Overview of the Anti-Money Laundering and Financing Terrorism Rules Applying in the Luxembourg Insurance Sector

Abstract

1.1 The fight against money laundering and financing terrorism (hereafter referred to as “AML“) has become a major rule to comply with for an international financial center as Luxembourg. A strong compliance system is a factor of trust and reliability for investors. According to the Financial Action Task Force (hereafter referred to as “FATF”) , money laundering is the processing of criminal proceeds to disguise their illegal origin enabling the criminal to enjoy these profits without jeopardising their source. Illegal arm sales, smuggling, and the activities of organised crime, including for example drug traffic and prostitution rings can generate huge amounts of proceeds. Embezzlement, insider trading, bribery and computer fraud schemes can also produce large profits and create the incentive to “legitimise” the ill-gotten gains through money laundering. The individual or group involved tries to find a way to control the funds without attracting attention to the underlying activity or the persons involved by disguising the sources, changing the form, or moving the funds to a place where they are less likely to attract attention.