Liechtenstein Implements 3rd Money Laundering Directive

by Ulrika Lomas, Tax-News.com, Brussels


Liechtenstein has set out the goal of applying leading standards in the fight against money laundering and financing of terrorism by implementing the 3rd EU Money Laundering Directive of the EU, according to the jurisdiction's government.

The government revealed in a posting on its website that the adoption of the directive, a recommendation of the IMF, will be transposed into national law by way of a revision of the Due Diligence Act.

"The Liechtenstein financial centre 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 IMF gave Liechtenstein good marks with respect to implementation and application of the international standards for the prevention and suppression of money laundering," the government stated.

The IMF report also issued several recommendations 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 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.

However, the Liechtenstein government stated that at the time the IMF assessment was published in autumn 2007, it was already planning the implementation of the 3rd EU Money Laundering Directive and the anti-money-laundering recommendations of the FATF, as well as the FATF Special Recommendations for the suppression of terrorist financing.

A report and draft law by the Liechtenstein 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.

The Due Diligence Act originally entered into force in 2004 as part of implementation of the 2nd EU Money Laundering Directive, but the Government plans to expand due diligence obligations under the new revisions to include not just the core area of the financial sector, but also professions such as statutory auditors, accountants, and tax consultants.

Hitherto, the scope of the act has been limited to the acceptance and safekeeping of third-party assets and the formation of domiciliary companies. Under the revised law, it 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 says that it 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 CHF25,000 (EUR15,500).

The Government is also adopting international standards concerning the reporting requirement in the case of suspicion of money laundering and terrorist financing. In future, 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 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 government argued.

"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," it added.

Source: Tax-News