EMEA AML Survey 2024

Measures to prevent money laundering, terrorist financing, and the proliferation of weapons of mass destruction (all of which are abbreviated as “AML” in this report) have improved significantly over the last decade, evolving from a compliance check in some jurisdictions, to one of the financial system’s main security measures. In recent years, regulators in Luxembourg, the EU, and beyond as well as international bodies like the Financial Action Task Force (FATF) have begun shifting their perspective on how to regulate AML practices and have increased their focus on effectiveness. Whereas previously AML compliance had been mostly concerned with whether AML systems were in place or not, more recent initiatives are instead examining whether these measures are effective and how they can be harnessed to contribute as much as possible to the fight against financial crime.

The EMEA AML Survey 2024 - Luxembourg Competing for effectiveness

After the release of the first EMEA AML Survey in April 2024, we now explore the results from Luxembourg respondents to the EMEA survey, to offer a granular picture of how AML is being tackled in the Grand Duchy. The survey had 396 respondents, 10% of which were from Luxembourg, across 40 countries in total. It should be noted that to carry out the survey PwC reached out to the key stakeholders in each territory and in many cases interviewed large, institutional respondents directly. As such, we ensured that the responses are representative of the overall financial industry in each territory, including Luxembourg. Indeed, the Luxembourg respondents include a significant portion of the systemically important banks in the Grand Duchy, including 39% of the Financial Stability Board’s ( ) 2023 Global Systemically Important Banks (G-SIBs) and 43% of the European Central Banks’ ( ) Luxembourg Systemically Important Institutions (O-SII), which are the institutions considered integral to the Luxembourg financial centre.

Luxembourg respondents are more sceptical of current and upcoming AML rules than their EMEA counterparts. Only 22% of Luxembourg respondents believe that current and upcoming AML rules are fully effective. Meanwhile, 53% of EMEA respondents are confident in current rules and 54% in upcoming rules. 

90% of Luxembourg respondents believe implementing universal regulatory standards would significantly improve AML effectiveness. This view is held by 100% of Luxembourg asset managers and 86% of bankers. Since Luxembourg is an international financial hub where AML teams interact with clients from various jurisdictions, it follows that they would value regulatory consistency.

Which regulatory changes would significantly improve your AML effectiveness?

^{Source: PwC Global AWM & ESG Research Centre}

Legacy AML operating systems are a persistent problem in Luxembourg. 38% of Luxembourg respondents claim their systems are “outdated”. This impedes adopting newer technologies such as AI, which are incompatible with older operating models. Indeed, 65% of respondents say that the maturity of their operating systems is a constraint to AI adoption. Data quality is the most often-cited impediment to increasing AML technological capabilities in Luxembourg, according to 53% of respondents. This issue is directly related to system maturity and the lack of skilled employees. Without modern systems and the necessary staff to operate them, the high-quality data needed for effective AML cannot be collected or processed. 

Percentage of respondents in selected countries that cited "Outdated systems" as an impediment to implementing new digital tools

^{Source: PwC Global AWM & ESG Research Centre}