Title: Liechtenstein’s Zero-Tolerance Approach to Financial Crime: AML/CFT Success Story
In the heart of Europe, the tiny principality of Liechtenstein has earned a reputation for its unyielding commitment to anti-money laundering (AML) and countering the financing of terrorism (CFT). Adhering to a strict zero-tolerance policy, Liechtenstein has implemented rigorous measures to prevent financial crimes.
The Role of the Financial Market Authority (FMA)
The Financial Market Authority (FMA) in Liechtenstein plays a pivotal role in ensuring compliance with AML/CFT obligations. The FMA’s mandate includes:
- monitoring AML/CFT rules
- investigating potential violations
- imposing penalties where necessary
The FMA diligently reviews reports from the due diligence system, conducts on-site inspections, and follows up on any suspicions of abusive financial conduct.
Persons Subject to Due Diligence
Persons subject to due diligence, which includes financial institutions, transfer of funds agents (TT service providers), and designated non-financial businesses and professions (DNFBPs), must comply with AML/CFT regulations. Key due diligence obligations encompass:
- identification and verification of clients, beneficiary owners, and sources of funds and wealth
- ongoing transaction monitoring
- filing of suspicious activity reports
The Financial Intelligence Unit (FIU)
Assisting the FMA in evaluating reports and analyzing potential threats, the Financial Intelligence Unit (FIU) in Liechtenstein is responsible for receiving and examining reports of suspected financial crimes. Where criminal activity is suspected, the FIU shares its findings with the Office of the Public Prosecutor. In addition, the FIU monitors broader patterns of money laundering, predicate offenses, and terrorism financing.
The Office of the Public Prosecutor
The Office of the Public Prosecutor is responsible for examining the FIU’s reports and initiating investigations when appropriate. If sufficient evidence exists, charges are filed with the competent court. The prosecution authorities enforce the criminal code related to money laundering, predicate offenses, and financing of terrorism, as well as specific provisions in the SPG (such as delayed or absent reporting of suspicions).
Maintaining the Beneficial Owners Register
Maintaining the Register of the Beneficial Owners of Legal Entities is a crucial component of Liechtenstein’s AML/CFT framework. The Office of Justice, which oversees the register, ensures transparency and accountability of the financial sector by providing access to information on the beneficial owners of companies, foundations, and trusts.
Evaluation by MoneyVAL
Recognized for its dedication to AML/CFT, Liechtenstein is routinely evaluated by the MoneyVAL, an FATF-style regional body based at the Council of Europe. In June 2022, MoneyVAL released its fifth report on Liechtenstein, acknowledging the country’s progress in strengthening measures against money laundering and terrorism financing. The report highlighted:
- Liechtenstein’s comprehensive understanding of its risks
- Robust supervisory approach
- Substantial compliance with FATF recommendations
Cooperation at the European Level
As part of its cooperation at the European level, Liechtenstein is represented by the FMA in the AML CFT Standing Committee (AMLSC) at the EU/EEA level. The AMLSC drives the development of regulatory technical standards (RTSs) and guidelines necessary for implementing the 4th and 5th EU Anti-Money Laundering Directives and Regulation (EU) 2015/847. By regularly exchanging information with other member countries, the AMLSC coordinates and harmonizes national AML/CFT efforts.