Anti Financial Crime Framework ¦ Luxembourg

Anti Financial Crime Framework ¦ Luxembourg

Build a Luxembourg‑ready AML/CFT/CPF framework with regulator‑aligned policies, risk assessments and implementation services meeting CSSF, AED and EU AML expectations.

Notice

The following information is provided for general informational purposes and does not form part of our editorial content. It relates to our professional services in Financial Crime.

The services described are provided byconcilio et labore GmbHconcilio et labore GmbH, which was founded by Bastian Schwind-Wagner. Bastian is a Certified Anti-Financial Crime Professional (CAFCP), a qualification validated by TU Dublin.

Overview

Build a robust anti-financial crime (AFC) framework tailored to Luxembourg’s regulatory landscape. This page summarises legal obligations, recommended controls, implementation steps and best practices to meet anti-money laundering (AML), counter terrorist financing (CTF) and counter proliferation financing (CPF) expectations.

Boost the effectiveness of your anti-financial crime framework! Targeted advisory support for Luxembourg regulated entities.

Why a strong anti-financial crime framework in Luxembourg matters

Luxembourg is a global financial centre subject to the EU AML framework and local laws enforced by the commission de surveillance du secteur financier (CSSF), the administration de l’enregistrement et des domaines (AED), the FIU Luxembourg and other authorities. A well-documented anti-financial crime framework reduces regulatory risk, prevents financial loss and protects reputation.

Key components of an effective compliance framework

  • Governance and policies: Board-approved anti-money laundering and counter-terrorist financing policy, clear roles and responsibilities, appointment of a RC/MLRO/Compliance Officer.
  • Risk appetite statement: Board-approved document that explains how much risk an organization is willing to accept in order to achieve its objectives. It sets clear boundaries for decision‑making by defining what level of risk is acceptable and what is not.
  • Risk assessment: Periodic enterprise-wide and product-level anti-money laundering and terrorist financing risk assessments aligned with Luxembourg and supranational risk indicators and the applicable sub-sector risk assessment.
  • Customer due diligence (CDD): Risk-based KYC, enhanced due diligence for PEPs and high-risk jurisdictions, ongoing monitoring, following international standards on combating money laundering and terrorism financing.
  • Transaction monitoring and screening: Real-time and batch monitoring with scenario rules, sanctions and PEP screening tuned to EU, UN lists and national measures applicable to the luxembourg market.
  • Reporting and escalation: Suspicious transaction reporting to the FIU, internal reporting workflows and regulatory notifications to the CSSF/AED.
  • Training and awareness: Role-based training, based on the anti-money laundering directive, for staff and periodic testing of controls.
  • Record-keeping and audit: Retention policies, audit trails and independent testing of anti money laundering and terrorist financing measures and controls.

Key instruments to follow:

  • Luxembourg’s AML laws implementing EU AML Directives (AMLD), e.g.
    • Law of 12 November 2004 on the fight against money laundering and terrorist financing
  • Subsequent AMLA and EBA guidelines on, inter alia, AML risk factors, terrorist financing risk factors, due diligence measures and the risk assessment of money laundering and counter terrorist financing in the financial sector
  • CSSF and AED circulars and guidance on AML/CFT/CPF for supervised entities, e.g.
    • CSSF Regulation No 12-02 of 14 December 2012 on the fight against money laundering and terrorist financing
  • The national risk assessment of money laundering in Luxembourg, provided by the Ministry of Justice
  • Financial Intelligence Unit (FIU) Luxembourg guidance on suspicious activity reporting.
  • Financial sanctions regimes published by the EU and UN; national enforcement measures.
  • Financial action task force (FATF) guidance on the fight against money laundering or terrorist financing and the use of the financial system to conduct organised crime

Step-by-step implementation roadmap

  • Gap analysis: Compare current controls against legal requirements (e.g. EU and Luxembourg law) and industry best practice in the Luxembourg financial sector.
  • Risk assessment: Conduct AML/CFT/CPF risk assessments at entity, product and jurisdiction level.
  • Policy and procedures: Draft/update AML/CFT/CPF policy, KYC/CDD procedures, transaction monitoring rules and escalation matrices.
  • Technology and data: Deploy or tune transaction monitoring systems, sanctions screening, identity verification and secure data storage.
  • People and governance: Appoint RC and MLRO, define reporting lines and set board oversight processes.
  • Testing and training: Run independent control testing and deliver role-based training programs according to the applicable legal framework and best practice.
  • Continuous improvement: Monitor regulatory changes, update risk assessments and iterate controls to mitigate financial crime risks.
  • Inclusion: Balance financial inclusion and anti-money laundering measures

Effective practical controls and metrics to demonstrate effectiveness to the CSSF and other relevant stakeholders

Implement measurable controls, KPIs and management information (MI) to evidence an effective framework:

  • Number and outcome of suspicious activity reports (SARs) filed to FIU.
  • Percentage of high-risk customers with enhanced due diligence completed.
  • False positive rate and tuning frequency for monitoring systems.
  • Time-to-onboard and time-to-investigate alert SLA metrics.
  • Completion rates for mandatory Luxembourg AML, CFT and CPF training.

