MPs press government over Spuerkees fine disclosure

When was Luxembourg Prime Minister Luc Frieden informed that Spuerkees would be fined by the Financial Sector Supervisory Commission (CSSF), and why were MPs in the special parliamentary commission not informed? Such questions and more were raised by opposition MPs after the CSSF published its decision to sanction Spuerkees at the end of July.

Details have now emerged that the bank’s management had already been informed of the sanction when they appeared before the special parliamentary commission on 5 May to answer questions about the Caritas case. However, the directors of the bank – which is 100% state-owned – did not disclose the matter to lawmakers at the time.

In his written response to MP Marc Baum, Prime Minister Luc Frieden stated that he himself had also been unaware of the fine for Spuerkees’ shortcomings in anti-money laundering controls when he attended the Caritas commission at the end of May.

Misunderstandings 'regrettable', says Spuerkees director

The government commissioner at Spuerkees informed Finance Minister Gilles Roth of the sanction by word of mouth on 2 May, the same day the CSSF also notified the bank. Roth was also informed that Spuerkees would examine all legal options to appeal, which it did by 30 May.

According to the government’s reply to LSAP MPs Taina Bofferding, Franz Fayot, and Mars Di Bartolomeo, the appeal focused in particular on the decision to make the fine public. For that reason, the finance minister argued, he could not comment at the time, as the CSSF might have accepted the appeal. Now that the sanction has been published, Roth said he is prepared to share the decision with parliament.

The same reasoning was used by Spuerkees' management when defending itself against criticism from MPs, who accused the bank of failing to be transparent before a special parliamentary commission. "This was not possible at that time. If there were misunderstandings, we truly regret that, because it was never our intention", Spuerkees director Françoise Thoma told RTL on 6 August.

Government hires external consultant for Spuerkees

Responses to the MPs questions also reveal that statements made by Spuerkees management during the Caritas commission sparked discussions within the bank’s board. It eventually emerged that the remarks by Spuerkees director Françoise Thoma, asserting that the bank had followed procedures, were in line with internal rules in place at the time.

Staff had indeed complied with these internal regulations. The response continued: "However, it became clear that the rules, although continuously updated to address new risks and fraud methods, were insufficient to account for the complexity of the Caritas fraud."

In 2020, the CSSF had first identified shortcomings in Spuerkees' anti-money laundering and counter-terrorism financing framework. The government "regrets" that, four years later, "the system for monitoring Spuerkees transactions still exhibits structural deficiencies despite improvements, leading to a new administrative sanction for the bank."

As a result, further measures have been taken. The government commissioner on the board proposed "hiring an international consultancy with extensive expertise in the sector to conduct an independent evaluation" of the bank’s systems.

Based on the findings of that evaluation, a plan for further corrective measures is expected to be developed by November.