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Luxembourg is inconsequential to many, but an investigation dubbed “OpenLux” shows how this small and secretive European country has attracted more wealth than the GDP of Japan.
Through favorable tax structures and opaque ownership registers, Luxembourg has attracted €4.5 trillion ($5.4 trillion) of investment funds into the country. But with this comes a serious risk of money laundering: As much as 80% of these investment funds have not declared their beneficial owners.
Analysis of the OpenLux database by Transparency International found “significant discrepancies” between named beneficial owners of investment funds. By law, these owners must be registered with Luxembourg authorities and, when business is done in the U.S., with the SEC. But 15% “submitted conflicting information,” the campaign group says, opening the door to money laundering.
The FBI is worried that investment funds are being used for large scale money laundering, according to an…