Financial Crime World

Title: Liechtenstein’s Financial Crime Landscape: MONEYVAL Report Reveals Progress and Challenges

MONEYVAL Acknowledges Liechtenstein’s Progress in Combating Financial Crimes

On June 29, 2022, MONEYVAL published its fifth round evaluation report on Liechtenstein, highlighting the principality’s advancements and remaining challenges in the fight against financial crimes.

Commendable Progress in Understanding Risks and Policy Making

  • Effective national policies and international cooperation
  • Understanding of money laundering (ML) and terrorism financing (TF) risks

Areas for Improvement

  • Strengthening supervision
  • Private sector adherence to AML/CFT measures
  • Transparency of beneficial ownership (BO)
  • ML investigation and prosecution
  • Targeted financial sanctions implementation

The Financial Intelligence Unit Plays a Crucial Role

The Financial Intelligence Unit (FIU) in Liechtenstein plays a significant role in investigations.

  • Insightful strategic analysis reports
  • Ongoing examination on TF, foreign tax crimes, and SAR/STR reporting

While the legal framework enables the investigation and prosecution of ML, complex legal structures within Liechtenstein pose challenges, particularly in tackling tax offenses committed abroad.

Prosecution of Financial Crimes

Although Liechtenstein has secured convictions for various ML crimes, third-party ML and stand-alone ML case prosecutions remain limited.

Terrorism Financing and Non-Profit Organizations

While Liechtenstein has shown competence in the single case of an TF confirmation, a lack of TF prosecutions aligns with its risk profile. However, initiatives in CFT demonstrate a sufficient commitment.

Non-profit organizations (NPOs) generally demonstrate good awareness of risks, but associations are falling behind in CFT measures. One visiting organization lacked understanding of their obligations.

Private Sector’s Understanding of Financial Crimes

The private sector’s understanding of ML/TF risks and liabilities is improving, with banks and large TCSPs making significant strides in risk mitigation measures. However, weaknesses persist in confirming wealth and source of funds, and possible use of shell companies.

The authorities are aware of the potential misuse of legal persons, taking steps to require a ‘qualified member’ to the governing body for many legal entities, totaling around 80%. Adequate access to basic and beneficial ownership information, however, lacks certainty in its accuracy and completeness.

International Cooperation: Challenges and Measures Taken

International cooperation remains essential for addressing predicate offenses predominantly committed abroad, posing challenges like double criminality requirements and the obligation to hear the eligible party. Measures have been taken to minimize these risks.