The Luxembourg Insurance Commission has published Luxembourg’s first vertical risk assessment of the potential 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 principal exposure arises from its cross-border financial flows and international business activities. Direct links to sanctioned countries and actors are limited, but complex sanctions-evasion structures may involve Luxembourg entities indirectly, particularly when funds are obscured or moved through the international financial system. Legal persons and legal arrangements present the highest residual risks. Foreign trusts, domestic fiduciary arrangements and nonprofit organisations operating abroad retain very high residual risk, while commercial companies are rated high. Most regulated financial sectors are rated low after mitigation, although wholesale, corporate and investment banking retains medium residual risk because of activities such as correspondent banking and trade finance. For insurance, non-life and reinsurance activities move from medium inherent risk to low residual risk, with maritime exposure representing about 6% of turnover or premiums in each segment.
Luxembourg Insurance Commission publishes first assessment of proliferation and terrorist financing sanctions risks
The Luxembourg Insurance Commission has published the country’s first assessment of targeted financial sanctions risks related to proliferation and terrorist financing. Cross-border financial activity creates indirect exposure despite limited direct links to sanctioned countries and actors. Legal arrangements and internationally active nonprofit organisations retain the highest residual risks, while most regulated financial sectors are rated low after mitigation.