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A decade in the fight against money laundering and terrorist financing

Achievements, challenges, and perspectives

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To the point


  • The last ten years have seen a series of financial scandals, which have led to increased regulatory attention and activity in areas such as tax offenses, beneficial ownership transparency, restrictive measures, and whistleblowing.
  • The EU has a stable system to combat money laundering and terrorist financing, but the effectiveness of the EU Directives depends on the adequate and comprehensive implementation by EU Member State.
  • Luxembourg strongly reenforced its AML/CTF framework by updating respective laws and increasing AML/CTF requirements in the past years.
  • Forthcoming EU legislation are set to further enhance the AML/CTF framework, covering due diligence obligations, sharing of information on beneficial ownership, and limiting cash payments. In addition, the EU also plans to launch the Anti-Money Laundering Authority (AMLA) in 2024.

In the past decade, governments, businesses, and organizations worldwide have increasingly fought against money laundering and terrorist financing. Despite progress, these threats persist and evolve.
The article provides an overview of some of the most drastic events of the past ten years and regulatory developments in the EU, particularly in Luxembourg, and an outlook on future regulatory developments and perspectives regarding the fight against financial crime.

Revelations of the last ten years


Multiple revelations (so-called leaks), scandals, and other incidents related to financial crime have had significant economic, legal, and social repercussions, demonstrating a lack of transparency and ethical behavior.

Despite some of these events being relegated to the background due to numerous developments, it is crucial to revisit the events, to better understand the regulatory changes in the past decade.

February 2014

Crimea annexation

In February and March 2014, Russia annexed the Crimean Peninsula. This event was globally recognized as a violation of Ukraine’s sovereignty and territorial integrity.

In response, the EU and other jurisdictions implemented sanctions and restrictive measures aimed at economically and politically pressuring Russia.

Highly analytical restrictions fell on financial stakeholders with very limited guidance at the time.

November 2014

Luxembourg Leaks

Luxembourg Leaks exposed the tax arrangements made between global companies and the Luxembourg government to optimize tax liability for these companies.

The whistleblower of the relevant tax documents was charged and found guilty. In February 2023, the European Court of Human Rights ruled in favor of whistleblowers’ protection.

This is considered by many as “year zero” of whistleblowing definition and protection framework. The EU Directive 2019/1937 and the Luxembourg bill 7945 are rooted there.

April 2016

Panama Papers

The disclosure of approximately 11.5 million confidential documents by the Panamanian law firm Mossack Fonseca, which specialized in the set-up of offshore companies, revealed various financial dealings of politicians, businessmen and celebrities. It also disclosed extensive use of offshore companies to conceal ownership and control structures.

November 2017

Paradise Papers

This leak comprised approximately 13.4 million documents originating from various offshore service providers, attributed to 19 tax havens, and exposed the extensive and complex nature offshore structures used to hide assets, minimize tax burden and conceal the true beneficial owner.

October 2021

Pandora Papers

The Pandora Papers leaked approximately 11.9 million documents from 14 different offshore service providers, exposing the use of offshore structures to evade taxes and conceal ownership.

The publication of the Panama, Paradise and Pandora Papers led to investigations, inquiries, resignations and dismissals.

Regarding Pandora Papers, which is considered one of the largest revelations to date, the Financial Action Task Force (FATF) highlights the relevance of transparency about actual beneficial owners’ identities.

February 2022

Russian invasion

In February 2022, the President of the Russian Federation ordered a “special operation” to invade four main Ukrainian regions (Kherson, Zaporizhzhia, Luhansk and Donetsk), which escalated the ongoing conflict.

The EU and other jurisdictions implemented and reinforced further sanctions to stop Russia's actions and safeguard Ukraine's sovereignty.

Over the past year, the consequences of sanctions have manifested in various forms.

December 2022


Even before the 2022 World Cup was held in Qatar, it was considered controversial within the EU for various corruption allegations. It is claimed that a Qatari company paid bribes to European politicians to support Qatar's bid to host the tournament.

This has raised ongoing concerns about the integrity and oversight of the EU's decision-making processes and controls within such supranational bodies.


During the last ten years, many other events, such as the Danske Bank scandal, the Russian Laundromat, the CumEx/CumCum files, the Wirecard scandal, or the Berlin clan real estate scandal, occurred in the area of financial crime, triggering regulatory attention and activity. The mentioned events are (in)directly related to the following topics:

  • Tax offenses and combating tax crime
  • Transparency requirements of beneficial owners
  • Restrictive measures (sanctions)
  • Whistleblowing

Review of regulatory developments


In the EU, a stable system, created by five successive EU AML/CTF Directives for combating ML/TF, has emerged over the last few decades.

