Liechtenstein Takes Steps to Enhance Fraud Detection Methods in Finance Sector

A recent report by MONEYVAL highlights both progress and areas for improvement in Liechtenstein’s efforts to prevent money laundering (ML) and terrorism financing (TF). The evaluation underscores the importance of fraud detection methods in the finance industry, particularly in a jurisdiction like Lichtenstein, where financial institutions play a significant role.

Progress Made in Addressing ML/TF Risks

According to the report, Liechtenstein has made substantial progress in addressing ML/TF risks, including:

• Understanding the threats posed by money laundering and terrorism financing
• Setting national policies and coordinating efforts to prevent these crimes
• Using financial intelligence to detect suspicious activities
• Confiscating proceeds of crime and investigating and prosecuting TF cases
• Cooperating internationally to address ML/TF risks

Areas for Improvement

However, the report also highlights areas where Liechtenstein needs to improve, including:

• Enhancing supervision to ensure that financial institutions are implementing effective AML/CFT measures
• Increasing transparency regarding beneficial ownership (BO) of legal persons and arrangements
• Improving money laundering investigation and prosecution
• Implementing targeted financial sanctions

The Role of the Financial Intelligence Unit

The Financial Intelligence Unit (FIU) in Liechtenstein plays a critical role in detecting suspicious activities. Suspicious Activity Reports (SARs)/Suspicious Transaction Reports (STRs) submitted by entities subject to the Due Diligence Act are generally in line with the prevalence of revenue-generating crimes, although there is room for improvement in targeting higher-risk predicate offenses such as tax offenses.

International Cooperation

International cooperation is crucial in addressing ML/TF risks, given the predominantly foreign nature of predicate offenses. Although challenges remain, Liechtenstein has taken steps to minimize these risks through recent measures.

Conclusion

The report emphasizes the importance of continued efforts by Lichtenstein authorities to enhance fraud detection methods, particularly in the private sector and with regard to BO information transparency.