Amendment to anti-money laundering law
Act of 29 July 2022 amending the Act of 12 November 2004
- 12 August 2022: Entry into force of the Law of 29 July 2022 amending the Anti-Money Laundering Law
The law of 29 July 2022 introduces several amendments to the law of 12 November 2004 (the anti-money laundering law).
The objective is to ensure consistency between Luxembourgish texts and international standards concerning mutual legal assistance in criminal matters and the fight against money laundering and terrorist financing (AML/CFT).
The law of 29 July 2022 also amends the law of 10 July 2020 (establishing a register of trusts), the code of criminal procedure, and the law of 8 August 2000 (relating to judicial assistance in criminal matters).
1. Amendments to the anti-money laundering law
1.1 Amendment of Article 1(8) of the amended law of 12 November 2004
Refinements to the definition of «Company and Trust Service Provider» in Article 1(8) of the amended Law of 12 November 2004:
- Replacement of the term «in a professional capacity» par «in the capacity of a business relationship» ;
- Add terms «Manager, director, board member» subject to the English term «director» as used in Directive (EU) 2015/849;
- Clarification of Article 1(8) of the law of 12 November 2004 with the term «if applicable» in accordance with FATF Recommendation 22.
Article 1(8) of the Coordinated Act of 12 November 2004:
By «company and trust service provider» [...] is meant any natural or legal person who provides in the context of a business relationship, one of the following services:
a) formation of companies or other legal persons; ;
b) holding the position of director, Manager, administrator, board member or a secretary of a company, a partner in a partnership or a similar function in relation to other types of legal entities, or cause another person to hold such a function; ;
c) provide a statutory seat, a business, administrative or postal address, or business premises, and, where applicable, any other service relating to a company, partnership, any other corporate body or any other similar legal construction; ;
d) to hold the office of fiduciary in a fiduciary arrangement, trustee in an express trust or equivalent office in a similar legal structure, or to cause another person to hold such an office; ;
e) act as a shareholder on behalf of another person (...) or arrange for another person to so act.
1.2 Amendment of Article 2(1) of the amended law of 12 November 2004
Clarifications to the scope of Article 2(1) of the amended law of 12 November 2004:
- Extension of the scope of activities for lawyers which «acting as custodians of bearer shares;
- Replacement of the term «professionally» par «in the capacity of a business relationship.
Article 2(1) points 12, 13 & 13 bis of the Coordinated Act of 12 November 2004:
Lawyers [...] fall within scope, when they:
a) assist its client in the preparation or execution of transactions concerning:
i. the purchase and sale of real estate or businesses,
the management of funds, securities or other assets belonging to the client,
iii. the opening or management of bank or savings accounts or portfolios,
iv. the organisation of contributions necessary for the formation, management or direction of companies,
versus. the incorporation, domiciliation, management or direction of trusts, companies or similar structures,
b) or act in the name of their client and on their behalf in any financial or real estate transaction; ;
c) or provide one of the services of service provider to companies and trusts; ;
d) or they provide Family Office services; ;
e) or act as custodians of bearer shares.
13. persons [...] within the scope of:
exercise in the context of a business relationship in Luxembourg, tax advisory services; ;
b) practise in the context of a business relationship In Luxembourg, one of the activities described in point 12, letters a) and b) above; or
c) undertake to provide, directly or through persons to whom they are linked, material aid, assistance or tax advice as their main economic or professional activity; ;
13 bis. Other persons [...] in the context of a business relationship In Luxembourg, the activity of a provider of services to companies and trusts.
1.3 Amendment of Article 3 of the amended law of 12 November 2004
Clarifications on customer due diligence obligations:
- Accuracy concerning the obligation to identify the client and the beneficial owner. The’Customer and ultimate beneficial owner identification using reliable and independent sources (Article 3(2)(a) and (b)) is independent of the appreciation of risks by professionals;
- Accuracy concerning the obligation for professionals to consult the beneficial ownership register (RBE) or the register of foundations or trusts (RFT) when verifying the identity of beneficial owners before entering into a business relationship or executing a transaction;
- Suppression of the term «or the references» to avoid confusion regarding the obligations for the retention of documents, data, and information.
Article 3 (2) bis of the consolidated law of 12 November 2004:
Professionals apply each of the customer due diligence obligations, […]. With the exception of the identification provided for in Article 3, paragraph (2), points a) and b), Professionals determine the scope of these measures based on their assessment of the risks associated with particular types of clients, countries or geographical areas, and particular products, services, transactions or distribution channels. In all circumstances, professionals carry out customer and beneficial owner identification [...].
