Financial Crime World

Liechtenstein Grapples with Global Financial Crime Trends

A recent evaluation report from MONEYVAL has highlighted both progress and areas for improvement in Liechtenstein’s efforts to combat money laundering (ML) and terrorism financing (TF).

Progress and Areas for Improvement

While acknowledging Liechtenstein’s substantial level of effectiveness in preventing ML/TF, MONEYVAL identifies several key areas that require further improvement.

  • Enhancing Supervision: The report highlights the need for enhanced supervision by regulatory bodies to ensure effective implementation of anti-money laundering (AML) and combating the financing of terrorism (CFT) measures.
  • Private Sector Measures: The application of AML/CFT preventative measures by the private sector, including banks and trust and company service providers, requires improvement.
  • Beneficial Ownership Transparency: The report notes that transparency of beneficial ownership (BO) of legal persons and legal arrangements needs to be improved.
  • Money Laundering Investigation and Prosecution: Strengthening money laundering investigation and prosecution is essential to ensure effective combat against ML/TF.
  • Targeted Financial Sanctions: Implementing targeted financial sanctions is crucial to prevent and counter terrorist financing.

Key Challenges

Despite progress, several challenges remain unaddressed:

  • Tax Crimes: The extent to which Liechtenstein’s financial sector could be used to launder proceeds from tax crimes committed abroad remains unassessed.
  • Non-Bank Assets: Information on non-bank assets held by trust and company service providers is lacking.

Financial Intelligence Unit (FIU)

The FIU in Liechtenstein is recognized as a vital source of financial information, with its analytical reports being an essential part of any investigation or operational activity. Suspicious Activity Reports (SARs)/Suspicious Transaction Reports (STRs) submitted by persons subject to the Due Diligence Act (DDA) are generally commensurate with revenue-generating crimes in the country.

Areas for Further Improvement

The report highlights several areas that require further improvement:

  • Limited Investigations: Limited investigations involving complex legal structures established and managed in Liechtenstein.
  • Lack of Prosecution: Lack of prosecution for tax offences committed abroad.
  • Insufficient Sanctions: Insufficient sanctions imposed on those convicted of ML/TF-related crimes.
  • Non-Conviction Based Confiscation Measures: Non-conviction based confiscation measures that are not sufficiently dissuasive or proportionate.

Recommendations

To address these areas, the report recommends:

  • Enhance supervision and application of AML/CFT preventative measures by the private sector
  • Improve transparency of beneficial ownership (BO) of legal persons and legal arrangements
  • Strengthen money laundering investigation and prosecution
  • Implement targeted financial sanctions
  • Increase understanding of TF risks and liabilities in the private sector
  • Improve identification and confirmation of source of wealth and source of funds

By addressing these recommendations, Liechtenstein can further strengthen its AML/CFT regime and continue to effectively combat global financial crime trends.