Luxembourg

People

Luxembourg serves as a destination and, to a lesser extent, a transit country for human trafficking. The illicit market mainly involves victims from Europe, Africa, Asia and South America, who are exploited for sexual and labour purposes. Victims are found in sectors such as commercial sex work, catering, construction and domestic service. Reports indicate that Roma children are transported from neighbouring countries and forced to beg, while foreign workers are frequently coerced into labour exploitation. Chinese, Nepalese, Pakistani and South American nationals, along with individuals from Eastern and Southern Europe, have been identified as particularly vulnerable.

The human smuggling market in Luxembourg is under-reported, with most available information linked to human trafficking. While cases of smuggling remain largely unknown, previous instances suggest that smuggling networks facilitate irregular migration into Luxembourg, often as a precursor to trafficking. While Luxembourg is not a major hub for human smuggling, its role in broader European migration networks makes it susceptible to such activities.

There is no verifiable evidence of an extortion or protection racketeering market in Luxembourg. However, the country hosts mafia-style groups, including Italian organizations, which may have an unquantified influence on criminal activities.

Trade

Luxembourg’s arms trafficking market remains limited, though the country plays a role in regional firearm movements due to its geographical location. Cross-border weapons seizures indicate that Luxembourg may serve as a transit point for illicit arms.

Counterfeit goods, particularly clothing, cosmetics and toys, form a relatively sizeable illicit market in Luxembourg. The estimated financial loss from counterfeit clothing alone is substantial, with cosmetics and toys contributing additional losses. The demand for counterfeit luxury goods persists, with illicit retail outlets in southern Luxembourg discreetly selling high-end fakes to regular customers. Studies show that one in five Luxembourgers has intentionally purchased counterfeit items.

The illicit trade of excise consumer goods, particularly tobacco and alcohol, remains an issue. Luxembourg’s lower excise duties compared to neighbouring France create a profitable environment for smugglers. Tobacco and alcohol are purchased in bulk and resold at a profit in France. While seizures have increased, they are typically in limited quantities.

Environment

There is no substantial evidence of flora crimes and fauna crimes within Luxembourg. No cases of non-renewable resource crimes were reported in recent years, indicating a low risk in this sector.

Drugs

Luxembourg functions as both a transit and destination country for heroin. While data on market consolidation remains insufficient, significant seizures have become more frequent. Reports indicate fluctuating heroin availability over the years, with recent declines in use coinciding with a rise in cocaine consumption. Foreign dealers are often linked to the trade, selling in Luxembourg while operating from neighbouring countries.

The cocaine market in Luxembourg is small but expanding, with increasing trafficking and arrests. Organized criminal networks have established a stronger foothold, particularly in Luxembourg City and border areas. The ‘Mocro Mafia’, a violent criminal network operating in Belgium and the Netherlands, has also extended its activities into Luxembourg, contributing to heightened delinquency and violence. Cocaine purity rates in Luxembourg are generally low, with common adulterants including levamisole and caffeine.

Cannabis remains the most widely consumed drug in Luxembourg. While the government has legalized private cultivation and consumption for personal use, the impact on trafficking remains to be seen, though small-scale illicit trade appears to persist. Increased police operations in recent years led to multiple seizures, and efforts continue to curtail illicit cannabis distribution.

The synthetic drug market in Luxembourg is growing, with law enforcement reporting large-scale seizures. Wastewater analysis confirms that consumption has increased, as has the rate of synthetic drug seizures by law enforcement.

Cyber Crimes

Cyber-dependent crimes are relatively common in Luxembourg, affecting individuals, businesses and public institutions. Hacking is among the most frequently reported offences. A 2024 cyberattack by Russian hackers temporarily disrupted government and corporate websites, reflecting Luxembourg’s vulnerability to international cyber threats.

Financial Crimes

Luxembourg continues to face substantial threats from financial crime, including fraud, phishing and tax evasion. Phishing scams are particularly widespread, often involving criminals posing as bank employees. Major financial scandals exposed systemic mismanagement and embezzlement within charitable organizations. The country remains a hub for global financial misconduct, with a Luxembourg bank implicated in laundering embezzled Azerbaijani funds. Luxembourg ranks among the top contributors to global financial secrecy, facilitating tax evasion and VAT fraud. A 2024 investigation revealed the ‘Moby Dick’ VAT fraud scheme, involving mafia networks operating across Europe. Also, the country has been central to fraudulent procurement schemes linked to political parties and continues to attract illicit investment operations.

Criminal Actors

There is no substantial evidence of domestic mafia-style groups exerting territorial control in Luxembourg. Local criminal networks operate informally but have some impact, particularly in drug trafficking, cooperating with foreign groups. The country’s role as a transit point for narcotics moving from the Netherlands and Belgium toward Southern Europe has driven their illicit operations. However, local criminal groups carry out their operations in a less structured manner. Without collaboration with transnational networks, local actors mainly operate in human trafficking and forced labour markets.