Special considerations for the financial sector, including fintech, UCITS and investment funds.

Fintechs and fund managers must adapt frameworks to business models: crypto-related activity requires enhanced crypto-asset controls, also especially related to terrorist financing; fund structures require clear investor onboarding and, inter alia, source-of-funds verification tailored to Luxembourg fund rules.

Common pitfalls to avoid

  • One-size-fits-all CDD rather than risk-based approaches.
  • Poor data quality and fragmented KYC repositories.
  • Infrequent tuning of monitoring scenarios causing alert overload.
  • Insufficient senior management oversight and lack of auditability.

How we can help to comply with Luxembourg AML regulations

We help financial institutions to ensure compliance by providing gap analyses, AFC program design, RC and MLRO as a service and independent testing tailored to Luxembourg requirements. Contact us to arrange an AML compliance review.

Boost the effectiveness of your anti-financial crime framework! Targeted advisory support for Luxembourg regulated entities.

Frequently Asked Questions (FAQ)

Firms must implement risk-based CDD, transaction monitoring, report suspicious transactions to the FIU, maintain records, appoint an RC/MLRO and comply with sanctions and regulatory reporting to the CSSF/AED.
At minimum annually, and whenever material changes occur such as new products, jurisdictions or regulatory updates.
For customers assessed as high-risk, politically exposed persons (PEPs), complex ownership structures, or transactions involving high-risk jurisdictions.
The Law of 20 July 2022 sets up a monitoring committee to oversee the application of restrictive measures in financial matters. Its goal is to strengthen Luxembourg’s financial system by ensuring compliance with sanctions and other restrictive regimes that target activities such as financing of terrorism, money laundering and related offences. The committee supervises how measures affect service providers, Luxembourg investment funds, and other entities operating within Luxembourg’s international financial sector.
Service providers and Luxembourg investment funds must apply enhanced due diligence and internal controls to identify and respond to risks linked to the financing of terrorism, money laundering and AML predicate offences. The monitoring committee helps ensure these entities follow applicable restrictive measures and report suspicious activity that could indicate forms of financial crime for the purposes of prevention and enforcement.
The Law of 13 January 2019 establishes the Beneficial Owner Register (RBE) to increase transparency about who ultimately controls companies and other entities. This transparency supports anti-money laundering and counter-terrorist financing efforts by making it easier for authorities, service providers and supervised institutions to identify beneficial owners and detect potential money laundering, the financing of terrorism, and other AML predicate offences. However, the RBE cannot be relied upon as a source of information; obligated parties must conduct their own research.
Entities should implement robust AML and counter-terrorist financing policies, register and keep accurate beneficial ownership information where required, monitor clients and transactions for suspicious signs of money laundering or financing of terrorism, and cooperate with the Luxembourg government, supervisors and other authorities. Prompt reporting of suspected offences and adherence to forms of financial reporting and controls will reduce legal risk and help protect the integrity of Luxembourg’s financial system.

How does this service fit within the broader AFC offering?

Financial crime frameworks form the backbone of the broader Anti-Financial Crime approach. This service integrates closely with AML/CFT/CPF compliance, risk assessment, KYC and CDD, transaction monitoring, sanctions compliance, AML/CFT/CPF audit preparation, and outsourcing controlling support, each covered on dedicated service pages within our Anti-Financial Crime offering.

Get started today

If you are establishing, reviewing, or enhancing your anti-financial crime framework, a structured and proportionate approach is essential in the Luxembourg environment to strenghten the prevention of money laundering under the current AML regulations.

✒Send us a message and we’ll get back to you.
✉E-mail us at e-mail@cetl.lu.
Rest assured, your query is important to us and we will respond shortly.
☏You can also contact Bastian on +49 171 5356474. If he is unable to answer your call immediately, he will call you back.

Connect with Bastian and follow FinancialCrime.lu.

Or simply book a rewarding meeting here:

Boost the effectiveness of your anti-financial crime framework! Targeted advisory support for Luxembourg regulated entities.