Landmark Ruling on non bis in idem in Luxembourg AML/CFT Proceedings

Introduction

On 26 February 2025, the Luxembourg Court of Appeal delivered a landmark ruling in the field of anti-money laundering and counter-terrorist financing (AML/CFT) concerning the application of the non bis in idem principle when both administrative and criminal sanctions are pursued for the same conduct. This report reviews the case details, legal reasoning, and implications for the financial sector and regulatory framework. —

Background

  • The financial institution SOCIETE1. S.A., operating a Luxembourg branch, was fined €170,000 by the Commission de Surveillance du Secteur Financier (CSSF) on 27 July 2020 for breaches of the Law of 12 November 2004 on AML/CFT.
  • Subsequently, in 2024, criminal proceedings were initiated against SOCIETE1. for identical breaches under the same law.

The non bis in idem principle, protected under Luxembourg law, EU law (Article 50 of the Charter of Fundamental Rights of the EU), and international treaties (Article 4 Protocol No. 7 ECHR, Article 14(7) ICCPR), prohibits double prosecution or punishment for the same offense. The Court considered three cumulative criteria:

  1. Nature of Sanction: The administrative sanction must be criminal in nature.
  2. Identity of Facts: The underlying facts in both proceedings must be identical or at least substantially overlapping.
  3. Absence of Exceptions: No exception to the non bis in idem principle applies.

In this case:

  • The Court determined that the CSSF administrative fine was criminal in nature based on its severity (€170,000) and repressive purpose, meeting the Engel criteria (qualification under national law is secondary; focus on objective nature, severity, and procedural resemblance).
  • The facts subject to both administrative and criminal procedures substantially overlapped; specifically, the criminal charges were included within the scope of the administrative sanction.
  • No legal framework existed to coordinate CSSF and public prosecutor actions to allow cumulative sanctions.

Court’s Decision

The Luxembourg Court of Appeal:

  • Declared criminal proceedings against SOCIETE1. inadmissible under the non bis in idem principle.
  • Held that imposing both an administrative sanction with criminal characteristics and a subsequent criminal sanction for the same conduct violates this principle.
  • Noted that neither Luxembourg law nor procedural regulations provide mechanisms to coordinate or limit cumulative sanctions between administrative and criminal authorities in AML/CFT cases.
  • Consequently, the Court reformed the earlier ordinance and dismissed criminal prosecution based on these grounds.
Aspect Details & References
CSSF sanction basis Articles 2-1(1), 8-4(1)-(3) of Law of 12 Nov 2004
Criminal charges basis Articles 2-2(1), 3, 5(1) of Law of 12 Nov 2004
Maximum administrative fine up to €5,000,000 or 10% annual turnover (Art. 8-4(3))
Maximum criminal fine up to €10,000,000 for legal persons (Art. 9 + Penal Code Art.36)
Engel criteria applied confirmed CSSF sanction as penal due to repressive purpose and severity
Identity of facts criminal facts subsumed under broader administrative findings
Coordination requirement absent under current Luxembourg law

Implications for the Financial Sector

  • Regulated entities gain clarity that once an administrative sanction with criminal characteristics is final, further criminal prosecution for identical facts is barred.
  • Enhances predictability in compliance risk management and enforcement exposure.

Coordination Between Authorities

  • The ruling exposes a legislative gap regarding coordination between CSSF and public prosecutors in AML/CFT enforcement.
  • May prompt reforms introducing procedural or legal frameworks to prevent double prosecution.

Broader Impact

  • This precedent will likely influence enforcement practices beyond AML/CFT, including competition law, tax law, employment law, and data protection where overlapping sanctions may arise.

Conclusion

The Court of Appeal’s decision marks a critical development in Luxembourg AML/CFT enforcement by reinforcing protection against double jeopardy in financial crime cases. It underscores the necessity for legal and procedural reforms to better coordinate administrative and criminal sanctions regimes. Financial institutions should reassess compliance strategies considering this ruling and remain vigilant for further regulatory updates.

References from the Case Documentation

  • Decision: Arrêt n°106/25 Ch.c.C. XI, 26 February 2025
  • Applicable Law: Law of 12 November 2004 on AML/CFT (Articles 2-1, 2-2, 3, 5, 8-4, 9)
  • International provisions: Article 4 Protocol No.7 ECHR; Article 14(7) ICCPR; Article 50 EU Charter
  • Engel criteria: Court of Human Rights decision Engel et autres c. Pays-Bas (8 June 1976)
  • Procedural details: Appeal declared admissible and founded; public prosecution declared inadmissible on non bis in idem grounds.

Dive deeper

  • CSJ Chambre du Conseil de la Cour d’appel, Arrêt n° 106/25 Ch.c.C. XI. du 26 février 2025. (Not.: 6264/18/CD) ¦ Link