Luxembourg's banks are losing their appeal

The Association of Banks in Luxembourg (ABBL) warns that there will be less flexibility in dealing with customers due to the tightening of European regulations. Today, the sudden blocking of cards and accounts at the shop till is becoming a reality even for those who have no connection to illegal activities. As ABBL Executive Director Jerry Grbic explained, banks have found themselves on the front line of the fight against money laundering and terrorist financing, which imposes strict monitoring obligations on them.

The main reasons for these restrictions are technicalities: expired identity documents, a lack of up-to-date customer information, or transactions that deviate from the customer’s usual spending pattern. “Unfortunately, regular customers can fall victim to mandatory checks,” notes Grbic. If the bank does not receive timely explanations regarding transactions or is unable to contact the account holder, a freeze becomes an inevitable automatic measure.

The situation is further complicated by the fact that, in recent years, the number of European directives and Luxembourg laws in the financial sector has increased significantly. For banks, the cost of a mistake is extremely high: failure to comply with regulations carries the risk not only of hefty fines but also of having their licence revoked. In such circumstances, credit institutions prefer to err on the side of caution, restricting access to funds at the slightest hint of doubt.

Despite growing discontent across Europe over excessive regulation and calls for greater flexibility, no instructions to relax the rules have yet been issued from Brussels. The ABBL states that it is working on proposals to simplify supervision. The association’s aim is to strike a balance that will reduce the administrative burden on citizens without creating additional risks for the country’s financial system.