Financial Crime World

Liechtenstein’s Zero-Tolerance Policy on Money Laundering: Effective Implementation and International Cooperation

Introduction

In recent years, the Principality of Liechtenstein has demonstrated its unwavering commitment to combating money laundering and financing terrorism (AML/CFT). As an EEA member state, it has meticulously implemented the 4th and 5th EU Anti-Money Laundering Directives as well as Regulation (EU) 2015/847 on information accompanying transfers of funds. This comprehensive approach has earned Liechtenstein a stellar reputation in the international community.

The Heart of Liechtenstein’s AML/CFT Framework

At the heart of Liechtenstein’s AML/CFT framework lies the Law on Professional Due Diligence for the Prevention of Money Laundering, Organised Crime and Financing of Terrorism (Due Diligence Act; SPG) and its implementing ordinance. These regulations impose stringent requirements on financial institutions, trust and corporate service providers, and designated non-financial businesses and professions (DNFBPs) to conduct thorough customer due diligence.

A Schematic Overview of AML/CFT Responsibilities in Liechtenstein

  • Financial Market Authority (FMA): monitors compliance with AML/CFT obligations, imposes measures and sanctions where necessary
  • Persons subject to due diligence: financial institutions, trust and corporate service providers, DNFBPs must comply with anti-money laundering rules when dealing with clients
  • Financial Intelligence Unit (FIU): receives and analyzes reports of suspicion from persons subject to due diligence and public authorities
  • Prosecution Authorities: examine FIU analysis reports and initiate investigations where appropriate
  • Office of Justice: maintains the register of beneficial owners of legal entities

Liechtenstein’s AML/CFT Framework in Action

The FMA rigorously monitors compliance with AML/CFT obligations, conducts on-site inspections, and follows up on information about abusive conduct on the financial market. The FIU receives and analyzes reports of suspicion from persons subject to due diligence and public authorities. Prosecution authorities examine FIU analysis reports and initiate investigations where appropriate.

Liechtenstein’s Register of Beneficial Owners

The Act on the Register of the Beneficial Owners of Legal Entities (VwbPG) was enacted to transpose the requirements of the Anti-Money Laundering Directives governing registers of beneficial owners of entities. This register with information on the beneficial owners of Liechtenstein companies, foundations, and trusts is maintained by the Office of Justice.

International Cooperation

Liechtenstein has been actively participating in AML/CFT efforts for decades, guided by international standards set by the Financial Action Task Force (FATF). Since 1999, it has been a member of MONEYVAL, an FATF-style regional body based at the Council of Europe in Strasbourg. In 2021/2022, implementation of the FATF Recommendations in Liechtenstein was reviewed by MONEYVAL as part of its fifth round of evaluations.

MONEYVAL’s Fifth Report on Liechtenstein

MONEYVAL published its fifth report on Liechtenstein on 29 June 2022, highlighting the country’s broad and convergent understanding of its money laundering and terrorist financing risks. The report shows that Liechtenstein has a strong supervisory approach commensurate to the risks and performed very well in comparison with other countries already evaluated.

Cooperation at the European Level

At the EU/EEA level, AML/CFT responsibilities relating to the financial market have been centralised at the European Banking Authority (EBA). The AML CFT Standing Committee (AMLSC), composed of high-level representatives of the national supervisory authorities, was created to fulfill these tasks. The FMA represents Liechtenstein in the AMLSC as a non-voting member.

Conclusion

In conclusion, Liechtenstein’s zero-tolerance policy on money laundering has been instrumental in establishing its reputation as a leading player in international efforts to combat financial crime. Its effective implementation of AML/CFT regulations and its commitment to international cooperation have earned it a stellar reputation among regulatory bodies and the global community.