Liechtenstein Banks Face Enhanced Compliance Audit Checklists

Regulatory Scrutiny Intensifies for Liechtenstein Banks

In the wake of growing regulatory scrutiny, Liechtenstein banks are under pressure to maintain robust risk management and governance practices. The country’s AAA rating by Standard & Poor’s serves as a benchmark for financial stability, emphasizing the importance of compliance with increasingly complex web of regulations.

Key Areas of Focus for Compliance Audit Checklists

The Financial Market Authority (FMA) will scrutinize banks’ adherence to the following areas:

Regulatory Capital and Liquidity

• Common Reporting Standard (CRS): Review of accurate reporting of financial data, including beneficial ownership information.
• Regulatory capital requirements: Ensuring adequate capital buffers to withstand potential losses.

Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT)

• Effective AML/CFT controls: Adequate risk assessments, customer due diligence, and suspicious transaction reporting.
• Monitoring and enforcement: Regular review of AML/CFT policies and procedures to ensure effectiveness.

Risk Management

• Risk identification and assessment: Development of robust risk assessment frameworks to identify, prioritize, and monitor risks.
• Risk mitigation strategies: Implementation of effective risk mitigation strategies to minimize potential losses.

Governance and Oversight

• Strong governance structures: Effective boards of directors, risk committees, and internal audit functions.
• Compliance oversight: Regular review of compliance policies and procedures to ensure adherence to regulatory requirements.

Compliance with International Sanctions

• North Korea sanctions: Compliance with United Nations and EU sanctions related to North Korea.
• Iran and Russia sanctions: Adherence to international sanctions regimes related to Iran and Russia.

Enhanced Compliance Requirements for Liechtenstein Banks

To address the areas of focus, banks will need to implement the following enhanced compliance requirements:

Strengthened Risk Assessment Frameworks

• Development of robust risk assessment frameworks that identify, prioritize, and monitor risks.
• Regular review and update of risk assessments to ensure accuracy and effectiveness.

Improved Governance Structures

• Establishment of effective boards of directors and risk committees.
• Implementation of strong internal audit functions to ensure compliance with regulatory requirements.

Enhanced AML/CFT Controls

• Implementation of robust AML/CFT controls, including adequate customer due diligence and suspicious transaction reporting.
• Regular review and update of AML/CFT policies and procedures to ensure effectiveness.

Regular Compliance Audits

• Conducting regular compliance audits to ensure adherence to regulatory requirements and identify areas for improvement.
• Implementation of corrective actions to address any deficiencies or weaknesses identified during the audit process.