International sanctions: a dedicated regime for financial sanction in Luxembourg

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On December 23, 2020 the Luxembourg legislator has published the Law of 19 December 2020 implementing financial restrictive measures (“Law of 19 December 2020”). This Law has repealed the Law of 27 October 2010 enhancing the anti-money laundering and counter terrorist financing legal framework.

With its entry into force on December 27, 2020, the Law of 19 December 2020 provides Luxembourg with a dedicated legislative arsenal for the implementation of financial restrictive measures adopted by the United Nations and the European Union.

Which financial restrictive measures?

The scope of application of the Law of December 2020 encompasses financial restrictive measures adopted by the United Nations and the European Union against certain States, natural and legal persons, entities and groups which take the form of:

The lists of restrictive measures will be established by virtue of a Grand-ducal decree.

Who is concerned?

Respect of financial restrictive measures is mandatory for

Authorities in charge of the supervision

Financial regulators (1) and self-regulatory bodies (2) are made responsible for the supervision of persons under their jurisdiction for the purpose of the implementation of the Law of 19 December 2020. As such, these regulators and bodies have increased supervisory and sanctioning powers.

Powers of supervision

To ensure effective implementation of financial restrictive measures, financial regulators and self-regulatory bodies have broad supervisory and investigatory powers.

They can notably:

They may also impose administrative sanctions:

Criminal sanctions for disrespect of the financial restrictive measures

Without prejudice to the application of the more severe penalties provided for, where applicable, by other legal provisions, failure to comply with the restrictive measures adopted pursuant to the Law of 19 December 2020 shall be punishable by imprisonment for a term of eight days to five years and a fine of EUR 12,500 to EUR 5,000,000 or one of these penalties only. Where the offence has resulted in substantial financial gain, the fine may be increased to four times the amount of the offence.

Based on common principles in criminal law which allow cumulation of sanctions, this implies that a legal entity and natural persons (for example directors) may face penalties for the same offense.

(1) Commission de Surveillance du Secteur Financier (« CSSF »), le Commissariat aux assurances (« CAA ») et l’Administration de l’enregistrement, des domaines et de la TVA (« AED »).
(2) L’Institut des réviseurs d’entreprises, l’Ordre des experts-comptables, la Chambre des notaires, les ordres des avocats, la Chambre des huissiers.
(3) In the case of professionals subject to the supervision of self-regulatory bodies, the sanction could also be a lifetime ban.

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Luxembourg Newsflash – International sanctions – a dedicated regime in Luxembourg

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