ÌÇÐÄVlog

Criticism against Luxembourg peaked when the Financial Action Task Force (FATF) evaluation in 2010 placed the Grand-Duchy’s anti-money laundering infrastructure on the gray list and when the LuxLeaks scandal broke out in 2014. Both events shifted the way authorities considered the protection of the financial place, from fostering secrecy to valuing respectability. The staff dedicated to financial surveillance and intelligence was increased drastically, and an entire economic and financial department was created within the prosecution services in 2024.

Historians, however, get triggered when phenomena are presented as brand new. During my three-month participation in the DIGSHELL project as a visiting student from the Ecole Normale Supérieure de Lyon and future PhD at Sorbonne Université, my goal was to prospect the history of the fight against financial crime in Luxembourg, answering two simple questions: does this history exist and can it be written?

From financial surveillance to judicial investigations: the research object

States have two types of institutions that combat financial offenses¹. First, administrative surveillance: the major institution in this regard is the Luxembourg Financial Sector Supervisory Commission (successivelyCommissaire au contrôle des banques-CCB, Institut monétaire luxembourgeois-IML and CSSF) that controls the banking sector. Although its sanctions are mostly confidential, its archives are extensive and accessible (under authorization)² . The institution, in collaboration with the C²DH, has started writing its own chronology of financial control in Luxembourg³. Second, judicial investigations that work with the police and the financial intelligence unit. Their history remains unwritten.

To offer a comprehensive history of the fight against financial crime, historians have to investigate these different institutions and how they interact. They also have to step out of a purely institutional and legal approach to understand who the actors of such institutions were, how their practices have evolved and why.

Oral history and CSSF archives

Judicial and police archives are not easily accessible in Luxembourg. This is why I resorted to oral history. Actors of the fight against financial offenses in Luxembourg are particularly eager for research participation. I met four prosecutors that specialized in financial crime and visited the specialized prosecution department. I interviewed the lead-delegate of the Grand-Duchy to the FATF, two CSSF officials and a journalist specializing in financial crime. Such interviews enabled me to consider the evolutions of their work during the span of a career. Comparing their accounts to press articles, official reports of their action and to evaluations issued by the FATF⁴ or the French National Assembly⁵ in 2000 has proven fruitful. To stretch the chronology even further into the 1970s and 1980s, the archives of the CSSF are key.

From 1973 to nowadays: an overview

The idea of a financial prosecution section in Luxembourg emerged in 1973. It was suggested by the deputy prosecutor Penning, after spending several weeks within the CBB. In previous years, magistrates and police officers had also visited their Belgian counterparts who were already specialized in economic offences⁶. Certain Luxembourgish juges d’instruction like Gaston Diederich⁷ had already led meticulous financial investigations in the early 1970s. The idea of an economic section was also a response to the law on investment funds and the IOS liquidation. The financial prosecution section in Luxembourg was finally enforced in 1980⁸. However, its staff was limited compared to the CCB that counted 45 agents in 1980⁹. All through the 1980s and 1990s, one major obstacle for the financial magistrates was the legal framework of bank raids. French magistrates have recognized the willingness of their Luxembourgish counterparts to cooperate¹⁰ but have also denounced the extreme slowness of the process. For example, investigations on a bank located in Luxembourg led by Frankfurt authorities and Luxembourgish judge Jean-Mathias Goerens¹¹ lasted at least three years in the 1980s. One interviewed prosecutor explained such delays in the 1980s and 1990s through the fact that all clients who were potentially targeted by a bank raid could successively appeal against the raid, hence systematically suspending investigations. Luxembourgish authorities also suspected foreign judicial cooperation requests as strategies to bypass Luxembourg’s fiscal opacity.

With the creation of the FATF in 1989, focalization shifted globally on anti-money laundering. In 1990, Luxembourg police arrested Franklin Jurado who recycled drug money, was sentenced in 1992 and transferred to the United States for further prosecution¹². Growing scandals backfired on the financial place, such as the BCCI case. The decade was marked by important foreign criticism and pressure on Luxembourg but led to little change. The first law to facilitate international cooperation was passed in 2000, enabling more efficient investigations. The fight against the financing of terrorism in the 2000s gave magistrates more leverage. For example, out of eighteen magistrates, six or seven were specialized in financial offences in the early 2000s The financial intelligence unit (CRF) also insisted on anti-money laundering. It was a small team of magistrates, led by prosecutor Carlos Zeyen (1998-2006) who had previously worked for a commercial law firm.

