Professionals subject to the law of 12 November 2004 relating to the fight against money laundering and terrorist financing, as amended (the AML Law) (the Professionals) should be aware of a few changes introduced by the law of 10 August 2018 reforming, among others, the organisation of the Luxembourg Financial Intelligence Unit (Cellule de Renseignement Financier, the FIU).
The changes will become applicable as from 1 November 2018.
1. Extended scope of activities to be reported to the FIU
Under the AML Law, Professionals have to report known and suspected offences of money laundering or terrorist financing.
The scope of that obligation has been extended to cover associated predicate offences to money laundering, ie the predicate offences listed in Article 506-1 (1) of the Luxembourg criminal code (these include, among others, aggravated tax fraud and tax evasion as well as any offence punished by a term of imprisonment of more than six months) as well as offences under Article 8 (1) (a) and (b) of the law of 19 February 1973 on the sale of medicinal substances and measures to combat drug addiction.
In addition, all suspicious transactions, including attempted suspicious transactions, must be reported, regardless of their amount.
2. New cooperation rules in connection with the filing of STR
2.1. Under the AML Law, Professionals are further required to refrain from carrying out transactions which they know or suspect or have reasonable grounds to suspect to be related to money laundering, terrorist financing and as from 1 November 2018, associated predicate offences, until they have informed the FIU and have complied with any specific instruction provided by the latter. The “threshold of suspicion” for the Professional triggering the obligation to file a suspicious transaction report (STR) with the FIU appears to be lowered.
Another innovation is that the period of validity of an instruction from the FIU to block the assets is no longer specified. The FIU may decide at any time to fully or partially release the order not to perform the transaction.
3. Clarified disclosure prohibition
Although this was already implied, the AML Law has been amended to clearly specify that Professionals must not disclose to the customer concerned by a suspicious activity report or to other third persons the fact that information is being, will be or has been reported or provided to the authorities or that a money laundering or terrorist financing investigation by the FIU is being or may be carried out, unless authorised to do so with the express consent of the FIU.
As before the above prohibition does not apply to disclosures to supervisory authorities and self-regulatory bodies or between certain categories of Professionals exercising their activity within the same entity or network or acting for the same client and belonging to the same category of Professionals, each time subject to additional conditions.
However, the AML Law now provides that the prohibition does not apply to disclosures between credit institutions and financial institutions, and between these institutions and their branches and majority-owned subsidiaries established in third-countries, provided that such branches and majority-owned subsidiaries comply fully with the group-wide policies and procedures, including the procedures for sharing information within the group, in accordance with Article 4-1 of the AML Law or Article 45 of Directive (EU) 2015/849, and that the group-wide policies and procedures meet the requirements provided in the AML Law or in Directive (EU) 2015/849. This extension aims at implementing faithfully article 39(3) of Directive (EU) 2015/849.
In order to ensure that the sharing of information within the group is allowed (as per Article 45(8) of Directive (EU) 2015/849), a new paragraph (6) to Article 5 has been added pursuant to which information on suspicions that funds are the proceeds of criminal activity or are related to terrorist financing and reported to the FIU shall be shared within the group, unless otherwise instructed by the FIU.
4. Actions against the FIU’s instructions
A new section has been introduced in the AML Law to provide for a right of action and a related procedure against instructions given by the FIU.
Any person justifying an interest in the property targeted by an instruction from the FIU not to perform transactions and the Professional concerned under this instruction, may request (upon simple request) to the Chambre du Conseil of the Luxembourg District Court (chambre du conseil du tribunal d'arrondissement) the release of such instruction.
The request must be transmitted to the FIU and the State prosecutor's office within twenty-four hours from its receipt. The FIU must submit a written report with the reasons justifying the instruction and forward such report to the office of the Chambre du Conseil within five days after receiving the request. Such written report is then provided to the applicant and the State prosecutor's office. The Chambre du Conseil may request or authorise the FIU to provide oral statements.
The decision rendered by the Chambre du Conseil on an instruction given by the FIU may be appealed by the State prosecutor's office or by the applicant.