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Banking Compliance Procedures in Liechtenstein Under Scrutiny

A Tiny Principality Faces Big Changes

April 17, 2024 - VADUZ, LIECHTENSTEIN

The tiny principality of Liechtenstein has long been a haven for financial services. Its liberal company system and favorable banking environment have made it an attractive destination for investors and advisers alike.

A New Era: From Confidentiality to Cooperation

In the mid-1990s, Liechtenstein underwent significant changes to its financial and banking systems. The country abandoned its tradition of confidentiality and information blocking in exchange for unfettered access to the European market.

  • This move marked a turning point for Liechtenstein, as it began to prioritize cooperation on tax issues and international matters.
  • Today, 12 institutions operate within the country, with a focus on asset management.

A Diverse Banking Sector

Despite its small size, Liechtenstein’s banking sector is surprisingly diverse. Three systemically relevant institutions:

  • LGT Bank AG
  • Liechtensteinische Landesbank AG
  • VP Bank AG

operate in the country, offering a range of financial products and services.

Benefits and Challenges of EU Membership

Liechtenstein’s membership in the European Economic Area (EEA) has granted its banks full freedom to provide services across the entire European Union. This makes it an attractive destination for globally oriented investors seeking diversification.

  • The country offers access to financial products authorized throughout the EU.
  • Liechtenstein is a member of the EEA, making it an ideal location for companies looking to expand their reach into Europe.
  • However, this also raises questions about banking compliance procedures in the principality, particularly given its history of confidentiality and information blocking.

Scrutiny Ahead

As Liechtenstein continues to navigate its position within the European market, it is likely that these issues will come under increasing scrutiny.