Title: Money Laundering Cracks Down: Liechtenstein’s Progress and Challenges, According to MONEYVAL Report
Overview
Amidst the global crackdown on money laundering (ML) and terrorism financing (TF), Liechtenstein’s financial system received renewed scrutiny with the recent publication of MONEYVAL’s fifth-round evaluation report. The report, released on June 29, 2022, highlights the country’s achievements and outstanding issues.
Commendations
MONEYVAL, the Council of Europe’s anti-money laundering and counter-terrorism financing (AML/CFT) body, commended Liechtenstein for the following achievements:
- Understanding of ML/TF risks
- National AML/CFT policies implementation
- Effective use of financial intelligence
- Efficient confiscation of proceeds of crime
Areas for Improvement
Despite the significant progress, there are areas for improvement:
- Supervision
- Application of AML/CFT preventive measures by the private sector
- Transparency of beneficial ownership (BO)
- Targeted financial sanctions implementation
Financial Intelligence Unit (FIU)
Liechtenstein’s Financial Intelligence Unit (FIU) plays a crucial role in providing essential financial information. The report suggests that the FIU could benefit from more comprehensive reports focusing on TF, proceeds of foreign tax crimes, and adequate SAR/STR reporting on these crimes.
Tackling TF Risks
Despite strides in tackling TF risks through national AML/CFT policies, some exemptions are not supported by a risk assessment. For example, the exemption for investment funds is widely used. Authorities need to handle potentially complex structures established within Liechtenstein more effectively.
Prosecution and Convictions
Convictions for various ML types exist, including self-laundering and foreign fraud. However, sanctions are not proportionate, and there is a need for a consistent prosecution approach. Confiscation of proceeds of crime is a priority, with assets seized and confiscated figures highlighting the framework’s effectiveness.
Lack of TF Prosecutions
One concern is the lack of TF prosecutions, in line with Liechtenstein’s risk profile. However, recent prosecutions indicate competent authorities’ skills in detecting TF. The commitment to combating TF is evident from the initiatives taken, but a specific counter-terrorism strategy is yet to be established.
Private Sector Awareness
Non-profit organizations generally demonstrated good awareness of risks, but this was not always the case for those operating as associations. The private sector’s understanding of ML/TF risks and liabilities has improved. However, past weaknesses in verifying the source of wealth, source of funds, and misuse of “shell” companies persist.
International Cooperation
Effective international cooperation is essential due to the predominantly foreign nature of ML predicate offences. Issues surrounding double criminality requirements for tax evasion and hearing obligations pose risks. However, measures have recently been taken to mitigate these challenges.