Terrorism and organized crime need to feed on the large flow of finance they generate.
Parallel to the internationalization of Luxembourg's financial centre, the country recognized a long time ago the importance of preventing institutions and legal financial channels from being used for terrorist, criminal and other illegal purposes; of closing access to the financial sector to those who commit such activities; of blocking their operations; of freezing and confiscating their assets and of arresting and condemning the perpetrators and those who help them.
Luxembourg legislation provides for particularly strict regulations governing access to the financial sector, particularly with regard to the identity and worthiness of shareholders and managers of financial institutions.
Furthermore, Luxembourg law on the financial sector imposes professional obligations on all persons active in this sector.
In particular, we must underline that perpetrators and accomplices of terrorist or other criminal acts shall not, in any way, be protected by Luxembourg banking secrecy. The law clearly stipulates that the obligation to secrecy shall not apply in court cases and before all judges.
On the contrary, all professionals in the financial sector are legally obliged to cooperate fully with the authorities responsible for applying the laws. The authorities, for their part, cooperate with their counterparts abroad. The financial sector's cooperation involves the obligatory denunciation to the legal authorities of any facts that may constitute evidence of money laundering.
With regard to preventive measures, the law of 5 April 1993 relating to the financial sector provides for the obligation, in Article 39, for banks to know their customers. Beyond that, the identification requirement applies to all transactions that exceed LUF 500,000. This amount will be reduced to EUR 10,000 from 1 January 2002.
Luxembourg was among the first countries to outlaw money laundering, initially with regard to drugs trafficking and subsequently for a wide spectrum of criminal activities. Within this framework, it ratified the Vienna Convention to combat the illegal trafficking of drugs and psychotropic substances, as well as the Strasbourg Convention relating to money laundering and the tracking down, seizure and confiscation of illegal substances.
Aimed at combating acts of terrorism, Article 506-1 of the penal code outlaws, in particular, the laundering of capital gained from crimes or offences committed within or in relation to an association of wrongdoers or a criminal organization, as well as the laundering of capital gained from violations against legislation on arms and ammunition.
The following categories of violations, in particular, are included:
violations against external State security (Articles 113 to 123 (8) PC);
violations against internal State security (Articles 124 to 135 PC);
intentional attacks and injury (e.g. murder: Article 393 PC and assassination: Article 394 PC);
unintentional attacks and injury (Articles 418 to 422 PC);
taking of hostages (Article 442-1 PC);
false entries on private documents (Articles 193 and 196 PC), false entries on public documents (Articles 194 and 195) and the use of false entries (Article 197 PC);
destruction of the personal property of others (Articles 528 to 534 PC);
violations against legislation on arms and ammunition;
Moreover, the penal code outlaws the formation of associations of wrongdoers (Article 322 ff PC) or criminal organizations (Article 324 to ff PC) and participation in the activities of such persons.
Accomplices of those who commit violations shall be punishable in accordance with Article 67 of the penal code.
The financing of such criminal activities shall be considered an act of involvement or complicity.
In addition, Luxembourg has approved the European Convention of 27 January 1977, which is aimed at repressing terrorism, and forms part of the agreement of 4 December 1979, which was concluded among the Member States of the European Communities and relates to the application of the European Convention for the repression of terrorism.
Hitherto, Luxembourg has also signed two other conventions, pending approval, relating to terrorism:
the International Convention for the repression of terrorist attacks in which explosives are used, adopted by the General Assembly of the United Nations on 15 December 1997, and
the United Nations Convention to combat international organized crime and its three additional Protocols.
Furthermore, the Luxembourg Government has already decided to sign the United Nations Convention for the repression of the financing of terrorism.