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  4. Implementation of the 5th AML Directive into Luxembourg law

Implementation of the 5th AML Directive into Luxembourg law

06 Apr 2020
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On 30 March 2020, pursuant to the Law of 25 March 2020[1] (the 2020 Law), Luxembourg further transposed the 5th AML Directive[2] into its national law.

The 2020 Law, which is significant in the context of the FATF’s scheduled on-site visit in Luxembourg, impacts the national AML/CTF framework in a number of key areas. To the extent that they have not already done so, obligated entities will need to adapt their policies, controls and procedures accordingly. Some of the important changes are as follows:

  • The scope of persons subject to AML/CTF obligations has been extended. For example, custodian wallet providers and virtual currency exchanges are now obligated entities, with consequent obligations under the Luxembourg AML/CTF framework.
  • The new definition of a "high risk country" includes countries considered to be high risk by the European Commission, the FATF and the Luxembourg supervisory authorities. Enhanced due diligence measures and heightened scrutiny will be required, not only with regards to new business relationships, but also as regards the ongoing monitoring of relationships related to such countries.
  • Customer due diligence measures have been extended. For example, obligated entities must identify and verify the identity of any person claiming to act on behalf of a customer. The authority of such person must also be verified.
  • Where appropriate, obligated entities may identify and verify a customer’s identity on the basis of documents, data or information obtained from a reliable and independent source, including (where available), electronic identification means, as set out in Regulation (EU) No 910/2014[3] or any other secure, remote or electronic identification process regulated, recognised, approved or accepted by the relevant national authorities.
  • The extended cooperation and information sharing framework between financial intelligence units, as well as between national and international financial supervisory authorities and self-regulatory bodies, aims at ensuring direct and quick communication in order to strengthen the fight against ML/TF.

The consolidated version of the Law of 12 November 2004 on the fight against money laundering and terrorist financing can be found here, pdf copyhere.

[1] Transposing, inter alia, Directive (EU) 2018/843 and amending the Law of 12 November 2004 on the Fight Against Money Laundering and Terrorism Financing, as amended

[2] Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing and amending Directives 2009/138/EC and 2013/36/EU

[3] Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC

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