Financial Crime World

Money Laundering Risks and Vulnerabilities: A Comprehensive Analysis of the Principality of Liechtenstein

The Principality of Liechtenstein, known for its financial center, has been proactive in combating money laundering and terrorist financing. In this article, we provide an analysis of the National Risk Assessment (NRA) summary published by the Liechtenstein government in 2018.

The Importance of Acknowledging Risks

  • Charles Tremper, former President of Liechtenstein, underlined the significance of acknowledging risks and planning to mitigate them.
  • The government, with this spirit, embarked on a thorough National Risk Assessment to identify threats, vulnerabilities, and countermeasures against illicit activities.

Threats and Vulnerabilities: Money Laundering

  • According to operational data from 2013-2015, the greatest risks stemmed from predicate offenses, like fraud, criminal breach of trust, and tax offenses.
  • Sectors with higher risks: private banking, financial consulting and planning, trust and company service providers, and the life insurance sector.

Terrorist Financing and Vulnerabilities

  • The threat situation remained low, with no reported terrorist attacks or suspicious activities involving domestic or foreign terror groups.
  • However, the non-profit sector’s vulnerabilities demanded further assessment.

Measures to Address Vulnerabilities

  • The NRA recommended the following measures:
    • Risk-based supervision
    • Direct electronic access to commercial registers
    • Improvements in the FIU’s data analysis capabilities
  • Considerations like the abolition of diversion options for misdemeanors against the Due Diligence Act
  • Adequate regulation for sectors like value warehouses and casinos

Updates to the NRA

  • Plan to update the NRA in 2019 with additional data on payment flows, beneficial owners’ nationality and place of establishment, and Liechtenstein NPOs transferring assets abroad
  • Strong legal and institutional framework in place
    • Due Diligence Act
    • Regulations governing trust and company service providers
    • Financial Market Act
  • In 2017, implemented automatic exchange of information and risk-based supervision

Conclusion

  • The NRA offers insights into the Principality of Liechtenstein‘s money laundering and terrorist financing risks and vulnerabilities.
  • Authorities will continue enhancing the regulatory framework and collaborating with international partners to safeguard against these activities.