Liechtenstein’s Financial Centre Faces Money Laundering and Terrorist Financing Risks
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A comprehensive National Risk Assessment has revealed that Liechtenstein’s financial centre is vulnerable to money laundering and terrorist financing risks. The assessment, conducted by the country’s authorities, highlights several key areas of concern.
High-Risk Sectors
The report identifies several high-risk sectors, including:
- Asset structuring
- High-end asset management
- Insurance
- Highly specialized investment funds
These products are complex and cater to a very high net worth clientele, making them attractive targets for money laundering and terrorist financing activities.
Single Investor Funds Under Scrutiny
In particular, single investor funds under the Investment Undertakings Act (IUG) have raised concerns due to their potential use in concealing assets acquired through criminal offenses. These funds can be established by or for legal entities, making them attractive vehicles for money laundering and terrorist financing.
Terrorist Financing Risk Low
However, the assessment found that the risk of terrorist financing is low in Liechtenstein’s financial centre. The country’s financial institutions have no subsidiaries or branches in countries classified as high-risk for terrorism, and products associated with high TF risks are of little significance in the country.
Data Limitations
The report acknowledges limitations in the data situation, particularly in certain areas. To improve the accuracy of its findings, Liechtenstein plans to conduct a second round of the National Risk Assessment, which will include:
- Expanding data collection on payment flows
- Collecting nationality and place of establishment of beneficial owners
- Other key factors
Call for Enhanced Regulation
The assessment highlights the need for enhanced regulation and supervision in certain sectors, including:
- Casinos
- Duty-free warehouses
- Free customs warehouses
- Value warehouses
The authorities have recommended implementing adequate regulations and associated supervision to mitigate these risks.
Outlook
Liechtenstein’s financial centre is committed to addressing the identified risks and improving its anti-money laundering and counter-terrorist financing measures. The country will continue to work closely with international partners to ensure the integrity of its financial system and prevent the misuse of its financial infrastructure.