Luxembourg, a hub for global finance, has seen a significant uptick in alerts on questionable transactions that could signal money laundering or even finance terrorism.
The number of reports concerning money laundering and terrorist financing filed by reporting entities with Luxembourg’s Financial Intelligence Unit rose 24 percent in the two years covered by the justice ministry’s “Statistics 2020-2021” report, published last week. During this period, the unit’s number of new cases opened for investigation on cybercrime and tax crimes rose by 143 percent and 146 percent, respectively.
The Financial Intelligence Unit is the national authority in charge of receiving and analysing suspicious transactions and activity reports and other information on events that could involve money laundering, associated “predicate offences” or terrorist financing.
The unit received 49,876 money laundering reports in 2021, up 24 percent from 40,328 in 2020. The much lower number of terrorist financing reports dropped by 29 percent during the two years, from 454 reports in 2020 to 321 in 2021.
“The development of such an extensive statistical document requires the collaboration of numerous institutions, with the Directorate for Combating Money Laundering and the Financing of Terrorism (AML/CFT Directorate) of the Ministry of Justice serving as the coordinating entity responsible for compiling the statistics to meet regulatory requirements for their publication” said a Justice ministry spokesperson.
International cooperation
Given Luxembourg’s status as an international financial centre, one of the unit’s core functions, besides “intense and robust domestic cooperation” is exchanging information with its international counterparts through reports and disseminating information.
The most intensive cross-border reporting, in terms of volume, is with Germany, with some 10,249 reports in 2021, down from 13,474 the previous year. The number generally follows the size of the country, with Spain, France, Ireland and Italy having higher numbers of reports. Reflecting the changes brought about by Brexit, exchanges with the UK dropped from 4,608 in 2020 to only 37 in 2021.
In terms of new notices opened for investigation, the two.highest numbers in 2021 were 7,665 for robbery or theft and 3,904 for fraud and forgery. But in comparing 2021 numbers with 2020, the number of cybercrime notices increased by 143 percent and the number of tax crimes notices increased by 146 percent.
Robbery and theft
Looking at the cases the unit prosecuted, the highest “predicate offence” number of cases was robbery or theft, at over 1000 cases in 2021, not much higher than 2020.
In descending order, the next-highest number of offences in 2021 were: 370 for fraud and forgery, 165 for illicit tracking in narcotic drugs and psychotropic substances, 110 for illicit arms trafficking, 123 for murder, grievous bodily harm, then 73 for illicit trafficking in stolen and other goods. Other categories including extortion, environmental offences and so on involved fewer cases.
The report details the number of people sentenced to prison without including suspended sentences. Over 200 people per year wen to jail for robbery or theft, about 60 went to jail for fraud and forgery in both years, and in 2021, nearly 50 people went to jail for illicit drug trafficking.
The uses of freezing
Among the sanctions the unit can levy against those who infringe the laws it enforces is the freezing of assets. In 2021 the unit issued a total of just over 38 million euros of freezing orders for a range of offences. This was down sharply by 83 percent between the two years of the report, as in 2020, there had been nearly 224 million.
This broke down into just over 11 million for money laundering in 2021, down from over 29 million the previous year, with 10 individual freezes, down from 31 in 2020.
Corruption, at 9.6 million euros frozen in 2021, was down sharply from the nearly 32 million euros in 2020, with the number of individual freezes much lower at 4 in 2021 vs 13 in 2020.
Sharp drop in fraud cases
Fraud freezes were down sharply over the two years, with just over 6 million in freezes for 48 freezes in 2021, versus over 40 million in 87 individual freezes in 2020.
For criminal tax offences, the individual amounts of the freeze diminished over the two years. In 2020, five freezes amounted to nearly 13 million euros, but in 2021, there were four that amounted to 6.4 million.
Though there were fewer terrorism and terrorist financing reports, there were 5 freezes over the two years, including 1 in 2020 for just under a million euros and four in 2021 for nearly 4 million euros.
Few cybercrime freezes
While there were a lot of cybercrime reports, there were only four freezes, amounting to just over 250 thousand euros in 2020 and none in 2021.
The October 2023 report concerns events in 2020 and 2021.
Explaining the delay, the justice minister’s spokesman said “the publication of these statistics involves a lengthy and labor-intensive process of coordination and compilation, primarily relying on data provided by various institutions.”
The Financial Intelligence Unit (known in French as the Cellule de renseignement financier) employed 33 full-time equivalent staff in 2021, including 18 analysts, up from 14 the year previous. The only other staffing increase was a single additional member of “support staff”.
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