Financial Crime World

Title: Liechtenstein’s Commitment to Financial Crime Prevention: MONEYVAL Evaluation Report

Recognizing Substantial Progress and Identified Areas for Improvement

MONEYVAL, the Council of Europe’s anti-money laundering and counter-terrorism financing (AML/CFT) body, published a new assessment report on June 29, 2022. They recognized Liechtenstein’s progress in preventing and combating money laundering (ML) and terrorism financing (TF). However, the report also highlighted areas needing improvements.

Acknowledging Liechtenstein’s Achievements

  • Understanding of ML/TF risks: MONEYVAL praised Liechtenstein’s understanding of ML/TF risks.
  • National policies: Appreciation for the country’s effective national policies.
  • Financial intelligence usage: Commendation for utilizing financial intelligence.
  • Confiscation of proceeds of crime: Recognition of the country’s efforts in confiscating proceeds of crime.
  • TF investigations and prosecutions: Acknowledgment of successful TF investigations and prosecutions.
  • International cooperation: Recognition of international cooperation.

Areas for Improvement

  • Supervision: Need for improvement in supervision.
  • Private sector AML/CFT measures: Encouragement for better implementation of AML/CFT measures in the private sector.
  • Transparency of BO information: Emphasis on improving transparency regarding Beneficial Ownership (BO) information.
  • ML investigation and prosecution: Call for more effective ML investigation and prosecution.
  • Implementation of targeted financial sanctions: Urge to implement additional targeted financial sanctions.

Financial Intelligence Unit (FIU) in Liechtenstein

The FIU in Liechtenstein plays a crucial role in combating ML and TF. Commendably, their reports contribute to investigations and operational activities carried out by law enforcement authorities. However, there is room for growth.

  • Further focus on high-risk predicate offenses: Need for more focus on investigating high-risk predicate offenses, especially tax offenses.
  • Additional strategic analysis reports: FIU could issue additional strategic analysis reports on TF, foreign tax crimes, and adequate SAR/STR reporting on these crimes.

Investigations and Prosecutions

While Liechtenstein has the legal and institutional framework for effective investigation and prosecution, some complex legal structures remain under-investigated.

  • Lack of investigation of certain legal structures: The deficiency is noteworthy since identified ML threats have not been fully reflected in the national risk assessment.

Non-Profit Organizations (NPOs) and Private Sector

NPOs have shown a high level of awareness of risks, but improvements are required from associations.

  • NPOs as associations: One such organization lacked understanding of their obligations in relation to CFT measures.

Liechtenstein’s private sector, particularly financial institutions, have significantly improved their understanding of ML/TF risks and associated liabilities. However, there is room for improvement:

  • Verification of source of wealth and source of funds: Financial institutions should pay more attention to verifying the source of wealth and source of funds.
  • Addressing use of “shell” companies: Attention is needed to prevent the use of “shell” companies to mitigate ML/TF risks.

BO Information Transparency

Effective measures are in place to prevent misuse, but the availability and accuracy of BO information needs improvement. This challenge is relevant to both legal entities and legal arrangements.

  • ML risks associated with legal entities and legal arrangements: Current awareness is generally good, but knowledge of TF requires improvement.

Conclusion

Liechtenstein’s commitment to addressing challenges ensures that it remains dedicated to the effective implementation of AML/CFT policies and continues to make progress in the fight against financial crimes. Key challenges include:

  • Underassessed risks: The need to address underassessed risks.
  • Transparency regarding BO information: Enhancing transparency regarding BO information to prevent misuse and ensure accuracy.
  • More effective application of ML/TF preventative measures by the private sector: Encouraging the private sector to apply AML/CFT measures more effectively.
  • Additional targeted financial sanctions: The need to implement additional targeted financial sanctions.