Most Read Contributor in Luxembourg, February 2017
On 17 February 2017, the Commission de Surveillance du Secteur
Financier ("CSSF"), together with the Financial
Intelligence Unit ("FIU") have published a new circular
(hereafter, "the Circular") providing more details on the
professional duties relating to tax crimes that professionals
should apply .
This circular follows the recent European and national
development and legislations aiming to prevent the use of financial
systems for the purpose of money laundering and financing terrorism
(hereafter: "AML/CTF"), i.e. among others the 2012 FATF
revised recommendations, the 4th AML directive as well as the Law
of 23 December 2016 implementing the 2017 Tax reform, as it extends
its application to tax crime related to direct and indirect taxes
by formerly recognizing aggravated tax fraud and tax swindle as
predicate offence .
3 types of Tax fraud have been defined, from simple tax fraud
with administrative sanction to aggravated tax fraud and tax
swindle, both considered as criminal sanctions and sentenced by
imprisonment (1 month to 3/5 years) and fines (between 25.000 EUR
and 6/10 times the amount of taxes avoided or reimbursement unduly
obtained). The 2 latters being considered as predicate offence
Consequently, the Professionals must ensure that appropriate
customer due diligence measures are in place to properly address
tax crime for any new business relationships established from the
1st January 2017 as well as for any existing relationships on a
risk based approach basis. This means that professionals will have
to capture appropriate information on the purpose and nature of the
business relationship, on the origin of the funds/assets to
properly evaluate and document the financial situation of the
client, its compliance with its tax obligations as well as
scrutinize the transactional activities.
Terminated business relationships as at 31 December 2016 are out
of scope. Dormant accounts have been considered as well in
situation where the account would be reactivated or the assets
requested by their successors.
The scope is applicable to tax crime committed or attempted both
in Luxembourg and abroad as long as tax crime would be incriminated
in this specific country. In addition, specific thresholds of
evaded taxes have been defined by the law of 23 December 2016 for
tax offences carried out in Luxembourg, enabling the professional
not necessarily to report any suspected transaction to the FIU if
the avoided tax amount is below 10.000 EUR.
A list of 22 indicators is provided in Appendix 1 to the
Circular to help professionals identifying potential tax crimes
which may serve money laundering purposes or terrorism financing
and reporting suspicious transaction activity to the FIU
It is the presence of one or several of these indicators that
may trigger a suspicion requiring further analysis from the
professionals and appropriate reporting to the FIU if needed.
This list is not exhaustive and does not prevent the
professional to evaluate each situation/transaction on a case by
Furthermore, the professionals are not under the obligation to
qualify the tax offence.
The publication of this Circular implies that professionals
would need to update their internal procedures and policies with
regards AML/CTF in order to include aggravated tax fraud and tax
swindle as predicate offence of money laundering and ensure
appropriate due diligence measures are in place as well as
complement these updates with appropriate trainings to
professional's employees .
KPMG Luxembourg can assist you further in the implementation of
this circular and these new requirements in your existing policy,
combining the expertise of both Tax and Financial Crime
The circular is available (only in French) on this
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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