Anti-money laundering

A series of developments in anti-money laundering had to be monitored last year, in particular the publication of the ESA’s joint AML guidelines, the adoption of the law implementing the 4th AML directive in Luxembourg and the discussions on the 5th AML directive.

2017 was a busy year for the ALFI AML working group.

On 26 June 2017, the European Supervisory Authorities published their joint guidelines on simplified and enhanced customer due diligence and the factors credit institutions and financial institutions should consider when assessing the money laundering and terrorist financing risk associated with individual business relationships and occasional transactions. The guidelines set out how credit and financial institutions can adjust the extent of their customer due diligence measures to mitigate the money laundering and terrorist financing risk they have identified. Chapter 9 of this paper specifically addresses providers of investment funds.

In parallel to the drafting of the abovementioned guidelines, the ESAs launched a consultation on 31 May 2017 on regulatory technical standards (RTS) relating to measures to take to mitigate money laundering and terrorist financing risks where a third country’s law does not permit the application of group-wide policies and procedures. In particular, issues such as individual money laundering and terrorist financing risk assessments, customer data sharing and disclosure of information related to suspicious transactions are addressed in this paper. The ALFI anti-money laundering working group drafted a response to this consultation.

At the national level, the long-awaited law implementing the 4th AML directive in Luxembourg was adopted on 9 February 2018. As a reminder, the 4th AML directive focuses on risk assessment and the corresponding risk-based approach, qualifies tax crimes as predicate offenses, and provides for the creation of national registers of beneficial owners. Whilst the extension of predicate offenses to tax crimes had already been implemented, the draft law on the central registry of beneficial owners should be adopted soon and will complete the implementation process of the directive. This registry will contain information on beneficial owners of corporate and other legal entities established in Luxembourg. A specific draft law on a registry of beneficial owners of fiduciary relationships is also to be adopted. ALFI is currently analysing the abovementioned texts with a view to updating its practices and recommendations aimed at reducing the risk of money laundering and terrorist financing in the Luxembourg fund industry.

2018 will continue to keep the working group occupied, with further developments expected to follow, as the 5th AML Directive was adopted on 14 May 2018 and should be published soon.

Evelyne Christiaens
Head of the Legal Department, ALFI