Financial Crime World

Title: Liechtenstein’s Financial Crime Landscape: AML/CFT Compliance and Challenges

Executive Summary

This article presents a summary of Liechtenstein’s anti-money laundering (AML) and countering financing of terrorism (CFT) measures based on the recent evaluation by the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL). The report assesses Liechtenstein’s compliance with the Financial Action Task Force (FATF) recommendations, the effectiveness of its AML/CFT system, and offers suggestions for strengthening it.

Key Findings

1. Risk Assessment

  • Authorities have assessed money laundering (ML) and terrorist financing (TF) risks transparently and impartially.
  • Understanding of ML and TF threats is good, but some areas need improvement.
  • Financial sector in Liechtenstein may be used to launder proceeds from tax offenses committed abroad.
  • Comprehensive analysis is required to assess risks fully.

2. Cooperation and Coordination

  • FIU is an essential source of financial intelligence.
  • Analytical reports provided by the FIU are highly regarded by law enforcement agencies (LEAs).
  • Communication and coordination among stakeholders, including the FIU, LEAs, and regulatory authorities, is effective.
  • Liechtenstein has a robust legal and institutional framework to deal with ML and TF.
  • Provisions for criminal justice measures where an ML conviction cannot be secured.
  • Confiscation of crime proceeds is a priority, with effective financial investigations used to accomplish this goal.

4. Supervision and Enforcement

  • The regulator, the Financial Market Authority (FMA), has improved its knowledge of ML/FT risks.
  • Difficulty in dealing with high-risk entities, particularly trust companies and investment funds.
  • Use of monetary fines by the FMA has increased but lacks effectiveness, proportionality, and dissuasiveness.

5. Financial Intelligence Unit

  • The FIU plays a crucial role in the AML/CFT system.
  • Has been effective in supporting investigations.
  • Resources and capacity of the FIU could be enhanced to manage its growing workload.

6. Challenges and Recommendations

  • Better understanding of ML risks associated with the current tax regime is needed.
  • Investigations and prosecutions of sophisticated ML schemes using complex legal structures in Liechtenstein.
  • Further analysis of financial flows and links to high-risk jurisdictions is required.

MONEYVAL’s recommendations focus on addressing these challenges and strengthening Liechtenstein’s AML/CFT system.

Conclusion

  • Liechtenstein has made progress in many areas, but challenges remain, particularly in understanding ML risks related to the current tax regime, investigating and prosecuting sophisticated ML schemes, and analyzing financial flows and links to high-risk jurisdictions.
  • MONEYVAL’s recommendations are geared towards addressing these challenges and strengthening Liechtenstein’s AML/CFT system.