Anti-money laundering and financial crime prevention

Requirements

What are the main anti-money laundering and financial crime prevention requirements for private banking and wealth management in your jurisdiction?

Liechtenstein has attached great importance to anti-money laundering (AML). As an EEA member, Liechtenstein has implemented the Fourth Money Laundering Directive (2015/849/EU) and Regulation (EU) No. 2015/847 on information accompanying transfers of funds.

Banks and investment firms licensed under the BankG as well as asset managers licensed under the VVG are subject to due diligence requirements according to the Due Diligence Act and the accordant ordinance, implementing the EU directives on money laundering. Such requirements include:

  • the identification and verification of the identity of the client;
  • the identification and verification of the identity of the beneficial owner of the assets;
  • the establishment of a business profile; and
  • risk-adequate monitoring of the business relationship.

The verification of the identity of clients regularly takes place within the scope of personal meetings. In this regard, the financial intermediary shall inspect the passport, identity card, driving licence or certified copies thereof, and collect further specific information on the client. Under specific conditions, financial intermediaries may undergo an online verification process instead of verifying the client in a personal meeting (eg, video conference). For the verification process of the identity of the beneficial owner, Liechtenstein law provides blank forms to be completed containing information on the beneficial owner. The business profile shall contain, inter alia, information on the economic background and origin of the assets deposited.

Increased due diligence requirements may apply in specific cases specified by law.

Politically exposed persons

What is the definition of a politically exposed person (PEP) in local law? Are there increased due diligence requirements for establishing a private banking relationship for a PEP?

A PEP is defined as a natural person who is, or was up until one year ago, entrusted with a prominent public function, as well as his or her immediate family members, or a person known to be a close associate of such a person. Such prominent public functions include, but are not limited to:

  • heads of state;
  • heads of government;
  • ministers and deputy or assistant ministers and senior officials of political parties;
  • members of parliaments;
  • members of supreme courts, of constitutional courts or of other high-level judicial bodies whose decisions are not subject to further appeal, except in exceptional circumstances;
  • members of courts of auditors or of the boards of central banks;
  • ambassadors, chargés d’affaires and high-ranking officers in the armed forces; and
  • members of the administrative, management or supervisory bodies of state-owned enterprises.

Increased due diligence measures apply to business relationships and transactions with PEP. The financial intermediaries mentioned above shall establish additional measures by implementing adequate risk-based procedures to determine whether the contracting party or the beneficial owner is a PEP or not, obtaining the approval of at least one member of the management before establishing a business relationship with a PEP as contracting party or beneficial owner or - where a contracting party or a beneficial owner is recognised as a PEP in the context of an existing business relationship - before continuing the business relationship. Each year, at least one member of the management shall approve the continuation of the business relationships with a PEP.

Documentation requirements

What is the minimum identification documentation required for account opening? Describe the customary level of due diligence and information required to establish a private banking relationship in your jurisdiction.

Financial intermediaries are required to collect certain customer and beneficial owner information before establishing a private banking relationship. The minimum information required for private individuals includes the full name, date of birth, residence and citizenship. The information required for legal entities includes the name or firm, type of legal entity, registered office, date of establishment, and date and place of entry in the public register, as well as the names of the bodies or trustees formally acting on behalf of the legal entity in dealings with the banks and wealth managers. This information must be proved by a valid official identification document with a photograph (in particular a passport, identity card or driving licence). Legal entities need to provide an extract from the commercial register or a similar document. In order to establish a business profile, banks and wealth managers must obtain information on the economic background and origin of the assets deposited, the profession and business activity of the effective depositor of the assets and the intended use of the assets, as well as authorised agents and bodies in contact with banks and wealth managers. In practice, financial intermediaries require more detailed information for account opening on a case-to-case basis.

Tax offence

Are tax offences predicate offences for money laundering? What is the definition and scope of the main predicate offences?

Yes. Tax offences are predicate offences for money laundering. The respective legal provisions have recently been revised to the effect that acts punishable by more than one year of imprisonment qualify as predicate offences for money laundering. Further, other specific crimes are covered from the scope of the predicate offences. In practice, the main predicate offences that may apply in the context of private banking are fraud and breach of trust.

Compliance verification

What is the minimum compliance verification required from financial intermediaries in connection to tax compliance of their clients?

An internal directive by the Liechtenstein Banking Association relating to due diligence measures with regard to the tax compliance of their clients requires banks to verify the tax compliance of their clients. Other financial intermediaries also undertake different measures to verify the tax compliance of their clients (eg, requesting tax compliance confirmations issued by the clients or their tax advisers).

Liability

What is the liability for failing to comply with money laundering or financial crime rules?

Financial intermediaries (private bank or wealth management institution and its employees) that fail to comply with due diligence measures under the Due Diligence Act either face criminal prosecution (a prison sentence of up to six months or a fine of not more than 360 times the daily fine rate set by the court) or administrative procedures (a fine of up to 200,000 Swiss francs; in cases of repeatedly or systematically committed administrative offences up to 5 million Swiss francs), depending on the type of failure.

Clients and financial intermediaries committing financial crimes under the Criminal Act can face criminal prosecution (prison sentence or fine). Civil liability may also arise from the failure to comply with money laundering or financial crime rules.