Financial Crime World

Money Laundering Crackdown in Liechtenstein: An Inside Look at the Country’s Financial Crime Prevention Measures

Introduction

Liechtenstein, a small European microstate nestled in the Alpine region, has gained recognition for its robust financial sector and business-friendly regulations. However, its reputation as a haven for private wealth has not exempted it from global efforts to combat financial crime, particularly money laundering. In this article, we explore the intricacies of Liechtenstein’s legal framework, regulatory requirements, and enforcement mechanisms designed to prevent financial crime.

1. Crime of Money Laundering and Criminal Enforcement

1.1 Legal authority to prosecute money laundering

  • The Liechtenstein public prosecutor’s office holds the legal authority to investigate and prosecute money laundering cases.

1.2 What must be proven to establish money laundering

  • Money laundering involves concealing the illegal origin of assets by proving that a person has engaged in one of the punishable acts.
  • The perpetrator must have acted with the requisite intent.

1.3 Extraterritorial jurisdiction and punishability of foreign crimes

  • Liechtenstein law applies to money laundering committed within its jurisdiction or when the punishable act of money laundering is carried out in Liechtenstein.
  • Proceeds of foreign crimes can be forfeited and confiscated if the crime is punishable under the law of the state where it was committed.

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1.9 Confiscation and forfeiture authorities

  • The prosecutor’s office can request a criminal court to order confiscation or forfeiture of assets used or intended to be used in the commission of an intentional criminal offense.
  • Assets obtained from a punishable act can be forfeited, as well as the amount saved in expenses resulting from the commission of the offense.

Corporate liability and penalties

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Penalties for individuals and legal entities

  • The StGB imposes varying penalties for individuals and legal entities depending on the specific act of money laundering and the amount of assets involved.
  • Maximum penalties range from three to ten years in prison and substantial monetary fines.

1.11 Criminal settlements and public disclosure

  • Liechtenstein’s Criminal Procedure Code does not allow for settlements between the public prosecutor’s office and a perpetrator.
  • However, the prosecutor may suspend prosecution under certain conditions that include the payment of an amount of money, performance of community service, or victim-offender mediation. Such suspensions are not public.

2. Anti-Money Laundering Regulatory/Administrative Requirements and Enforcement

2.1 AML requirements and regulatory authorities

  • Liechtenstein enacted the Due Diligence Act (SPG) and the Due Diligence Ordinance (SPV) to impose anti-money laundering requirements on financial institutions and other businesses.
  • The Liechtenstein Financial Market Authority (FMA) and the Financial Intelligence Unit (FIU) enforce these regulations through guidelines and instructions.

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3. Anti-Money Laundering Requirements for Financial Institutions and Other Designated Businesses

3.1 Scope of AML regulations

  • The StGB and related regulations apply to various financial institutions, including banks, investment firms, payment service providers, and Trustworthy Technology (TT) service providers, as well as professions such as lawyers and real estate agents.
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Conclusion

The commitment of the tiny nation of Liechtenstein to maintaining a reliable and secure financial system is evident through its implementation of robust financial crime prevention measures. As the fight against financial crime continues to evolve, so too will Liechtenstein’s regulatory landscape. By understanding its legal framework, regulatory requirements, and enforcement mechanisms, we gain a comprehensive view of its dedication to thwarting money laundering.