Anti-Money Laundering (AML), Counter Terrorist Financing (CTF) and Counter Proliferation Financing (CPF) for Specialised PFS & FinTech ¦ Luxembourg

Anti-Money Laundering (AML), Counter Terrorist Financing (CTF) and Counter Proliferation Financing (CPF) for Specialised PFS & FinTech ¦ Luxembourg

AML/CFT/CPF advisory for Luxembourg PFS and FinTechs: risk‑based framework design, outsourcing oversight, and inspection‑ready governance aligned with CSSF/AED and EU rules.

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 of our AML, CTF and CPF services

Luxembourg is a leading European financial center with strict obligations on anti-money laundering (AML), countering the financing of terrorism (CFT), and counter-proliferation financing (CPF). PFS and fintech companies must implement robust AML/CFT/CPF frameworks to meet the Law of 12 November 2004 (as amended), CSSF guidance, EU AML directives and regulations, as well as, FATF standards.

Boost your PFS or FinTech’s AML/CFT/CPF readiness! Targeted advisory support for Luxembourg regulated entities.

Scope & applicability for specialised PFS & Fintech

PFS & fintech firms in Luxembourg fall within the scope when providing financial services such as payment services, crypto-asset services, custody, brokerage, advisory services, corporate services, or acting as intermediaries for fund transactions. Determine applicability by mapping products, clients and channels against regulated activities.

Core AML/CFT/CPF requirements

Design your compliance program around these core components:

  1. Risk assessment: conduct entity-level and product-level AML/CFT/CPF risk assessments, refreshed at least annually or upon material change.
  2. Customer due diligence (CDD/KYC): identify and verify customers and beneficial owners, apply enhanced due diligence (EDD) for PEPs and higher-risk relationships, ongoing monitoring and periodic refreshes.
  3. Transaction monitoring: implement rules-based and behavior analytics to detect suspicious patterns and threshold breaches.
  4. Reporting: file Suspicious Transaction Reports (STRs) to the Cellule de Renseignements Financiers (CRF) in Luxembourg promptly and maintain internal escalation procedures.
  5. Record-keeping: maintain records of transactions, CDD documents, risk assessments and STRs for at least five years (or as prescribed by law).
  6. Internal controls & governance: appoint a named AML/CFT/CPF Compliance Officer, establish committees, clear policies and procedures, and audit mechanisms.
  7. Training: provide role-specific AML/CFT/CPF training for staff and senior management with tracked completion.

Conducting effective AML/CFT/CPF risk assessments

A best-practice risk assessment includes:

  • Identification of inherent risks by, inter alia, customer type, product, channel and geography.
  • Likelihood and impact scoring methodology adapted to fintech business models (e.g., wallets, tokenization).
  • Controls mapping and residual risk calculation.
  • Risk appetite statements and mitigation plans with timelines.

KYC & CDD: practical steps for specialised PFS & Fintech

Implement a tiered approach:

  • Standard CDD: verify identity using reliable, independent sources and collect purpose of the relationship.
  • Enhanced CDD: additional verification, source-of-funds/source-of-wealth evidence, transaction limits and monitoring for high-risk clients (including PEPs and sanctioned persons).
  • Ongoing monitoring: automated screening, periodic reviews, and triggers for re-verification when risk increases.

Transaction monitoring & technology

Fintechs should combine data strategy with tooling:

  • Data capture: centralize identity attributes, device signals, payment flows, IP/geolocation and behavioral metrics.
  • Rules & models: layered rules, machine learning anomaly detection and typology libraries tailored to, inter alia, crypto flows, or marketplace payments.
  • False positive management: prioritized alerts, investigator workflows, and feedback loops to tune detection.

Sanctions screening & CPF considerations

Sanctions and CPF controls must be integrated into onboarding and ongoing screening with real-time/near-time watchlists, global sanctions lists, and mechanisms to freeze or block transactions. Ensure screening covers customers, beneficial owners, controllers, and related third parties.

Governance, policies & internal controls

Establish clear governance:

  • Designate a senior manager as AML/CFT/CPF Responsible Officer with direct access to the board.
  • Document policies: AML/CFT/CPF policy, sanctions policy, CDD policy, transaction monitoring policy and escalation procedures.
  • Independent review: periodic internal audit and external independent review to validate program effectiveness.

Reporting obligations & cooperation with the CSSF and other authorities

Report suspicious transactions to the CRF without delay. Co-operate with CSSF inspections, provide required records and support cross-border information requests under applicable confidentiality and data protection rules (GDPR).

