Always smile at the border
The new Bill on the fight against money laundering and terrorist financing has been passed by the Luxembourg Parliament. Luxembourg has followed recommendations by the Financial Action Task Force (FATF), an OECD body whose purpose is the development and promotion of policies to combat money laundering and terrorist financing. The aim of the legislation is to strike a balance between the respect of privacy and Luxembourg’s international obligations. The text was presented by Jean-Louis Schiltz and Gilles Roth from the Christian Social People’s Party (CSV). LFF spoke to Gilles Roth.
Last February, the FATF (The Financial Action Task Force ) report asked Luxembourg to amend its law in order to implement recommendations that facilitate the cooperation of judiciary authorities in criminal law matters. What duties does this imply for the Luxembourg legal system?
When judicial assistance is requested by a foreign authority, three types of information have to be given. Information can be requested with regard to a person who holds, controls or manages an account at one or more banks and with regard to banking transactions made in the past; and bank transactions can be monitored within a period of up to three months.
What about banking secrecy in these three specific cases?
Two conditions have to be met in order to suspend banking secrecy: the demand for judicial assistance has to stem from a foreign authority and it has to concern a criminal offence and not an administrative one. I have to underline that this element is not new. The new element is the fact that a search can be made at several banks and that the foreign authority can now ask for a monitoring of bank transactions.
These new measures imply that a bank customer can no longer make objections in the three cases mentioned above. How was this problem solved in the text of the Bill?
This was one of the trickiest points in the text. Following the GAFI recommendations we had to amend the 2000 law on judicial mutual aid. Up till now, the customer has been informed by his bank in the case of a search.
Furthermore, he has the option of making an objection which meant that it took a certain amount of time before a case could be brought before court. Now we have to implement an international protocol saying that a bank has to respect a confidentiality clause.
This means that the bank is no longer allowed to inform the customer that a search is being made to obtain information about his account or banking transactions. Obviously, a customer can no longer make objections because he is simply not informed about the search.
How is this problem solved in the text of the Bill?
In the Parliamentary judicial committee we came to the conclusion that self defence is an elementary right. That is why we have foreseen in the text that a so called mémoirecan be introduced by a bank or a third party that has a legitimate right to do so. A customer can do so too when he is informed about the search.
How hard was the balancing act between the respect for privacy on the one hand and international duties on the other?
We started from the principle that elementary legal principles have to prevail, meaning that the evidence has to be established. That is why it is important that a bank customer be able to make objections during the enquiry. If one or several mémoiresare introduced the so called Chambre du Conseil, composed of three professional judges, has to decide on the correctness of the procedure and about the arguments put forward in the mémoires.
Which FATF recommendations have been translated into the text of the Bill?
We have a European regulation from 2005 which says that the circulation of cash amounts above €10,000 to a non EU country have to be declared in Luxembourg. Only Findel airport is concerned because it is our only frontier with non EU States. Now FATF has written in its report that cash transactions within the European Union also have to be declared.
It is important to underline that such transfers do not imply that there is an automatic intention of money laundering. The presumption of innocence has to prevail. Furthermore, in the Parliamentary judicial committee we stressed that the principle of proportionality has to persist. So Customs should do their job but should not exaggerate their controls, meaning that they should not be over zealous and control every person who crosses the border.
 An OECD organisation that fights money laundering and terrorist financing, known as GAFI in French.