Beyond COVID-19: Crisis response or road to recovery?
Crisis response or road to recovery?
New entities falling in scope, additional risk factors and stricter enhanced due diligence measures involving high-risk jurisdictions are some of the changes introduced by the law of March 25, 2020 partly transposing into Luxembourg law the Directive 2018/843 of May 30, 2018 (the “5th AML Directive”) and certain requirements of the Financial Action Task Force (FATF) Recommendations.
The purpose of the law of March 25, 2020 is to amend the law of November 12, 2004 on the fight against money laundering and terrorist financing, as amended (the “AML Law”) in addition to other sectorial laws. The concerned entities will have to ensure compliance with the new requirements, which is of critical importance in the context of the FATF’s on-site visit scheduled for this year in Luxembourg. The highlights include the following.
Professionals are required to apply specific enhanced due diligence measures to business relationships and or transactions involving “high-risk jurisdictions”, which include namely the countries identified as such by the European Commission. Moreover, the law of March 25, 2020 introduces new factors potentially evidencing a higher risk in Annex IV of the AML Law.
As part of their due diligence measures, professionals are now required to collect a proof of registration or an excerpt from the relevant register of beneficial owners when entering into a business relationship with corporate or legal entities, trusts or similar arrangements which are subject to the mandatory disclosure of beneficial ownership information. In respect of trusts, the law clarifies that all parties to the trust are to be considered as beneficial owners.
The law of March 25, 2020 extends the scope of the AML Law so as to include service providers engaged in exchange services between virtual currencies and fiat currencies, custodian wallet providers, traders of art and estate agents dealing with monthly rent of €10,000 or more.
The law of March 25, 2020 intends to lower the thresholds for identifying purchasers of payment instruments.
The law of March 25, 2020 fully aligns the self-regulatory bodies’ powers regarding compliance with the AML Law by the members of the concerned professions, which are now subject to a uniform sanction regime. It also provides for increased cooperation between supervisory authorities and self-regulatory bodies on a national and international level.
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