions provided for in Article 8-6(1) of the AML/CFT Law is applicable.

Context and major cases of non-compliance with the

professional obligations identified

The administrative fine was imposed following an on-site inspection of the CSSF conducted on the

Luxembourg Branch which had started on 12 November 2018, focusing on anti-money laundering

and counter-terrorist financing (“AML/CFT”) aspects of the framework in place at the Luxembourg

Branch. During said inspection, the CSSF identified persistent breaches in the AML/CFT framework

of the Luxembourg Branch, which related particularly to the following points:

•

The Luxembourg Branch’s money laundering/terrorist financing risk analysis did not cover

the full scope of activities of the Luxembourg Branch and therefore contravened Article 2-

2(1) of the AML/CFT Law. The risk analysis failed to adequately account for the risks posed

by over 1,000 natural persons investing directly in the funds managed by the Luxembourg

Branch. As a consequence of the regulatory framework of a foreign jurisdiction, that does

not foresee intermediary investors, these persons were directly registered with the funds

managed by the Luxembourg Branch and were to be considered as its clients, despite

interactions occurring through local distributors. This specific framework required

consideration of these final investors within the money laundering and terrorist financing

(“ML/FT”) risk assessment.

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•

Deficiencies regarding due diligence on investors:

While relying on third party entities in terms of investor identification and

verification of identity, the Luxembourg Branch failed to provide evidence of

complete initial and ongoing documentation, including for the source of wealth, for

a politically exposed person (“PEP”) investor, as required under enhanced due

diligence measures. Moreover, at the time of approving the investor, the ML/FT risk

had been assessed as low. This contravened Articles 3-3(2), 3-2(4) as well as 3(2)a)

to c) of the AML/CFT Law;

The Luxembourg Branch failed to ensure performance of timely ongoing monitoring

in line with internal procedures and provide complete initial documentation for one

investor, therefore violating Article 3(2)a) and d) of the AML/CFT Law, as well as

Article 37(3) of CSSF Regulation 12-02.

In this case the Luxembourg Branch did not provide accurate information to the

CSSF, which was considered as unsatisfactory in terms of cooperation.

•

Deficiencies regarding due diligence on intermediary investors:

Absence of senior management approval for two intermediary investors files,

although the decision to establish any business relationship with a new intermediary

belonged solely to the Luxembourg Branch;

Additionally, the Luxembourg Branch did not align the risk level of an intermediary

investor with its geographical risk profile.

Therefore, the Luxembourg Branch contravened Article 3-2(3)c) of the AML/CFT Law.

•

The Luxembourg Branch failed to provide evidence of complete initial and ongoing name

screening against PEP and financial sanctions lists for five investor accounts, thus

contravening Article 3(2)d) of the AML/CFT, as well as Article 33(1) of CSSF Regulation 12-

02.

Insufficient AML/CFT review cycle by Internal Audit of the Luxembourg Branch’s activities at

the time of the on-site inspection, in accordance with Article 44(2) of CSSF Regulation 12-

02, which requires a yearly review in terms of AML/CFT. Indeed, while no AML/CFT related

internal audit had been conducted the year preceding the on-site inspection and no AML/CFT

related internal audit review cycle for the Luxembourg Branch having been in place, the

Luxembourg Branch continuously did not comply with the above requirement in 2019 and

2020.

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