Fight against money laundering and terrorist financing

Towards a transparent future

In Luxembourg, the non-profit sector plays a central role in supporting private initiatives, whose purpose may be philanthropic, social, religious, scientific, cultural, artistic or educational, or to promote sports, health and well-being or other social and artistic endeavours. Luxembourg is home to various types of associative organisations – ranging from small associations and foundations through to associations recognised as being of public interest. For some of them, the Grand Duchy also extends the privilege of NGO status, which is granted by the Minister of Foreign and European Affairs. Luxembourg is also firmly committed to ensuring transparency, and to combating money laundering and terrorist financing.

In response to a changing global environment marked by increasing transparency and security challenges, the new Law of 7 August 2023 on non-profit associations and foundations revisits the legal framework applicable to associations and foundations. Some of the new law's main goals include:

• enhancing associations' and foundations' financial and organisational transparency;
• requiring associations and foundations to file annual financial statements to ensure strict and transparent financial monitoring;
• requiring associations and foundations to maintain meticulously managed members' registers, permitting quick access to details in the event of official requests.

The purpose of this legal initiative is two-fold: firstly, it seeks to ensure compliance with international standards, in line with the Financial Action Task Force's (FATF's) Recommendation 8, and secondly, it seeks to prevent associative organisations from misappropriating funds for illegal purposes, such as money laundering and terrorist financing.

The law also introduces a simplified ‘administrative dissolution without liquidation’ procedure to ensure that RCS data is kept up to date, in line with international requirements.

While taking steps to improve transparency, Luxembourg has also sought to ensure that the new measures do not restrict or hinder the development of associations and foundations.

Lastly, this legal reform confirms Luxembourg's commitment to supporting harmonious working relations between the public and private sectors, while preserving a robust, ethically grounded associative landscape.