Financial Crime World

Title: FinCEN Warns US Banks of Money Laundering Risks in Liechtenstein’s Offshore Financial Sector

Overview

The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, has issued a warning [1] to US financial institutions regarding the potential money laundering risks associated with transactions involving or related to the Principality of Liechtenstein.

Elevated Financial Crime Risks in Liechtenstein

The advisory, published in July 2000, highlights the following serious issues in Liechtenstein’s anti-money laundering (AML) regime:

  1. Identities of Clients: Liechtenstein banks do not have to verify the identities of clients introduced by local lawyers, licensed trustee companies, or corporate agents [2].
  2. Suspicious Transaction Reporting: Liechtenstein’s reporting of suspicious transactions is mandatory but requires a strong suspicion of money laundering before a report can be submitted [3].
  3. Limited Information Sharing: Liechtenstein authorities can share financial information with foreign investigators through a complex and cumbersome judicial process [4].
  4. Strict Bank Secrecy: The country still upholds strict bank secrecy, with limited reporting and international cooperation [5].

Concerns and Reactions

  • FATF Identification: The Financial Action Task Force on Money Laundering (FATF) has identified Liechtenstein as a non-cooperative jurisdiction in the fight against money laundering [6].
  • Deficiencies and Actions: The Principality has acknowledged the deficiencies in its AML systems and has taken steps to address them, including drafting legislative changes and creating a special task force to investigate money laundering [7].
  • US Financial Institutions’ Responsibilities: US financial institutions that encounter transactions originating in or routed to Liechtenstein must exercise increased vigilance and report any suspicious transactions in accordance with applicable laws [8].

Contact Information and Anti-Disclosure Provisions

Any questions or comments regarding the contents of this advisory should be addressed to the FinCEN Office of Communications [9]. It is important to note that any report related to a transaction involving Liechtenstein will be considered a report of a suspicious transaction, protected by anti-disclosure and liability-shielding provisions of the Bank Secrecy Act [10].

Offering Technical Assistance

The U.S. Department of the Treasury remains willing to offer technical assistance to help Liechtenstein improve its AML framework [11].

[1] FinCEN Advisory: Liechtenstein (July 24, 2000). Available: https://www.fincen.gov/resources/statutes-regulations/advisories/2000-july/advisory-00-12.html [2] Id. [3] Id. [4] Id. [5] Id. [6] FinCEN Advisory: International Money Laundering and Related Crimes Risk Assessment of the Principality of Monaco (January 2010). Available: https://www.fincen.gov/sites/default/files/advisory/Files/principalitiesofmonaco.pdf [7] FinCEN Advisory: Liechtenstein (July 24, 2000). Available: https://www.fincen.gov/resources/statutes-regulations/advisories/2000-july/advisory-00-12.html [8] Id. [9] FinCEN Advisory: Liechtenstein (July 24, 2000). Available: https://www.fincen.gov/resources/statutes-regulations/advisories/2000-july/advisory-00-12.html [10] Id. [11] FinCEN Advisory: Liechtenstein (July 24, 2000). Available: https://www.fincen.gov/resources/statutes-regulations/advisories/2000-july/advisory-00-12.html