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Financial Institutions Face Heavy Fines for AML Violations
Zurich - The financial sector in Liechtenstein is on high alert after a recent announcement from the Financial Market Authority (FMA) warning financial institutions and businesses of severe penalties for violating anti-money laundering (AML) regulations.
Consequences of Non-Compliance
According to the Supervisory Act, any failure to comply with suspicious transaction reporting requirements can result in fines of up to CHF 1 million or double the amount gained through the administrative infraction, whichever is higher. Additionally, intentional failures of AML obligations can lead to criminal infractions and penalties.
The FMA has outlined a range of sanctions that can be imposed on individuals and legal entities, including:
- Monetary fines
- Prohibition of new business relationships
- Disciplinary measures
- Public disclosure of decisions
- Temporary suspension or revocation of licenses
- Criminal charges
Repeated Violations
In the event of repeated, systematic, or serious violations, the supervisory authorities may take more severe actions, such as:
- Publicly disclosing decisions against a financial institution or business subject to AML requirements
- Temporarily prohibiting the performance of authorized activities
- Withdrawing licenses
- Temporarily prohibiting individuals from performing executive functions
Criminal Infractions
Financial institutions have also been warned that penalties are not limited to administrative fines. All violations of suspicious transaction reporting requirements constitute criminal infractions and can result in severe penalties.
Risk-Based Approach
The FMA has emphasized the importance of a risk-based approach in identifying and verifying:
- Customer identities
- Beneficial ownership
- Recipient of distributions from legal entities established on a discretionary basis
- Establishing a business profile and supervising business relationships commensurate with the level of risk
TT Service Providers Face Additional Scrutiny
In addition to financial institutions, Token and Trading Platform (TT) service providers have been specifically targeted by the FMA due to their involvement in the cryptocurrency market. TT service providers are required to register according to the Token and TT Service Provider Act and must adhere to strict AML regulations.
The FMA has warned that any failure to comply with AML requirements can result in severe penalties, including:
- Fines
- Suspension or revocation of licenses
- Criminal charges
TT service providers have been urged to ensure timely risk-adequate monitoring of their business relationships, conduct simple investigations when circumstances arise, and carry out special investigations when suspicious transactions occur.
Conclusion
The FMA’s announcement serves as a stark reminder of the importance of AML compliance in Liechtenstein’s financial sector. Financial institutions and businesses must take immediate action to ensure they are meeting their AML obligations and risk facing severe penalties for non-compliance.
As the cryptocurrency market continues to evolve, it is essential that TT service providers also prioritize AML compliance to avoid falling foul of the law. The FMA has made it clear that any failure to comply with AML regulations will be met with swift and severe action.