The law dd. October 27th, 2010 (Memorial n°193, No-vember 3rd, 2010) brought several innovations in re-spect of anti-money laundering regulations in Luxem-bourg and modified the law dd. December 6th, 1991 on the insurance sector.
The aim of this article is not to give an extensive over-view of the existing anti-money laundering legislation, but to give a short outline of the major changes.
Scope – Definition of a residual category of profes-sionals – Foreign service providers
- Insurance companies and insurance intermediaries are obviously part of the scope of the anti-money laundering legislation of November 12th 2004, how-ever only for their activities in the life insurance busi-ness (insurers: all branches of annex II to the law of December 6th 1991; intermediaries: “life insurance and other services related to investments”).
The October 27th, 2010 law introduces a new, very broad, residual category of professionals subject to the anti-money laundering regulations (new point 7 of article 2(1)): other professionals than those specifi-cally enumerated and which deliver to their clients, on a commercial basis, at least one type of those professional services listed in the appendix to the law.
This list is quite long and includes generic operations such as transfer of money or assets, loans, operations on stock markets, wealth management, etc.
All professionals of the insurance sector, even if not dealing with life insurance, might thus now also be subject to the anti-money laundering regulations, provided they deliver this kind of services to their clients.
- The 2004 law was already applicable to Luxem-burgish establishments of foreign professionals. It is now also applicable to such professionals delivering services in Luxembourg without having an establish-ment in the country (FOS).
Risk analysis – Written report
Each professional within the scope of the legislation has to perform a risk analysis with regard to money laundering in its specific business. The results of this analysis now have to be recorded in a written report (new article 3(3)).
Simplified alertness obligation
Whereas formerly life insurance contracts with an annual premium not exceeding 1.000 € (or a single premium not exceeding 2.500 €) and pension prod-ucts were exempted from anti-money laundering obligations, the insurance professionals are now only allowed to reduce their vigilance obligation with re-gard to such contracts, but not to totally exclude them from their surveillance measures.
The law now also defines the minimum requirements of this simplified alertness obligation and imposes a follow-up of the client relationship in order to make sure that the conditions for the simplified obligations are met also in the future (article 3-1 (3) and (4)).
Enhancement of the cooperation obligations and of the supervision powers
The already existing Cellule de Renseignement Finan-cier is now recognised as a separate body within the Public Prosecutor’s office and article 5 of the 2004 law (cooperation and denunciation obligations) is modified in order to implement this change and to strengthen these obligations.
Furthermore, with regard to insurance professionals, the new articles 46(5) and 111(4) of the law dd. De-cember 6th, 1991 empower the Commissariat aux Assurances to impose sanctions on insurance profes-sionals if they do not comply with the anti-money laundering regulations.
The law of October 27th 2010 also enhances the Com-missariat aux Assurances’ powers in several other areas:
- ensure the correct application of the law in the rela-tions between insurance companies and clients and between insurance intermediaries and clients;
- new investigation powers: right to require access to all information and documents; to visit the professional’s premises and to take copies of documents, books, accounts, etc.; to interview managers and em-ployees; to collect information from other govern-mental, public or judicial bodies;
- right to publish sanctions imposed on insurers or intermediaries;
- penalties in case an insurance professional does not comply with the Commissariat’s injunctions;
- analysis of the brokers’ shareholder structure.
New non-disclosure obligation
The professionals subject to the anti-money launder-ing legislation were always subject to a non-disclosure (towards their clients) obligation in case of denuncia-tion or in case of public prosecution related to money laundering or financing of terrorism.
A second law dd. October 27th, 2010 (Memorial n°194 dd. November 3rd, 2010) implementing the European convention on judicial cooperation in criminal matters and modifying the Luxembourg law of August 8th 2000 on judicial cooperation, introduced a new article 7 in the latter legislation imposing an additional non-disclosure obligation on credit institutes (and their managers and employees) with regard to any seizure of documents or communication of information re-garding a client within the framework of an interna-tional judicial cooperation.
Criminal fines from 1.250 € to 1.250.000 € are fore-seen in case of non-compliance with this confidential-ity obligation.
As the law refers to “credit institutes” and the prepara-tory works to “banks”, one has to consider that insur-ance companies and insurance intermediaries are not within the scope of this new non-disclosure obligation.
