Countries/Jurisdictions of Primary Concern - Liechtenstein
The Principality of Liechtenstein is the richest country on earth on a per capita basis. It has a well-developed offshore financial services sector, relatively low tax rates, liberal incorporation and corporate governance rules, and a tradition of strict bank secrecy. All of these conditions contribute significantly to the ability of financial intermediaries in Liechtenstein to attract both licit and illicit funds from abroad. Liechtenstein’s financial services sector includes 17 banks, 120 fund/asset management companies, 367 trust companies, 22 insurance companies, 50 insurance intermediaries, and 403 other financial intermediaries. The three largest banks in Liechtenstein manage 85 percent of the country’s $125 billion in wealth.
The business model of Liechtenstein’s financial sector focuses on private banking, wealth management, and mostly nonresident business. It includes the provision of corporate structures such as foundations, companies, and trusts that are designed for wealth management, the structuring of assets, and asset protection.
In recent years Liechtenstein banking secrecy has been softened to allow for greater cooperation with other countries to identify tax evasion. The Government of Liechtenstein has recently renegotiated a series of double taxation agreements to include administrative assistance on tax evasion cases. On October 29, 2014, Liechtenstein also signed the OECD Multilateral Competent Authority Agreement, which will activate automatic exchange of information based on the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.
There are no reported abuses of non-profit organizations, alternative remittance systems, offshore sectors, free trade zones, or bearer shares.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: //2009-2017.state.gov/j/ct/rls/crt/
Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or illegal drug sales that otherwise significantly affect the U.S.: NO
criminalizATION OF money laundering:
“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes
Are legal persons covered: criminally: YES civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES
KYC covered entities: Banks; securities brokers; insurance companies and brokers; money exchangers or remitters; financial management firms, investment companies, and real estate companies; dealers in high-value goods; lawyers; casinos; the Liechtenstein Post Ltd.; and financial intermediaries
Number of STRs received and time frame: 293 in 2013
Number of CTRs received and time frame: Not applicable
STR covered entities: Banks; securities brokers; insurance companies and brokers; money exchangers or remitters; financial management firms, investment companies, and real estate companies; dealers in high-value goods; lawyers; casinos; the Liechtenstein Post Ltd.; and financial intermediaries
money laundering criminal Prosecutions/convictions:
Prosecutions: 55 in 2013
Convictions: 0 in 2013
Records exchange mechanism:
With U.S.: MLAT: YES Other mechanism: YES
With other governments/jurisdictions: YES
Liechtenstein is a member of the Select Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), a FATF-style regional body. Its most recent mutual evaluation can be found at: http://www.coe.int/t/dghl/monitoring/moneyval/Countries/Liechtenstein_en.asp
Enforcement and implementation issues and comments:
The 2013 reporting year saw a slight decline of STRs, down by 8 percent compared to 2012. Forty-five percent of the STRs were for suspected fraud, 15 percent for money laundering (a rise from last year), and 40 percent enumerated other offenses. In 2012, 62 percent of Liechtenstein’s STRs were forwarded to the Office of the Public Prosecutor. A total of $28 million of assets were frozen in 2013.
In practice, many of the customer characteristics often considered high-risk in other locales, including non-residence and trust or asset management accounts, are considered routine in Liechtenstein and are subject to normal customer due diligence procedures. Additionally, Liechtenstein does not explicitly designate trusts and foundations, entities with bearer shares, or entities registered in privately-held databases in the high-risk category. Liechtenstein should consider reviewing whether this decision makes its financial system more vulnerable to illegal activities. Attempted transactions related to funds connected to terrorism financing or terrorism are subject to suspicious transaction reporting.
Despite Liechtenstein’s efforts to bring money laundering offenses fully in line with relevant standards, there are some questions surrounding the efficacy of its implementation as there has been only one domestic money laundering conviction since 2007.