5/5 – 2011 – Luxembourg Court of Appeals (Court d’Appel du Grand-Duché de Luxembourg 5ème chambre) decision of 28 June 2011, docket number 340/11

1. In a 31 October 2013 decision, the 18th Criminal Chamber of Luxembourg’s District Court imposed a fine of EUR 5000 on a Luxembourg notary for violation of his professional obligations because the notary failed to identify the beneficial owner of a company for which he amended the articles of incorporation.
2. The notary acknowledged having failed in his duty to identify his clients in 2009, and his lawyer pleaded attenuating circumstances, requesting that the court defer its delivery of the sentence as long as the notary, who had a no criminal record, not commit another such offense.
3. The notary, who was swamped with work, had judged that the risk of money laundering was practically non-existent, and thus did not identify his clients, but rather relied on the information provided to him by a business finder with whom he had worked for a long time and who he trusted. The strict KYC obligations under Law of 12 November 2004, as amended, do not permit a notary to omit identifying his clients or the origin of the funds coming from them.
4. The case did not require a magistrate to open an investigation, the matter was heard by the court in a short, 30-minute hearing, after the notary was heard by the criminal police (police judiciaire). The prosecutor requested that a fine of EUR 10,000 be imposed, but the court imposed a fine of half that amount.
5. Additionally, the lower court validated the prosecutor’s view that the offense the notary committed was a “hidden” offense (infraction clandéstine), one for which the prescription period began to run only when the offense was discovered, the propagation of which would have allowed the prosecutor to bring actions against parties for infractions or omissions committed many years prior.
6. However, on appeal the Luxembourg Appeals Court acquitted the notary in its 18 June 2014 decision, overturning the lower court ruling and holding that the prescription period for the prosecutor’s claims had run, thus the claims were barred.
7. At the time the original action was brought, the prescription period was three (3) years. The prescription period has since been extended to five (5) years for infractions committed after 1 January 2010.
8. In this case, the infraction was committed on 15 January 2009, at the client’s general meeting of shareholders.
9. The notary’s lawyer argued that because the prosecutor did not take action against the notary until 31 May 2012, and hear his testimony until 16 June 2012, those claims were barred because the prescription period began to run on 15 January 2009, and ended on 15 January 2012, four and a half months after the first act of prosecution.
10. The notary’s lawyer also argued that legal certainty requires that the use of the legal construction of a hidden offense must be used sparingly and exclusively for crimes requiring an element of the perpetrator’s intent to hide the infraction. He further argued, and the Appeals Court agreed, that raising his client’s infraction to the level of a hidden offense would distort the nature of the infraction as the notary’s infraction was solely one of omission. While his client was indeed negligent, he did not attempt to hide anything, and the prosecutor should have begun its action against his client earlier.

Example 1: http://bit.ly/2pSnX2a

Example 2: http://bit.ly/2q3b6pb

Example 3: http://bit.ly/2ryjui4

Example 4: http://bit.ly/2ryrlMF