Liechtenstein implements 3rd Money Laundering Directive of the EU into national law

Liechtenstein has set out the goal of applying leading standards in the fight against money laundering and financing of terrorism. The 3rd Money Laundering Directive of the EU and the recommendations of the International Monetary Fund will therefore be adopted into national law by way of a revision of the Due Diligence Act.

The Liechtenstein financial center can only assert itself in the tightened international competition among business locations if the highest international standards are followed in the application of the law. The evaluation by the International Monetary Fund (IMF) gave Liechtenstein good marks with respect to implementation and application of the international standards for the prevention and suppression of money laundering. The IMF report also issued several recommendations, however, to improve the prevention of criminal acts. For instance, the IMF voiced some doubts whether the scope of the defensive measures is already extensive enough to fully cover the relevant FATF recommendations. In the fight against financing of terrorism, the IMF furthermore suggested modifying the definition of the offense, so that it covers all elements set out in the International Convention for the Suppression of the Financing of Terrorism.

Already at the time the IMF assessment of Liechtenstein was published in autumn 2007, the Government was planning the implementation of the 3rd EU Money Laundering Directive and the anti-money-laundering recommendations of the FATF (Financial Action Task Force) as well as the FATF Special Recommendations for the suppression of terrorist financing. A report and draft law by the Government are now available for implementation of the EU directive and the FATF Recommendations into national law. Other recommendations, such as enhancing the efficiency of international legal assistance and introducing the criminal liability of legal persons, will be incorporated into other ongoing legislative projects.

With the legislative project on revision of the Due Diligence Act, which entered into force in 2004 as part of implementation of the 2nd EU Money Laundering Directive, the Government plans to expand due diligence obligations. While the scope of due diligence so far has focused on the core area of the financial sector, professions such as statutory auditors, accountants, and tax consultants will henceforth be included in due diligence. While the scope has so far been limited to the acceptance and safekeeping of third-party assets and the formation of domiciliary companies, the law will be expanded to include relevant activities of natural and legal persons who, within their enterprises, are responsible for the formation of companies, exercise the function of general manager of a company, or make a domicile available. With this expansion of due diligence, Liechtenstein is confronting the danger that money laundering and terrorist financing may move to non-regulated areas. The scope of due diligence continues to include banks and investment firms, investment undertakings and life insurances, the post office and exchange offices. The law will henceforth also cover casinos, real estate brokers, auditors, auditing companies, professional trustees, and lawyers, to the extent that they engage in financial transactions. Due diligence also covers persons and companies dealing in goods, if payment is made in cash and the amount exceeds 25,000 francs.

The Government is also adopting international standards concerning the reporting requirement in the case of suspicion of money laundering and terrorist financing. Henceforth, a reporting requirement under the Due Diligence Act will apply not only in the case of existing business relationships and completed transactions, but also in the case of attempted transactions. The preventive defensive measures set up by Liechtenstein will thus be reinforced by an additional pillar. The Government is convinced that the reporting requirement in the attempt phase will enhance the level of knowledge of the FIU (Financial Intelligence Unit) with respect to critical phenomena in the financial center, thereby strengthening the early-warning system provided by the defensive measures.

The revision of the Due Diligence Act through the incorporation of the 3rd EU Money Laundering Directive and the FATF anti-money-laundering and counter-terrorist-financing recommendations fits into a framework established by the Government for the Liechtenstein financial center. Liechtenstein wants to take a leading position in the fight against crime and to meet international obligations. Especially in connection with the current debate concerning the protection of privacy, the Government has made clear that criminals cannot benefit from this protection. This unequivocal approach is in line with the guideposts established for the future of the Liechtenstein financial center in the "Futuro" project.

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