Financial Crime World

Evaluation Report: Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Practices in Liechtenstein

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Overview

This report evaluates the effectiveness of anti-money laundering (AML) and combating the financing of terrorism (CFT) measures in Liechtenstein. The report notes that while progress has been made in implementing international standards, there are still areas for improvement.

Preventive Measures - Financial Institutions

AML/CFT Requirements

  • AML/CFT preventive measures are defined in the Due Diligence Act and Ordinance.
  • Financial institutions must conduct customer due diligence (CDD) on a risk-based approach.
  • Beneficial ownership information, source of funds, and purpose of the relationship must be established.

Challenges in Implementation

  • The report notes that the legal provisions give excessive discretion to financial institutions when applying the risk-based system.
  • The requirements do not fully comply with specific criteria of the FATF Recommendations.

Law Enforcement

Responsibilities

  • Law enforcement in ML and FT cases rests with the Public Prosecutor and national police, specifically the Economic Crime Unit.
  • The report notes a general tendency to transfer cases to the authorities of the jurisdiction where the predicate offense occurred.

Financial Intelligence Unit (FIU)

Role and Effectiveness

  • The FIU is an independent financial intelligence unit that conducts thorough operational analysis of Suspicious Activity Reports (SARs) received.
  • The report notes that the FIU has a good relationship with reporting entities and puts effort into raising awareness among relevant sectors.

Supervision

Responsibilities

  • The FMA, an independent authority, is responsible for prudential and AML/CFT supervision as well as customer protection.
  • The report notes that while the FMA has developed and implements effective AML/CFT preventive measures, a greater involvement of FMA supervisors in on-site inspection work would improve overall effectiveness.

Recommendations

Strengthening Requirements

  • Strengthening requirements for foreign branches and subsidiaries related to AML/CFT.
  • Broadening identification and verification requirements for beneficial owners.
  • Improving supervision by the FMA through more on-site inspections.

Overall, the report highlights areas where Liechtenstein needs to improve its AML/CFT practices to fully comply with international standards.