CSSF Details Areas For Improvement In Money Laundering Controls

At a conference on December 3, 2019, Luxembourg's Financial Sector Supervisory Authority (CSSF) has underlined to members of the country's investment fund industry the need for improvement in aspects of controls designed to curb money laundering and the financing of terrorism.

Noting that Luxembourg is Europe's largest fund centre in terms of assets under management, the CSSF notes that the country's National Risk Assessment on Money Laundering and Terrorist Financing risks in December 2018 indicated that the investment fund sector carried a high risk because of the variety of entities involved, the high volume of retail and institutional investors and of the international scope of its business.

As the responsible authority designated by Luxembourg's Anti-Money Laundering legislation of 12 November 2004 (the "AML Law") for the oversight of money laundering and financing of terrorism controls on the part of registered alternative investment fund managers and self-managed non-alternative investment funds, the CSSF conducted in 2019 a survey designed to collect Anti-Money Laundering / Counter Financing Terrorism (AML/CFT) relevant data, and perform AML/CFT scoring of supervised entities

It concluded from the results that while most of the managers and funds surveyed possessed a sound framework for AML/CFT controls, there were some outliers, and discussions with industry members had identified areas for improvement or where further guidance was required.

  1. Beneficial owner

    The CSSF emphasises that there is always at least one beneficial owner and it is always an individual. In the case of corporate entities, senior executives should be treated as the beneficial owners if no other individuals meet the description or if there is any doubt regarding the identified persons as to the accuracy of their identification (see Article 1(7) of the AML Law).

  2. Procedures

    The regulator says procedures are the crucial building blocks of an efficient AML/CFT control framework, to ensure coherent and homogeneous controls commensurate with the entity's risks. Therefore, there is no one-size-fits-all procedure; they should be customised and continuously updated in the light of changes to the regulatory framework and to the circumstances of entities themselves (see Article 4(1) of the AML Law).

  3. Risk-based approach

    A risk-based approach should be employed to optimise the use of resources and ensure that controls are commensurate with the inherent risks faced by...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT