Luxembourg Country Summary

FATF Status

Luxembourg is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The latest follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Luxembourg was undertaken in 2023. According to that Evaluation, Luxembourg was deemed Compliant for 28 and Largely Compliant for 11 of the FATF 40 Recommendations. It was rated Highly Effective for 3 and Substantially Effective for 6 of the Effectiveness Compliance ratings.

In 2023, Luxembourg ranked as the ninth least-corrupt country globally, with improvements in its Corruption Perceptions Index score and compliance with anti-money laundering regulations. While the country has implemented measures such as a whistleblower law and has a dedicated Committee for the Prevention of Corruption, concerns about government transparency persist. Luxembourg faces challenges with human trafficking, drug markets, and cyber crimes, but maintains a stable governance structure and strong public trust, effectively combating organized crime and financial crimes.

Luxembourg, despite its small size and population, is the third-wealthiest country in the world based on GDP per capita. The economy has shown resilience, with a well-performing financial sector that accounts for about one-third of GDP, although it faces risks from financial market volatility. The government is focused on strategic investments and tax adjustments to enhance competitiveness and boost household purchasing power, while also aiming to diversify the economy beyond its reliance on the financial sector.

Luxembourg offers a highly attractive investment climate characterized by political stability, transparency, and a strong focus on growth sectors, particularly in finance and technology. The government actively supports foreign direct investment with no restrictions on ownership and has implemented regulatory reforms to enhance competitiveness, while also promoting diversification into sectors like logistics and ICT. Additionally, Luxembourg's strategic location as a gateway to Europe and its favorable tax environment further bolster its appeal to international investors.