The Annual AML/CFT Compliance Report

In our previous publication, we detailed the requirements for the Compliance Officer to produce the Annual Compliance Report as specified in the CSSF Circular 18/698 sub-section 5.3.2.6. 

Please peruse the article at the following link in order to obtain further information.

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Further to this, sub-section 5.4.1.2. of the same Circular mandates that all investment firms are to designate an AML/CFT Compliance Officer at the senior management level. The designation of the AML/CFT Compliance Officer at the management level should be based on the size and nature of the investment firm's activities.

The AML/CFT compliance officer must submit a summary report of the compliance with AML/CFT obligations to the management at least once a year.

It must cover at least the following areas:

• Results of risk assessments, measures taken to mitigate risks and risk tolerance; 
• Customer due diligence (CDD) conducted on clients, fund initiators, portfolio managers, etc.;
• Enhanced due diligence (EDD) on Intermediaries acting on behalf of their clients (art. 3 CSSF Reg. 12-02);
• Initial and ongoing Politically Exposed Persons (PEP) due diligence;
• Asset due diligence;
• monitoring of blocked positions;
• periodic review of business relationships according to their risk;
• monitoring of third-party compliance, in case of delegation of AML/CFT tasks;
• number of identified breaches of AML/CFT professional obligations;
• Number of AML/CFT actions implemented. 

The report should also include a statistical history of identified suspicious transactions cases reported to the Financial Intelligence Unit (FIU).

The report should provide a statistical history concerning transactions reported in the framework of financial sanctions. 

The report must be approved by the board of directors and submitted to the CSSF annually within five months of the end of the financial year.

It is noteworthy that standardized report templates are readily available, usually generated by Luxembourg associations and working groups. It is imperative to emphasize that the annual AML/CFT report is subjected to strict regulatory scrutiny, wherein reports are expected to provide a comprehensive and adequate level of detail regarding identified breaches and implemented AML / CFT actions. Therefore, it necessitates utmost attention to ensure compliance.

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