Financial Crime World

Liechtenstein: Money Laundering and Terrorism Financing Still a Concern

Report Highlights Areas for Improvement

A recent report by MONEYVAL has identified several areas where Liechtenstein can improve its efforts to prevent and combat money laundering (ML) and terrorism financing (TF). Despite some progress, the country still faces significant challenges in this area.

Strengths and Weaknesses

The report praised Liechtenstein for:

  • Good understanding of ML/TF risks
  • Effective national policies and coordination
  • Use of financial intelligence
  • Confiscation of proceeds of crime
  • TF investigations and prosecution
  • International cooperation

However, it also identified several areas that require improvement, including:

Enhancing Supervision and Private Sector Measures

  • Applying anti-money laundering (AML) and combating the financing of terrorism (CFT) measures by the private sector
  • Transparency of beneficial ownership of legal persons and legal arrangements
  • Money laundering investigation and prosecution
  • Implementation of targeted financial sanctions

Addressing TF Risks and Improving Reporting

  • Better reporting on suspicious transactions
  • Lack of convictions for ML involving complex legal structures established and managed in Liechtenstein
  • Need for more reports on TF, laundering of proceeds of foreign tax crimes, and adequacy of reporting on these crimes

Financial Intelligence Unit (FIU) Analysis

The FIU was praised for its analytical reports, which provide valuable information for law enforcement authorities. However, the report noted that further reports on TF, laundering of proceeds of foreign tax crimes, and adequacy of reporting on these crimes could be useful.

Liechtenstein’s legal framework allows for effective investigation and prosecution of all types of ML. However, the report noted that sanctions imposed are not sufficiently dissuasive and proportionate. Confiscation of proceeds of crime is also pursued as a policy objective in Liechtenstein, with assets seized and confiscated generally being in line with the country’s risk profile.

Private Sector Efforts

The private sector was found to have a good understanding of ML/TF risks, with banks and large trust and company service providers having put in place sophisticated measures to mitigate them. However, the report noted that less attention had been paid to identifying and confirming the source of wealth and funds, and the possible illicit use of “shell” companies.

International Cooperation

The authorities were found to have a good understanding of ML/TF risks and liabilities in the private sector, but the report noted that there was still room for improvement in terms of reporting suspicious transactions and investigating complex legal structures. International cooperation was also identified as an important area for improvement, given the predominantly foreign nature of predicate offences for ML.

Conclusion

While Liechtenstein has made progress in combating money laundering and terrorism financing, there is still much work to be done to address these significant risks.