Luxembourg’s first National Risk Assessment of money laundering and terrorist financing (NRA), published in December 2018, has concluded that the Specialised Professionals of the Financial Sector (Specialised PFS) providing corporate services carried a high inherent money laundering and financing of terrorism (ML/FT) risk. This finding is not unusual as this category of professionals falls into a larger category called the Trust and Company Service Providers (« TCSP ») therefore this result is in line with conclusions of the Financial Action Task Force (FATF) and the European Commission in its own Supranational Risk Assessment.
In order to link the NRA to the Specialised PFS entity-level ML/FT risk assessments that the CSSF performs annually, and to develop a more granular and systematic perspective on the risks faced by TCSP (more particularly Specialised PFS), the CSSF began in 2019 an analysis of ML/FT risks related to the TCSP activities carried out by Specialised PFS. It is to be noted that TCSP activities are also carried out by other professionals and, whilst they are not the focus of this assessment, they may also find this assessment useful.
Building on the findings from the NRA, this sub-sector risk assessment takes a closer look not only at ML/FT inherent risks, but also at risk-mitigating factors applied by Specialised PFS and the CSSF, as well as their impact on inherent risk and the resulting residual risk level.
The CSSF expects Specialised PFS to reflect the findings and conclusions from this sub-sector risk assessment into their frameworks to ensure they remain appropriate to effectively mitigate ML/FT risks. Other CSSF supervised entities should also consider and use the findings and conclusions from this sub-sector risk assessment as appropriate in case they provide TCSP services.