Luxembourg Insurance Commission publishes first targeted financial sanctions risk assessment, legal arrangements retain very high residual risk

The Luxembourg Insurance Commission has published Luxembourg’s first vertical assessment of risks arising from the breach, nonimplementation or evasion of targeted financial sanctions related to proliferation financing and terrorist financing. Covering 2018 to 2023, the assessment finds that Luxembourg’s main exposure stems from its large cross-border financial sector and international business activities. Direct links to countries and actors within scope are very limited, but complex sanctions evasion structures could involve Luxembourg entities indirectly in moving or obscuring funds. Legal persons and legal arrangements present the greatest residual risk. Commercial companies are rated high, while domestic fiduciary arrangements, foreign trusts and nonprofit organisations operating abroad within the Financial Action Task Force definition retain very high risk after mitigation. Wholesale, corporate and investment banking, notaries, chartered professional accountants, accounting professionals, trust and company service providers and car dealers have medium residual risk. Most other assessed financial sectors, including insurance, collective investments, payment and electronic money institutions, virtual asset service providers and specialised financial professionals providing corporate services, are rated low after existing legal, supervisory and private sector controls are considered.