Luxembourg implements 5th Anti-Money Laundering Directive

On 21 March 2020, the Luxembourg Chamber of Deputies adopted¹ bill of law 7467 (the Law) transposing certain provisions of the 5th Anti-Money Laundering Directive (AMLD 5).

The purpose of this Law is in particular to provide certain amendments to the Law of 12 November 2004 on the fight against money laundering and the financing of terrorism (the 2004 Law), in order to transpose the main provisions of AMLD 5 and to include certain recommendations from the financial action task force (FATF).

In a nutshell, the Law provides for:

1. an extension of the circle of “professionals” to whom the 2004 Law applies, so as to include in particular virtual currency providers and custodian wallet providers;
   
   
2. enhanced customer due diligence measures to be performed in the context of business relationship involving high-risk third countries;
   
   
3. the creation of a list of national public offices and functions that qualify as “politically exposed”;
   
   
4. clarification of the concept of “control by other means”, in the context of determining beneficial owners;
   
   
5. an obligation for professionals to consult the relevant companies / trust beneficial owner register when entering into a business relationship. Note in this respect that although the Law includes no transitory provision, one may reasonably expect that such obligation only applies once the relevant register is available;
   
   
6. an obligation to understand the purpose and nature of every business relationship (in line with the 10th FATF recommendation);
   
   
7. a broader scope of the enhanced due diligence (and an increase of the powers of the competent authorities) especially when high-risk third countries are involved; and
   
   
8. an extension of the list of factors and types of evidence of potentially higher risks in annex IV of the 2004 Law.

¹First constitutional vote. A request to dispense with the second vote required by the Constitution has been filed.