The Grand Duchy of Luxembourg recently received a positive evaluation in the 4th mutual evaluation report conducted by the Financial Action Task Force (FATF) and published on September 27, 2023. The report acknowledges the quality of Luxembourg’s framework for the fight against money laundering and the financing of terrorism (AML/CFT) while also providing recommendations for further improvements. As a result, Luxembourg will be under regular monitoring by the FATF, which is considered a good outcome. The report specifically praised Luxembourg’s financial sector and its supervision by the CSSF, highlighting the effectiveness of AML/CFT supervision. The CSSF’s supervisory approach was commended for being well-developed and risk-based. The report also noted improvements in the AML/CFT supervisory regime and the robustness of controls during licensing and registration processes. However, there is room for improvement in addressing terrorism financing risks, enhancing communication about sanctions against deficient professionals, and reporting suspicious activities to the Financial Intelligence Unit. Overall, the report acknowledged that professionals in the financial sector have solid controls and a good understanding of their AML/CFT obligations and related risks. However, the FATF’s report suggests a need for a better understanding and response to this risk, building on the information provided by the 2022 vertical risk assessment report on terrorism financing adopted in Luxembourg. The report also suggests that the CSSF should improve the way it communicates sanctions imposed on professionals found deficient. More detailed press releases could help make information about the nature of deficiencies and sanctions more accessible to the financial sector. In summary, Luxembourg’s 4th mutual evaluation report by the FATF acknowledges the country’s strong efforts in combating money laundering, with particular praise for its financial sector supervision and regulatory framework. While there are areas for improvement, the overall evaluation result is positive, leading to regular monitoring by the FATF, which is a desirable outcome. 

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