Financial Crime World

Financial Crime Prevention Tips in Liechtenstein

Liechtenstein has established itself as a financial hub with a strong focus on anti-money laundering (AML) and financial crime prevention. To maintain its reputation and trust in the financial sector, the country has implemented robust regulations to protect against financial crimes. In this article, we will provide essential tips for individuals and businesses operating in Liechtenstein to ensure compliance with these regulations.

Understanding Anti-Money Laundering Requirements

Liechtenstein has adopted European Union (EU) directives on money laundering, which requires banks and investment firms licensed under the Liechtenstein Banking Act (BanKG) and asset managers licensed under the Asset Management Act to implement due diligence measures. These measures include:

  • Identifying and verifying client identity: Financial intermediaries must verify the identity of their clients through documentation and other means.
  • Verifying beneficial owner’s identity: The identity of the beneficial owner, who is the individual or entity that ultimately owns or controls the assets, must be verified.
  • Establishing a business profile: A thorough understanding of the client’s business operations and risk profile is necessary to ensure compliance with regulations.
  • Risk-adequate monitoring of business relationships: Regular monitoring of business relationships is essential to identify potential risks and take appropriate measures.

Politically Exposed Persons (PEPs)

A PEP is defined as a natural person who holds or has held a prominent public function, including heads of state, government ministers, and members of parliaments. Financial intermediaries must implement additional measures to verify the identity and beneficial ownership of PEPs.

Additional Measures for PEPs

  • Enhanced due diligence: Financial intermediaries must conduct more thorough checks on PEPs, including verifying their source of wealth and income.
  • Regular monitoring: PEPs are subject to regular monitoring to ensure compliance with regulations.

Documentation Requirements

Financial intermediaries are required to collect specific information from clients, including:

  • Full name
  • Date of birth
  • Residence
  • Citizenship for private individuals
  • A valid official identification document with a photograph and an extract from the commercial register or similar document for legal entities

Tax Offense and Predicate Offenses

Tax offenses are predicate offenses for money laundering in Liechtenstein. Financial intermediaries must verify the tax compliance of their clients through internal directives and other measures.

Internal Directives

  • Financial intermediaries must establish internal guidelines to ensure compliance with tax regulations.
  • Regular audits and monitoring are necessary to identify potential risks.

Compliance Verification

Financial intermediaries face criminal prosecution, administrative procedures, or civil liability if they fail to comply with due diligence measures under the Due Diligence Act. Clients and financial intermediaries committing financial crimes can also face criminal prosecution.

Penalties for Non-Compliance

  • Criminal prosecution: Financial intermediaries and clients who commit financial crimes may be subject to criminal prosecution.
  • Administrative procedures: Failure to comply with regulations may result in administrative procedures, including fines and penalties.
  • Civil liability: Clients and financial intermediaries who fail to comply with regulations may face civil liability.

To maintain a strong reputation and avoid potential penalties, it is essential for individuals and businesses operating in Liechtenstein to adhere to these regulations and implement robust anti-money laundering measures. By understanding the requirements and best practices outlined above, you can ensure compliance and protect your business from financial crime risks.