Combating money laundering and the funding of terrorism

Combating money laundering and the funding of terrorism
02 Mär 2018

New obligations for employers and new powers for supervisory authorities

Dorothée David

A law of 13 February 2018 transposes into Luxembourg law the provisions of Directive 2015/849 of 20 May 2015 (4th anti-money-laundering directive) on professional obligations and the powers of supervisory authorities relating to combating money laundering and the funding of terrorism. The Law, which thus modifies the law of 12 November 2004 on the same subject, came into force on 18 February 2018.

The Law applies to credit institutions as well as all other parties listed in modified article 2 of the 2004 law (hereinafter “professionals”). Among other things, it stipulates the following specific provisions relating to the employment relationship:

Obligation to introduce an internal alert system: the Law specifically imposes the obligation for professionals to introduce appropriate procedures, proportionate in their nature and size, allowing their staff or anybody in a comparable situation to report breaches of professional obligations relating to combating money laundering and the funding of terrorism internally, through a specific, independent, anonymous channel. Alongside this, obligations designed to make sure employees know about professional obligations relating to combating money laundering and the funding of terrorism, and are trained on this issue, are extended to all employees (the law previously only targeted the “employees involved”), as well as to knowledge by the staff of the applicable requirements in terms of data protection.

Greater protection for internal reports or cooperation with the Luxembourg authorities: the Law specifies and enhances the protection enjoyed by a professional, or an employee or manager of such a professional, in the event of disclosure in good faith to the competent Luxembourg authorities of information relating to money laundering and the funding of terrorism as required by law. Such disclosure does not constitute a breach of any restriction to the disclosure of information imposed by a contract, by professional secrecy “or by a legislative, regulatory or administrative provision”, and does not imply any responsibility for the professional or person involved of any kind, “including in a situation in which they did not have precise knowledge of the underlying breach, regardless of whether illegal activity has actually taken place.” The Law also adds that “people, including employees and representatives of the professional who report, internally or to the financial information unit, a suspicion of money laundering or the funding of terrorism, are protected from any threat or any hostile act, and in particular from any harmful or discriminatory measure in terms of employment.”.

Supervision and sanctions for professionals: the Law gives the supervisory authorities power to impose a temporary ban from professional activities, for a maximum of 5 years, on individuals subject to their prudential supervision, as well as members of the management body, employees and agents associated with them, if any of the different professional obligations stipulated by law is breached. The supervisory authorities also have the power to impose administrative fines of a maximum total limited to twice the benefit gained from the breach or €1,000,000. The Law specifies that if the professional involved is a credit institution or financial institution, these maximum amounts will be increased to €5,000,000 or 10% of the total annual turnover for a legal person and €5,000,000 for a natural person. A fine of a total of up to €250 to 250,000 is also incurred by any natural or legal person who obstructs the exercising of the supervisory authority’s supervisory powers, who does not respond to their orders or who knowingly provides incomplete, inaccurate or false information.

Law of 13 February 2018