Catenaa, Wednesday, May 28, 2025-Cryptocurrency firms in Luxembourg, particularly Virtual Asset Service Providers (VASPs), have been designated as “high-risk” for money laundering in the nation’s 2025 National Risk Assessment, underscoring mounting regulatory concerns around digital asset activities.
The report, published May 26, points to high transaction volumes, decentralized structures, and global clientele as core vulnerabilities. It warns that VASPs’ cross-border reach and weak compliance frameworks could be exploited for laundering illicit funds stemming from cybercrime, tax offenses and corruption.
Luxembourg’s financial regulator, the Commission de Surveillance du Secteur Financier (CSSF), acknowledged ongoing supervisory challenges, including limited capacity and inadequate tools to oversee the fast-evolving crypto sector. Cases of VASPs registering without proper understanding of anti-money laundering (AML) rules, and failing to conduct customer due diligence or monitor suspicious transactions, were cited as systemic gaps.
The assessment follows the Financial Action Task Force’s 2023 evaluation, which flagged deficiencies in Luxembourg’s AML enforcement. Authorities say the new classification will shape future policy and resource allocation, particularly as the country prepares for full implementation of the EU’s Markets in Crypto Assets (MiCA) regulation by July 2026.
Despite the warning, no specific firms were named for misconduct. However, the report signals a shift toward tighter oversight and stricter compliance requirements for digital asset platforms operating in or through the country.
Bitstamp became the first major exchange to secure a MiCA license from the CSSF earlier this month. Meanwhile, Standard Chartered has announced plans to launch a crypto custody hub in Luxembourg, citing MiCA as a strategic regulatory advantage.
