Financial Crime World

Liechtenstein Cracks Down on Financial Crime: Banking Regulations in Focus

Introduction

The Principality of Liechtenstein has taken significant steps to prevent financial crime and maintain transparency in its banking sector. As a member of the European Economic Area, Liechtenstein adheres to international standards set by the Financial Action Task Force (FATF) and regularly implements EU directives on money laundering into national law.

Anti-Money Laundering and Financial Crime Prevention

Banks, investment firms, asset managers, and trust service providers in Liechtenstein are subject to strict due diligence requirements. These include:

  • Identifying and verifying the identity of clients: Financial intermediaries must collect specific information on clients, including full name, date of birth, address, citizenship, and tax identification number (TIN).
  • Identifying and verifying the beneficial owner of assets: For legal entities, financial intermediaries need to provide information on the company’s name, type, registered office, and TIN.
  • Establishing a business profile: Financial intermediaries must establish additional risk-based procedures to determine whether a client is a PEP and obtain approval from at least one member of the management before establishing a relationship.

Politically Exposed Persons

Increased due diligence measures apply to business relationships with Politically Exposed Persons (PEPs), defined as individuals holding prominent public functions or their immediate family members. Financial intermediaries must:

  • Establish additional risk-based procedures to determine whether a client is a PEP
  • Obtain approval from at least one member of the management before establishing a relationship

Documentation Requirements

The minimum identification documentation required for account opening includes:

  • Certified passport or ID copy
  • Utility bills (not older than three months)
  • Proof of address

For legal entities, financial intermediaries require:

  • Certified extract from the commercial register or similar document
  • Information on the company’s name, type, registered office, and TIN
  • Names of bodies or trustees formally acting on behalf of the legal entity

Tax Offence

Tax offences are predicate offenses for money laundering in Liechtenstein. The main predicate offenses include fraud and breach of trust.

Compliance Verification

Financial intermediaries must verify the tax compliance of their clients through internal directives or by requesting tax compliance confirmations from clients or their tax advisers.

Liability

Failure to comply with due diligence measures under the Due Diligence Act can result in:

  • Criminal prosecution (up to six months in prison or a fine)
  • Administrative procedures (up to 5 million Swiss francs)

Clients and financial intermediaries committing financial crimes can face:

  • Criminal prosecution
  • Civil liability may also arise from non-compliance