Luxembourg’s National Prevention Committee on money laundering and financing of terrorism (“NPC”) has published a revised version of Luxembourg’s National Risk Assessment which was prepared under the direction of the Ministry of Justice in Luxembourg and approved by the NPC on 28th April 2025, herein referred to as the “2025 NRA”.
Scope
The fight against money laundering (“ML”) and financing of terrorism (“FT”) shares a common legal framework, however, within the context of Luxembourg, as included within the 2018 NRA and 2020 NRA on ML/FT and the 2022 FT Vertical Risk Assessment (“VRA”), the level of ML threat in Luxembourg differs from the FT threat level.
In this respect, the 2025 NRA takes into consideration only ML risks. The 2025 NRA follows the same methodology as adopted for the previous 2018 NRA and 2020 NRA, and includes quantitative and qualitative data for 2020 till 2023. A separate risk assessment on FT will be carried out at a later stage and will be based on the methodology adopted for the 2022 FT VRA and includes quantitative and qualitative data for 2021 till 2024.
The main scope of all NRAs is to identify and provide a common understanding to policy makers, law enforcement authorities, supervisors, obliged entities and professionals on the risks of ML and FT to ensure that ongoing risk-based mitigation measures are implemented in line with the risks, priorities and recommendations disclosed in the respective NRA.
Summary
The 2025 NRA builds on the analysis and results obtained through the previous NRAs whereby initially the inherent risks arising from the main ML threats and vulnerabilities to which Luxembourg is exposed to, are assessed. Mitigation measures to reduce the inherent risks are then considered to determine the residual risks.
In general, proceeds of ML from foreign crimes is the most significant ML threat (in view of Luxembourg’s position as a global financial centre) when compared to domestic ML, due to Luxembourg’s low criminality level. Fraud and forgery, tax crimes, corruption and bribery continue to be the main external ML threats.
With reference to ML vulnerabilities, banks, investment firms, e-money institutions, payment institutions, Specialised Professionals of the Financial Sector providing corporate services, virtual asset service providers, and life insurance undertakings registered a “High” inherent risk level, while within the non-financial sector, the inherent risk levels for all legal and accounting professions remained “High”, except for the audit profession and bailiffs, which registered a “Medium” inherent risk. In addition, legal arrangements were assessed as bearing the highest inherent risk, followed by sociétés commerciales.
Moving forward
In view of the revised publication of the 2025 NRA, professionals should refer to the risks and corresponding mitigation measures, as well as the recommendations provided in the 2025 NRA to update their AML/CFT Risk Assessments on the threats and vulnerabilities to which they are exposed to.
Should you require any clarifications on the above, or assistance in updating the AML/CFT Risk Assessments in line with the findings and results of the 2025 NRA, kindly contact Natalia Hernandez or Jonathan Camilleri.