1998 International Narcotics Control Strategy Report

Bureau for International Narcotics and Law Enforcement Affairs
United States Department of State
February 26, 1999

LUXEMBOURG

I. Summary

Luxembourg is a transit country for drugs destined for the western European market. It cooperates with U.S. law enforcement, and last year worked closely with U.S. authorities on several important cases. Luxembourg remained an active international donor for counternarcotics programs in developing countries, and was invited to join the UNDCP "Major Donors" Group. Luxembourg also enacted a comprehensive new money laundering statute, which broadens the scope of financial crimes and imposes reporting requirements on a wider range of businesses.

II. Status of Country

Luxembourg is not a significant producer of illegal narcotics or precursor chemicals. It is primarily a transit country, and will likely remain so due to its central location and the lack of border controls within Europe. It has also been reported that the country has one of the highest drug consumption rates per 1,000 people in Europe. Due to strong bank secrecy laws, and previously weak reporting requirements for financial sector employees, bankers and investors have been major recipients of laundered funds. For the past several years, however, Luxembourg has taken steps to reduce money laundering by vigorously cooperating with foreign law enforcement authorities and strengthening legislation.

III. Country Actions Against Drugs in 1998

Accomplishments. Luxembourg's most important accomplishment included passage of a comprehensive money laundering law. Under previous law, money laundering crimes were only prosecuted when supported by a related drug offense. However, the new law expands the crime of money laundering to include proceeds of kidnapping, prostitution rings, child exploitation, arms trafficking and organized crime. It also imposes reporting duties (and potential liability) on bankers, investors, insurance employees, notaries, accountants and casino employees.

Internationally, Luxembourg signed agreements to finance anti-narcotics projects in Laos and Vietnam. Last year, Luxembourg pledged $1.7 million to fund a three-year alternative development project in Laos.

Law Enforcement Efforts. During the first ten months of 1998, 222 marijuana plants, 1.86 kilogram of heroin, 17 grams of cocaine, and 1.156 kilogram of marijuana was seized. Also law enforcement authorities arrested 73 people, warned 814, and charged 573 people for drug-related offenses.

Corruption. No corruption cases were reported in 1998.

Agreements and Treaties. Luxembourg is party to the 1988 UN Convention Against Illicit Traffic of Narcotic Drugs and Psychotropic substances, and generally complies with the Convention's goals and objectives. It is also a party to the 1961 UN Single Convention, its 1972 Protocol, and the 1971 UN Convention on Psychotropic Drugs. In 1997, a Mutual Legal Assistance Treaty (MLAT) and Extradition Treaty were signed between the U.S. and Luxembourg. Both treaties were ratified by the U.S. in January 1999 and now await Luxembourg's ratification. Luxembourg also participates in international narcotics groups including the Dublin Group and the Financial Action Task Force (FATF), and was admitted in 1998 to the UNDCP "Major Donors" group.

Cultivation and Production. There is no reported cultivation or production of illicit drugs in Luxembourg.

Drug Flow/Transit. Luxembourg is a transit country for drugs destined for the European market. Law enforcement authorities are concerned about drugs transiting the country through Findel Airport and overland through neighboring countries.

Domestic Programs. Drug consumption is a significant concern for Luxembourg authorities, with approximately 2,000-3,000 active drug users in the country. The Luxembourg government uses anti-drug education programs to target young people in its demand reduction effort. The government maintains a methadone program and a drug hotline.

IV. U.S. Policy Initiatives and Programs

Bilateral Cooperation. Luxembourg and U.S. law enforcement authorities cooperate closely on counternarcotics and judicial matters, particularly as they relate to money laundering. Last year, Luxembourg police worked with the DEA on several cases including the arrest in January of three individuals transporting 4 kilograms of cocaine from Bolivia to Europe through Luxembourg. This operation resulted in the seizure of 292,000 Dutch Guilder.

The Road Ahead. Over the next year, Luxembourg and the United States will continue their close cooperation on narcotics and money laundering cases. This cooperation will be enhanced when the National Assembly passes into law the Extradition and Mutual Legal Assistance Treaties. Luxembourg took an important step last year in expanding its money laundering legislation. How well it succeeds will depend on how well the private and public sectors work together to implement the new reporting requirements.