Luxembourg significantly extends the scope of AML prosecutions (dual test, all crimes) and obligations.

The Luxembourg legislature has enacted Bill 8486, which makes significant amendments to the country's anti-money laundering (AML) and criminal procedure framework.

The reforms aim to:

• Address deficiencies identified in the Financial Action Task Force (FATF) September 2023 mutual evaluation report, which set a June 2026 deadline for the country to improve its AML regime.
• The FATF report urged greater focus on AML investigations, prosecutions, and asset recovery.

With this in mind, Luxembourg's government has radically expanded the scope of the AML offence under art. 506-1 of the criminal code.

• Until now, there has been an enumerated list of 'predicate' offences that could give rise to AML prosecutions.
• That has now been replaced by a system under which almost any crime or misdemeanour, committed at home or abroad, can serve as a predicate offence.

This revised provision expressly includes

• The purpose or product of a crime, whether direct or indirect, as well as the material benefit deriving from it.

The offence thus covers

• Not only the proceeds received
• But also the material benefits or savings arising from criminal conduct, such as tax evasion.

For predicate offences committed abroad, the only requirement is a dual criminality test

• That the act must be punishable in the country where it was committed, except for certain serious offences.

Funds derived from tax fraud committed in another jurisdiction can thus be prosecuted as money laundering in Luxembourg, provided the act is also criminal there.

• This applies even if the original perpetrator cannot be prosecuted due to limitation periods or death.

The extended definition of predicate offences also means

• That financial institutions must now report suspicions to the Financial Intelligence Unit for all types of offences, not just financial or economic crimes.
• The obligation to report suspicious transactions applies without the reporting persons having to qualify the underlying offence.

Investigations

• Moreover, prosecutors can now request multiple investigative acts, such as searches, seizures, and expert reports, without procedural delays or opening a full investigation.
• The scope of eligible offences has been expanded to include forgery, corruption, illegal interest-taking, influence peddling, extortion, and false accounting.
• A legal entity that fails to respond to a summons can now be indicted based on a non-appearance report, which helps avoid stalemates and prolonged immobilisation of seized assets. An indictment can be pursued against individuals subject to an arrest warrant even if they cannot be apprehended, allowing the case to advance despite the person’s absence.

The result of these changes.

• This expanded scope requires professionals subject to AML obligations to strengthen their risk assessment practices further,
• Institutions and professionals subject to AML obligations will need to recalibrate
• Transaction-monitoring scenarios,
• screening rules and
• Analytics to identify patterns that may signal proceeds, indirect benefits or cost-savings linked to any offence under Luxembourg law.
• Firms will also need to broaden training so that front-line teams and investigators can recognise a wider range of red flags, including:-
• Those associated with breaches of professional secrecy,
• Certain environmental offences and
• Foreign predicate offence risks, such as tax crimes and corruption.
• Firms must also enhance their cross-border documentation to address dual-criminality considerations.

Sources

• https://www.step.org/industry-news/luxembourg-significantly-extends-scope-aml-prosecutions
• Baker McKenzie https://www.bakermckenzie.com/en/insight/publications/2026/01/luxembourg-major-reform-of-the-aml-framework
• Luxembourg legislature https://legilux.public.lu/eli/etat/leg/loi/2025/12/12/a556/jo
• FATF (September 2023 report) https://www.fatf-gafi.org/content/fatf-gafi/en/publications/Mutualevaluations/MER-Luxembourg-2023.html