Over ten years of work I regularly hear the same request from capital owners and their managers: give a structured and practical approach to AML compliance in Luxembourg so that a family office can grow calmly, open accounts and conduct transactions unhindered in Europe, Asia and in the CIS markets. I built COREDO in 2016 as a comprehensive support platform: from company registration and obtaining financial licenses to AML consulting and audit support. Today I summarize our approach to anti-money-laundering compliance in Luxembourg – the center of the European private banking industry and family capital.
Family office in Luxembourg and AML
The key question is whether family offices must be registered as financial institutions in Luxembourg. The answer depends on the actual services: investment advisory to third parties, asset management, trust administration, company formation and provision of a registered address (TCSP activity): all of this can bring the office under CSSF supervision and impose anti-money laundering obligations on family offices. Even the single-family model falls under Luxembourg’s anti-money-laundering legislation if it performs functions classified as “obliged entities” under the AML law (for example, the formation of trusts and holding structures).
Regulatory framework: laws and standards
Anti-money laundering legislation of Luxembourg is based on the Law of 12 November 2004, which implements AMLD5 and AMLD6 and takes into account the recommendations of FATF. The role of the CSSF in AML for a family office is critical if the office falls under supervision as a PFS: the regulator publishes CSSF recommendations on AML, circulars on internal control, KYC/EDD procedures and risk management.
Financial intelligence – Cellule de Renseignement Financier (CRF), the national FIU. Offices file mandatory SAR reports in Luxembourg to the CRF when suspicious transactions are identified. EU sanctions lists, OFAC and global sanctions screening become part of daily screening. At the same time GDPR and data retention requirements, CRS and FATCA for the exchange of tax information, as well as DAC6 – for reporting on cross-border tax arrangements, affect compliance design.
Family office AML obligations
COREDO’s practice confirms: a strong AML framework is built around four pillars: KYC, risk assessment, monitoring and reporting.
- Know Your Customer policies. We build KYC requirements for a Family Office in Luxembourg around real processes: identification, verification, document collection, address confirmation, checking source of funds and source of wealth (SoF/SoW). Which documents are needed for KYC of a private investor in Luxembourg: passport/ID, address, tax residency declaration, confirmation of source of funds (sale of a business, dividends, inheritance), corporate package for structures.
- Ultimate Beneficial Owner (UBO) verification for a family office. Analysis of ownership and beneficiary chains, cross-check with the central UBO register (RBE), documenting control links and trust agreements. We use graph databases to accelerate analysis of complex structures and reduce errors.
- PEP screening for the family office and sanctions screening. Integration of sanctions lists screening into family office processes: EU, OFAC, HMT, as well as PEP screening and PEP data sources. We implement risk scoring and review frequency by risk classes.
- CDD and EDD for the family office. Basic Due Diligence (CDD) for low and medium risk and enhanced due diligence (EDD) for complex cases: complex trust structures, offshore chains, PEP status, high-risk geographies, unusual flow patterns. When to apply enhanced due diligence (EDD) — family office cases: entry of a high-risk partner into a private deal, investments through an opaque SPV, large transactions with intermediary funds.
- Transaction monitoring procedures for a family office in Luxembourg. Setting thresholds for SAR and criteria of suspiciousness in Luxembourg, AML risk scenarios in private investments (back-to-back loans, prepayments without commercial basis, atypical circular payments, closing a deal through an opaque crypto exchange wallet), documenting decisions and escalation.
- Requirements for internal control and AML policy. Policies and procedures, risk appetite and risk matrices, client risk assessment and grading (risk scoring), onboarding regulations for high-net-worth individuals, role responsibilities: compliance officer/MLRO, secondary roles RC/RR (if applicable), DPO and their interaction.
- Requirements for maintaining a register of beneficiaries in Luxembourg and retention: retention and archiving of KYC documents for 5–10 years depending on status, data storage requirements and retention periods in AML procedures, segregation of access to data.
How to implement AML in a family office
Our experience at COREDO has shown that a successful program is built on a clear logic: «diagnosis – design: implementation – improvement».
- Diagnosis. Assessment of the business model, mapping of products and channels, inventory of jurisdictions, gap analysis against AMLD5/AMLD6, CSSF guidance and FATF. Registration of the family office and AML risks are evaluated from the start, including «when a family office falls under AML regulation in Luxembourg».
