Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) in Liechtenstein

Money Laundering (ML)

Liechtenstein’s approach to money laundering is crucial in preventing illicit financial flows. However, there are areas that require improvement.

Investigations and Prosecutions

• Most Money Laundering (ML) investigations in Liechtenstein are triggered by incoming MLA requests from abroad.
• Analysis of financial flows is essential for ML investigations; however, there have been few prosecutions targeting sophisticated ML schemes.
  • Key Challenge: Insufficient prosecution of complex money laundering cases.

Risk Assessment and Sanctions

• The country’s risk assessment indicates that self-laundering of proceeds from fraud committed abroad is a prevailing typology.
• Sanctions imposed by Liechtenstein courts are not proportionate and dissuasive, which can hinder the effectiveness of AML measures.
  • Recommendation: Enhance sanctions to ensure they are both proportionate and dissuasive.

Confiscation

The confiscation of proceeds from crime is an essential policy objective in Liechtenstein. The country has made significant progress in this area.

Inter-Institutional Cooperation

• Authorities have established strong inter-institutional cooperation to detect, seize/freeze, and confiscate assets.
  • Key Strength: Effective collaboration among authorities has improved the effectiveness of confiscation measures.

Conviction- and Non-Conviction-Based Confiscation

• Conviction- and non-conviction-based confiscation, including confiscation of equivalent value, are frequently applied in practice.
  • Best Practice: The use of various confiscation methods allows for a more comprehensive approach to asset recovery.

Terrorist Financing (TF)

Liechtenstein’s efforts to combat terrorist financing have shown some promising developments.

Risk Assessment and Prosecutions

• There have been no TF prosecutions or convictions in Liechtenstein.
• The national TF risk assessment concludes that the risk of TF in Liechtenstein is medium.
  • Key Challenge: Lack of prosecutions and convictions for terrorist financing offenses.

Detection and Prevention Measures

• Authorities have demonstrated skills and knowledge to detect collection, movement, and use of funds for TF purposes.
  • Strength: The country’s ability to identify potential terrorist financing activities has improved.

Terrorism Financing Strategy

Liechtenstein has developed a comprehensive strategy to prevent and suppress terrorist financing.

Initiatives and Commitment

• Liechtenstein has developed a TF Strategy to address the risk of terrorist financing.
• Other initiatives undertaken by the country in the CFT field show an appropriate degree of commitment, inter-agency cooperation, and awareness by competent authorities.
  • Key Strength: The development of a TF strategy demonstrates a strong commitment to combating terrorist financing.

Conclusion

While Liechtenstein has made progress in AML/CFT measures, there are areas that require improvement. Enhancing prosecutions for sophisticated money laundering schemes and increasing sanctions for terrorist financing offenses will help strengthen the country’s efforts against illicit financial flows.