Training, awareness & compliance culture in anti-money laundering and counter terrorist financing

Develop role-based training that covers typologies relevant to PFS & fintech Luxembourg operations, sanctions, CPF risks, and how to spot red flags. Promote a speak-up culture and ensure whistleblowing channels align with local law.

Quick implementation checklist for specialised PFS & Fintech

  • Complete AML/CFT/CPF risk assessment and document findings.
  • Appoint a qualified AML Compliance Officer and backup.
  • Adopt or update AML/CFT/CPF policies aligned with Luxembourg law.
  • Implement KYC/CDD processes and EDD for high-risk clients.
  • Deploy transaction monitoring system tuned to product typologies.
  • Integrate sanctions screening across onboarding and payments.
  • Set record-keeping, reporting and audit schedules.
  • Run staff training and maintain evidence of completion.

Technology & Vendors

Select vendors that support GDPR, provide audit trails, and deliver configurable rules for crypto, e-money, payment and marketplace use cases. Consider a hybrid approach combining rules-based detection with ML models and human review to reduce false positives while maintaining regulatory defensibility.

Boost your PFS or FinTech’s AML/CFT/CPF readiness! Targeted advisory support for Luxembourg regulated entities.

Frequently Asked Questions (FAQ)

Professional service firms (PFS), regulated financial institutions, payment institutions, crypto-asset service providers (CASPs) and many fintechs operating in Luxembourg must comply if they perform regulated financial activities or act as intermediaries.
Use risk-based KYC: identity verification, beneficial ownership checks, sanctions screening, and EDD for high-risk customers. Apply digital onboarding safeguards and ongoing monitoring appropriate to product risk.
Typical findings include missing risk appetite statements, weak risk assessments, insufficient EDD for high-risk clients, inadequate transaction monitoring, poor record-keeping and lack of timely SARs/STRs.
The Commission de Surveillance du Secteur Financier (CSSF) supervises many entities in the Luxembourg financial sector and assesses compliance with the Law of 12 November 2004 on the fight against money laundering and terrorist financing. At national level, the financial intelligence unit (FIU) and other authorities coordinate financial intelligence and risk assessments, while specialized committees (for example those created under the Law of 20 July 2022 setting up a monitoring committee for restrictive measures in financial matters) support sanctions-related supervision.
Professionals are required to meet due diligence obligations under the Law of 12 November 2004, as amended, and related circulars: verify customers and beneficial owners, screen for sanctions and PEPs, apply enhanced due diligence (EDD) for higher-risk relationships, and keep records. Supervised entities include Luxembourg investment fund managers, payment and provider activities, trust and company service providers (TSCPs) and other PFS; some are supervised by the CSSF or other competent authorities depending on the sub-sector.
Conduct entity-level and sub‑sector risk assessments (SSRA) that identify risk factors, inter alia, by customer, product and geography, map inherent risks, and score likelihood and impact. Align controls to international standards and FATF guidance, implement proportionate transaction monitoring and sanctions screening, and document mitigation plans and adequate internal management requirements with timelines to reduce residual risk.
The financial intelligence unit (FIU) collects and analyses financial intelligence produced by obliged entities and receives Suspicious Transaction Reports. Firms must file STRs without delay when they detect facts that may constitute money laundering, money laundering and terrorist financing, or financing related to proliferation of weapons of mass destruction (WMD), and must cooperate with follow‑up requests while respecting confidentiality and data‑protection rules.
Non‑compliance can lead to supervisory measures, fines and reputational consequences; regulators expect firms to implement circular guidance and the Law of 12 November 2004’s requirements. Luxembourg implements international standards on combating money laundering set by the Financial Action Task Force (FATF) and EU directives, so obligations reflect both national law and those international standards.

How does this service fit within the broader AFC offering?

AML/CFT/CPF for PFS and FinTechs is closely linked to AML/CFT/CPF compliance, risk assessment, KYC & CDD, transaction monitoring, sanctions compliance, AML/CFT/CPF audit preparation, and AML/CFT/CPF policies & procedures. These areas are addressed on dedicated service pages within our broader Anti-Financial Crime offering.

Get started today

To implement or remediate an AML/CFT/CPF program for PFS & fintech, start with a gap assessment and prioritized remediation roadmap. If you are reviewing your AML/CFT/CPF framework, responding to supervisory feedback, or preparing for inspection as a PFS or FinTech, a structured and proportionate approach is essential. For tailored support, contact us or request a compliance health check.

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Boost your PFS or FinTech’s AML/CFT/CPF readiness! Targeted advisory support for Luxembourg regulated entities.