CSSF Updates AML/CFT blacklist with 4 countries
On October 28, 2024, Luxembourg’s financial sector regulator, the Commission de Surveillance du Secteur Financier (CSSF), updated its circular CSSF 22/822. This amendment added Algeria, Angola, Côte d’Ivoire, and Lebanon to the FATF’s list of jurisdictions under increased monitoring, while removing Senegal due to its progress in addressing anti-money laundering and counter-terrorism financing (AML/CFT) deficiencies.
In October 2024, Algeria, Angola, Côte d’Ivoire, and Lebanon each committed to collaborating with the FATF and their relevant regional bodies to strengthen their AML/CFT measures. These commitments include efforts to improve national cooperation, increase transparency on beneficial ownership, expand oversight of financial and non-financial sectors, and enhance investigations and sanctions related to money laundering and terrorism financing. Algeria and Angola have focused on strengthening supervision and financial intelligence, Côte d’Ivoire has reinforced its legal and asset management frameworks, and Lebanon has targeted anti-bribery measures, risk management, and unlicensed financial activities.
In contrast, Senegal, which has made significant strides since 2021, was removed from the list. The FATF recognized Senegal’s achievements in enhancing its understanding of AML/CFT risks, fostering international cooperation, improving financial institution supervision, expanding law enforcement capacity, implementing sanctions, and monitoring high-risk non-profits.
The Democratic People’s Republic of Korea (DPRK), Iran, and Myanmar are still listed as high-risk jurisdictions requiring enhanced due diligence and/or countermeasures due to significant strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing.
As of today, the following countries are identified as high-risk countries:
Get in touch with our Corporate team for advice and assistance on the latest developments.
New EU Commission study on areas most at risk of corruption
Corruption impacts every sector, but some areas are particularly vulnerable, especially those handling large public funds or delivering essential services like healthcare. To better understand these vulnerabilities, the European Commission released the study “High-risk Areas of Corruption in EU Member States: A Mapping and In-Depth Analysis” (https://op.europa.eu/fr/publication-detail/-/publication/5c0730b2-9769-11ef-a130-01aa75ed71a1/language-en) on November 4, 2024. Launched in 2023, the study highlights six key sectors facing high corruption risks, examining the reasons for these risks and offering insights into how corruption damages critical systems.
The study’s findings highlight six specific areas—healthcare, finance, public procurement, defence and security, construction and infrastructure, and sports. Corruption in these areas not only undermines service quality and trust but also often involves cross-border elements that call for coordinated EU action. The findings of the study were a major point of discussion at the 2nd plenary meeting of the EU Network Against Corruption on October 3, 2024.
The study’s results also align with the EU’s 2023 Joint Communication on the fight against corruption, emphasizing that this research will inform the EU’s first full anti-corruption strategy. A follow-up study will investigate actions that mitigate corruption in these high-risk areas.
Which sectors are most at risk, and what are the specific threats?
The study outlines six high-risk sectors in detail, each facing unique challenges that require tailored anti-corruption strategies:
Public Procurement: Why is it so vulnerable?
Public procurement—where governments spend on goods and services—makes up around 14% of the EU’s gross domestic product (GDP), with expenditures of over EUR 2 trillion each year. The large amounts of money, combined with complex and often opaque processes, make this sector a prime target for corruption. Here, common forms of corruption include bribery, collusion, and embezzlement. Corruption in public procurement not only diverts funds from their intended uses but can also lead to inflated costs, poor service quality, and weakened public trust. Improving transparency and enhancing oversight mechanisms are vital to reducing corruption in this sector.
How does corruption affect healthcare in the EU?
Healthcare is a vital sector, and corruption here can have direct consequences on public health and safety. With significant budgets, multi-layered supply chains, and a mix of public and private players, the sector faces risks that include fraudulent billing, conflicts of interest, and favouritism. The financial impact of healthcare-related corruption in the EU is estimated at up to EUR 56 billion each year. As healthcare access is often a matter of life and death, these vulnerabilities create serious risks for patients. Tackling healthcare corruption requires strengthening regulatory frameworks and improving transparency to safeguard both resources and patient outcomes.
What makes the financial sector so attractive for corrupt practices?
The financial sector, encompassing banking, insurance, and investments, is a cornerstone of the EU’s economy. However, it also harbours considerable corruption risks, including money laundering, tax evasion, and links to organized crime. Corruption in this sector often crosses borders, as criminal groups exploit jurisdictional differences to launder money or evade taxes. Such activities are estimated to cost the EU up to EUR 1 trillion annually. Addressing corruption here calls for coordinated regulatory responses across Member States, with robust measures to counter tax fraud and financial crime.
Why is the defence and security sector at such high risk?
Increased defence spending in response to EU security demands has made the sector more vulnerable to corruption. The high level of secrecy, significant funding, and involvement of both national and international supply chains all contribute to risks such as bribery, arms sales corruption, and the misuse of procurement funds. Corruption within the defence sector affects national security, while the sector’s opacity makes tracing and combating corruption challenging. Addressing these issues requires establishing clearer accountability standards and promoting transparency in defence-related spending.
