The organisation praised some of the steps that Luxembourg has taken, but it made it clear that there remain significant problems in enforcing anti-bribery laws.

The Organisation for Economic Co-operation and Development has warned Luxembourg that “very weak enforcement” of rules to stamp out bribery “remains a matter of concern.”

The Paris-headquartered group did say, however, that the European Union jurisdiction has made “significant” legislative and institutional reforms.

The organisation recommended that Luxembourg carry out several reforms. 

Luxembourg, like other international financial centres, is under pressure to foil illicit financial flows. 

The Luxembourg Criminal Code is the key piece of Luxembourg legislation governing bribery. Lawmakers widened its scope in February 2011. The European state is also party to two United Nations Conventions against Bribery and Transnational Organized Crime.

“The Working Group notes in particular the constitutional reform that came into force on 1 July 2023, aimed at strengthening and modernising the status of judges and prosecutors,” it said in a statement. “Nevertheless, the legislative and institutional reforms are weakened by structural resource issues affecting the entire criminal justice system.”

It continued: “In spite of having secured the first foreign bribery convictions of natural persons since the convention came into force in the Grand Duchy, the very weak enforcement of the foreign bribery offence remains a matter of concern.”

The Working Group urged Luxembourg to take actions such as:

-- Find lasting, structural solutions, backed by sustained political will, to allocate sufficient resources to the fight against foreign bribery; 
-- Raising fines for natural and legal persons; and 
-- Devoting greater attention to the detection of foreign bribery, including through anti-money laundering mechanisms.

Among more positive moves, the OECD applauded Luxembourg’s “ambitious” new law establishing a general whistleblower protection regime.

“The adoption of “plea bargaining” in the form of a judgment upon agreement (jugement sur accord) is also welcome as this mechanism should facilitate the resolution of complex financial cases,” the OECD said.

Financial hubs such as Luxembourg continue to vie for business, which puts a premium on their retaining a strong reputation for conduct. Organisations such as the OECD and the Financial Action Task Force (FATF) – an intergovernmental body driving policy on anti-money laundering – make a regular point of issuing reports and lists of compliant/non-compliant regimes. So much so that the "lists" – such as being on a "grey list" for requiring further work – are important reputational issues.

(Separately, this publication is attending the Association of the Luxembourg Fund Industry – aka ALFI – conference in the jurisdiction today and tomorrow. A report is forthcoming.)