Financial Crime World

Title: Liechtenstein’s Financial Crime Enforcement Agencies: A Zero-Tolerance Approach to Money Laundering and Terrorist Financing

Overview

In the picturesque Alpine microstate of Liechtenstein, financial crime is a concern that is taken seriously. Liechtenstein has prioritized anti-money laundering and countering the financing of terrorism (AML/CFT) for over two decades, making it a leading example in Europe.

The Financial Market Authority (FMA): Enforcing Compliance

At the heart of Liechtenstein’s AML/CFT efforts is The Financial Market Authority (FMA), which oversees the compliance of those subject to due diligence. The FMA is responsible for:

  • Evaluating and addressing any suspected violations through the SPG reporting system
  • Conducting on-site inspections
  • Following up on abusive financial market conduct

Entities Bound by Due Diligence Obligations

The following entities are bound by these due diligence obligations:

  1. Financial institutions
  2. Transaction Transmission Service Providers (TTSPs)
  3. Designated Non-Financial Businesses and Professions (DNFBPs)

These groups adhere to the regulatory framework laid out in Liechtenstein’s laws and regulations, primarily the Due Diligence Act (SPG) and Ordinance on Professional Due Diligence for the Prevention of Money Laundering, Organised Crime and Financing of Terrorism (SPV).

Key Due Diligence Obligations

The entities bound by due diligence obligations have the following obligations:

  • Identification and verification of clients
  • Identification and verification of beneficial owners
  • Clarification of clients’ source of funds and source of wealth
  • Ongoing transaction monitoring
  • Reporting of suspicions

The Financial Intelligence Unit (FIU): Central Pivot

The Financial Intelligence Unit (FIU) acts as the central pivot in this triangular system. Responsibilities of the FIU include:

  • Receiving and analyzing suspicious activity reports from subjects of due diligence and public authorities
  • Reporting its findings to the Office of the Public Prosecutor if criminal offenses are suspected
  • Assessing general AML/CFT risks and trends in the country

The Office of the Public Prosecator: Investigating and Prosecuting

The Office of the Public Prosecutor examines and follows up on the FIU’s reports, initiating investigations when sufficient evidence exists. It prosecutes offenses related to the Criminal Code and part of the SPG, such as failure to file timely or complete reports.

Register of Beneficial Owners

As part of its efforts to transpose the requirements of the Anti-Money Laundering Directives, Liechtenstein enacted the Act on the Register of Beneficial Owners of Legal Entities (VwbPG). Maintained by the Office of Justice, this register catalogs the beneficial owners of Liechtenstein companies, foundations, and trusts.

International Cooperation

Liechtenstein’s commitment to international standards is evident from its membership in the Financial Action Task Force (FATF) sister organization, MONEYVAL, since 1999. In 2021/2022, MONEYVAL assessed Liechtenstein’s progress in AML/CFT measures during its fifth round of evaluations, concluding that the country had a strong understanding of its risks and a comprehensive approach in combating financial crimes.

Conclusion

Liechtenstein’s financial crime enforcement agencies work tirelessly to ensure a robust AML/CFT framework, maintaining the highest standards of compliance with international norms, and continuing to improve their systems.