This period corresponds to the beginning of the careers of most prosecutors currently specialized in financial crime and that played a central part in the elaboration of the new economic and financial department created in 2023-2024. Some of them were also part of Carlos Zeyen’s team at the CRF. The difference between the financial prosecution section created in 1980 and the current economic and financial department is of scale and scope. Nowadays, 23 prosecutors and deputy prosecutors work on financial offences¹³, with the help of six professionals and scholars that are experts in economy, business law, and accountancy. The CRF is now composed of seventy agents. The growing number of press releases concerning the repression of financial crime in Luxembourg testifies of the densification of financial prosecutions. The scope has changed not only because of law evolution but also because of the transformation of financial crime itself. The most important offenses now concern scams, complexified by crypto-criminality.

Why should this history be written?

The answers to my questions are falsely evident. Yes, there is a nearly six-decade-old history of the fight against financial offenses in Luxembourg, and yes, it can be written. But as a tax haven, Luxembourg also had its own definition of financial offenses, excluding tax evasion until the 2000s, and focalizing, in recent years, on the anti-money laundering policy. As such, the history of the fight against financial crime in Luxembourg would contribute to the ERC project by shedding light on how judicial and administrative repression shaped – or failed to shape – norms of financial practices in Luxembourg. The shaping of these norms seems, however, to have been kept secret for a long time. This may be linked to one persistent phenomenon of the fight against financial offences in Luxembourg: the inbalance between the means allocated to banking surveillance, efficient but confidential, and judicial authorities. As such, the history of the judicial fight against financial crime in Luxembourg is also a history of fragility. The ERC project investigates shell companies that have channeled tax evasion but also money-laundering. The fragility of judicial investigations might have also favored the use of such channels. Finally, a lot of banking surveillance agents, and more rarely financial magistrates became experts precisely because they had studied or worked in the same fields as lawyers, accountants, notaries and auditors that contribute to tax engineering at the heart of the DIGSHELL project. Joining the fight against financial crime, in this sense, made them outsiders.

Author(s)

Roxana PEREZ, Visiting student

References

_1. Pierre Lascoumes et Carla Nagels, Sociologie des élites délinquantes. De la criminalité en col blanc à la corruption politique (2^e éd.), Paris, Armand Colin,2018.

_2. A master’s thesis has started exploring some of this collection. Iona Turdean, Approaching anti-money laundering from a historical perspective: form the 1^st anti-money laundering directive to Luxembourg, master’s thesis, ÌÇÐÄVlog, 2021.

_3. Surveillance, indépendance et intégrité. 75^e anniversaire du contrôle prudentiel et de la surveillance de la place financière au Luxembourg, CSSF and C²DH, 2020 ; La surveillance de la place financière (1945-2020): une histoire inédite! D’Iwwerwaachung vun der Finanzplaz (1945-2020) – eng onerzielte Geschicht!, Claude Lahr (dir.), 2020, [Documentary],

_4. GAFI, Rapport d’évaluation mutuelle, Lutte contre le blanchiment de capitaux et le financement du terrorisme, Luxembourg, 10 février 2010.

_5. Rapport d’information déposé en application de l’article 145 du Règlement par la mission d’information commune sur les obstacles au contrôle et à la répression de la délinquance financière et du blanchiment des capitaux en Europe (1), Tome I, Volume 5 – Le Grand-Duché du Luxembourg (Vincent Peillon et Arnaud Montebourg) N°2311, enregistré le 30 mars 2000.

_6. Archives nationale du Luxembourg (ANLux), C000016649 – Criminalité en matière financière 1975-1979 : Création d’une section (CSSF).

_7. Gaston Diederich : AnLux – CSSF/B3-0117

_8. Loi du 7 mars 1980 sur l’organisation judiciaire.

_9. Aforementioned documentary.

_10. Renaud Van Ruymbeke, Mémoires d’un juge trop indépendant, Paris, Editions Tallandier, 2021.

_11. Jean Mathias Goerens : AnLux – C000016611- Whistleblowing (1983-1988)

_12. General Assembly of the United nations. Extraordinary session, 8-10 June 1998.

_13. Organization chart of the economic and financial department of the parquet de Luxembourg (non-published), 2026.