Luxembourg: Fight Against Money Laundering: Beware Of Excessive Zeal

Last Updated: 29 July 2014
Article by Nuala Doyle and Thierry Pouliquen

There has been an interesting development in the controversial Luxembourgish case of an Icelandic bank (Landsbanki Luxembourg S.A.) in liquidation (the "Bank").

On July 10th 2014, Luxembourg's Court of Appeal sitting in chambers (hereinafter the "Court") gave a landmark judgment (hereinafter the "Judgment"). The Court overturned an order of the investigating judge which had ruled that the time limit to prosecute had been reached in respect of facts alleged in a criminal complaint filed by a group of 108 plaintiffs against, among others, the Bank.

The Court's views on the incompetence of the judge to rule on the facts that occurred in other jurisdictions do not require comment here. The Court itself had dealt with the issue of the international competence and declared the investigating Luxembourg judge incompetent to rule on offences of fraud. However, the Court retained jurisdiction for the other alleged offenses of the former bank executives (accounting fraud and criminal conspiracy) and, the most shocking part of the judgment, for the alleged offence of money-laundering by the liquidator.

The liquidator, who is a lawyer by profession, was appointed by the Luxembourg District Court sitting in commercial matters. Lawyers are among the professionals who are subject to the anti-money laundering law of  November 12th 2004, as amended (the "AML Law"), but only in respect of part of their activities, excluding, inter alia, judicial activities. The obligation under the AML Law (which is the preventive aspect in the fight against money laundering) does not, therefore, apply to the judicial mandate of the liquidator. At the risk of stating the obvious, it must be remembered that the judicial activity of the lawyer, even if it falls outside the so-called preventative aspect of the fight against money-laundering, it is nevertheless subject to the provisions of the criminal law against money laundering.

Indeed, the absence of an obligation to report suspicions of money laundering (under the AML Law) shall in no way prejudice the application of the criminal law. Under the criminal law, a professional who receives funds whose illicit origin he cannot be unaware of, even in legitimate transactions, is guilty as (co)perpetrator or accomplice, of money-laundering.

According to the decision of the Court, the mandate of liquidator confers no immunity from prosecution. On that basis, the Court recalled some of the specific characteristics of the offence of money laundering:-

  • It concerns an independent offence, which is punishable despite there being no prosecution or conviction of the primary offense of which it is the consequence;
  • The money laundering offense can be committed in Luxembourg in respect of a primary offense committed abroad;
  • No time limit is prescribed by law between the commission of the predicate offense and the act of money laundering.

The decision demonstrates that the offense of money laundering may be akin to a "broom wagon" (where a case under the conventional offenses may fail, the offense of money laundering can still be established). The offense of money laundering makes it possible to bring illicit activities from the past to the forefront. Since money laundering is subsequent to the primary offence, it is sufficient to delay start of the limitation period for the underlying crime (such as the misuse of corporate assets) in setting the statute of limitations for the offense of money laundering.

The Decision does not precise the form of money-laundering of which the liquidator is accused (transfer/use/holding of the laundered money) but it is necessary to consider in this context what are the essential conditions for such a lawsuit. At this stage, it is not possible to predict what the prosecution will deem appropriate to conclude in this respect. The first obstacle that comes to mind is the professional secrecy of a lawyer by which it is inconceivable that a lawyer must report the facts to the prosecuting authority. It should be recalled in fact, that a lawyer, when not acting within the scope of the AML Law, is not under an obligation to report a suspicion. Rather, she remains fully bound by professional secrecy under Article 458 of the Penal Code.

On the other hand, the prosecuting authorities have the obligation to establish the moral and material elements of the offense.

The constituent acts of money laundering do not have an inherently reprehensible character and are in fact only punishable when they concern funds stemming from a prior offense.

Proof of the existence of a crime or an offence which has directly or indirectly benefited the perpetrator must be established. The laundered property:

  • must have been the object of an offence or the property which it was substituted for in which case it is indirectly related to the primary offence ; or
  • must be the product of the primary offence or the pecuniary benefit resulting from a primary offense or property which has been substituted for it.

For the material element of the offence to be established, the illicit origin of the property requires on the one hand to prove that the property stemmed from a primary offense and secondly, the existence of the primary offense or at least a consistent body of evidence establishing certainty that there was a primary offense. Consequently, it is primarily for the Public Prosecutor to prove the criminal origin of the funds.

The moral element of the offence finds its source in the intention of the perpetrator to launder the proceeds of property which he or she knows comes from the commission of a crime or misdemeanor. To criminalise the laundering, general fraud or the offender's willingness to commit the offense is required. The alleged launderer must have knowingly committed one of the acts constituting the money-laundering, that is to say, he must have been aware of the illicit origin of the property or funds upon receipt. If the accused has even a doubt that the funds were of a lawful origin, this will count in his favour. It is not necessary that the launderer benefits from the transaction.

Worst case scenario: the liquidator may even be the only person prosecuted. Let's imagine for a moment that the judicial liquidator has realised the assets and converted them into funds; as a result of this completely mundane act, she could become blameworthy if the authorities manage to trace the dubious origins of funds which were held / converted, and thus laundered. Imagine even further a scenario that the perpetrators of the primary offense are ultimately not prosecuted or convicted, due to, in particular, the statute of limitations on the offence being exceeded.

The liquidator would be prosecuted or convicted, while the former bank executives responsible for the fraud escape prosecution. The liquidator will however only have carried out his mandate for the benefit of creditors. And if the liquidator, having had doubts, had not proceeded with the liquidation, what would the same creditors have said?

Is this not touching on the absurd?

Will the bankruptcy judge overseeing the liquidation be held as an accomplice to the money-laundering? Will the civil parties who are eventually compensated not be deemed guilty of holding laundered money?

What about professionals subject to the AML Law who intervene in transactions relating to the assets of the liquidation of the bank? Should they report a suspicion of money-laundering when they read in the press that the liquidator is prosecuted for laundering?

We ask the question, will lawyers who can act as receivers or liquidators, still accept to be appointed as such by the courts? The fight against money laundering once again demonstrates its excessive and aberrant characters. The full extents of the consequences of this surprising Judgment remain to be seen.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions