Luxembourg was among the first countries to pass a law to combat money laundering. Initially confined to the field of drug trafficking, this fight has been repeatedly extended, in particular by widening the definition of the infraction of money laundering, the list of primary infractions and that of the professionals concerned.
The mechanism put in place is primarily preventative. It notably imposes on financial institutions, including insurance companies, the obligation to verify the identity of their client or of the beneficial owner before entering into a business relationship or executing a transaction.
Throughout their relationship with the client, these financial institutions must examine the client's requests for transactions, particularly as regards the source of funds and on their own initiative must report any fact or event that might constitute an indication of money laundering to the Luxembourg Financial Intelligence Unit (FIU).