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Banking Regulations and Supervision in Liechtenstein

The Financial Market Authority (FMA) of Liechtenstein has outlined key points regarding banking regulations and supervision within their jurisdiction. This article provides a comprehensive overview of these points.

Acquisition and Suitability of Acquirers

Assessing the Suitability of Proposed Acquirers

The FMA assesses the suitability of proposed acquirers through a process that considers various factors, including:

  • Shareholder structure
  • Beneficial owners
  • Good repute and experience of key individuals
  • Financial soundness
  • Regulatory compliance risks
  • Supervision effectiveness
  • Money laundering or terrorist financing risks

Restrictions on Foreign Shareholdings

There are no specific restrictions on foreign shareholdings in banks beyond those applicable to any acquirer under the suitability assessment process.

Domestic and Globally Systemically Important Banks

Framework for Systemically Important Institutions

Liechtenstein has transposed the Capital Requirements Directive (CRD) and Credit Institutions Regulation (CRR) framework, which includes provisions for systemically important institutions. However, there are no additional specific provisions beyond these EU directives.

Sanctions for Violations of Banking Regulations

The FMA can impose various sanctions, including:

  • Revocation of licenses
  • Dissolution of banks or investment firms
  • Imprisonment
  • Monetary penalties

Resolution Regime for Banks

Liechtenstein has transposed the Bank Recovery and Resolution Directive (BRRD) into national law, which includes a bail-in tool as part of its resolution mechanism.

Protection of Client Assets and Cash Deposits

Banks and investment firms must join a self-regulation body or participate in a foreign protection scheme to protect client assets and cash deposits.

FinTech and Blockchain Regulatory Efforts

FinTech and blockchain-related regulatory efforts have been significant, with the introduction of a blockchain act aimed at addressing various legal aspects of blockchain business models. Supervision is also evolving, with the establishment of a specialized practice group for FinTech-related financial services.

Biggest Threat to the Success of the Financial Sector

The ability to attract and retain a qualified workforce is considered crucial for Liechtenstein’s competitive position in the global financial sector.

These points provide insight into the regulatory environment and challenges facing the financial sector in Liechtenstein, highlighting its efforts to adapt to changing trends, particularly in FinTech and blockchain, while maintaining competitiveness.