AML/KYC Luxembourg: Compliance Guide for Companies and Funds

Customer Due Diligence (CDD) obligations

Customer Due Diligence (CDD) includes identifying and verifying the identity of the customer and the ultimate beneficial owner (UBO), understanding the purpose and nature of the business relationship, and ongoing transaction monitoring. For high-risk customers (PEP, high-risk countries, complex structures), enhanced due diligence (EDD) is required: source of wealth, source of funds, senior management approval, enhanced transaction monitoring. For low-risk customers, simplified measures may apply.

PEP and sanctions screening

• Politically Exposed Persons (PEP) screening: government members, senior officials, central bank executives and their relatives
• Checking international sanctions lists: EU, UN, OFAC (US), UK Treasury
• Adverse media screening to detect involvement in corruption, fraud or organised crime cases
• Regular update of filters (at minimum for each transaction and annually for existing clients)

Suspicious activity reporting

Any suspicious transaction must be reported to the Financial Intelligence Unit (CRF, Cellule de Renseignement Financier) of the Luxembourg Public Prosecutor's Office. The report must be filed before execution of the transaction if possible, or immediately afterwards if the suspicion arises later. The reporter is protected by law (no civil or criminal liability for good-faith reports). Non-compliance with AML/KYC obligations exposes firms to administrative penalties of up to 5 million euros or 10% of annual turnover.