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Banking Regulations in Liechtenstein

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Overview

This article provides a comprehensive overview of banking regulations in Liechtenstein, as provided by the Financial Market Authority (FMA) of Liechtenstein.

Banking Regulations

  • The FMA is responsible for regulating and supervising banks in Liechtenstein.
  • Banking activities require a license from the FMA.
  • The FMA assesses the suitability of proposed acquirers, including their shareholder structure, reputation, financial soundness, and compliance with regulatory requirements.

Restrictions on Foreign Shareholdings

  • There are no specific restrictions on foreign shareholdings in banks.
  • The assessment of the proposed acquirer’s suitability is comprehensive and includes aspects such as:
    • Shareholder structure and beneficial owners
    • Good repute and experience of any person who will direct the bank or investment firm
    • Financial soundness
    • Potential risks with regard to compliance with regulatory requirements
    • Potential risks with regard to money laundering or terrorist financing

Resolution Regime for Banks

  • Liechtenstein has transposed the Bank Recovery and Resolution Directive (BRRD) into national law.
  • The BRRD provides a framework for bank resolution, including a bail-in tool as possible resolution mechanism.

Client Asset Protection

  • Banks and investment firms are obliged to join a self-regulation body or participate in a foreign protection scheme for deposit protection.
  • The majority of regulated intermediaries in Liechtenstein have joined the Deposit Guarantee and Investor Compensation Foundation SV (EAS).
  • Over the last years, FinTech and blockchain-related regulatory efforts have been dominant and continue to be a topical matter.
  • The FMA has installed a specialized practice group for FinTech-related financial services.

Biggest Threat to the Success of the Financial Sector

  • Attracting qualified workforce is an important factor to remain competitive in the face of rapid regulatory development and competition from other financial centers.