Financial Crime World

Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Framework in Liechtenstein

Overview

Liechtenstein’s Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) framework has made significant progress in recent years. However, there are still areas that require improvement to fully comply with international standards.

Key Aspects of AML/CFT Measures in Liechtenstein

Investigative Judges

  • Liechtenstein has investigative judges who have the power to impose coercive measures, enabling serious investigations and effective prosecutions.
  • These judges play a crucial role in ensuring that financial crimes are thoroughly investigated and prosecuted.

Law Enforcement Authorities

  • The legal framework is comprehensive enough for law enforcement authorities to initiate ML-related investigations and proceedings.
  • Mutual legal assistance requests and FIU reports are used to facilitate cooperation between law enforcement agencies.

Preventive Measures - Financial Institutions

  • AML/CFT preventive measures are defined in the Due Diligence Act (DDA) and expanded in secondary legislation (Due Diligence Ordinance - DDO).
  • All financial institutions fall under the personal scope of application, and FATF-defined transactions are covered under the substantive scope.

Risk-Based Approach

  • Liechtenstein has an overall risk-based approach that requires financial institutions to build and keep updated profiles for each long-term customer.
  • The profile consolidates CDD data, including beneficial ownership information, source of funds, and purpose of the relationship.

Detection of Suspicious Activities

  • Detection of suspicious activities is based on deviation from the profile on the basis of risk criteria.
  • However, the legal provisions may give excessive discretion to financial institutions when applying the risk-based system and do not fully comply with specific FATF criteria.

Customer Due Diligence (CDD)

  • CDD requirements are broadly in line with international standards, but some areas need strengthening, such as identification of beneficial owners and verification of customers’ and beneficial owners’ identity.
  • Financial institutions must ensure that they have adequate procedures in place to verify the identity of their customers.

Regulatory Requirements

  • Financial institutions may rely on domestic and foreign intermediaries to provide customer profile information and certified copies of identification documents.
  • However, they are legally protected from responsibility for deficiencies in CDD conducted by their intermediaries.

FMA Supervision

  • The FMA is an independent authority responsible for prudential and AML/CFT supervision, as well as customer protection.
  • All financial institutions are licensed by the FMA based on internationally accepted criteria.