Financial Crime World

Financial Crime Detection Techniques in Liechtenstein: A Model for Effective Anti-Money Laundering Measures

Introduction

Liechtenstein has established itself as a leader in anti-money laundering and combating the financing of terrorism (AML/CFT) efforts, with a zero-tolerance policy towards financial crime. As an EEA member, the country has implemented key EU directives and regulations to ensure a safe and secure financial environment.

AML/CFT Framework

At the heart of Liechtenstein’s AML/CFT framework are two key regulations:

  • Law on Professional Due Diligence for the Prevention of Money Laundering, Organised Crime and Financing of Terrorism (Due Diligence Act; SPG): Imposes due diligence obligations on financial institutions, trust service providers, and designated non-financial business and professions (DNFBPs), requiring them to identify and verify clients, beneficial owners, source of funds and wealth, and report suspicious transactions.
  • Ordinance on Professional Due Diligence for the Prevention of Money Laundering, Organised Crime and Financing of Terrorism (Due Diligence Ordinance; SPV): Enhances the due diligence obligations outlined in the Due Diligence Act.

Financial Intelligence Unit (FIU)

The FIU plays a critical role in Liechtenstein’s AML/CFT system, receiving and analyzing reports of suspicious activity from persons subject to due diligence and public authorities. Where it suspects a criminal offence has been committed, the FIU reports to the Office of the Public Prosecutor, which initiates investigations and files charges with the competent court.

Register of Beneficial Owners

The Office of Justice maintains the Register of Beneficial Owners of Legal Entities, which provides information on the beneficial owners of Liechtenstein companies, foundations, and trusts. This register is a key component of the country’s AML/CFT framework, ensuring transparency and accountability in the ownership structures of legal entities.

International Cooperation

Compliance with international standards is a top priority for Liechtenstein, with active participation in AML/CFT efforts guided by:

  • Financial Action Task Force (FATF): An inter-governmental organization that sets global standards on combating money laundering and terrorist financing.
  • MONEYVAL: An FATF-style regional body that evaluates the effectiveness of countries’ AML/CFT measures.

In 2021/2022, MONEYVAL reviewed Liechtenstein’s implementation of the FATF Recommendations, concluding that the country has a broad and convergent understanding of its money laundering and terrorist financing risks. Liechtenstein performed exceptionally well in comparison with other countries evaluated by MONEYVAL, scoring highly in key areas such as risk assessment, supervisory approach, and effective application of legal regulations.

Conclusion

Liechtenstein’s financial crime detection techniques and AML/CFT measures serve as a model for other countries to follow. With its strong commitment to transparency, accountability, and international cooperation, the country has established itself as a leader in anti-money laundering efforts, ensuring a safe and secure financial environment for businesses and individuals alike.