The implementation of EU restrictive measures in financial matters ("sanctions"), once adopted, requires mechanisms that bring together the competent national authorities and ensure their rigorous and consistent application. These mechanisms are contained in the Luxembourg Law of 19 December 2020 on the implementation of restrictive measures in financial matters ("Sanctions Law"), which was amended by a law of 20 July 2022 setting up a monitoring committee for restrictive measures in financial matters and amending Article 506-1, first indent, of the Criminal Code. This law entered into force on 24 July 2022.
Creation of a national monitoring committee for sanctions This newly created committee is responsible for monitoring the implementation of sanctions and contributing to the development of the related national policies. It is composed of a representative of each of the following administrations: the Ministry of Finance, the Ministry of Foreign and European Affairs, the Ministry of Justice, the Commission de surveillance du secteur financier (CSSF), the Commissariat aux assurances (CAA), the Administration de l'enregistrement, des domaines et de la TVA (AED) and the Financial Intelligence Unit ("FIU"). The committee meets as often as its tasks require and at least twice a year.
It may consult or invite third parties to its meetings, including external experts or representatives of the natural and legal persons bound to comply with the Sanctions Law. Infringement of sanctions as a new type of associated predicate offence to money laundering Article 506-1, first indent, of the Criminal Code relating to the offence of money laundering was amended. The infringement of Article 10 of the Sanctions Law and the enforcement measures and decisions referred to therein has been added to the list of associated predicate offences to money laundering.
In concrete terms, it is the intent of the legislator that the breach of any international, European or national sanctions applicable in Luxembourg may from now on constitute an associated predicate offence to money laundering. As a reminder, the offence of money laundering is punishable by imprisonment for a term of one to five years and a fine of between EUR 1,250 and EUR 1,250,000, or by one of these penalties only. As a result, the FIU is now competent to receive suspicious transaction and activity reports of suspected violations of the Sanctions Law.
This provision therefore expands the FIU's powers and aims to strengthen the legislative and regulatory framework for the implementation of sanctions, including the freezing of assets. Entities are therefore required immediately to inform the FIU, on their own initiative, when they know, suspect or have reasonable grounds to suspect that a breach of sanctions and related enforcement measures and decisions is ongoing, has occurred or has been attempted. Regulatory specifications regarding the enforcement of sanctions In addition, the Grand-ducal Regulation of 14 November 2022 clarifying the Sanctions Law has provided further guidance to natural and legal persons bound to comply with the Sanctions Law.
Indeed, the government has made it clear that both the enforcement of sanctions and the informing thereof to the Ministry of Finance ought to be made without delay. The Grand-ducal Regulation has also clarified that the enforcement of sanctions did not require any prior notification. For more information regarding the Sanctions Law, please read here.
For further information and guidance on international and EU sanctions, including a list of all applicable EU regulations and affiliated texts and their interpretation, reference can be made to the dedicated webpages of the Luxembourg Ministry of Finance (which includes useful best practice guides and forms), the CSSF and the European Commission (which includes a comprehensive Q&A). For an insight on the latest seventh and eighth packages adopted at EU level, please read our article on this topic. The content of this article is intended to provide a general guide to the subject matter.
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