{"id":"circulars/cssf-20-740","title":"Circular CSSF 20/740","type":"circular","date":"2020-04-10","kind":"circular","html":"

Circular CSSF 20/740 is a CSSF circular, published 10 April 2020. Subject: Financial crime and AML/CFT implications during the COVID-19 pandemic.

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Relevant for: AIFMs, AISPs, Central Securities Depositories (CSDs), Credit institutions, Credit servicers, Data Reporting Service Providers (DRSPs), E-money institutions, Investment firms, Investment fund managers, Investment funds and vehicles, Management companies - Chapter 15, Management companies - Chapter 16, Mortgage credit intermediaries, Other specific authorisations, registrations and information, Part II UCIs, Payment institutions, Payment institutions/electronic money institutions/AISPs, Pension funds, SICARs, SIFs, Specialised PFS, Support PFS, UCITS, Virtual asset service providers (VASPs).

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Main topic: Financial crime, Prospectus. Keywords: AML/CFT, Coronavirus.

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Text

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Luxembourg, 10 April 2020 To all professionals under AML/CFT supervision of the CSSF

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Re: Financial crime and AML/CFT implications during the COVID-19 pandemic Ladies and Gentlemen, The purpose of this Circular is to provide guidance to all professionals subject to anti-money laundering and counter-terrorism financing (AML/CFT) supervision of the CSSF in relation to the money laundering and terrorism financing (ML/TF) risks and AML/CFT implications of the COVID-19 pandemic. This Circular should be read in conjunction with related guidance on COVID-19 by EU, international and national authorities including the Financial Action Taskforce (FATF), 1 the European Banking Authority (EBA), 2 the Cellule de Renseignement Financier (CRF), 3 EUROPOL, 4 and INTERPOL, 5 as well as related guidance on AML/CFT previously issued by the CSSF (e.g. CSSF Circular 19/732 and CSSF Circular 17/661). 6 The CSSF supports the measures taken and proposed by Luxembourg’s government and international bodies to address the health and economic impacts of the COVID-19 pandemic. The CSSF is committed to safeguarding the integrity of the financial sector and reiterates that the fight against financial crime remains a priority. The CSSF notes that as many economies experience a downturn, financial flows are likely to diminish. 7 However, experience from past crises suggests that in many cases illicit financial flows will continue, and criminals and terrorists may seek to exploit temporary weaknesses in AML/CFT controls. 8 The CSSF therefore requires that supervised professionals continue to put in place and maintain effective systems and controls to ensure that Luxembourg’s financial system is not abused for ML/TF purposes. This guidance is structured as follows: •

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Section 1 sets out several new and emerging ML/TF threats resulting from COVID-19;

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Section 2 describes several possible areas of particular vulnerability for the financial sector;

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Section 3 describes several mitigating actions that require particular focus for supervised professionals; and

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Section 4 outlines CSSF’s approach to AML/CFT supervision during this period.

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1 FATF, Statement by the FATF President: COVID-19 and measures to combat illicit financing, 2020. Available here. 2 EBA, Statement on actions to mitigate financial crime risks in the COVID-19 pandemic, 2020. Available here. 3 CRF, Typologies COVID-19, 2020. Available here. 4 EUROPOL, Pandemic profiteering – How criminals exploit the COVID-19 crisis, 2020. Available here. 5 INTERPOL, INTERPOL warns of financial fraud linked to COVID-19, 2020. Available here. 6 A full list of CSSF Circulars related to AML/CFT are available here. 7 EBA, Statement on actions to mitigate financial crime risks in the COVID-19 pandemic, 2020. Available here. 8 EBA, Statement on actions to mitigate financial crime risks in the COVID-19 pandemic, 2020. Available

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Emerging ML/TF threats from COVID-19

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Criminals around the world are taking advantage of the COVID-19 pandemic and are finding new ways to generate illicit funds. 9 New and emerging ML/TF threats 10 concern the most vulnerable in society as well as the general public at large. They include: •

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Those crimes that represent both a significant operational risk for financial institutions and a ML/TF threat – namely cybercrime and fraud;

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Those crimes where the risk to financial institutions is primarily related to the laundering of illicit proceeds – namely bribery and corruption, trafficking in counterfeit goods, robbery or theft, and insider trading and market manipulation.

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The nature of each of these threats is outlined below.

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1.1 Cybercrime The imposition of social distancing rules has increased the demand for information and supplies through online channels, significantly increasing cyber security risks for users.

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The text above is the opening of the document; the PDF carries the whole.

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Document page, PDF. Source: Commission de Surveillance du Secteur Financier (CSSF), reproduced with the CSSF's consent. The French text prevails.

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