Financial Crime World

Banking Regulations in Liechtenstein

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Regulatory Authority and Licensing Requirements

The Financial Market Authority (FMA) is the regulatory authority for banks in Liechtenstein. To operate in Liechtenstein, banks need a banking license from the FMA.

Types of Licenses Required

  • A banking license is required to operate in Liechtenstein.

Specific Requirements for Foreign Banks

Foreign banks wishing to establish a subsidiary or branch in Liechtenstein must be licensed by the FMA and comply with local regulations.

Restrictions on Bank Activities

There are restrictions on the activities that can be undertaken by a bank in Liechtenstein. Banks are not allowed to engage in certain activities such as:

  • Stock trading
  • Real estate business (unless they have specific licenses for these activities)

Special Regime for Systemically Important Banks

Liechtenstein has a special regime for domestic and/or globally systemically important banks.

Sanctions for Violation of Banking Regulations

In case of violation of banking regulations, the FMA as the competent authority is obliged and authorised by law to issue orders and to impose sanctions, which can lead to:

  • Revocation of license
  • Expiry of license
  • Withdrawal of license
  • Dissolution of a bank

Resolution Regime for Banks

Liechtenstein has implemented and transposed the Bank Recovery and Resolution Directive 2014/59/EU (BRRD) into national law. The Law on Recovery and Resolution of Banks and Investment Firms (Sanierungs- und Abwicklungsgesetz/”SAG”) came into effect on January 1st, 2017.

Protection of Client Assets and Cash Deposits

In accordance with EU directives, Art. 7 of the Liechtenstein Banking Act contains provisions on:

  • Guarantee of bank deposits
  • Protection of investors

Banks and other financial service providers are required to ensure adequate protection of deposits and investments by establishing separate organisations or participating in foreign protection schemes.

Bail-In Tool in Bank Resolution

Liechtenstein has transposed the Bank Recovery and Resolution Directive 2014/59/EU (BRRD) into national law, which includes a bail-in tool as possible resolution mechanism.

Gone Concern Capital Requirements

There is a requirement for banks to hold gone concern capital (“TLAC”).