The first AML/CTF Directive was adopted in 1991 to address ML/TF threats to single markets and has since been revised several times to align with FATF standards. Each new EU AML/CTF Directive aims to close gaps — either by expanding scope and/or by introducing targeted measures to detect and prevent new ML/TF practices.

The latest and 5th EU AML/CTF Directive extends its scope beyond the financial sector to include parties, like lawyers, notaries, auditors, real estate agents, luxury goods dealers and all gambling services. The tightened measures concern among others:

  • Requirements for identification, tracing, seizure, and forfeiture of criminal assets and proceeds;
  • Transparency in money transfers with enriched data and enhanced monitoring;
  • Requirements for exchange of information between EU Member States (and the interconnection of beneficial ownership registers within the EU, as well as the improvement of cooperation between FIUs and supervisory authorities);
  • Increasing transparency and guidance on ultimate beneficial ownership of legal entities and trusts;
  • Expanding scope to include digital assets and new regulations for cryptocurrencies and related financial intermediaries.

However, an EU Directive can only be effective if it is properly and fully implemented by EU Member States at their national level.

How has Luxembourg enforced AML/CTF regulations over the past decade? In Luxembourg, the basis for combating ML/TF was created by the law of 12 November 2004 (the Luxembourg AML/CTF Law), which aimed to implement the 2nd EU AML/CTF Directive.

To comply with international standards and recommendations, both the legislation around ML/TF and the Luxembourg AML/CTF Law have been continuously amended; most recently in 2022. This continuous improvement reflects efforts to adapt to changing circumstances and address the following topics:

  • The scope of professionals subject to the legislation has expanded to include real estate developers operating in Luxembourg, notaries, virtual asset providers, custodial or administrative service providers, and brokers of art work, including art galleries and auction houses, where the value of a or related transaction(s) amounts to €10.000;
  • The requirement for an annual corporate ML/TF risk assessment that was introduced, enabling professionals to identify and assess ML/TF risk, as well as establish and adapt internal processes and systems using a risk-based approach;
  • The expansion of enhanced due diligence measures to include counterparties with politically exposed persons (PEPs) connections and counterparties with relation to high-risk countries;
  • The expanded definition of PEPs and family members. Directors, deputy directors and board members of international organizations are considered PEPs, and siblings as PEPs family members. This expansion brings board members of an organization, such as the FIFA, under increased scrutiny and due diligence obligations;
  • The introduction of a register of beneficial owners and the associated information sharing requirements;
  • The Financial Intelligence Unit (FIU) is vital in combatting ML/TF, a fact repeatedly highlighted by the FATF. The analysis of collected Suspicious Activity and Transaction Reports (SARs and STRs) and the cooperation with FIUs of other jurisdictions, as well as the relevant law enforcement authorities, contributes to the detection of cross-border ML/TF cases.

Other laws, as well as Grand-Ducal or CSSF ordinances and circulars, supplement the Luxembourg AML/CTF Law. The ordinances and the CSSF circulars provide detailed guidance for individual sectors of Luxembourg’s financial industry.

Another cornerstone of the ML/TF fight in Luxembourg is CSSF Regulation 12-02, updated in August 2020, which addresses (among others) investment fund managers and their business activities.
Investment fund managers must apply risk-based due diligence to the assets in which an investment fund invests and which are tangentially held by various counterparties. The EU is unique in not focusing exclusively on the client/investor side and addressing the associated ML/TF risks, but other countries are expected to follow suit and adopt similar legislation.

The law of 13 January 2019, which regulates the establishment of a central registry of beneficial owners of legal entities domiciled in Luxembourg, implemented its 4th EU AML/CTF Directive to improve transparency and traceability of beneficial owners. This measure is indirectly related to some of the events listed above (like Panama Papers), which revealed the need for greater transparency regarding ownership and control structures.

The register was publicly accessible until the European Court of Justice (ECJ) ruled on 22 November 2022 that the fifth EU AML/CTF Directive was invalid for its provision to publicize the information on beneficial owners.
This has temporarily blocked public access to the register in Luxembourg (and other EU countries) until December 2022, and it is now only accessible to professionals with an appropriate authorization to retrieve the data. The EU must revise its EU AML/CTF Directive to ensure the protection of the privacy of beneficial owners. These developments complicate the fight against corruption, money laundering, terrorist financing and the enforcement of sanctions in the EU.

According to statistics, employees are the most frequent whistleblowers of professional fraud incidents, highlighting the need to establish a framework to protect them, as demonstrated by the Luxembourg Leaks. The EU Whistleblower Directive, published on 23 October 2019, aimed to address this issue. However, Luxembourg, among other EU countries failed to meet the deadline for national transposition, which was set for 17 December 2021, due to concerns about the draft’s superfluous content like insufficient protection of civil servants, ambiguity regarding imposition of sanctions and data privacy. After the revised draft was resubmitted to the State Council on 23 March 2023, the respective Law was finally published in the Official Memorial on 17 May 2023.

