Demystifying stereotypes
Luxembourg
as a financial hub
Due to rumours and sensational articles, the general public often identifies the Luxembourg financial market as a banana republic where almost anything, especially that which is forbidden, is possible!
However, this is far from the truth.
In the Grand Duchy of Luxembourg, economic activity is regulated (access to the profession) and overseen by sectoral supervisory bodies.
The overall tax rate is within the European average, and social coverage, although very competitive, is superior to that of some neighbouring countries.
However, those who manage their business responsibly, respect the rights of individuals and companies, and pay their taxes can greatly benefit from establishing themselves in the Grand Duchy. They will be recognized as creators of jobs and wealth, rather than as an inexhaustible tax reservoir.
Anti-money laundering regulations
Given the development of its financial market on an international scale, Luxembourg has long recognized the need to combat the abuse of financial circuits.
The European directive 2001/97/EC of December 28, 2001, established a legal framework applicable to all European countries. This directive was transposed into Luxembourg law by the law of November 12, 2004, reinforced by the Law of October 27, 2010, and two Grand Ducal regulations dated October 29, 2010, and February 1, 2010. The law of February 13, 2018, transposed the European directive 2015/849 concerning provisions related to professional obligations and the powers of supervisory authorities in the fight against money laundering and terrorist financing.
The list of professionals subject to preventive measures is not limited to banks. Professionals in sectors such as lawyers, insurers, notaries, company auditors, accountants, and tax and economic advisors are also obligated to comply.
Thus, “Compliance” services have been established to meet regulatory requirements:
- Know Your Customer (KYC) and Know Your Transaction (KYT)
- Know the economic beneficiary
- Understand the client’s activities
- Know the source of funds
- Duty to cooperate with authorities: report any breaches of anti-money laundering laws