Banker's Academy AML Training by Country

Anti Money Laundering (AML) By Country: Liechtenstein

Anti Money Laundering (AML) in Liechtenstein

Money laundering in Liechtenstein is a major concern due to the country’s well-developed offshore financial services sector, relatively low tax rates, liberal incorporation and corporate governance rules, and tradition of strict bank secrecy. Therefore, Liechtenstein has taken serious legislative and administrative steps in recent years to improve its Anti Money Laundering (AML) regime.

In 1996, Liechtenstein first criminalized money laundering, recognizing all crimes and drug-related misdemeanors as predicate offenses. Since then, this provision has included all corruption offenses and terrorist financing as predicate offenses and by criminalizing “own-funds” laundering as well as eliminating the knowledge requirement.

On February 1, 2005, Liechtenstein’s primary piece of AML legislation, the Due Diligence Act (DDA), became the legal basis for the preventive measures to be taken by financial intermediaries. The DDA repealed a number of prior laws, including the 1996 Due Diligence Act and its amendments. The DDA applies to banks, e-money institutions, casinos, dealers in high-value goods and a number of other classes of entities. Along with the 2005 Due Diligence Ordinance, the DDA sets out the basic requirements of the AML regime: customer identification, suspicious transaction reporting, and recordkeeping. The DDA mandates that banks and postal institutions not engage in business relationships with shell banks nor maintain passbook accounts or deposits payable to the bearer.

Liechtenstein's Financial Intelligence Unit (FIU), Stabstelle Financial Intelligence Unit (SFIU), receives Suspicious Transaction Reports (STRs) relating to money laundering and terrorist financing. The EFFI first became operational in March 2001 and is now a member of the Egmont Group. The STR requirement applies to banks, insurers, financial advisers, postal services, exchange offices, attorneys, financial regulators, casinos and other entities. In recent years, the government has reformed its suspicious transaction reporting system to permit reporting for a much broader range of offenses than in the past.

The Economy of Liechtenstein

Despite its small size and limited natural resources, Liechtenstein has developed into a prosperous, highly industrialized, free-enterprise economy. As a vital financial service sector, Liechtenstein has the highest per capita income in the world.

The Liechtenstein economy is widely diversified with a large number of small businesses. Low business taxes and easy incorporation rules have induced many holding companies to establish nominal offices in Liechtenstein, providing 30% of state revenues. Liechtenstein imports more than 90% of its energy requirements.

The government is working to harmonize its economic policies with those of an integrated Europe. In 2008, Liechtenstein came under renewed international pressure to improve transparency in its banking and tax systems.

Banking in Liechtenstein

Liechtenstein is in a currency union with Switzerland, therefore the Swiss National Bank performs most of the country’s banking duties. The Swiss National Bank conducts the country’s monetary policy as an independent central bank, with a primary goal of ensuring price stability.

The Swiss National Bank is also responsible for the issuing of currency and providing services for high-value payments between banks; providing the Swiss franc money market with liquidity via repo transactions; contributing to financial stability by regularly analyzing and monitoring conditions and developments in the financial system; participating in international monetary cooperation and providing technical assistance; acting as banker to the Confederation, and compiling statistical data on banks and financial markets, the balancing of payments, the international investment position and the Swiss financial accounts.

Currency in Liechtenstein

The national currency in Liechtenstein is the Swiss Franc. The franc comes in both banknotes and coins. Banknotes are available in 5, 10, 20, 50, 100, 200, 500 and 1000 denominations. Coins are available in 1, 2, 5, 10, and 20 centimes and 5 franc pieces.

The Euro is also generally accepted throughout Liechtenstein. The Euro comes in both banknotes and coins. Banknotes are available in 5, 10, 20, 50, 100, 200 and 500 denominations. Coins are available in 1, 2, 5, 10, 20, 50 cent pieces, and 1 and 2 Euro coins.