Ruling [LU] ¦ Luxembourg Court Confirms Liability of Lawyer for Money Laundering Compliance Failures

Luxembourg Court Confirms Liability of Lawyer for Money Laundering Compliance Failures

In a recent judgment dated November 28, 2024, the Court of Cassation of Luxembourg upheld the conviction of a lawyer, referred to as PERSONNE1., for multiple breaches of the country’s anti-money laundering (AML) laws. The case centers on violations of the amended Law of November 12, 2004, which governs measures to combat money laundering and terrorist financing. PERSONNE1., acting as a domiciliary agent for a client company, failed to meet her legal obligations related to enhanced due diligence, internal procedures, risk assessment, and cooperation with authorities. The Court rejected her appeal against an increased fine and confirmed the findings of the appellate court regarding her professional misconduct.

Legal Issues and Court’s Reasoning

The defense argued that some of the alleged offenses related to facts predating the 2004 law and therefore could not be punished retroactively. However, the Court clarified that the relevant period for infractions began in June 2012 when PERSONNE1. formally assumed her role as domiciliary agent, well after the law’s enactment. Additionally, the Court addressed prescription issues by confirming that the offenses qualified as “clandestine” or “hidden” crimes, meaning the limitation period started only upon discovery during a police search in February 2019.

Regarding the substance of the offenses, the Court found that PERSONNE1. had not fulfilled her duty to conduct enhanced ongoing vigilance towards politically exposed persons, specifically related to a client who was the son of a former prime minister with a history of corruption charges. The documentation provided was incomplete and inconsistent, failing to adequately identify or monitor the beneficial owners or verify sources of funds over several years. Her internal procedures were also deemed insufficient to manage money laundering risks effectively.

Bastian Schwind-Wagner_Follow "The Luxembourg Court of Cassation has reaffirmed that legal professionals bear critical responsibilities under AML laws and can face severe penalties for failing to implement adequate due diligence and risk management measures. This case serves as a strong reminder that compliance is an ongoing duty requiring vigilance and thorough documentation."

Implications for Legal Professionals and AML Compliance

This ruling underscores the strict responsibilities imposed on legal professionals involved in company domiciliation and management services under Luxembourg’s AML framework. Lawyers must implement robust internal controls, maintain comprehensive records, regularly update client information, and perform continuous risk assessments. Failure to rigorously apply these standards can lead to significant criminal sanctions, including hefty fines and reputational damage. The decision also highlights that AML obligations are ongoing and extend throughout the entire business relationship, not just at client onboarding.

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