- Design. Development of an AML policy and internal controls (internal controls), KYC/EDD procedures, risk assessment at the client, counterparty and transaction levels, scenarios for a transaction monitoring system, integration of AML into corporate governance and regulatory notifications and timelines.
- Implementation. KYC automation: OCR, APIs and integrations; electronic client identification (eID) and AML; connecting tools for sanctions screening, KYC providers and data aggregators; SIEM setup for event logging; incident response procedures and an AML crisis plan.
- Improvement. Metrics for AML program effectiveness (KPIs), evaluation of ROI from implementing AML technologies, cost-benefit analysis of compliance, management of false-positive alerts and handling false positives, regular horizon scanning of regulatory changes and adaptation of the AML policies of the family office.
Technologies: RPA, AI and graph analytics
The solution developed at COREDO for one of the European offices demonstrated how the move from manual KYC to RPA/AI solutions in family offices reduces onboarding time from weeks to days. We integrated OCR for passport recognition, APIs to registries and sanctions lists, a workflow engine for escalations and digital approvals.
The use of KYC platforms in a family office: the economic justification is measured by a combination of indicators, a TCO breakdown (licenses, integrations, support), reduction in verification time, reduction of operational errors and improvement in SAR quality. A cost-benefit analysis (ROI) of implementing AML technologies in a family office provides a clear picture when scaling.
GDPR and AML: data and privacy
Data privacy vs AML: a frequent source of questions. The impact of GDPR on AML procedures of a family office requires clear legal bases for processing (legal obligation, public interest), data minimization, limited access and logging. The roles of the DPO and compliance officer in the family office structure synchronize privacy and AML processes: access matrices, DPIA for new technologies, retention and scheduled deletion.
Reporting and interaction with the CRF and the CSSF
Mandatory SAR reports in Luxembourg are filed with the CRF when a transaction or client behavior meets the criteria for suspicious activity. We configure rules for detecting suspicious activity (SARs) by jurisdiction, counterparty type, atypical amount/frequency and source of funds. Internal investigations and interactions with the CRF in Luxembourg are documented with checklists so that every decision has supporting rationale and a timeline.
Preparing for CSSF AML audits in a family office includes sample testing, walkthroughs of KYC files, checks of sanctions screening and transaction monitoring logs. The COREDO team has implemented ready-made playbooks for inspections: who is responsible, which reports we export, how we document remediation.
Funds, M&A and correspondent banking
AML policy for private investment structures of family offices covers SICAR, SIF, SPF and SPV chains. The practice of due diligence on investor onboarding requires validation of SoF/SoW, verification of powers of attorney and trust structures, vendor due diligence for managers and advisers (AML due diligence for managers and asset managers of family offices). Compliance control when accepting new family assets and structures prevents subsequent account freezes.
AML control for cross-border private deals and M&A takes into account DAC6 triggers, sanctions risks, CLS windows, escrow schemes and PPAs. Managing the risk of de-validation of counterparties and correspondent banking is important for the ability to execute large transfers: banks expect transparency on UBO and payment chains, pre-agreed KYC packages and CRS/FATCA statuses. De-risking scenarios and loss of banking access for family offices often arise from inconsistencies in KYC and sanctions screening: we minimize such scenarios by proactive preparation and cooperation agreements with banks and intermediaries.
COREDO case studies: how we build compliance
- Case: implementation of an AML program in a European family office. The client, a multi-family structure in Luxembourg managing private funds (SIF) and direct investments in the EU and Asia. We conducted a risk assessment, classified clients, implemented KYC/EDD procedures, integrated sanctions screening and a transaction monitoring system. During the first quarter onboarding metrics improved, SAR processes received clear criteria and a timeline, and the CSSF review passed without remarks.
- Sanctions case: integration of OFAC and EU sanctions filtering into investment committees. The COREDO team set up pre-trade screening and post-trade monitoring, defined threshold events for escalation. The office implemented instant “stop-list” rules upon sanctions updates and graph analytics for indirect ownership.
- Automation case: transition to RPA/AI in KYC. Implementation of OCR and APIs to registries, workflows for EDD, automated risk scoring. ROI manifested in reduced manual work, fewer false positives and faster approvals without compromising quality.
