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Liechtenstein Cracks Down on Financial Crime: Best Practices Revealed

In its effort to maintain a reputation as a secure and stable financial hub, Liechtenstein has implemented a comprehensive strategy to prevent financial crime. The country’s open and internationally-oriented financial market is built on a foundation of strict adherence to international standards.

Combating Money Laundering and Financing of Terrorism

As a member of the European Economic Area (EEA) and MONEYVAL, Liechtenstein has committed itself to implementing the recommendations of the Financial Action Task Force (FATF). The country’s authorities have taken a proactive approach in combating money laundering and financing of terrorism (ML/FT), with a focus on close cooperation between all relevant bodies.

Whole-of-Government Approach

The government’s strategy is centered on a whole-of-government approach, which involves financial market participants. This ensures that not only are FATF and EU requirements implemented, but also actions are taken to protect the country’s own interests. The authorities and financial market participants are acutely aware of their critical roles in preventing ML/FT.

Identifying and Assessing Risks

Identifying and assessing ML/FT risks is a crucial component of Liechtenstein’s anti-money laundering and counter-terrorist financing (AML/CFT) regime. In recent years, the country has conducted rigorous information and data analysis to determine its risk exposure through National Risk Assessments.

Global Perspective

The financial center in Liechtenstein serves a global client base, offering a wide range of financial products and services from a small geographic area. While this presents a competitive advantage, it also poses challenges from an ML/FT risk perspective. To mitigate these risks, the authorities take a global view, assessing and addressing risks from a worldwide perspective.

Regulation and Supervision of Virtual Assets

Liechtenstein was at the forefront in introducing regulation and supervision for virtual assets (Blockchain Act) in 2020. This move allowed authorities to evaluate data for risk assessment purposes. The country is now constantly monitoring changes in the market and reassessing them from a risk perspective, including new technologies and the financial market as a whole.

AML/CFT Strategy and Action Plan

The results of these risk assessments inform the improvement of national AML/CFT measures. Based on the findings, Liechtenstein’s government has adopted an AML/CFT strategy and action plan, prioritizing further cooperation, coordination, and information exchange at both national and international levels. The country is also fostering close relationships with its counterparts in the United States, including FinCEN, OFAC, the Department of Justice, and the Securities and Exchange Commission.

Conclusion

Liechtenstein’s commitment to financial crime prevention has earned it a reputation as a trusted financial hub, and these best practices offer valuable lessons for other countries looking to strengthen their own AML/CFT regimes.