Financial Crime World

Financial Crimes and Terrorism Financing in Liechtenstein: MONEYVAL Issues Call for Improvements

A recent evaluation report by MONEYVAL has highlighted both strengths and weaknesses in Liechtenstein’s efforts to combat money laundering (ML) and terrorism financing (TF). The report, published on June 29, 2022, praised the country for its understanding of ML/TF risks, national AML/CFT policies, use of financial intelligence, confiscation of proceeds of crime, TF investigations and prosecution, and international cooperation. However, it also identified areas that require improvement.

Strengths

  • Liechtenstein has a good understanding of ML/TF risks and liabilities in the private sector.
  • Banks and large trust and company service providers have a sophisticated understanding of the risks associated with private banking and wealth management.
  • The country’s legal and institutional framework allows for effective investigation and prosecution of all types of ML.

Weaknesses

  • Some threats and inherent risks have not been fully assessed, including the potential for Liechtenstein’s financial sector to be used to launder tax crimes committed abroad.
  • Exemptions from AML/CFT policies are not supported by a country risk assessment, such as the exemption for investment funds.
  • Suspicious Activity Reports (SARs)/Suspicious Transaction Reports (STRs) submitted by persons subject to the Due Diligence Act (DDA) could be more targeted at higher-risk predicate offenses, such as tax crimes.

Financial Intelligence Unit (FIU)

The FIU plays an important role in providing financial information and analytical reports that are crucial to investigations and operational activities carried out by law enforcement authorities. However, the report noted that SARs/STRs submitted by persons subject to the DDA could be more targeted at higher-risk predicate offenses.

Confiscation of Proceeds of Crime

  • Confiscation of the proceeds of crime is pursued as a policy objective in Liechtenstein.
  • The outcome of authorities’ actions is generally in line with the country’s risk profile.
  • However, there have been no TF prosecutions in the country, despite efforts to detect and disrupt TF activities.

Beneficial Ownership (BO) Transparency

  • The report highlighted the importance of transparency in BO of legal persons and legal arrangements.
  • Some non-profit organizations (NPOs) are not aware of their obligations under CFT measures.

Conclusion

While Liechtenstein has made progress in combating financial crimes and terrorism financing, there are still areas that require improvement to ensure the country’s AML/CFT regime is effective and robust.