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Fintech Compliance Regulations in Europe in Liechtenstein

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The financial sector in Liechtenstein has witnessed significant growth in recent years, driven by its favorable regulatory environment and strategic location at the heart of Europe. As the country continues to attract fintech companies and startups, understanding the compliance regulations is crucial for businesses looking to operate in this market.

Regulatory Bodies

In Liechtenstein, the Financial Market Authority (FMA) is the primary regulator responsible for overseeing the financial sector. The FMA has a dedicated department focused on fintech-related inquiries, ensuring that the country’s regulatory framework remains competitive and adaptable to emerging trends.

Activities Requiring a License or Registration

The following activities require a license or registration in Liechtenstein:

  • Banking business: Any activity that involves taking deposits, lending money, or providing other financial services requires a banking license.
  • Payment services:
    • Fintech companies offering payment services, such as payment initiation service providers and account information providers, must obtain a payment services license under the revised Liechtenstein Payment Service Act (PSD2).
  • Insurance products: The distribution of insurance products is a regulated activity in Liechtenstein, and fintech companies selling or marketing insurance products must comply with the Liechtenstein Insurance Act.
  • Credit references and credit information services:
    • These activities may constitute account information services under PSD2.

EU Legislation

As an EEA member state, Liechtenstein’s regulatory framework harmonizes with EU legislation. This means that fintech companies operating in Liechtenstein must also comply with relevant EU regulations, such as:

  • Payment Services Directive (PSD2)
  • Electronic Money Directive (EMD)
  • Insurance Distribution Directive (IDD)

Regulation of Crowdfunding

In November 2020, the Regulation on European Crowdfunding Service Providers (ECSP) for business entered into force. This regulation affects Liechtenstein jurisprudence and will apply directly across the EU from November 10, 2021.

Invoice Trading and Factoring

Factoring is not regulated as a financial market activity in Liechtenstein if the risk of insolvency is assumed by the buyer. However, depending on the use case, registration under the Blockchain Act may supersede the requirement for a business license.

Payment Services and Open Banking

The revised Liechtenstein Payment Service Act (PSD2) introduces new roles such as payment initiation service providers and account information providers. Banking institutions must make customer or product data available to third parties to a certain extent, promoting competition in the market.

Insurance Products and Credit References

Fintech companies selling or marketing insurance products must comply with the Liechtenstein Insurance Act. Credit references and credit information services may constitute account information services under PSD2.

Conclusion

Liechtenstein’s regulatory framework provides a favorable environment for fintech companies to operate, innovate, and grow. Understanding the compliance regulations is crucial for businesses looking to succeed in this market. By navigating these regulations, fintech companies can focus on developing innovative solutions while ensuring they remain compliant with the law.

Stated Date

This content was accurate as of June 10, 2020.