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Banque de Luxembourg, one of the country’s largest commercial banks, has been hit with a €1.3m fine by the country’s Commission de Surveillance du Secteur Financier (CSSF).
One of Luxembourg’s oldest banks has become the latest financial institution in Europe to face the wrath of strict anti-money laundering (AML) enforcement, having been given a financial sanction by the CSSF following an inspection in 2018.
The CSSF noted weaknesses in the bank’s reporting systems as per requirements laid out in the country’s AML legislation.
Among the issues that have been raised by the banking watchdog include the failure to report suspicions of money laundering, as well as late reporting to the country’s Financial Intelligence Unit (FIU).
"The audit did not reveal any unlawful activity. The weaknesses identified, relating to facts prior to 2018, were immediately dealt with in a remediation programme,” the bank has said in a statement to the press.
Luxembourg’s financial crime prevention has come under scrutiny in the last decade. It failed its last Financial Action Task Force (FATF) review in 2010, and its next one is coming up this year.
In 2021, however, the CSSF took several actions against the various financial institutions in the country. For example, it imposed a fine amounting to €60,000 on investment firm Almagest Wealth Management S.A. for breaches of AML obligations related to its risk assessment, customer due diligence measures and the reporting of suspicious activities and/or transactions to the FIU.
In July, it fined Swiss bank Mirabaud & Cie €440,000 after finding "important deficiencies" in its AML framework, especially regarding customer due diligence. Regulators also noted a lack of cooperation from the bank with the public authorities.
Hot water with the commission
In June, the European Commission decided to refer Luxembourg to the Court of Justice of the European Union (CJEU) and to request the court order the payment of financial penalties for failing to take all actions necessary to transpose EU rules on the freezing and confiscation of proceeds of crime.
These rules make it easier for member states' authorities to recover the profits that criminals make from serious and organised crime, and member states were required to have transposed the directive in question by October 4, 2016.
The commission had already referred the country to the CJEU in 2018 for not completely implementing AML rules that were supposed to be transposed by member states as part of the Fourth Anti-Money Laundering Directive.
