MONEYVAL Slams Liechtenstein's Financial Crime Investigation Process

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Liechtenstein’s Financial Crime Investigation Process Under Scrutiny in Latest MONEYVAL Report

On June 29, 2022, MONEYVAL published its fifth round evaluation report on Liechtenstein, highlighting both the country’s strengths and areas where further improvements are needed to prevent and combat money laundering (ML) and terrorism financing (TF).

Substantial Level of Effectiveness but Areas for Improvement

While acknowledging Liechtenstein’s substantial level of effectiveness in preventing and combating ML and TF, the report also highlighted several areas that require attention. The country has a good understanding of ML and TF risks, including those related to the financial sector.

Key Strengths

Good understanding of ML/TF risks: Liechtenstein has a solid grasp of the risks associated with money laundering and terrorism financing, particularly in the financial sector.
Effective investigation and prosecution of all types of ML: The country’s legal and institutional framework allows for effective investigation and prosecution of all types of money laundering.

Areas for Improvement

Enhancing supervision and application of AML/CFT preventative measures by the private sector
Increasing transparency of beneficial ownership (BO) of legal persons and legal arrangements
Improving money laundering investigation and prosecution
Implementing targeted financial sanctions

Challenges Ahead

The report notes that Liechtenstein’s authorities lack investigations involving complex legal structures established and managed in the country. Additionally, convictions for ML are predominantly self-laundering of proceeds from foreign fraud, rather than third-party ML or stand-alone ML cases.

Progress Made in Addressing TF Risk

Despite these challenges, the report concludes that Liechtenstein has made progress in addressing TF risk through national AML/CFT policies. The country’s non-profit organizations showed good awareness of risks they face, but associations operating as NPOs were not aware of their CFT obligations.

Private Sector Understanding of ML/TF Risks

The understanding of ML/TF risks and liabilities in the private sector is generally good, with banks and large trust and company service providers having a good understanding of risks associated with private banking and wealth management. However, less attention was paid to identifying and confirming source of wealth and source of funds, as well as the possible illicit use of “shell” companies.

Conclusion

In conclusion, while Liechtenstein has made progress in preventing and combating ML and TF, further improvements are needed to strengthen its financial crime investigation process. The country’s authorities must work to address the areas highlighted by MONEYVAL and implement targeted measures to enhance supervision, transparency, and investigation of ML cases.