Independent Audit and Risk Management Requirements for Banks in Liechtenstein

The Financial Market Authority (FMA) of Liechtenstein has announced that banks operating in the country must undergo an annual external, independent audit to ensure compliance with regulatory requirements. This audit will be acknowledged by the FMA, providing assurance to investors and customers.

Key Requirements

• Banks must establish a risk management system independent of their operational business.
• A dedicated compliance department is also required.
• Employees must have procedures in place to report any violations of BankG and CRR regulations.
• Personnel charged with key functions must have a good reputation, adequate experience, and professional qualifications.

Place of Management

To operate effectively in Liechtenstein, banks must demonstrate that their effective place of management is located within the country. This includes:

• Ensuring that members of the management board work from and in Liechtenstein.
• Establishing sufficient substance in terms of office space and key personnel employed in Liechtenstein.

Outsourcing

Banks may outsource certain key functions, such as internal audit, with prior approval from the FMA. However:

• The outsourcing of critical or core functions will be subject to stricter regulatory requirements.
• Prior approval is required for all outsourcing activities.

Cross-Border Banking Activities

• Banks seeking to operate in Liechtenstein must obtain a licence from the FMA.
• Banks based in countries within the European Economic Area (EEA) may establish themselves in Liechtenstein through the “passporting” regime, provided they notify the FMA prior to commencing activities.
• Non-EEA banks may only provide banking services in Liechtenstein through a branch established in the country and subject to a licence from the FMA. Banks from third countries may not provide banking services in Liechtenstein unless on a “reverse solicitation” basis, which is still subject to clarification.

Conciliation Board

The Liechtenstein government has introduced an extrajudicial conciliation board to settle disputes between customers and banks. The board acts as a mediator to resolve complaints submitted by customers and encourages discussions between the disputing parties to reach a mutually acceptable solution.

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