Transparency International has asked Luxemburg’s government to disclose the identity of all individual, end-investors who financially benefitted from the country’s investment funds.

The Berlin-based organisation in an Open-lux investigation initiated by Le Monde uncovered how Luxembourg’s investment funds largely operated in secrecy, paving the way for criminals and corrupt individuals to avoid taxes, hide assets, and launder funds.

Faulting Luxembourg’s anti-money laundering framework and the European Union, TI revealed that approximately 80 per cent of private investment funds in Luxembourg did not declare who benefits from them.

When data from the Luxembourg registry were compared with reports of some funds submitted to the US government, the analysis showed that over 15 per cent submitted conflicting information to the US and Luxembourg authorities about their beneficial owners.

Maíra Martini, a research and policy expert, who pointed the need for the EU and Luxembourg to close the loophole said, “It does not make sense for the definition of a beneficial owner to only include certain shareholders or the person making investment decisions.”

Ms. Martini said the current framework allows politically exposed persons to hide their assets and potentially launder illicit funds.

TI in the cause of its investigation vetted three million documents and records from Luxembourg’s online business register platforms, including corporate documents, financial statements, and beneficial ownership declarations from more than 260,000 companies, covering a period from 1955 to December 2020.

Luxembourg accounts for more than €4.5 trillion in assets estimated to hold about 67 per cent of cross-border funds worldwide.