Financial Crime World

Financial Fraud on the Rise in Liechtenstein Despite Regulatory Efforts

Despite a challenging international environment, the financial sector in Liechtenstein has remained stable, according to the Financial Market Authority’s (FMA) Economic Report 2023. However, the report also highlights a growing number of financial fraud cases in the country.

Growing Number of Financial Fraud Cases

According to the FMA, a total of 192 ongoing proceedings or preliminary investigations were concluded during the reporting period, resulting in fines totaling 1,489,500 Swiss francs for violations of banking law, market manipulation, insider trading, and transactions involving clone companies. In one notable case, a legal entity was slapped with a fine of 500,000 Swiss francs.

Common Violations

  • Market abuse
  • Accepting deposits without necessary authorization
  • Insider trading
  • Unlawful disclosure of insider information

FMA’s Response to Financial Fraud

The FMA has also had to open 88 administrative proceedings or administrative criminal proceedings in response to suspected financial fraud. Nine criminal complaints were lodged with the public prosecutor’s office due to suspicion of various financial crimes, including:

Suspected Crimes

  • Market abuse
  • Acceptance of unauthorized deposits
  • Insider trading
  • Concealment of material facts
  • Fraud related to clone companies
  • Violation of trademark protection
  • Activity without registration in the context of token and trusted technology services

New Regulations Aimed at Protecting Investors

Despite these challenges, the FMA has continued to develop new regulations aimed at protecting investors and preventing financial fraud. The authority is currently working on a revised version of the Financial Market Act, which is expected to be finalized by January 1, 2025. New regulations have also been drafted for:

Upcoming Regulations

  • Securities trading
  • Digitalization
  • Cryptocurrency trading

Industry Praise for FMA’s Efforts

The FMA’s efforts to combat financial fraud have received praise from industry experts, who credit the authority’s effective enforcement policies with helping to maintain stability in Liechtenstein’s financial sector despite international challenges.