Title: Liechtenstein Takes the Lead in Financial Crime Deterrence: A Look at the Principality’s Proactive Approach

Introduction

The European principality of Liechtenstein has gained a reputation as a trailblazer in the fight against financial crime in the international arena. With an open, globally-oriented financial market and a strong commitment to implementing global standards, Liechtenstein is at the forefront of efforts to combat money laundering and terrorism financing (ML/FT).

Membership in EEA and MONEYVAL

As a member of the European Economic Area (EEA), Liechtenstein has adopted all EU Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) provisions. Additionally, as a proud member of the MONEYVAL committee, Liechtenstein has voluntarily undertaken to implement the recommendations of the Financial Action Task Force (FATF).

A Whole-of-Government Approach

A whole-of-government approach to financial crime prevention is the cornerstone of Liechtenstein’s strategy. All national bodies responsible for the prevention of ML/FT have worked closely together to implement not only FATF and EU requirements but also actions serving Liechtenstein’s own interests.

Risk Identification and Assessment

Identification, assessment, and understanding of ML/FT risks are critical for the development and implementation of a robust AML/CFT regime. In recent years, Liechtenstein’s authorities have conducted thorough National Risk Assessments (NRA) and extensive information and data analysis to shed light on the country’s risk exposure.

Challenges and Mitigation Strategies

Liechtenstein’s global financial center caters to clients worldwide, offering a diverse range of financial products and services within a small geographic area. While this presents a competitive advantage, it also presents challenges from an ML/FT risk perspective. Risks are assessed, monitored, and mitigated from a global perspective.

Regulation and Supervision of Virtual Assets

In a groundbreaking move, Liechtenstein became the first country to introduce comprehensive regulation and supervision for virtual assets in 2020. This legislation allowed authorities to evaluate a wealth of data for risk assessment purposes and stay abreast of newer or emerging risks.

International Cooperation and Strategic Partnerships

The results of the risk assessments have served as the foundation for a strategic and actionable AML/CFT approach by the Liechtenstein government. Intensification of international cooperation, especially with US authorities, is an essential priority in the ongoing battle against financial crime. Ongoing strategic partnerships include entities such as FinCEN, OFAC, DOJ, and the SEC.

Conclusion

As the financial landscape continues to evolve, Liechtenstein remains committed to implementing the most effective measures to ensure the integrity of its financial system and protect the interests of its clients and partners. By staying at the forefront of these initiatives, Liechtenstein reaffirms its position as a leading actor in the financial world.