15/08/22

LUXEMBOURG: Jurisdiction amends AML law on beneficial ownership verification.

As published on step.org/industry-news, Monday 15 August, 2022.

A law gazetted on 8 August 2022 substantially amends Luxembourg's anti-money laundering (AML) regulations, setting out practitioners' obligations to identify customers and beneficial owners in accord with Financial Action Task Force (FATF) recommendations.

In January 2022, Luxembourg introduced a new law under which money laundering offences carried out by a practitioner in the course of their professional activities will be treated as an aggravating circumstance, attracting more severe criminal sanctions. The law, just enacted, now clarifies that practitioners must conduct customer due-diligence (CDD) on new customers regardless of the risk assessment, although the result of the risk assessment will influence the level of CDD applied. Also, before establishing a business relationship or executing a transaction for a customer, they must also check the register of beneficial owners (RBO) or the register of trusts or fiduciaries (RFT) and compare the information provided by the customer with the registers, to detect errors, discrepancies, missing information or non-registration. They must also keep a copy of documents, information and data that are necessary to comply with customer due diligence obligations, not just a reference to these documents.

The new law also changes the formal definitions of professional persons who provide services subject to the regulations, replacing the undefined concept of services provided 'by way of business' with 'by way of a business relationship'. A trust and company service provider (TCSP) is thus any natural or legal person who provides a third party with any of the services listed in the regulations by way of a business relationship. Moreover, a practitioner performing the functions of company director or secretary, or providing a registered office, business address, correspondence or administrative address or business premises in the context of a business relationship, is also now designated as a TCSP. A similar provision appears in the revised AML regulations to be introduced next month in the UK.

Other amendments in the Luxembourg law include the following:

• Lawyers are subject to the AML regulations when they act as depositories of bearer shares, in accordance with the FATF recommendations.
• Professionals should have in place adequate risk-management systems to determine whether the client or the person purporting to represent the client or the beneficial owner is a politically exposed person, in accordance with FATF Recommendation 12.
• Luxembourg's competent authorities may comply with a valid request from a foreign counterpart authority to carry out an investigation or inspection on site, and can request their foreign counterpart authorities to carry out such investigation in their own territory.
• The maximum period for trustees and fiduciaries to update information contained in the RBO is reduced to one month after any changes.