Financial Crime World

Title: Liechtenstein’s Financial Sector Under Scrutiny: MONEYVAL’s Assessment Highlights Progress and Areas for Improvement

Overview

On 29th June 2022, the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering and Countering the Financing of Terrorism Measures (MONEYVAL) published its fifth round evaluation report on Liechtenstein. This article provides an overview of the report, focusing on the effectiveness of Liechtenstein in preventing and combating money laundering (ML) and terrorism financing (TF) as assessed by MONEYVAL.

Progress in Liechtenstein

  1. Understanding of ML/TF Risks: Liechtenstein authorities have a strong grasp of key ML and TF risks.
  2. AML/CFT Policies and Coordination: Established national policies and coordination exist.
  3. Effective Use of Financial Intelligence: The Financial Intelligence Unit (FIU) is a valuable source of financial information.
  4. Successful Confiscation of Proceeds of Crime: Significant progress has been made in this area.
  5. Investigations and Prosecutions of TF Activities: Several positive developments in this regard.
  6. International Cooperation: The report highlights the importance of this aspect in Liechtenstein’s AML/CFT framework.

Areas for Improvement

  1. Supervision: Enhancements are necessary in this area.
  2. Application of AML/CFT Preventative Measures by the Private Sector: More attention is required in this regard.
  3. Transparency of Beneficial Ownership (BO): Improvements are needed to ensure effective investigation and prosecution of ML.
  4. ML Investigation and Prosecution: More effective measures are necessary to address complex legal structures and standalone ML cases.
  5. Implementation of Targeted Financial Sanctions: The need for improvement in this area is emphasized.

Key Findings and Recommendations

  • Under-assessed risks (Tax Crimes and Non-bank Assets): Potential threats from tax crimes and information on non-bank assets held by trust and company service providers have not been fully assessed.
  • Suspicious Activity Reports (SARs) and Suspicious Transaction Reports (STRs): The lack of SARs and STRs on significant tax offenses is a concern.
  • Targeted Financial Sanctions: More stringent sanctions are required for non-conviction based confiscation and for failure to report suspicious transactions.
  • International Cooperation: Measures have been taken to minimize the risks posed by double criminality requirements for tax evasion and the obligation to hear the eligible party before providing evidence to a foreign jurisdiction.

Conclusion

MONEYVAL’s assessment provides an in-depth look at Liechtenstein’s progress in the fight against financial crime and highlights the steps the country must take to address persisting vulnerabilities.