Financial Crime World

Financial Crime Investigators in Liechtenstein Urged to Improve Techniques Amid MONEYVAL Criticisms

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Recent evaluation report by MONEYVAL has highlighted several areas where Liechtenstein’s financial crime investigators can improve their techniques to effectively combat money laundering (ML) and terrorism financing (TF).

Areas for Improvement

The report, published on June 29, 2022, acknowledged that the country has made significant progress in preventing and combating ML/TF, but also identified several areas for improvement. These include:

  • Enhancing supervision to prevent financial crimes
  • Applying anti-money laundering (AML)/counter-terrorism financing (CFT) preventative measures by the private sector
  • Increasing transparency of beneficial ownership (BO) information
  • Improving money laundering investigation and prosecution

Gaps in Financial Information

The report noted that while Liechtenstein’s Financial Intelligence Unit (FIU) is an important source of financial information, there are still gaps in the country’s ability to identify and prosecute ML/TF crimes. For example:

  • The FIU has not produced reports on TF, laundering of proceeds from foreign tax crimes, or adequacy of Suspicious Activity Reports (SARs)/Suspicious Transaction Reports (STRs) reporting on these crimes

Investigation and Prosecution

The authorities were also criticized for their lack of investigation and prosecution of ML/TF cases involving complex legal structures established and managed in Liechtenstein. The report noted that:

  • While there have been convictions for all types of ML, self-laundering of proceeds from foreign fraud remains the most common type of ML prosecuted

Targeted Financial Sanctions

The report highlighted concerns about the country’s implementation of targeted financial sanctions, with some experts noting that the sanctions imposed are not sufficiently dissuasive and proportionate. The authorities were also urged to:

  • Improve their supervision of non-profit organizations (NPOs) to prevent them from being misused for TF purposes

Positive Notes

The report acknowledged that Liechtenstein’s private sector has a good understanding of ML/TF risks and liabilities, with banks and large trust and company service providers having put in place sophisticated measures to mitigate these risks.

International Cooperation

The report highlighted the importance of international cooperation in combating financial crime, noting that:

  • Liechtenstein’s predicate offences for ML are predominantly committed abroad
  • While the country has made efforts to improve its cooperation with foreign jurisdictions, some issues remain, including the double criminality requirements for tax evasion and the obligation to hear the eligible party before providing evidence to a foreign jurisdiction

Conclusion

Overall, the MONEYVAL report provides a critical assessment of Liechtenstein’s financial crime investigation techniques and highlights areas where improvement is needed. By addressing these concerns, Liechtenstein can strengthen its efforts to combat ML/TF and maintain its reputation as a leading international financial center.