Financial Crime World

Financial Crimes Soar in Liechtenstein: US Treasury Issues Warning to Banks and Financial Institutions

Background

In June 2001, the Financial Crimes Enforcement Network (FinCEN) issued an advisory to banks and financial institutions operating in the United States regarding the Principality of Liechtenstein. The advisory warned that financial crimes were rampant in Liechtenstein and urged increased scrutiny of transactions involving the country.

Reasons for the Advisory

According to FinCEN, Liechtenstein had failed to adequately address money laundering concerns and was non-cooperative in the fight against financial crime. This lack of cooperation led to a significant increase in financial crimes, including money laundering and terrorist financing.

Reforms and Compliance

However, since the issuance of the advisory, Liechtenstein has taken significant steps to reform its counter-money laundering system and bring it into compliance with international standards. As a result, FinCEN has withdrawn its advisory, citing the country’s newfound commitment to combating financial crime.

Recognition by International Bodies

Liechtenstein’s reforms have been recognized by the Financial Action Task Force on Money Laundering (FATF), which removed the country from its list of non-cooperative jurisdictions. This recognition is a testament to Liechtenstein’s efforts to improve its financial system and combat financial crimes.

Ongoing Obligations

Despite the withdrawal of the advisory, banks and financial institutions are still required to report suspicious activity and comply with all applicable provisions of law. The advisory serves as a reminder of the ongoing obligation to detect and prevent financial crimes in transactions involving Liechtenstein.

Vigilance Remains Crucial

James F. Sloan, Director of FinCEN, emphasized that the withdrawal of the advisory does not mean that financial institutions can relax their vigilance. “We continue to monitor the situation closely and urge all banks and financial institutions operating in the United States to remain vigilant in detecting and reporting suspicious activity,” he said.

A Major Victory for Liechtenstein

The move is seen as a major victory for Liechtenstein, which has long been criticized for its lax approach to financial regulation. The country’s commitment to reforming its financial system is a welcome development, and the withdrawal of FinCEN’s advisory is a testament to its success.

Key Takeaways

  • Financial crimes were rampant in Liechtenstein prior to reforms.
  • Liechtenstein has taken significant steps to reform its counter-money laundering system and bring it into compliance with international standards.
  • FinCEN has withdrawn its advisory, citing the country’s newfound commitment to combating financial crime.
  • Banks and financial institutions are still required to report suspicious activity and comply with all applicable provisions of law.
  • Vigilance remains crucial in detecting and preventing financial crimes in transactions involving Liechtenstein.