Title: “Liechtenstein’s Strict Anti-Money Laundering Regulations: A Close Look at Private Banking and Wealth Management Compliance”

Overview

In Liechtenstein, the private banking and wealth management sectors prioritize anti-money laundering (AML) measures and financial crime prevention. As a member state of the European Economic Area (EEA), Liechtenstein adheres to respective European legal acts, aligning with the Financial Action Task Force (FATF) standards.

Compliance in Private Banking and Wealth Management

Liechtenstein’s banking and financial institutions, including banks, investment firms, asset managers, and trust service providers, are obligated to follow due diligence requirements:

Due Diligence Regulations

1. Identification and verification of the client’s identity
2. Identification and verification of the beneficial owner of the assets
3. Establishment of a business profile
4. Risk-adequate monitoring of the business relation

The institutions must implement EU directives on money laundering and adhere to these regulations.

Identity Verification

The verification of a client’s identity typically occurs during in-person meetings, with financial intermediaries reviewing approved documents and obtaining additional information. Online verification processes such as video conferences are also acceptable, given certain circumstances. The identity verification process for a beneficial owner follows similar guidelines.

Politically Exposed Persons (PEPs)

PEPs, individuals who hold or have recently held significant public functions, are subject to increased due diligence requirements. Financial intermediaries must determine if the contracting party or beneficial owner is a PEP with risk-based procedures. Approval from at least one management member is required before initiating a business relationship.

Minimum Identification Documentation

1. Full name
2. Date of birth
3. Address or residence
4. Citizenship
5. Tax Identification Number (TIN) for individuals
6. Name or firm, type of legal entity, registered office, date of establishment, date and place of entry in the public register, TIN, and identification documents for their members for legal entities

Tax Offenses

Tax offenses, including fraud and breach of trust, serve as predicate offenses for money laundering in Liechtenstein. Financial intermediaries must verify the tax compliance of their clients through various means, as outlined in the Liechtenstein Banking Association’s internal directive.

Consequences of AML and Financial Crime Non-Compliance

Failure to comply with AML or financial crime rules may result in criminal prosecution for financial intermediaries and their employees, with potential prison sentences or fines. Administrative procedures involving fines up to CHF 5 million for repeatedly or systematically committed offenses may also apply. Clients and financial intermediaries committing financial crimes may face criminal prosecution and civil liability.