Economy & Politics

Scent of financial scandal on the Square

85 Luxembourg banking institutions are suspected of laxity in the reporting of suspicious transactions for a total amount of several billion euros. Information revealed by the International Consortium of Investigative Journalists.

85 Luxembourg banking institutions are suspected of laxity in the reporting of suspicious transactions for a total amount of several billion euros. Information revealed by the International Consortium of Investigative Journalists.

(JFC, with Thomas Klein) – This is a new revelation that could shake some bank executives in Luxembourg. After LuxLeaks and the Panama Papers, the International Consortium of Investigative Journalists (ICIJ) has indeed just laid a new pavement in the pond of international finance. This time, the scandal relates to late reporting of suspicious activity reports. It would involve 85 Luxembourg banks.

Financial institutions are in fact required to report these so-called suspicious activities within 30 days to the Financial Crimes Enforcement Network (FinCEN), which is part of the US Treasury Department. Following a data leak, the research collective gained access to more than 2,100 money laundering suspicion reports, which banks submitted to FinCEN between 2000 and 2017. 110 media from 88 countries searched these documents.


Banque Generale du Luxembourg. BGL BNP PARIBAS. Kirchberg Headquarters. Photo: Guy Wolff

Much of the world’s stock of foreign direct investment on a global scale consists of “shadow” capital, designed to circumvent the tax obligations of multinationals, according to an IMF study. The Grand Duchy and the Netherlands play a leading role.


Their analysis revealed that the majority of banks adopt a behavior that is far too lax with regard to regulations. The study further points out that suspicious activity was not reported until after … 166 days on average. The record in this area belongs to the American bank BNY Mellon, who only reported a suspected case after more than … 18 years! According to the ICIJ, during the period under investigation – from 1999 to 2017 – banks carried out transactions worth more than $ 2,000 billion (around 1.690 billion euros) tainted with suspicion of suspicious activity.

Out of all the cases studied by the ICIJ, 85 transactions involve Luxembourg banks. As part of these operations, they received a total of 765,636,755 dollars (652 million euros) and transferred 640,108,879 dollars (545 million euros). The KBL European Private Bankers (now renamed Quintet) sits at the top of the list, having received a total of $ 554,871,814 (€ 472 million) in three transactions.


Three years after the revelations of the “Panama Papers” scandal, the Grand Duchy only receives a few crumbs of the 1.06 billion dollars recovered by 22 countries, announced the ICIJ on Wednesday.


However, the fact that these transactions appear in ICIJ’s research does not necessarily imply illegal activity. These are just suspicious activity reports that the banks themselves have submitted. “This is not comparable to the Panama Papers case, because the fact that suspicious activity is reported shows above all that the banks are doing their job,” said a bank manager in Luxembourg who wishes to remain anonymous.

Note that in Luxembourg, banks are also required to report suspicious transactions to the Financial Sector Supervisory Commission (CSSF) and to the “Financial Intelligence Unit” (CRF) of the public prosecutor’s office. According to the annual report of the FIU, the number of suspicious transaction reports has fallen from less from 5,000 in 2010 to over 50,000 last year.


Executives in the fight against tax crimes would like to “expand” their teams.

Five years after the LuxLeaks revelations, the fight against white-collar crime has failed to take off, according to the magistrates in charge. The cause is the lack of qualified personnel and increasingly sophisticated business.


The six judges and 14 financial analysts in charge of this control have long since reached saturation point. But according to the Ministry of Finance, the Grand-Ducal regulations are in line with European requirements, while the new versions of the directives on the fight against money laundering have already created the conditions for more severe action.


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