Financial Crime World

EU Financial Supervision: EEA/ EFTA States’ Regulators Play Key Role

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A key aspect of EU financial supervision lies with the supervisory authorities of the European Economic Area (EEA) and European Free Trade Association (EFTA) states, particularly in times of crisis.

EFTA Surveillance Authority’s Role

  • The EFTA Surveillance Authority is responsible for overseeing financial intermediaries based in EEA/EFTA states.
  • The authority can take direct action against financial intermediaries based in an EEA/EFTA state in extreme crisis situations.
  • Draft decisions are prepared independently by the European financial supervisory authorities or upon request from the authority.
  • In the case of EEA/EFTA states, legal recourse does not go to the Court of Justice of the European Union (CJEU) but directly to the EFTA Court.

Macro-Prudential Oversight: ESRB’s Role

  • The European Systemic Risk Board (ESRB) is responsible for macro-prudential oversight of the EU financial system and preventing systemic risk.
  • The board monitors and assesses systemic risks, issuing warnings and recommendations as necessary.
  • Liechtenstein participates in the work of the ESRB but has not conferred any competence on the board to set binding measures.

International Supervisory Cooperation

  • The Financial Market Authority (FMA) of Liechtenstein is a member of various global supervisory bodies, including:
    • International Organization of Securities Commissions (IOSCO)
    • International Association of Insurance Supervisors (IAIS)
    • International Organisation of Pension Supervisors (IOPS)
  • Bilateral relations with Switzerland are particularly close due to the currency treaty and shared economic space.

EU-Compatibility and Competitiveness

  • Liechtenstein’s financial sector is a significant part of its economy, with banking being the focal point.
  • The principality enjoys direct market access to the EU and EEA, as well as a privileged relationship with Switzerland, enhancing its financial intermediaries’ reach.
  • The FMA enforces international supervisory standards, ensuring Liechtenstein’s financial market oversight is globally recognized and respected.

Conclusion

In conclusion, the supervisory authorities of EEA/EFTA states play a crucial role in EU financial supervision, particularly in times of crisis. Liechtenstein’s integration into the European financial supervisory system ensures a harmonized regulatory framework with the EU, despite its non-EU status. The FMA’s membership in global supervisory bodies and bilateral relations underscore its commitment to international cooperation and compliance.