There is no recorded evidence of state-embedded actors participating in organized crime in Luxembourg, although the risk of corruption associated with financial opacity is concerning.

Foreign criminal actors, particularly transnational mafia groups, maintain a foothold in Luxembourg, mainly in drug and arms trafficking. The Italian ‘Ndrangheta has been implicated in multiple cases, particularly in relation to laundering criminal proceeds through Luxembourg’s financial infrastructure. Several members of the ‘Ndrangheta have been arrested in Luxembourg in recent years, with investigative reports such as the OpenLux revelations exposing the extent of the group’s financial operations in the country. Albanian-speaking organized crime groups and the ‘Mocro Mafia’ also play a role, particularly in narcotics distribution. These groups operate in urban centres and border regions, with the Gare district and the southern border identified as hotspots for illicit activity. Furthermore, organized crime groups from Belgium and the Netherlands have increased their presence in Luxembourg, taking advantage of its position within broader European drug trafficking routes. Groups originating from West and North Africa have reportedly strengthened their grip on drug trafficking, controlling a considerable portion of the local market. These networks extend beyond drug-related activities to human trafficking and illicit trade in tobacco products. Moreover, Luxembourg’s status as a global financial hub has allowed powerful international criminal networks to embed themselves in its economy. Various foreign criminal organizations have established connections to Luxembourg, mainly to exploit the country's financial sector for money laundering.

Luxembourg’s financial and economic sectors provide opportunities for illicit financial activities, particularly in aggressive tax planning and money laundering. The food sector, pharmaceuticals and financial services have been identified as areas where profit transfers occur. While tax planning itself is not illegal, Luxembourg’s legal framework has allowed multinational corporations to shift profits and minimize tax obligations. Also, the Financial Action Task Force (FATF) has previously noted the country’s money-laundering risks due to facilitation by private consultants and weaknesses in supervisory boards, and a general vulnerability in financial oversight.

Leadership and governance

Luxembourg’s government has demonstrated a commitment and proactive approach to combating organized crime, particularly in drug trafficking, through transnational collaborations disrupting organized criminal networks. Also, the government has introduced coordinated preventive and repressive strategies spanning various ministries. Public trust in government institutions remains relatively high, with democratic governance and institutional reliability widely seen as robust. But some experts argue that public awareness of the growing integration of criminal activities into the legal economy remains low in Luxembourg, as in other Western nations.

Despite efforts to enhance transparency, Luxembourg has been criticized for a lack of anti-corruption legislation and weak transparency mechanisms. The country has also been criticized for its failure to implement cooling-off periods for government officials, and for the absence of strong laws on the freedom of information. The small size of Luxembourg has been identified as a factor complicating transparency, as close relationships between political, administrative and judicial powers may hinder necessary separation. Although Luxembourg has established initiatives such as a transparency register and an open data platform, doubts have been expressed about whether these measures are effective and accessible. While the government has taken steps to improve transparency, including reviewing regulations governing access to information, the overall impact remains debatable.

Internationally, Luxembourg has shown compliance with global standards on organized crime through its active participation in operations and treaties. The ‘Hazeldonk’ operation, supported by the Benelux police treaty, exemplifies the country’s cross-border cooperation in tackling drug trafficking, money laundering and the illegal arms trade. Luxembourg’s Interpol National Central Bureau plays an active role in international law enforcement, particularly in fugitive operations and information-sharing. Luxembourg has also engaged in significant asset seizures as part of international initiatives, confiscating large sums linked to organized crime. But experts argue that Luxembourg could do significantly more to address financial crimes, particularly in relation to money laundering and tax evasion.

Luxembourg has implemented several laws on human trafficking, money laundering and cybercrime. The country’s legislative framework aligns with international standards, criminalizing labour and sex trafficking with substantial penalties. However, the Group of Experts on Action against Trafficking in Human Beings has raised concerns about Luxembourg’s definition of trafficking, which treats force, fraud, or coercion as aggravating factors rather than core elements, potentially affecting international cooperation in prosecutions. Also, Luxembourg has recently legalized cannabis for personal use, aligning with broader European trends in drug policy. Lastly, Luxembourg has implemented measures, alongside other EU countries, to restrict the private ownership of exotic animals.