How does corruption impact construction and infrastructure?
The construction and infrastructure sector is essential to economic growth, but its projects are often susceptible to corruption due to high value, complex procurement processes, and extensive timelines. Common practices include bid-rigging, use of substandard materials, and bribery, leading to costly projects and compromised safety standards. Corruption in this area not only raises costs but can also jeopardize public safety when corners are cut on safety requirements or materials. With the sector contributing approximately 5% to the EU’s total gross value added, reforms to improve oversight and regulatory compliance are essential to safeguard public resources.
How widespread is corruption in sports, and what are its effects?
Sports corruption in the EU is particularly evident in betting and match-fixing schemes, with football and tennis being prime targets for illicit activities. Corruption in this area not only damages the integrity of sports but also exploits players, fans, and communities, particularly through illegal betting networks. Match-fixing and other corrupt practices not only erode public trust in sports but also involve complex international crime networks. Addressing these issues requires coordinated efforts across borders, with enhanced regulatory frameworks that address sports betting, match-fixing, and associated financial crimes.
What is the Path Forward for Tackling Corruption in High-Risk Sectors?
The study’s conclusions stress the need for a strategic, multifaceted approach to effectively address corruption in these six sectors. Suggested actions include enhancing transparency, improving regulatory collaboration across borders, and bolstering enforcement capabilities to counter complex, evolving corruption risks. By implementing a robust anti-corruption framework across the EU, Member States can work together to protect public resources, enhance service quality, and rebuild trust in public institutions.
These findings will inform the EU’s forthcoming anti-corruption strategy, which will focus on prevention, enforcement, and accountability. Prioritizing these high-risk sectors offers an opportunity to mitigate the extensive impacts of corruption, fostering a safer, more transparent, and fair society for all Europeans.
Get in touch with our Corporate team for advice and assistance on the latest developments.
New RCS Filing Requirements: Mandatory Luxembourg National Identification Numbers for Natural Persons
Starting on 12 November 2024, the Luxembourg Business Registers (LBR) will introduce new filing requirements for natural persons associated with entities registered in the Luxembourg Trade and Companies Register (RCS). These changes are aimed at enhancing the accuracy of records and aligning with the National Register of Natural Persons, thereby improving the quality of official information.
Who Will Be Impacted?
The new obligations will apply to all natural persons associated with entities registered in the RCS, including individuals acting in roles such as managers, directors, shareholders, auditors, and legal representatives. This requirement applies regardless of whether the individuals are resident or non-resident in Luxembourg.
Exemptions: Certain categories of individuals are exempt from this obligation, such as judicial representatives in legal matters and agents of foreign entities with branches in Luxembourg.
Key Updates and Required Information
The most notable change is the requirement for entities to submit the Luxembourg National Identification Number (LNIN)—often referred to as the Matricule or CNS number—for each natural person affiliated with an entity.
- For those already holding a LNIN: Entities simply need to input the LNIN in the appropriate field during the next filing or update. No additional documentation will be necessary.
- For those without a LNIN: An application for a new LNIN will need to be submitted. The application must include personal information such as full name, date and place of birth, nationality, gender, and private home address. In addition, proof of identity and residence documents will be required, with translations accepted in either Luxembourg’s official languages or English (non-certified translations are sufficient).
Confidentiality: While the LNIN will be mandatory, it will not be made public in the RCS. Other personal details, such as gender, nationality, and residence information, will similarly remain confidential. These details will be shared with the State Information Technology Centre (Centre des technologies de l’information de l’Etat) for entry into the National Register of Natural Persons.
Transition Period and Compliance
A transition period starting from 12 November 2024 will be granted, during which entities will be able to update their records free of charge. The duration of this transition has not yet been officially determined. During this phase, filings can proceed even without providing the LNIN, but all entities must ensure they have completed the updates before the end of this period.
Once the transition period closes, filings involving natural persons—whether new registrations, modifications, or annual updates—must include the LNIN. Failure to comply may result in the rejection of filings by the RCS.
Effects on the Register of Beneficial Owners (RBE)
For those listed in the Register of Beneficial Owners (RBE), these changes will also require updates to the RBE records, ensuring that the LNIN is included in line with RCS filings. Keeping these records synchronized is crucial to prevent inconsistencies.
What Steps Should Entities Take?
Entities are encouraged to begin gathering LNINs for all relevant individuals as soon as possible. For those who do not yet have a LNIN, it is advisable to start the application process to avoid delays.
If you require assistance in navigating the registration or updating process, we are here to help. We can provide guidance on both the application for new LNINs and compliance with the updated RCS filing requirements.
For further details, you can consult the LBR FAQ regarding these new requirements, available in French FAQ – Identifiant National (lbr.lu).
Should you have any questions or need further support for the registration, feel free to reach out to our Corporate team.
