Financial Crime World

Liechtenstein Lags Behind in Financial Crime Fight, MONEYVAL Report Reveals

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Introduction

A recent report by MONEYVAL, the Committee of Experts on the Evaluation of Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Measures and Standards, has highlighted several areas where Liechtenstein needs to improve its efforts to combat financial crime. The report evaluated the country’s AML/CFT framework for the fifth time and praised Liechtenstein’s overall effectiveness in preventing and combating money laundering (ML) and terrorism financing (TF), but identified several shortcomings that need to be addressed.

Strengths and Weaknesses

The report highlighted several strengths, including:

  • Progress in understanding ML/TF risks: Liechtenstein has made significant progress in identifying and assessing ML/TF risks.
  • National policies and coordination: The country has set national policies and coordinated efforts to combat financial crime effectively.
  • Financial intelligence: Liechtenstein’s Financial Intelligence Unit (FIU) produces comprehensive strategic analysis reports, which is a positive step towards combating financial crime.

However, the report also identified several weaknesses, including:

  • Enhancing supervision: Liechtenstein needs to improve its supervision of financial institutions and other entities to prevent ML/TF.
  • Private sector AML/CFT measures: The country’s private sector still faces challenges in applying effective AML/CFT preventative measures.
  • Beneficial ownership transparency: Liechtenstein lacks transparency regarding the beneficial ownership of legal persons and legal arrangements, which makes it difficult to combat financial crime effectively.
  • Investigation and prosecution of ML/TF cases: The country still faces challenges in investigating and prosecuting ML/TF cases, particularly those involving complex legal structures.

Recommendations

The report made several recommendations to improve Liechtenstein’s AML/CFT framework, including:

  • Improving understanding of ML/TF risks: Liechtenstein should focus on improving its understanding of ML/TF risks, particularly with regards to tax crimes committed abroad.
  • Enhancing supervision: The country should strengthen its supervision of financial institutions and other entities to prevent ML/TF.
  • Increasing transparency of beneficial ownership: Liechtenstein should improve the transparency of beneficial ownership of legal persons and legal arrangements to combat financial crime effectively.
  • Investigation and prosecution of ML/TF cases: The country should continue to improve its investigation and prosecution of ML/TF cases, particularly those involving complex legal structures.

Conclusion

While Liechtenstein has made significant progress in combating financial crime, there is still much work to be done to address the identified shortcomings. The country’s authorities must continue to strengthen their AML/CFT framework to prevent and combat ML and TF effectively.