Title: Liechtenstein’s Stringent Anti-Money Laundering Regulations in Private Banking and Wealth Management

Liechtenstein, the European microstate, is renowned for its robust anti-money laundering (AML) measures and compliance in the financial sector. With the global focus on combating financial crime, Liechtenstein has aligned its regulations with the international standards of the Financial Action Task Force (FATF). Here’s a comprehensive look at the requirements and regulations for private banking and wealth management in Liechtenstein.

Requirements for Private Banking and Wealth Management in Liechtenstein

Following its membership in the European Economic Area (EEA), Liechtenstein incorporates EU directives into its domestic legislation. Several sectors, including regulatory bodies, banks, investment firms, asset managers, and trust service providers, fall under the jurisdiction of the Due Diligence Act and its implementing ordinance in the fight against money laundering. Key measures include:

1. Client identification and verification: Banks must verify a client’s identity and, in some cases, their beneficial owner, through methods such as in-person meetings, certified copies, and online verification processes.
2. Business profile establishment: Gathering data on clients’ economic backgrounds and the origin of assets deposited is crucial.
3. Risk-proportionate monitoring: Regularly monitoring business relationships for suspicious activities is essential.

Identity checks can be carried out during face-to-face encounters, but online verification options are available under specific conditions. Liechtenstein laws provide blank forms to assist in the identification of beneficial owners. Heightened due diligence applies to specific cases outlined by law.

Politically Exposed Persons (PEPs) and Additional Due Diligence Requirements

A PEP is defined as a natural person holding a prominent public function, their immediate family members, or a close associate. Such positions include heads of state, ministers, parliamentarians, and members of the judiciary, among others. Financial intermediaries must implement additional risk assessment measures when dealing with PEPs, including obtaining approval from management prior to establishing a business relationship or continuing an existing one. Each year, at least one management member must approve the continuation of business relationships with PEPs.

Identification Documentation for Account Opening

Financial intermediaries require various identification documents when opening accounts. For individual clients, minimum information includes their full name, date of birth, address, citizenship, and Tax Identification Number (TIN). Legal entities must provide their official identification document with a photograph, documentation proving the address of their registered office, and details of their principal bodies. An officially certified extract from the commercial register or similar document is also necessary.

Tax Offenses as Predicate Offenses for Money Laundering

Yes. Acts punishable by more than one year of imprisonment can serve as predicate offenses for money laundering. The main predicate offenses include fraud and breach of trust, making private banking a potential hotspot for such criminal activities.

Compliance Verification Measures for Financial Intermediaries on Clients’ Tax Compliance

There is an internal directive by the Liechtenstein Banking Association dictating that banks must verify their clients’ tax compliance. Other financial intermediaries may employ various methods, such as requesting tax compliance confirmations.

Liability for Non-compliance with Money Laundering or Financial Crime Regulations

Financial intermediaries that breach due diligence measures risk criminal prosecution, including up to six months in prison or fines, and administrative penalties of up to 200,000 Swiss francs for individual infractions or up to 5 million Swiss francs for repeated or systematic offenses. Clients and intermediaries alike can face criminal charges and civil liabilities for committing financial crimes.