On Monday 21 September 2026, Luxembourg’s Ministry of Finance reported that the Grand Duchy had completed its first vertical risk assessment (VRA) concerning international financial sanctions relating to terrorist financing and proliferation financing.

According to the ministry, the VRA covers the period 2018–2023 and specifically examines the risks Luxembourg faces from the violation, circumvention or non-implementation of international financial sanctions relating to terrorist financing and proliferation financing. Prepared under the ministry’s direction, it is the result of a collective effort at national level involving public and private sector stakeholders brought together within the Financial Sanctions Monitoring Committee.

The VRA forms part of Luxembourg’s efforts to deepen its understanding of these risks and underlines its commitment to giving public and private stakeholders a clear view of them, enabling them to adapt their practices and resources to the reality of the risks, the ministry said. Its objective is to provide an overview of the vulnerabilities and threats facing Luxembourg, both by sector of activity and across sectors. In this context, certain sectors considered internationally to be high risk and identified in Luxembourg’s 2020 national risk assessment as presenting a higher risk are examined in greater depth. In this way, Luxembourg aims to respond as effectively as possible to the Financial Action Task Force (FATF) recommendations on understanding risks and combating terrorist financing and proliferation financing, particularly in view of its position as an international financial centre.

According to the ministry, the methodological approach adopted for the VRA is consistent with the FATF’s approach to risk assessment and comparable to that followed for Luxembourg’s other national and vertical risk assessments, on which it draws. The main threats affecting Luxembourg and its sectoral and cross-sectoral vulnerabilities were identified to assign an inherent risk rating to each sector of activity examined. Measures put in place by public and private stakeholders to mitigate these threats, such as private sector checks, oversight by supervisors and self-regulatory bodies, reports of suspicious activities or transactions, and national and international cooperation, were analysed in parallel, making it possible to determine a residual risk rating for each sector of activity examined

The ministry summarised the VRA’s main findings as follows:

  • Luxembourg has a robust legal framework that enables the effective implementation of international financial sanctions. Its exposure to the risk of violation, circumvention or non-implementation of international financial sanctions is mainly due to the scale of the country’s cross-border financial flows and international commercial activities.
  • The increasingly indirect nature of the means used to circumvent international financial sanctions exposes Luxembourg entities to the risk of becoming inadvertently involved in complex terrorist financing and proliferation financing networks, despite having very limited direct links with the countries concerned. Among the more exposed entities are legal persons and legal arrangements, and certain designated non-financial businesses and professions.
  • The nature of the threats varies according to the type of activity. In relation to proliferation financing, the importance of Luxembourg’s financial sector and the crucial role of its legal entities in international trade may expose it to risks. In relation to terrorist financing, the range of actors that may pose a threat to Luxembourg is more diverse, resulting in the use of a variety of techniques and methods to violate or circumvent international financial sanctions.
  • The measures put in place by the various stakeholders contribute to significantly mitigating the risks Luxembourg faces from the violation, circumvention or non-implementation of international financial sanctions relating to terrorist financing and proliferation financing.

The VRA is available in English on the Ministry of Finance website.