Financial Crime World

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Terrorist Financing Risks in Liechtenstein: Non-Profit Organisations in the Spotlight

Introduction

Liechtenstein’s financial institutions are being urged to take a closer look at non-profit organisations (NPOs) operating within the country, as they may be vulnerable to terrorist financing risks. According to the Financial Action Task Force (FATF), NPOs pose an increased risk of being misused for TF purposes.

What are Non-Profit Organisations?

The FATF defines NPOs as legal entities that primarily engage in raising or disbursing funds for charitable, religious, cultural, educational, social, or fraternal purposes. However, not all NPOs are exposed to the same level of risk. Those that engage in common-benefit activities, such as fundraising and disbursement of funds, are considered higher-risk entities.

Examples of Higher-Risk NPO Activities

  • Fundraising
  • Disbursement of funds
  • Common-benefit legal entities

Mitigating Terrorist Financing Risks

To help Liechtenstein NPOs identify potential risks and mitigate them, the country’s Financial Intelligence Unit (SFIU), the Financial Market Authority, and the Fiscal Authority have released a factsheet on the risk of abuse by NPOs for TF purposes. The document provides guidance on the legal forms commonly used in Liechtenstein to pursue common-benefit activities and their qualification as NPOs under FATF Recommendation 8.

Key Takeaways

  • Non-profit organisations operating in Liechtenstein may be vulnerable to terrorist financing risks
  • Common-benefit legal entities that engage in fundraising and disbursement of funds are considered higher-risk entities
  • Persons subject to due diligence are reminded of the obligation to immediately notify the SFIU if there is a suspicion of TF

What’s Next?

Liechtenstein’s financial institutions and NPOs are advised to carefully review the factsheet and take necessary steps to mitigate potential terrorist financing risks. The SFIU can be contacted for further information and guidance on how to report suspicious transactions.

Steps to Take:

  • Review the factsheet
  • Conduct due diligence on high-risk NPOs
  • Report suspicious transactions to the SFIU