Financial Crime World

FINANCIAL INSTITUTION RISK ASSESSMENT IN LIECHTENSTEIN REQUIRES IMPROVEMENTS

The MONEYVAL fifth round evaluation report on Liechtenstein has acknowledged that the country has a substantial level of effectiveness in preventing and combating money laundering (ML) and terrorism financing (TF). However, it also identified areas where improvements are needed to enhance supervision, application of AML/CFT preventative measures by the private sector, transparency of beneficial ownership (BO), money laundering investigation and prosecution, and implementation of targeted financial sanctions.

UNDERSTANDING OF KEY RISKS

According to the report, Liechtenstein’s authorities have a good understanding of key ML and TF risks. However, some threats and inherent risks remain unassessed. The country’s Financial Intelligence Unit (FIU) is an important source of financial information, and its analytical reports are crucial for investigations and operational activities carried out by law enforcement authorities.

AML/CFT POLICIES AND PRACTICES

  • Investment funds: Despite success in addressing TF risk through national AML/CFT policies, there are still exemptions that lack a country risk assessment.
  • FIU reports: The FIU has produced comprehensive strategic analysis reports. However, further reports on TF, laundering of proceeds of foreign tax crimes, and adequacy of SAR/STR reporting on these crimes could be useful.

INVESTIGATIONS AND PROSECUTIONS

  • ML investigations: The country’s legal and institutional framework allows for effective investigation and prosecution of all types of ML. However, investigations involving potentially complex legal structures established and managed in Liechtenstein are lacking.
  • Convictions and sanctions: Convictions for all types of ML have been secured. Self-laundering of proceeds from foreign fraud remains predominant. However, sanctions imposed are not sufficiently dissuasive and proportionate.

CFT PRACTICES

  • NPOs awareness: Non-profit organisations (NPOs) operating in Liechtenstein have shown good awareness of risks they face.
  • Private sector understanding: Understanding of ML/TF risks and liabilities in the private sector is generally good, with banks and large trust and company service providers having a sophisticated understanding of associated risks.

IMPLEMENTATION OF AML/CFT MEASURES

  • Access to BO information: Effective measures are in place to prevent misuse by legal entities and legal arrangements. However, access to basic and BO information on these entities and structures did not cause any difficulties.
  • Reporting obligations: Compliance with reporting obligations was limited, with fewer tax offences reported than expected.

INTERNATIONAL COOPERATION

International cooperation is an important part of Liechtenstein’s AML/CFT scheme. Certain issues related to double criminality requirements for tax evasion and obligation to hear eligible party before providing evidence to a foreign jurisdiction may impact effective cooperation. However, recent measures have minimised the risks posed by these legal provisions.

In conclusion, while Liechtenstein has made significant progress in preventing and combating money laundering (ML) and terrorism financing (TF), there are still areas that require improvement. The country’s authorities need to enhance supervision, application of AML/CFT preventative measures by the private sector, transparency of beneficial ownership (BO), money laundering investigation and prosecution, and implementation of targeted financial sanctions. By addressing these weaknesses, Liechtenstein can further strengthen its AML/CFT regime and effectively combat ML and TF risks.