In a ruling handed down on 26 February 2025, the Court of Appeal in chambers declared inadmissible the criminal proceedings brought against a financial institution on the grounds that an administrative sanction had previously been imposed on it by the Commission de Surveillance du Secteur Financier (CSSF). The decisive factor in this case was the principle of non bis in idem.
Defining a violation of the non bis in idem principle
The non bis in idem principle is a fundamental legal principle that is enshrined at both European and national level. It prohibits the prosecution of a person for an act for which it has already been prosecuted and tried.
A double sanction constitutes a violation of the non bis in idem principle when:
- the administrative sanction is of a criminal nature;
- it relates to the same facts; and
- the conditions for an exception to the non bis in idem principle are not met.
These were the criteria taken into account by the judges in the present case.
In this case, in 2020, a financial institution had been subjected to a substantive administrative fine, which had become final, imposed by the CSSF for failure to comply with several provisions of the law of 12 November 2004 on the fight against money laundering and terrorist financing (Law of 2004). It was subsequently prosecuted again in 2024 by the public prosecutor under the Law of 2004.
Both the supervisory and judicial authorities have similar powers to impose sanctions in this area. These penalties may be imposed for the same breaches of the Law of 2004, such as those related to the obligation to perform a risk assessment, customer due diligence, adequate internal management requirements, cooperation requirements with the Financial Intelligence Unit (FIU), the authorities, and the self-regulatory bodies, and reporting of breaches.
In the case at hand, the facts outlined in the public prosecutor's indictment had already been covered by the administrative sanction previously imposed by the CSSF.
Following application of the case law of the European Court of Human Rights, the judges determined that the administrative sanction imposed by the CSSF is of a criminal nature, given its nature and severity.
Finally, having rejected the double penalty and declaring the public prosecutor's action against the financial institution inadmissible, the Court of Appeal in chambers stated that
it is undeniable that the objective pursued by the Law of 2004 is in the public interest, as it aims to combat money laundering and the financing of terrorism. However, it is more difficult, if not impossible, to justify how the penalties – two fines – pursue complementary aims. Moreover, there is no regulation in domestic law that ensures coordination between the CSSF and the public prosecutor
Potential consequences and implications to anticipate
This ruling by the Court of Appeal in chambers is of fundamental importance for the Luxembourg financial sector.
Clarification of the criteria for non-cumulation of administrative and criminal penalties is welcome in a field where administrative penalties are generally very severe compared to criminal penalties, which often come much later.
This ruling strengthens the legal certainty of regulated entities within the scope of the Law of 2004, enabling them to better anticipate the legal risks of potential breaches of their obligations to combat money laundering and terrorist financing. At the same time, it is likely to encourage more effective coordination between administrative and prosecuting authorities.
This precedent will have a significant impact on future legal proceedings as a reference used by litigants.
Last but not least, this precedent may have far-reaching implications for other regulated sectors and fields of law where sanctions are often imposed before criminal proceedings, such as competition law, tax, employment law or data protection.
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.