- Audit case: preparation for a CSSF inspection. We conducted a pre-audit, trained staff, updated UBO registers, and worked through a SAR case study. Auditors noted the maturity of processes and control points.
Anti-money laundering outsourcing for family offices
AML outsourcing for family offices gives access to expertise, accelerates the start, reduces CAPEX on technology and lowers the risk of missing regulatory changes. I always note that outsourcing compliance functions and responsibility are different things: managers retain fiduciary duties and legal responsibility for AML violations.
Metrics and cost of compliance
Pricing of compliance services for family offices, cost benchmarks and ROI depend on the office model, geography, number of counterparties and transaction volume. Costs are made up of licenses for screening and transaction monitoring systems, integrations, training and regular audit samples. I look at AML program effectiveness metrics: onboarding time, share of EDD cases, level of false positives, incident response speed, completeness of KYC files, quality of SARs and results of external reviews.
AML Readiness Roadmap
- Days 1–30: legal qualification of activities, gap analysis against AMLD5/AMLD6 and CSSF, risk assessment, design of policies and roles, selection of a KYC/sanctions provider, data plan taking GDPR into account.
- Days 31–60: implementation of KYC/EDD procedures, integration of sanctions screening, basic rules of transaction monitoring, staff training, launch of SAR workflow, registration of processes for maintaining a central UBO register.
- Days 61–90: optimization of thresholds and scenarios, configuration of CRF reporting, CSSF audit test, stress test of the crisis plan, finalization of KPIs and dashboards, approval of regulatory notifications and timelines.
This roadmap is universal yet flexible. The COREDO team can adapt it for family offices of any complexity — from single-family offices to multi-level structures with funds and international SPVs.
Questions of owners and managers
- AML requirements when accepting investment funds in a family office. We verify the source of funds, reconcile amounts and sources with the investor’s profile, check transactional paths, and apply EDD in complex cases.
- Registration of beneficial owners and central UBO register. We reconcile data with corporate documents, trust agreements, and update records upon changes.
- CRS and FATCA impact on reporting. We synchronize KYC collection with tax forms, correctly determine tax status, and introduce control dates.
- impact of EU sanctions and international lists on family office investment decisions. The investment committee receives a sanctions report prior to a transaction and post-trade monitoring, with reporting to compliance.
- Counterparty checks (vendor due diligence). We use provider risk scoring, verify licenses and regulatory status, and analyze media risks and court records.
Culture of compliance and accountability
Legal liability of family office managers for breaches of AML, AMLD5 and AMLD6 compliance: a matter of personal and institutional risk. I always place a culture of compliance at the core: AML training and personnel testing, incentives and personal accountability of managers, regular refresher sessions and knowledge checks.
Role structure of compliance in a family office: clear responsibilities, independence of second-line functions, access to the board of directors and the investment committee. Integration of AML into corporate governance strengthens the office’s position vis-à-vis banks and the regulator.
What COREDO provides and when to contact us
Sometimes a targeted consultation is enough to set up risk assessment or SAR criteria. Sometimes a full project is needed to move to automation, configuring a transaction monitoring system, selecting providers and training the team. COREDO’s experience confirms: consolidating all these tasks into a single project and unified procedures produces a multiplied effect – fewer mistakes, transparent processes and a single logic for audits.
We handle company registration issues in the EU, the Czech Republic, Slovakia, Cyprus, Estonia, the United Kingdom, Singapore and Dubai, support Licensing (crypto, payments, forex and banking), build AML processes and prepare for inspections. This set of competencies allows a comprehensive view of AML: with an understanding of licensing, tax transparency, CRS, DAC6 and banking realities.
Conclusions
Luxembourg places high expectations on compliance, and that is good for Family Offices that want to operate long-term and with peace of mind. AML for Family Office in Luxembourg: not a set of formalities but an operating system: KYC/EDD, monitoring, SARs, sanctions, GDPR, CRS/FATCA and corporate governance. When this system works, banks trust it, deals close on time, and the regulator sees maturity.
I built COREDO as a partner that holds this complex together with a single logic and brings processes to fruition. If you are looking for compliance for a Family Office that withstands CSSF inspections and CRF requests, while accelerating business,, the COREDO team is ready to step in: we’ll assess risks, develop solutions and scale them together with the growth of your capital.