Financial Crime World

Liechtenstein Financial Centre Faces Heightened Money Laundering Risk

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National Risk Assessment Identifies Significant Vulnerabilities in Financial Sector

A comprehensive National Risk Assessment has identified significant vulnerabilities in Liechtenstein’s financial sector, with over 50% of suspicious activity reports being reactive rather than proactive. The assessment highlights several areas of concern that increase the risk of money laundering and terrorist financing.

Banking Sector Concerns

  • A lack of risk-based supervision in private banking is a major concern.
  • The focus on high-net-worth clients and international clients from countries with high corruption risks has increased the risk of money laundering and terrorist financing.

Life Insurance Products at Risk

  • Single premiums, which can be used to conceal assets acquired through criminal activities, are a heightened risk area in life insurance products.
  • The sector’s lack of comprehensive risk-based supervision is a major concern.

Securities/Asset Managers/Funds Sector Risks

  • Single investor funds under the Investment Undertakings Act (IUG) are particularly vulnerable to money laundering.

Low Risk of Terrorist Financing

  • No suspicious activity reports relating to terrorist financing have been identified.
  • No requests for mutual legal assistance from abroad in the last 10 years.

Gaps in Regulation and Supervision

  • Casinos, duty-free warehouses, free customs warehouses, and value warehouses exhibit gaps in regulation and supervision.

External Factors Influence Money Laundering Risk

  • Experts say that the risk of money laundering and terrorist financing in Liechtenstein’s financial centre is heavily dependent on external factors.
  • Therefore, it is crucial to examine countries and predicate offences which carry increased risk potential for domestic market participants.

Government Commitment to Expanding Data Situation

  • The government has committed to expanding the data situation in a second round of the National Risk Assessment.
  • This includes:
    • Payment flows from and to Liechtenstein
    • Nationality and place of establishment of beneficial owners
    • Number of maintained PEP relationships
    • Number, purpose, and partner relationships of Liechtenstein NPOs transferring assets abroad