Recent Luxembourg Anti-Money Laundering ('AML') Case-Law

Two recent Luxembourg judicial decisions have acquitted professionals of criminal liability pursuant to the fight against money laundering, providing some welcomed clarifications on the cooperation obligation of professionals under the Luxembourg law of 12 November 2004 on the fight against money laundering and terrorist financing (the "AML Law").

Suspicious transaction report

The first decision was rendered by the Luxembourg District Court sitting in criminal matters on June 12th 2014, which had to consider the case of two managers of a professional of the financial sector ("PFS"), who did not file a suspicious transaction report (hereafter "STR"), in a situation where a bank did so in respect of the same common client ("Case 1").

Non-compliance with any AML professional obligations, committed knowingly, may lead to criminal sanctions (a fine between EUR 1,250 to EUR 1,250,000) even in the absence of a money-laundering or terrorist financing offence, (art. 9 of the AML Law).

Article 5 of the AML Law requires professionals, their directors, officers and employees (without prejudice to the obligations vis-à-vis the competent regulatory or supervisory authorities) to cooperate, without delay, with the responsible Luxembourg authority, the Financial Intelligence Unit (Cellule de renseignement financier) ("FIU").

The obligation to cooperate requires professionals who know, suspect or have reasonable grounds to suspect that money laundering or terrorist financing is being committed or has been committed or attempted, to file an STR on their own initiative, without delay. A suspicion may arise upon consideration of the person concerned, its development, the origin of the funds, the purpose, nature and procedure of the operation (Article 5(1)(a) of the AML Law).

There is no limit set on the applicability of this cooperation obligation insofar as what grounds may give rise to a suspicion; the word client is not even mentioned in the legal provision concerned. It must be stressed that no limitation in time is specified as to when the facts or circumstances which may give rise to the suspicion occurred or came to pass, and to the best of our knowledge, there is no Luxembourg legal definition of suspicion. (According to Merriam Webster dictionary, this is a feeling that someone is possibly guilty of a crime or of doing something wrong.)

The judgment in Case 1 clarifies the consequences of one professional filing an STR while another professional...

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