Ruling [LU] ¦ Luxembourg Court Acquits Company in Beneficial Ownership Registry Case Due to Lack of Intent

Luxembourg Court Acquits Company in Beneficial Ownership Registry Case Due to Lack of Intent

Introduction

In a recent judgment delivered by the District Court of Luxembourg on June 4, 2025, a limited liability company, SOCIETE1, was acquitted of charges relating to non-compliance with the obligations under Luxembourg’s beneficial ownership registry law. The case highlights critical issues surrounding the enforcement of transparency laws in corporate governance and the significance of intent in financial crime prosecutions.

Background of the Case

The public prosecutor had accused SOCIETE1 of two main infractions: failing to timely register all required information on its beneficial owners in the national Register of Beneficial Owners (RBE) and failing to retain such information at its registered office. These obligations stem from the Luxembourg law of January 13, 2019, as amended in 2025, which implements EU directives aimed at increasing transparency to combat money laundering and terrorist financing.

Legal Framework and Changes in Legislation

The case involved interpreting a recent amendment that introduced an essential element of “intentionality” into the offense of failing to register beneficial ownership information. Before the amendment, any omission could potentially trigger penalties. However, the new law restricts criminal liability only to cases where the omission was made knowingly and deliberately. This legislative change plays a pivotal role in assessing the accused company’s liability.

Bastian Schwind-Wagner_Follow "The Luxembourg court’s decision in the SOCIETE1 case emphasizes that criminal penalties for failing to comply with beneficial ownership registration rules require proof of intentional misconduct. This ruling highlights the judicial system’s careful consideration of intent in financial crime enforcement."

Court’s Analysis and Decision

While the court acknowledged that SOCIETE1 had indeed failed to fulfill its registration and record-keeping duties, it found no evidence proving that these omissions were made intentionally. The defense argued that operational difficulties with external service providers caused unintentional delays and lapses. Furthermore, regarding the retention of information at the company’s headquarters, there was insufficient proof that electronic records were not kept, as no examination of seized computer equipment was conducted.

Given these facts, the court concluded that the necessary element of intent was absent. As a result, SOCIETE1 was acquitted on both charges, illustrating the judiciary’s careful application of criminal standards in financial regulatory matters.

Implications for Corporate Compliance and Financial Crime Enforcement

This ruling underscores the importance of distinguishing between negligent administrative errors and deliberate wrongdoing in enforcing anti-money laundering laws. Companies must still maintain robust compliance systems to avoid violations; however, prosecutors must establish clear intent to secure convictions. The case also highlights potential challenges for authorities in gathering conclusive evidence, especially concerning digital record-keeping.

In summary, the judgment demonstrates a balanced approach between upholding legal requirements for transparency and ensuring fair treatment under criminal law principles.

Dive deeper