Luxembourg’s financial regulator, the Commission de Surveillance du Secteur Financier (CSSF), has published its 2024 annual report, and the message is clear: the fight against money laundering and terrorist financing (AML/CFT) remains at the heart of its mandate.
After conducting 290 targeted inspections in 2023, the watchdog carried out 358 in 2024, an increase of 23 percent. On the sanctions side, the rise was even more striking: the authority issued 33 administrative decisions last year, compared with 22 a year earlier, with the total amount of fines rising from 3.1 million euro to 4.7 million euro (+52 percent).
This trend reflects a clear intensification of supervision. The inspections, carried out among banks, financial service providers and fund managers, revealed progress but also persistent shortcomings. The 2024 report points to insufficiently thorough Know Your Customer (KYC) procedures, internal risk assessments that were sometimes too generic, and a recurring shortage of specialized compliance staff. For the CSSF, these deficiencies represent serious vulnerabilities at a time when Luxembourg remains under the scrutiny of the Financial Action Task Force (FATF), the IMF, and soon the European Anti-Money Laundering Authority (AMLA).
The tougher sanctions highlight the regulator’s determination to underscore the strategic importance of AML/CFT. Already in 2023, the CSSF imposed 22 sanctions totaling 3.1 million euro. But 2024 marked a step up in scale: not only did the number of sanctions rise by 50 percent, but the cumulative amounts of fines also increased by more than half. In some cases, the CSSF imposed detailed remediation plans with close follow-up. In others, it restricted the activities of a sector player. All are signals of reduced tolerance for shortcomings.
Increasingly strict supervision
This evolution takes place in a European context marked by the imminent launch of AMLA, which will have direct supervisory powers starting in 2025. The CSSF annual report stresses that the reputation of Luxembourg’s financial center will depend on the robustness of its systems to prevent financial abuse. For the CSSF, this is no longer just a regulatory requirement but also a matter of credibility and international competitiveness. The regulator also warns against purely formal approaches. Too many players, it notes, still treat compliance as a box-ticking exercise, without genuine integration of AML/CFT into their governance. Boards of directors are explicitly called upon to take up their role and put the management of financial crime risks at the core of their strategy. The year 2024, with its wave of heavier and more numerous sanctions, shows that the regulator is no longer limiting itself to warnings.
Another key pillar for the CSSF in 2024 was cooperation. At the national level, the authority stepped up its exchanges with the Financial Intelligence Unit, the public prosecutor’s office and the Central Bank of Luxembourg. Internationally, it took an active role in colleges of cross-border supervisors and in preparatory work for AMLA. These cooperation mechanisms are designed to strengthen consistency and prepare for the entry into force of the new European framework. At the same time, the CSSF expanded its awareness-raising efforts, organizing seminars and workshops for compliance officers and approved managers. The goal: clarify expectations, share best practices and prepare the sector for emerging risks, particularly those related to crypto-assets and decentralized finance.
The priorities for 2025 have already been set. The Luxembourg regulator plans to further intensify its inspections, with particular attention to the quality of KYC processes, the effectiveness of systems for detecting suspicious transactions, and the involvement of governing bodies. After a 23 percent increase in AML/CFT inspections and a 52 percent rise in fines within a single year, the message is unambiguous: the CSSF will continue to tighten its stance as long as structural weaknesses persist.