US Warns Financial Institutions: Be Vigilant on Transactions with Liechtenstein
The US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued a new advisory urging financial institutions operating in the United States to exercise enhanced scrutiny over transactions involving Liechtenstein. The warning comes as the tiny European principality has been identified as non-cooperative in the fight against money laundering.
Liechtenstein’s Counter-Money Laundering Regime
FinCEN has identified several systemic problems with Liechtenstein’s counter-money laundering regime, including:
- Lack of identity verification for bank customers
- Weak oversight of professionals who introduce clients to banks
- Difficulty in sharing information with other countries due to the country’s financial sector primarily serving foreign residents and citizens
Additional Concerns
The advisory notes that Liechtenstein’s commitment to strict bank secrecy, use of bearer shares, and numbered accounts create opportunities for money laundering. The country has been identified by the Financial Action Task Force on Money Laundering (FATF) as non-cooperative in the fight against money laundering, and its legislative changes aimed at addressing these issues have yet to be implemented.
US Financial Institutions Take Note
As a result of this advisory, US financial institutions are advised to:
- Carefully examine transactions involving Liechtenstein, including those with entities organized or domiciled there, or persons maintaining accounts in Liechtenstein
- Report any transactions of $5,000 or more that may be related to money laundering (institutions subject to suspicious transaction reporting rules)
Technical Assistance Offered
US officials are willing to provide technical assistance to help Liechtenstein remedy its counter-money laundering deficiencies and improve international cooperation in combating financial crimes. The advisory emphasizes that the enhanced scrutiny is necessary to prevent illegal activities, but does not imply a blanket prohibition on doing business with Liechtenstein.
Conclusion
In summary, US financial institutions operating in the United States are advised to exercise enhanced scrutiny over transactions involving Liechtenstein due to systemic problems with the country’s counter-money laundering regime.