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Board of Directors and General Management Must Guarantee Proper Monitoring of Business Conduct

In a move to strengthen the financial sector, the Board of Directors and General Management of banks and investment firms in Liechtenstein have been reminded of their responsibility to ensure proper monitoring of business conduct.

Responsibility of the Board of Directors

According to Article 22, Paragraph 4, of the Banking Act (BA), the Board of Directors is responsible for the overall direction, supervision, and control of the bank or investment firm. This responsibility includes ensuring that all activities are conducted in a manner consistent with the principles of good governance and that the interests of clients and shareholders are protected.

Guidelines from the Financial Market Authority

To help banks and investment firms implement effective risk management and internal control systems, the Financial Market Authority (FMA) has issued guidelines. These guidelines emphasize the importance of establishing clear policies and procedures for managing risks and ensuring compliance with regulatory requirements.

Key Areas of Focus

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In particular, the FMA has identified several key areas where banks and investment firms must focus their attention:

  • Risk Management: Banks and investment firms must establish robust risk management systems to identify, assess, and mitigate potential risks.
  • Internal Control Systems: Effective internal control systems are essential for ensuring compliance with regulatory requirements and protecting the interests of clients and shareholders.
  • Compliance with Regulatory Requirements: Banks and investment firms must ensure that they comply with all applicable regulatory requirements, including those related to anti-money laundering and combating terrorist financing.

New Regulations

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In addition to these guidelines, several new regulations have been introduced in recent years to further strengthen the financial sector. These include:

  • Law on Token and Trustworthy Technology Service Providers: This law requires banks and investment firms to register and be supervised by the FMA if they provide services related to tokenized assets or trustworthy technology.
  • Amendment to the Due Diligence Ordinance: This amendment introduces new requirements for know-your-customer, anti-money laundering, and customer documentation.

Conclusion

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In conclusion, the Board of Directors and General Management of banks and investment firms in Liechtenstein have a critical role to play in ensuring that their institutions are properly monitored and governed. The FMA’s guidelines and regulations aim to provide a framework for achieving this goal and protecting the interests of clients and shareholders.