In Luxembourg, the law of 19 December 2020 establishes the framework for implementing restrictive measures in financial matters, including those imposed by the UN and EU, such as those regarding Russia. The CSSF prioritizes timely elaboration of relevant processes and screening tools, as assessed during on-site inspections. However, the recent tightening of Russia’s sanctions has emphasized the need for financial institutions to adapt further to changing legal and geopolitical conditions.

The law of 23 December 2016 was enacted to prevent tax crime. This led, among others, to the expansion of the list of predicate offenses for money laundering, which includes aggravated tax evasion ("fraude fiscale aggravée") and tax evasion ("escroquerie fiscale"). Simple tax fraud, on the other hand, is subject only to administrative sanctions. All three concepts are clearly defined and distinguished from each other in the law.

In addition, the CSSF published Circular 17/650, supplemented by Circular 20/744, listing the indicators of possible tax crime for the banking and investment fund industry. Both the consideration of tax crime as a money laundering offense in accordance with the requirements of the 4th EU AML/CTF Directive and especially the integration of this issue in terms of combating ML/TF by means of detailed regulatory provisions for the financial industry, highlight Luxembourg’s far-sighted position.

The mutual evaluation of Luxembourg by the FATF in November 2022, as part of the 4th evaluation round, is another key event to mention, alongside the increasing regulatory requirements compared to the 2010 evaluation report. The plenary discussion related to the visit is scheduled for June 2023. Until then, the outcome of the FATF evaluation and related measures for Luxembourg remain to be seen.

Outlook for regulatory developments


In July 2021, the European Commission presented a package of four legislative proposals to strengthen the EU AML/CTF framework.
In March 2023, the EU adopted three pieces of draft legislation on provisions of the EU AML/CTF package that consists of:

1. the EU "single rulebook" regulation with provisions on:

  • conducting due diligence on customers by different entities, such as banks, assets and crypto assets managers, real and virtual estate agents and high-level professional football clubs;
  • exchanging information on beneficial ownership, bank accounts, land or real estate registers whereby beneficial ownership means having 15% plus one share, or voting rights and other direct/indirect ownership interest, or 5% plus one share in a high-risk situation;
  • lowering the cash payment limit to €10,000;
  • using anonymous instruments, such as crypto-assets, and new entities, like crowdfunding platforms and;
  • banning citizenship by investment schemes (golden passports) and imposing strong AML controls on residence by investment schemes (golden visas).

2. The 6th EU AML/CTF Directive with provisions on:

  • Financial Intelligence Units and their cooperation with Europol, the European Anti-Money Laundering Authority (AMLA), Eurojust and the European Public Prosecutor's office;
  • granting access (for at least 2.5 years) to beneficial owner registries including the interconnected central registries for persons with legitimate interest like journalists, reporters, civil society organizations, higher education institutions;
  • aggregating information on ownership of goods like yachts, planes, and cars worth more than €200,000 or goods stored in free zones.

3. The regulation establishing the AMLA, a supervisory authority responsible for monitoring risks and threats within and outside the EU and directly supervising specific credit and financial institutions based on their risk level. AMLA can require companies and individuals to provide information, conduct on-site visits with judicial authorization, and impose sanctions.

The EU aims to extend the agency's competence, allowing it to create lists of high-risk non-EU countries and granting AMLA the authority to mediate between national financial supervisors. It also wants AMLA to settle disputes, supervise and investigate the national implementation of the single AML rulebook, monitor the supervisors in the non-financial sector and receive whistleblower complaints. The EU plans to implement AMLA in 2024.

The three draft legislations mentioned are ready for negotiation with the European Parliament after being confirmed during April’s plenary session.

The 4th legislative proposals, endorsed by the Council in October 2022, is to revise 2015’s Regulation on Transfers of Funds to include transfers of crypto-assets. The proposal was debated in European Parliament on 19 April 2023 and approved on 20 April 2023, in conjunction with the Markets in Crypto-assets regulation (MiCA).



Money laundering and terrorist financing are fundamental cross-border problems. To combating them effectively, Luxembourg aims to be a leading example in the fight against organized crime.

As this article highlights, financial crime intentions and practices and regulatory requirements are both constantly evolving. However, the velocity at which these developments proceed is different. Regulatory developments are often corrective actions that try to cure existing criminal practices.

In addition, EU Directives might be transposed into national legislation with interpretation and local markets specificities, creating potential gaps, inconsistencies, and loopholes for criminals to exploit. Therefore, instead of EU Directives and as already foreseen in the upcoming EU legislative AML/CTF package, EU regulations for combating ML/TF should be issued to have an immediate binding character for all EU member states.

It remains exciting to see how the EU’s fight against financial crime will develop and whether current plans can be implemented smoothly and promptly to promote sustainable economic growth.