Liechtenstein’s Crusade Against Financial Crimes: A New Risk-Based Approach to Money Laundering and Terrorist Financing
Subtitle: Key Findings of Liechtenstein’s National Risk Assessment (NRA) 2018
Liechtenstein, the small Alpine country known for its financial center, has been relentlessly pursuing a campaign against money laundering and terrorist financing in recent years. The findings from Liechtenstein’s National Risk Assessment (NRA), compiled by the government and financial regulatory authorities, highlight a multifaceted approach to mitigate these risks.
“The first step in the risk management process is to acknowledge the reality of risk. Denial is a common tactic that substitutes deliberate ignorance for thoughtful planning.” – Charles Tremper, Director of the Financial Market Authority, Liechtenstein
Commitment to a Risk-Based Strategy
Liechtenstein has adopted a risk-based strategy to tackle financial crimes. This strategy means that resources and measures will be allocated according to the level of risk in various sectors and services.
Key Findings of the NRA
Threats
- Primary threats to Liechtenstein’s financial sector: Money laundering, particularly from predicate offenses like fraud, embezzlement, and criminal breach of trust.
- Financing of terrorism and terrorism: A lesser but challenging to assess risk due to a lack of available data.
Vulnerabilities
- Lack of risk-based supervision
- Absence of direct electronic access to commercial register data for the Financial Intelligence Unit (FIU)
Sector-specific risks
Several sectors exhibit varying degrees of risk:
- Trust and company service providers
- Auditors and audit firms
- Real estate agents
- Persons trading in goods
- Casinos
- Insurers
Recommendations
To mitigate identified risks:
- Introduce risk-based supervision
- Optimize dual supervision
- Improve the system of sanctions
- Implement more effective systems for submitting Suspicious Activity Reports
Conclusion
Despite specific risks, Liechtenstein’s financial sector is taking appropriate steps to minimize them. The government and regulatory bodies aim to strengthen protective measures to safeguard the financial system’s integrity, transparency, and security.
The NRA is an essential document reflecting the authorities’ commitment to maintaining a robust and effective anti-money laundering and counter-terrorist financing framework. This commitment will be further bolstered with the implementation of the fourth EU Anti-Money Laundering Directive and the automatic exchange of information between financial institutions.
Staying Vigilant and Proactive
In today’s interconnected world, it is increasingly crucial for financial centers to stay vigilant and proactive in the fight against financial crimes. Liechtenstein’s National Risk Assessment provides a practical and comprehensive blueprint to navigate the challenges posed by modern financial crimes and to continuously adapt and evolve as new threats emerge.