Evolving Architecture: Anti-Money Laundering/Combating the Financing of Terrorism

The first AML Directive established customer identification measures, record-keeping, and suspicious activity reporting for financial institutions, but initially limiting the money laundering definitions to drug-related offences, excluding corruption. Its measures focused on the financial sector and were incorporated into Luxembourg law through amendments to banking, financial legislation, and the Penal Code. This was further consolidated by the Law of 12 November 2004, which addressed AMLD2 and expanded upon AMLD1.

AMLD2 tightened AMLD1 with stricter controls: it broadened the predicate offences for money laundering to all serious crimes (including corruption), provided a more detailed definition of money laundering, and extended scope to additional professionals such as lawyers, accountants and auditors. These changes were transposed into Luxembourg law by the Law of 12 November 2004 on the fight against money laundering and terrorist financing, which also amended the Penal Code, the Code of Criminal Procedure and other relevant legislation.

AMLD3 repealed AMLD1 and AMLD2 and introduced a risk‑based AML/CFT framework aligned with the FATF 40 Recommendations. It defined money laundering and terrorist financing separately, expanded scope to include trusts and company service providers, and harmonised the definition of politically exposed persons (PEPs) to cover natural persons entrusted with prominent public functions, their immediate family members, and known close associates, noting a one‑year presumption after leaving office. These changes were transposed into Luxembourg law through a major restructuring of the Law of 12 November 2004 and amendments to the Penal Code, implemented by the Law of 27 October 2010.

AMLD4 repealed AMLD3 and revised the definition of PEPs' family and associates, enhancing due diligence for all PEPs due to increased corruption risk. This was primarily enacted through two laws amending the Law of 12 November 2004: the Law of 13 February 2018, which also updated the Penal Code and related laws, and the Law of 10 August 2018, which strengthened the Financial Intelligence Unit's role and information-sharing duties. On 13 January 2019, a law was implemented to establish a register of beneficial owners in compliance with Article 30 of AMLD4.

It highlights enhanced monitoring of high-risk third countries with corruption issues and new initiatives for identifying PEPs by requiring Member States to provide and consolidate PEP information into a single list. These measures were integrated into Luxembourg law through the Law of 13 January 2019, establishing a publicly accessible beneficial ownership register, and the Law of 25 March 2020, which amended the Law of 12 November 2004 to create a central electronic data retrieval system for the FIU.

The AML6 package reforms the EU AML/CFT framework with two regulations and one directive for improved harmonisation among Member States.

AMLA (Regulation (EU) 2024/1620), effective 7 January 2025 established the Anti-Money Laundering Authority in Frankfurt to enhance supervision of high-risk entities, promote supervisory convergence, and improve FIU cooperation.

The AMLR (Regulation (EU) 2024/1624), effective 7 October 2027 creates a uniform AML/CFT rulebook, expanding the definition of PEPs, divided by location and ensuring consistent preventive obligations. Additionally, AMLD6 (Directive (EU) 2024/1640), transposing by 7 October 2027 focuses on national governance and supervision, updates the Whistleblower Protection Directive, and repeals AMLD4 to enhance oversight frameworks.