Criminal justice and security

Luxembourg’s judiciary includes specialized units focused on organized crime, such as the Organized Crime Section, which handles cases related to armed robberies, drug offences and human trafficking. The legal framework prescribes stringent penalties for trafficking offences, with higher sentences for crimes involving minors. But lenient sentencing patterns and deficiencies in enforcement, particularly in financial crimes, are concerning. Judicial capacity remains a problem, with understaffing reported in key investigative units. The Judicial Police, responsible for investigating trafficking, is reportedly undercapacitated, prompting proposals to hire more staff. Nonetheless, Luxembourg’s judiciary remains generally effective in prosecuting organized crime cases. Luxembourg’s prison system operates under state control, ensuring compliance with international detention standards. The government provides detainees with access to healthcare, education and work opportunities. Oversight mechanisms, such as the ombudsman’s external monitoring of penitentiaries, reinforce the country’s commitment to maintaining humane prison conditions.

The country’s law enforcement agencies have established specialized units to combat organized crime. The Central Criminal Investigation Directorate and the Criminal Investigation Department focus on cybercrime, narcotics, economic offences and anti-terrorism. Also, dedicated units within the police handle human trafficking cases. Luxembourg’s law enforcement agencies actively engage in international intelligence-sharing and participate in peacekeeping missions.

In Luxembourg, the free movement of people and goods facilitates trade, but also creates vulnerabilities to trafficking and organized crime. The recent implementation of the Benelux police treaty enhances cross-border cooperation, allowing for more effective monitoring and enforcement actions. Luxembourg’s position within the ‘blue banana’ corridor – an arc of dense urbanization extending from Liverpool to Milan via London, the Benelux states and the Ruhr – increases its exposure to illicit trafficking flows, particularly in areas near the French and Belgian borders. However, increased cross-border coordination has improved Luxembourg’s ability to meet these challenges.

Economic and financial environment

Luxembourg has developed a robust anti-money laundering (AML) and counter-terrorist financing framework, with oversight by the Directorate for Combating Money Laundering and the Financing of Terrorism within the Ministry of Justice. The country participates in FATF initiatives and has been recognized for its strong financial intelligence capabilities. However, some experts argue that Luxembourg’s financial sector remains highly exposed to money laundering risks due to its dominant banking industry. Although recent reforms aim to enhance AML measures, weaknesses remain in asset recovery and regulatory supervision of non-financial entities. Luxembourg’s Financial Intelligence Unit produces high-quality intelligence reports but has resource constraints. The FATF has recommended more staff and stronger enforcement mechanisms to counter growing financial crime. Also, in 2024, Luxembourg’s financial regulator has committed to strengthening anti-corruption measures in line with upcoming EU directives. While Luxembourg has made progress in strengthening its AML framework, more reforms are necessary to address vulnerabilities in financial crime enforcement.

Luxembourg is a leading global wealth-management hub, with a favourable regulatory environment that supports investment activities. The country ranks highly in economic freedom indices, reflecting its stable and transparent financial sector. But Luxembourg’s tax policies have been flagged as facilitating aggressive tax planning, with multinational corporations using Luxembourg-based subsidiaries to shrink their tax obligations. That said, Luxembourg is not listed on the EU’s tax-haven blacklist, and the government continues to implement measures to enhance financial oversight.

Civil society and social protection

Luxembourg provides extensive support for victims of organized crime, particularly trafficking victims. The government funds shelters and services that offer housing, psychological assistance and legal aid to victims. But access to these services is sometimes constrained due to operational shortcomings, such as shelter capacity and service hours. Civil society organizations play a critical role in victim support, operating shelters and providing advocacy for crime victims. The government collaborates with these organizations in coordinating care services, demonstrating a commitment to multi-stakeholder engagement in crime prevention. But weaknesses remain in ensuring financial support for victims beyond trafficking cases. Also, police reports have expressed concern about the level of protection of minors and young adults affected by crime.

Luxembourg has developed national prevention strategies to combat organized crime, with an emphasis on human trafficking. The inter-ministerial trafficking committee oversees anti-trafficking efforts, implementing a National Action Plan (NAP). But the NAP has been criticized for lacking clear time-frames and resource allocations. The government has taken steps to improve enforcement mechanisms, including increasing the rate of labour inspections and strengthening victim-identification procedures. Awareness campaigns and social media initiatives also contribute to crime prevention efforts. Luxembourg has established a robust framework to prevent financial crimes and largely complies with international standards. Reforms following LuxLeaks and external pressure have improved tax transparency. The Commission de Surveillance du Secteur Financier oversees financial institutions and monitors for fraud and regulatory breaches. However, financial crime prevention remains challenging due to ongoing financial opacity.

Non-state actors, including CSOs and the media, play an active role in combating organized crime. The government allocates substantial funding to NGOs that provide victim services and awareness campaigns. Luxembourg ranks highly in press freedom indices and provides a supportive environment for investigative journalism. However, close ties between journalists and political or economic entities may be preventing full editorial independence.