Financial Crime World

Liechtenstein Cracks Down on Money Laundering with Stringent KYC Regulations

A Zero-Tolerance Zone for Illicit Financial Activities

The Principality of Liechtenstein has solidified its reputation as a zero-tolerance zone for illicit financial activities, demonstrating its relentless pursuit of anti-money laundering (AML) and combating the financing of terrorism (CFT). As an integral member of the European Economic Area (EEA), Liechtenstein has implemented key EU directives to strengthen its AML/CFT framework.

Key EU Directives Implemented in Liechtenstein

  • The 4th and 5th Anti-Money Laundering Directives
  • Regulation (EU) 2015/847 on information accompanying transfers of funds

These directives form the foundation of Liechtenstein’s AML/CFT regulations, ensuring a robust framework for financial institutions, trust and company service providers, and other designated non-financial businesses and professions.

Responsibilities of Financial Institutions and Service Providers

  • Identification and verification of clients, beneficial owners, source of funds and wealth
  • Ongoing transaction monitoring
  • Reporting of suspicious activities

These entities must adhere to these due diligence obligations to mitigate money laundering risks.

The Role of the Financial Intelligence Unit (FIU) and Office of the Public Prosecutor

The FIU plays a pivotal role in analyzing reports from financial institutions and public authorities, while the Office of the Public Prosecutor initiates investigations and prosecutes suspected money laundering offenses.

  • Provides transparent information on beneficial owners of companies, foundations, and trusts
  • Maintained by the Office of Justice, aligning with EU requirements for registers of beneficial owners

This register serves as a crucial tool in combating money laundering and financing of terrorism.

Recognition from International Bodies

Liechtenstein’s robust approach to AML/CFT has been recognized by international bodies such as the Financial Action Task Force (FATF) and its regional associate member, MONEYVAL. In its fifth round of evaluations, MONEYVAL acknowledged Liechtenstein’s progress in improving measures to combat money laundering and financing of terrorism.

Regular Follow-up Process by MONEYVAL

Liechtenstein will be subject to the regular follow-up process by MONEYVAL, marking it as one of only five member jurisdictions with this outcome. The country’s laws, ordinances, and guidance were rated “compliant” or “largely compliant” with 37 out of 40 FATF recommendations.

EU/EEA Level Participation

Liechtenstein has been actively participating in AML/CFT efforts through its membership in the European Banking Authority (EBA) and the Anti-Money Laundering Committee (AMLSC). The FMA represents Liechtenstein as a non-voting member of the AMLSC, ensuring harmonization and coordination with other national supervisory authorities.

Conclusion

Liechtenstein’s commitment to strict KYC regulations serves as a model for other jurisdictions in its determination to combat money laundering and financing of terrorism. By staying vigilant and adapting to evolving threats, Liechtenstein remains at the forefront of international efforts to maintain financial stability and prevent illicit activities.