The Luxembourg District Court (TA, 12 June 2014)

A recent Luxembourg judicial decisions have acquitted professionals of criminal liability under the fight against money laundering, providing some welcomed clarifications on the cooperation obligation of professionals under the Luxembourg law of 12 November 2004 on the fight against money laundering and terrorist financing (the “AML Law”).

Back ground

1. One of the clients of a Luxembourg domiciliation agent is targeted by negative press articles revealing an apparent conviction for fraud in Sweden.
2. After further internal investigations, the daily managers of the relevant domiciliation agent  decide not to file a suspicious activities report (“SAR”) with the Financial Intelligence Unit (“FIU”).
3. Subsequently, the daily managers are prosecuted for having breached their professional obligations relating to the combat against money laundering and terrorist financing.

Decision of the District Court

1. The concept of “suspicion” is a subjective concept which varies depending on the level of knowledge which the relevant professional has about a given transaction.
2. The accused managers were not found guilty as they were able to explain in a clear, coherent and credible manner why they did not have a suspicion of money laundering despite the negative press and the criminal conviction;
   1. Presence of negative press or even criminal convictions may not necessarily be a sufficient reason per se to file an SAR – depends on case-by case internal investigations and verification’s on the concerned.
3. Client;
   1. The risk of a breach of the obligation to professional secrecy in the case of an unfounded SAR filing?