Assessment of predicate tax offences in an AML/CTF context: The asset management industry should prepare for CSSF inspections
The new provisions introduced by Circular 17/650, as amended through Circular 20/744, impact the AML/CFT compliance obligations of the asset management industry. Asset managers (as well as other regulated investment professionals) should review their internal procedures and document the risk assessment of their business activities in order to prepare for CSSF inspections.
In February 2017, the CSSF published Circular 17/650 following the 2017 Luxembourg tax reform extending the money laundering offence to aggravated tax fraud and tax evasion. The release of Circular 17/650 followed the revised FATF standard of 2012/2013 and of the 4th AML Directive (Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing in Luxembourg law). This initial Circular provided general guidance for all entities falling under the supervision of the CSSF to raise suspicions of tax fraud and evasion through a (non-exhaustive) list of common indicators set out in Annex 1 of the Circular.
In July 2020, Circular 17/650 was amended by a new circular, Circular 20/744, which complements the common indicators included in Annex 1 by new indicators that are to be taken into account specifically in the context of collective investment activities and professionals providing services in that particular sector.
The Circular, as amended, is applicable to all the entities supervised by the CSSF, with a focus on investment fund managers.
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