AML/CTF legislation country profile

ECBA Questionnaire filled in for Luxembourg

a) Legislation

1. Definition of money laundering in the local legal system.

In Luxembourg, money laundering is defined by the articles 506-1 to 506-7 of the Penal Code and concerns:

 -  The fact of knowingly facilitating, by any means, the misleading justification of the origin of goods, 
  constituting the direct or indirect object or product of a primary crime;
  -  The fact of knowingly helping the investment, the dissimulation or the conversion of goods constituting  the
  direct or indirect object or product of a primary crime or constituting the benefit of a primary crime;
 -  The fact of acquiring, detaining or using goods constituting the direct or indirect object or product of a 
 primary crime or constituting the benefit of a primary crime, with the knowledge that these goods derive from
 a primary crime.

2. Sanctions for money laundering offence.

According to articles 506-1 to 506-7 of the Penal Code money laundering is sanctioned as follows:
  - One to five years imprisonment and/or a fine between 1.250 Euros and 1.250.000 Euros;
  - Fifteen to twenty years imprisonment and/or a fine between 1.250 Euros and 1.250.000 Euros if money
laundering has been committed in the framework of a criminal organisation;
  - In some cases the ban from some civil rights for a period from five to ten years;
Attempt of money laundering leads to the same sanctions.

3. (Legal) professions especially affected by local AML/CTF legislation.

In Luxembourg, the law of 12 November 2004 as modified (latest by the law of 17 July 2008 implementing the directives 2005/60/CE and 2006/70/CE) foresees professional obligations in relation to prevention from money laundering. The persons concerned by these obligations are:
- Banks and other professionals of the financial sector according to the law of 5 April 1993;
- Insurance companies;
- Pension funds;
- Investment funds;
- Auditors (Réviseurs d’entreprises);
- Accountants;
- Real estate agents;
- Notary publics;
- Tax advisers;
- Trust and domiciliation agents;
- Casino operators;
- Any person negotiating goods, in case payments are made in cash for an amount of at least 15.000 EUR;
- Attorneys at law.

4. Specific regulations imposed upon attorneys at law.

Attorneys at law are subject to the law of 12 November 2004 when they:

• Assist their client with the preparation and the realisation of transactions concerning:
  -  The purchase and the sale of real estate or commercial companies;
  - The management of client funds, bonds or other assets;
  - The opening or the management of bank, savings or securities accounts;
  - The organization of the necessary funding related to the incorporation, the management or the direction of companies;
  - The incorporation, the domiciliation, the management or the direction of trusts, companies or similar structures.
• Act in the name and for the account of their client in any financial or real estate transaction; or
• Provide any of the services of a company and trust service provider.

According to the provisions of the law of 12 November 2004, attorneys at law, when they fulfil the above-mentioned conditions, have the obligation to:
- identify their client;
- identify the beneficial owner;
- obtain information on the object and the nature of the contemplated business relation;
- be constantly vigilant with respect to the concluded transactions, the origin of the funds and the coherence between the transaction and their knowledge of the client.

In case of any doubt regarding money laundering, the law of 12 November 2004 provides the obligation to report directly to the Luxembourg state prosecutor (article 5.1). However, in case of attorneys at law, article 7.2 of the law of 2004 provides an exception. Instead of reporting directly to the state prosecutor, attorneys at law report to the President of the Bar Association they have been admitted to. He will forward the report to the Prosecutor after having assessed that all conditions are fulfilled.

b) Bar Association

1. Directives – formulated by the Bar Association – guiding the interpretation of the legislation and the force of these directives (binding, guideline,…).

In Luxembourg, the President of the Bar Association, the prosecution and the CSSF (Commission du surveillance du secteur financier-surveillance body of the financial sector) issue circular letters regularly. These letters contain recommendations or instructions and help the interpretation of the legislation in connection to the fight against money laundering. If there is any acute problem, the President of the Bar Association may be asked to take a binding decision relating to the way of acting in a specific case.

2. Causes for discussion at the implementation stage of the European Directive in local legislation especially in relation to a possible conflict between this legislation and your professional code of ethics?

Article 9 of the law of 2004 provides sanctions for professionals who do not respect the obligations imposed by this law. During the parliamentary debates in relation to the vote of this law, representatives of the Bar Association proposed to add the term “knowingly” in this paragraph, so that only those professionals who contravene knowingly to the provisions of the law of 2004 would be sanctioned. According to them, the negligence committed by a professional in relation to his professional obligations should only lead to disciplinary or administrative sanctions proper to each profession. This gave rise to a debate. An argument in favour of the introduction of the term “knowingly” in article 9 of the law of 2004, was that the incrimination of negligence would lead to the fact that the professional would hesitate to denounce a client because of the fear of being blamed for a negligence in the exercise of his profession. The term “knowingly” has eventually been introduced in article 9 of the law of 2004.

Further, the vote of the law of 12 November 2004 gave rise to a debate in connection with the professional secrecy attorneys at law are subject to. That is the reason why denunciations are made towards the President of the Bar Association and not directly towards the State Prosecutor.

3. Any action taken by the local Bar Association against the way in which the European directive was implemented in local legislation?

No legal action undertaken.

4. Other bodies that have undertaken any form of action to safeguard the rights of their members in this respect.

No.

c) Legal practice

1. Particularities that foreign attorneys at law in contact with the local legal system should be aware of / recommendations to be taken into consideration?

It may happen that a bank informs the prosecutor of a money-laundering suspicion case without informing the client. Combined with the banking secrecy, it may be wise to contact a local lawyer for assistance in cases where urgent action may be instrumental.

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The ECBA maintains this website to provide and disseminate information on criminal procedure in the EU with regard to national money laundering legislation as it applies to attorneys at law. The content of the website relies on contacts in each jurisdiction and although our aim is to keep this information accurate, the ECBA does not warrant or assume any legal liability or responsibility for the accuracy, completeness, or reliability of the content. This information does not constitute legal advice. If errors are brought to our attention, we will try to correct them. Some of the documents on this website may contain links to information created and maintained by other organizations. Please note that the ECBA does not control and cannot guarantee the accuracy of these materials.

Last Updated (January 2010)