Title: “Liechtenstein Takes a Leading Role in Money Laundering Defense: The Small European Country’s Strategic Approach”

Introduction

In the heart of Europe, the tiny principality of Liechtenstein has emerged as a global leader in the fight against money laundering and financing of terrorism (ML/FT). With an open, internationally oriented financial market, the country has adopted a robust strategic approach following strict international standards.

Commitment to Preventing ML/FT: Beyond EEA Regulations

Liechtenstein’s commitment to preventing ML/FT goes beyond European Economic Area (EEA) regulations. It’s also a member of MONEYVAL, the Council of Europe’s Committee of Experts on the evaluation of AML/CFT measures. Here, the nation has agreed to implement the recommendations of the Financial Action Task Force (FATF).

Whole-of-Government Approach

A whole-of-government approach is at the core of Liechtenstein’s strategy. National bodies responsible for combating ML/FT work closely together, with financial market participants, to implement requirements and protect the country’s interests:

• National bodies: Responsible for combating ML/FT
• Financial market participants: Supporting the implementation of requirements

Risk Assessment

Risk assessment plays a crucial role in implementing and developing a national AML/CFT regime. According to recent National Risk Assessments (NRA), Liechtenstein’s financial center boasts an international clientele, making it both a competitive advantage and a challenge from a ML/FT risk perspective.

Early Adoption of Virtual Asset Regulations - Liechtenstein’s “Blockchain Act”

In 2020, Liechtenstein became the world’s first country to introduce comprehensive regulations and supervision for virtual assets, or the “Blockchain Act.” This early legislation allowed authorities to gauge risks related to the rapidly evolving market:

• Ensuring due diligence standards apply to the token economy

Adopting an AML/CFT Strategy and Action Plan

Following the risk assessments, the Liechtenstein Government adopted an AML/CFT strategy and an action plan:

• Priority: Closer international cooperation: Key strategic partnerships and operational collaborations with key institutions, such as FinCEN, OFAC, DOJ, and the SEC

Ongoing Monitoring and Assessment

The evolving nature of financial markets necessitates Liechtenstein’s commitment to ongoing monitoring and risk assessment. Through constant vigilance, the country positions itself to promptly respond to emerging or changing risks.