Financial Crime World

Liechtenstein Fintech Compliance Regulations Take Centre Stage as European Economy Expands

Introduction

In a significant move, Liechtenstein’s Financial Market Authority (FMA) has taken centre stage in supervising fintech products and services within the jurisdiction. As a member of the European Economic Area (EEA), Liechtenstein is bound by EU directives and regulations, which include the Payment Services Directive (PSD2) and the Alternative Investment Fund Managers Directive (AIFMD).

FMA’s Commitment to Fintech Supervision

  • The FMA has dedicated an entire department to addressing inquiries related to fintech.
  • This underscores its commitment to ensuring that fintech companies operating within the jurisdiction adhere to regulatory requirements.

Regulatory Requirements for Fintech Companies

  • Banking Activities:
    • Deposit and loan businesses
    • Investment services
    • Payment services
    • E-money
  • Consumer Lending: Regulation depends on the concrete business model.
    • Taking deposits and lending them to others is considered a banking activity, which must be licensed.
    • Loans given in the form of tokens representing e-money or financial instruments may not require Banking Act licensure.

Alternative Finance Products and Services

  • Must comply with the Collective Investment Scheme (CIS) Regulation.
  • This regulation defines an ‘alternative investment fund’ as a fund that collects capital to invest it pursuant to a defined strategy on behalf of investors.

Regulation of Managers of Alternative Investment Funds

  • Regulated under the AIFMD, which primarily targets professional investors.
  • Allows true crypto funds to be achieved under this directive.

Peer-to-Peer Lending and Crowdfunding

  • Not specifically regulated in Liechtenstein, but EU legislation applies and should be analyzed on a case-by-case basis.
  • Crowdfunding is subject to regulation, with an EU directive due to be enacted that will affect Liechtenstein jurisprudence as a member of the EEA.

Payment Services Regulation

  • Regulated under the revised Liechtenstein Payment Service Act.
  • Based on PSD2 and set to enter into force in October 2019.
  • Requires financial institutions to make customer or product data available to third parties, promoting competition in the market.

Conclusion

Liechtenstein’s fintech compliance regulations align with European Union directives and regulations, ensuring that fintech companies operating within the jurisdiction adhere to strict regulatory requirements. As the European economy expands, it is essential for countries like Liechtenstein to stay up-to-date with the latest regulations and ensure a seamless integration of fintech into their financial markets.

Date: 12 July 2019