Financial Crime World

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Compliance Risks Lurk in Financial Services Sector in Liechtenstein, Experts Warn

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Liechtenstein has made significant strides in combating money laundering and terrorist financing (AML/CFT) over the years, but compliance risks still persist in the financial services sector, experts warn.

Background

As a member of the European Economic Area (EEA), Liechtenstein has implemented various anti-money laundering directives, including:

  • 4th and 5th EU Anti-Money Laundering Directives
  • Regulation (EU) 2015/847 on information accompanying transfers of funds

Compliance Risks Remain a Concern

Despite these efforts, compliance risks remain a significant concern. The Financial Market Authority (FMA) Liechtenstein is responsible for monitoring compliance with AML/CFT obligations by:

Financial Institutions and Service Providers

Must Comply with AML/CFT Rules

  • When dealing with clients, financial institutions, trust and corporate service providers, and designated non-financial businesses and professions (DNFBPs) must comply with AML/CFT rules.
  • However, many of these entities may not have the necessary resources or expertise to conduct adequate due diligence.

Limited Resources for Monitoring Compliance

The FMA’s resources may be stretched thin, leaving it difficult to effectively monitor all financial institutions and service providers. The Financial Intelligence Unit (FIU) is responsible for receiving and analyzing reports of suspicion from:

  • Persons subject to due diligence
  • Public authorities

However, experts warn that the FIU’s resources may be limited, making it difficult to effectively analyze all reports and identify potential money laundering or terrorist financing activities.

Recent Evaluation by MONEYVAL

In a recent evaluation by MONEYVAL, Liechtenstein was found to have made significant progress in improving its AML/CFT measures. However, experts warn that compliance risks remain a significant concern, particularly in the financial services sector.

Recommendations for Addressing Compliance Risks

To address these risks, it is essential that:

  • Financial institutions and service providers implement robust AML/CFT systems
  • Conduct regular due diligence on their clients
  • The FMA and other authorities continue to monitor compliance and take enforcement action where necessary

Conclusion

While Liechtenstein has made significant strides in combating money laundering and terrorist financing, compliance risks still persist in the financial services sector. It is essential that all stakeholders work together to address these risks and ensure a safe and stable financial system for everyone.