Article 3 (4) of the consolidated law of 12 November 2004:
Customer and beneficial owner identity verification must take place before establishing a business relationship or carrying out a transaction. When entering into a new business relationship with a company or other legal entity, trust, or legal construct that has a similar structure or functions to a trust for which beneficial owner information is required to be registered [...], professionals shall obtain proof of registration or an extract from the register. and compare their information with that in the registers to identify any erroneous data, missing data, or the absence of a registration, modification, or deregistration. Professionals proceed in the same way when exercising ongoing due diligence in business relationships.. […]
Article 3 (6) a) of the consolidated law of 12 November 2004
Regarding customer due diligence measures, a copy or the references documents, data and information necessary to comply with customer due diligence obligations […], including, where applicable, data obtained through the use of electronic identification means, relevant trust services […], or any other secure electronic or remote identification process regulated, recognised, approved or accepted by the competent national authorities, accounting records, business correspondence, as well as the results of any analysis carried out, for five years after the end of the business relationship with the customer or after the date of the occasional transaction […].
1.4 Amendment of Article 3-1 (1) of the Amended Law of 12 November 2004
Clarification regarding the consideration of risk assessment from the professional when applying simplified vigilance measures.
Article 3-1 (1) of the consolidated law of 12 November 2004:
When professionals identify, based on their risk appetite a lower risk of money laundering and terrorist financing, they may apply simplified customer due diligence measures.
1.5 Amendment of Article 3-2 (4) of the amended law of 12 November 2004
Clarification on the enhanced customer due diligence obligation.
The obligations under Article 3-2 (4) of the amended law of 12 November 2004 apply to transactions or business relationships with politically exposed persons. whether they are a client, a person claiming to act on behalf of and for the client, or a beneficial owner.
Article 3-2 (4) of the consolidated law of 12 November 2004
With regards to transactions or business relationships with Politically Exposed Persons, whether they are the client, a person claiming to act on behalf of and for the client, or the beneficial owner, professionals must, in addition to customer due diligence measures […].
a) have adequate risk management systems, including risk-based procedures, to determine if the client, the person purporting to act on behalf of and for the customer or the beneficial owner is a politically exposed person; ;
b) obtain authorisation at a senior level of management before establishing or, if an existing client, maintaining a business relationship with such individuals; ;
c) take all appropriate measures to establish the origin of the assets and the origin of the funds involved in the business relationship or transaction with such persons. In addition, credit institutions and financial institutions shall take all appropriate measures to establish the origin of the assets and the origin of the funds of customers and beneficial owners identified as politically exposed persons; ;
d) ensure enhanced ongoing monitoring of the business relationship.
1.6 Amendment to Article 9-2 bis of the modified law of 12 November 2004
Clarifications on the cooperation of supervisory authorities with their foreign homologues through the addition of paragraphs 8 and 9.
Article 9-2 bis (8) & (9) of the consolidated law of 12 November 2004
(8) Supervisory authorities may ask their foreign counterpart authorities to conduct an on-site investigation or inspection within the territory of the counterpart authority in question. Subject to the consent of their foreign counterpart authorities, officials from the supervisory authorities may participate in, or carry out, the on-site investigation or inspection abroad.
(9) Supervisory authorities may, in response to a duly reasoned and justified request from a foreign supervisory authority, conduct an investigation or an on-site inspection, within the scope of their missions in the field of combating money laundering and terrorist financing, on persons subject to their respective supervisory powers, in accordance with Article 2-1 established in the Grand Duchy of Luxembourg, under the following conditions:
- the on-site inquiry or inspection shall not prejudice the sovereignty, security or public order of the Luxembourg State; ;
- the on-site investigation or inspection is not likely to hinder proceedings initiated in Luxembourg for the same facts and against the same persons
- the persons concerned have not been definitively judged for the same facts in Luxembourg; ;
- the applicant authority grants the same right to the supervisory authority; and
- the requesting authority offers guarantees of professional secrecy at least equivalent to the professional secrecy to which the supervisory authority is subject.
The supervisory authority may, upon request, authorise the presence of agents from the requesting authority during an on-site investigation or inspection. However, the on-site investigation or inspection shall be under the control of the supervisory authority. If the supervisory authority is unable to comply with such a request, it shall inform the requesting competent authority as thoroughly as possible.
2. Modification of Articles 2(2) and 3(1) of the Law of 10 July 2020 establishing a register of fiducies and trusts
Relative accuracy of update timenot exceeding one month) identification and identity verification information.
Article 2(2) of the consolidated law of 10 July 2020:
The information [on the beneficial owners of any express trust administered in the Grand Duchy of Luxembourg and of any fiducie] is adequate, accurate and up-to-date. It shall be updated within a reasonable time. not exceeding one month after any changes […].
Article 3 (1) of the consolidated law of 10 July 2020:
The trustees of express trusts administered in the Grand Duchy of Luxembourg and the fiduciaries obtain and keep basic information on other professionals and entities governed by foreign law, who, if their registered office were located in the Grand Duchy of Luxembourg, would be considered professionals, who provide services to the trust or otherwise engage in a business relationship with the trust. This information is accurate and up-to-date. It is updated within a reasonable time. not exceeding one month after all changes.
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