Liechtenstein’s Efforts to Combat Money Laundering and Terrorist Financing

Liechtenstein has made significant strides in combating money laundering (ML) and terrorist financing (TF) in recent years. The country has seen an increase in the number of reports filed with the Financial Intelligence Unit (FIU), a positive trend. However, there are still areas that require improvement.

Quality of Suspicious Activity Reports

One area of concern is the quality of Suspicious Activity Reports (SARs) and Suspicious Transaction Reports (STRs) received by the FIU. While most SARs/STRs filed by persons subject to the Domestic Disclosure Act (DDA) are commensurate with the landscape of prevalent proceeds-generating crimes in the country, there is a lack of targeting higher-risk predicate offenses such as tax offenses.

Challenges with Reporting

Lack of targeting higher-risk predicate offenses
Limited reporting of suspicious activities related to tax offenses

Dissemination of Information

Despite the increase in SARs/STRs, there has been no tangible difference in the number of FIU disseminations to law enforcement agencies (LEAs). Additionally, while the tendency of reactive or non-reporting, which was prevalent before 2018, has decreased, it can still be observed.

Limited dissemination of information to LEAs
Reactive or non-reporting still a challenge

Asset Recovery and Management

The Asset Recovery and Management Office (ARMO) has made progress in recovering stolen assets. However, delays in receiving responses to mutual legal assistance requests from abroad have hindered the full recovery of seized assets.

Challenges with Asset Recovery

Delays in receiving responses to MLA requests
Limited ability to recover seized assets due to lack of international cooperation

Framework Treaty with Switzerland

Liechtenstein’s framework treaty with Switzerland has been criticized for weaknesses in its system. However, communication between the Swiss Border Guard Corps and the National Police is intensive and smooth.

Challenges with Framework Treaty

Weaknesses in the system
Limited international cooperation

Terrorist Financing

There have been no prosecutions or convictions in Liechtenstein related to terrorist financing (TF). The country has never received an MLA request from foreign counterparts in relation to terrorism or TF. The national TF risk assessment concluded that the risk of TF in Liechtenstein is medium.

Challenges with Terrorist Financing

No prosecutions or convictions
Limited international cooperation
Medium-level risk of TF

Legislative Framework

Despite these challenges, Liechtenstein’s legal framework ensures automatic implementation of UN sanctions related to TF/ML into the national framework. The country has also recently amended its legislation in line with FATF Recommendations covering TF/ML supervision and procedures for designation, listing, and delisting.

Strengths of Legislative Framework

Automatic implementation of UN sanctions
Amendments to legislation in line with FATF Recommendations

Conclusion

While there are areas that require improvement, Liechtenstein’s efforts to combat ML and TF demonstrate a commitment to these issues. Further cooperation and coordination between authorities will be necessary to effectively address these threats.

Recommendations for Improvement

Improve the quality of SARs/STRs
Enhance information sharing with LEAs
Increase international cooperation in asset recovery and terrorist financing investigations
Strengthen the framework treaty with Switzerland