On 22 October 2025, the District Court of Luxembourg handed down a jugement sur accord in the criminal case relating to the collapse of KAUPTHING BANK LUXEMBOURG S.A. in October 2008. Under this judgement, each of the defendants was sentenced to a financial penalty of €75,000 in the form of confiscation and/or a fine.
This case stems from the collapse of KAUPTHING BANK LUXEMBOURG S.A. in October 2008, which occurred in the wake of its Icelandic parent company's bankruptcy. In the final days before the moratorium was declared, a series of suspicious financial transactions took place involving asset transfers between the Icelandic bank, its Luxembourg subsidiary and the offshore entity LINDSOR HOLDING CORPORATION, a company established shortly before the 2007-2008 banking crisis.
At the end of April 2010, the CSSF reported to the Luxembourg public prosecutor's office financial transactions carried out at the end of September and beginning of October 2008 involving, in particular, KAUPTHING BANK LUXEMBOURG and LINDSOR HOLDING CORPORATION. The public prosecutor's office then instructed the Judicial Police Service (SPJ) to conduct a preliminary investigation.
The proceedings initiated related to several financial transactions carried out in the days preceding the suspension of payments by KAUPTHING BANK LUXEMBOURG in the context of the bankruptcy of its Icelandic parent company. These transactions involved, in particular, transfers of assets between the Icelandic bank, its Luxembourg subsidiary and the offshore company LINDSOR HOLDING CORPORATION. These complaints triggered what would become one of Luxembourg's most complex cross-border financial crime investigations, requiring sustained judicial cooperation with Icelandic authorities over more than a decade.
The investigation revealed that these transactions had enabled certain former de jure and de facto executives of KAUPTHING BANK LUXEMBOURG to exploit the banking panic to offload illiquid or heavily depreciated securities, using internal mechanisms financed by the Icelandic parent company. To conceal these transactions, they subsequently created backdated documentation to provide false justification. These actions were thus classified as forgery, use of forged documents, misuse of company assets and money laundering.
The procedural journey was extensive: following a preliminary investigation in 2010, a formal judicial investigation was opened in April 2011. In a closing speech on 8 April 2011, the Luxembourg public prosecutor's office opened a judicial investigation against "unknown persons", provisionally classifying the facts as domestic theft, breach of trust, misuse of company assets, receiving stolen goods, forgery and use of forged documents, and money laundering
The instruction phase proved highly complex, encompassing six indictments, 33 witness hearings, 29 investigation reports, and international letters rogatory executed in Iceland in 2013 and 2016. After the Public Prosecutor requested referral to the criminal chamber in February and December 2023, the investigating chambers confirmed the referral in early 2025.
After more than fourteen years of proceedings, marked by exemplary cooperation between the Luxembourg and Icelandic authorities, the three defendants agreed to plead guilty as part of a plea bargain with the Public Prosecutor's Office.
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