The International Monetary Fund (IMF), which assessed the Financial Market Authority in 2007, has announced its positive findings. The IMF final report, published the end of June 2008, gives good marks to the Liechtenstein supervisory authorities. Already in the general report on the Liechtenstein financial center, which was published in March, the IMF had certified the Principality of Liechtenstein's high standards in its fight against money laundering and financing of terrorism.
The Financial Market Authority Liechtenstein (FMA) has made substantial progress on the path toward a modern and internationally recognized supervisory authority. Moreover, information exchange and cooperation between the FMA and foreign supervisory authorities functions smoothly. These are the summarized findings of the IMF assessment, which focused on banking supervision, securities supervision, and measures against money laundering and financing of terrorism. The IMF classifies Liechtenstein as an Offshore Financial Center (OFC), since many Liechtenstein financial intermediaries mainly offer services to non-residents. At the end of 2007, the FMA counted 2,089 financial intermediaries subject to FMA supervision. The IMF assessment of banking supervision was carried out on the basis of the recommendations by the Basel Committee on Banking Supervision, while securities supervision was analyzed with respect to compliance with the standards of the International Organization of Securities Commissions (IOSCO).
Given the financial and company services offered by the Liechtenstein financial sector, the IMF identified a particular risk of money laundering. In addition to the specializations in wealth management, fiduciary services, and life insurance products, the Liechtenstein financial center has experienced an expansion in non-banking services over the past few years, including investment undertakings and insurances. About 90% of business is offered to non-residents, who are attracted by access to discreet and flexible legal forms, bank secrecy, and attractive tax possibilities in a stable and well-regulated environment. Using risk-based counter-measures, the supervisory authorities strive to combat the risks of money laundering and financing of terrorism. Accordingly to the IMF assessment, not all available measures already meet the required standards, but the IMF assessors expect Liechtenstein to be able to close the remaining gaps with its implementation of the 3rd EU Money Laundering Directive.
In their 2008 report, the IMF assessors point out that Liechtenstein had been placed on a list of non-cooperative countries in 2000 by the FATF, the Financial Action Task Force of the OECD, but had been taken off this list again only one year later. Since then, the authorities have made substantial progress toward compliance with the FATF recommendations, which the IMF already praised during its first assessment in 2002. The progress identified at that time has since been continued by way of legislative amendments and new institutional structures. The IMF found cooperation among national authorities in the fight against money laundering and financing of terrorism to be effective. The capacity and willingness of Liechtenstein to cooperate internationally and to exchange available information has improved significantly. To achieve further improvements, the IMF calls for the legal foundations for information exchange with foreign supervisory authorities to be strengthened. The IMF also criticizes that the available legal remedies may delay the surrender of information.
Already at the beginning of March, when the first general IMF report was presented, Prime Minister Otmar Hasler noted with satisfaction that the IMF had given the Liechtenstein financial center good marks with respect to supervision and anti-money-laundering. The IMF report confirmed the reform path taken after the 2001 financial crisis, which was now being further pursued with the revision of foundation law and tax law. The report confirmed the Prime Minister's belief that the creation of the independent and integrated Financial Market Authority (FMA) constituted an important step toward high-quality supervision and regulation of the financial center. The Government has responded positively to the IMF recommendations to intensify the prevention and prosecution of money laundering. As Prime Minister Otmar Hasler emphasized, the implementation of the 3rd EU Money Laundering Directive would encompass most of these recommendations.
If you would like further information on Liechenstein including current Liechtenstein topics please visit us at www.liechtenstein.li.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
