Protection against money laundering
The fight against money laundering and terrorist financing has been a top priority for Liechtenstein for years, which has a zero-tolerance policy towards such matters. As a member of the EEA, Liechtenstein has fully implemented the EU’s third Anti-Money Laundering Directive (2005 / 60 / EC) as well as the Commission Directive (2006 / 70 / EC) concerning both the definition of the term “politically exposed person” and the determination of the technical criteria for simplified due diligence obligations.
The European Parliament adopted the fourth EU Anti-Money Laundering Directive on 20 June 2015, it came into force on 25 June 2015 and also applies to Liechtenstein as an EEA member. Liechtenstein is currently in the process of transposing the new directive into national law. The revised Due Diligence Act (DDA) (“Sorgfaltspflichtgesetz (SPG)”) is expected to enter into force on 1 September 2017.
Liechtenstein’s Criminal Law on Corruption was revised in March 2016 and is the basis for the ratification of the Council of Europe’s Criminal Law Convention on Corruption. With the revision, Liechtenstein makes bribery in the private sector a predicate offence for money laundering and implements the international standards of the Council of Europe and the United Nations Organisation (UNO) on the fight against corruption.
The Financial Intelligence Unit (FIU) serves as the central authority for obtaining and analysing information that is necessary to recognise money laundering, predicate offences for money laundering, organised crime and terrorist financing. The revision of the FIU Law on 1 March 2016 and the adaptations made to the Due Diligence Act ensure Liechtenstein is fully legally compliant with the international standard. The FIU represents Liechtenstein in expert committees on anti-money laundering and terrorist financing in the EU.
LLB has assigned the highest priority to combating money laundering and its predicate offences as well as financing of terrorist or criminal activities. Monitoring is performed by an IT system. In addition to the systematic monitoring of transactions, employees receive ongoing training on regulatory changes. They are also sensitised to the indications of possible money laundering activities.
MiFID II / Liechtenstein
The Liechtenstein financial centre implemented the Markets in Financial Instruments Directive (MiFID) on 1 November 2007. The MiFID simplifies cross-border financial services and allows securities firms, banks and stock markets to also offer their services in other EU / EEA member states. Furthermore, they are required to conduct precise client and product analyses as well as disclose information on compensations and commissions.
The Amendment (MiFID II) and the accompanying Regulation (MiFIR) will come into force in the EU on 3 January 2018, one year later than originally planned. They provide for further regulation of the financial markets and investment services. Furthermore, MiFIR regulates trading transparency, an area that was not at the focus of MiFID. Besides the refinement of regulations since MiFID, the aim of MiFID II is to create greater transparency in the markets and to increase investor protection.
High-frequency trade will be made more transparent and subject to stricter supervisory controls, while position limits on commodity trading will be stricter. In future, throughout the EU, the appropriateness and suitability of advice given to individual clients at bank branches must be checked and a more comprehensive recording made of telephone consultations. The appropriateness and suitability checks and the recordings must document why a financial product was recommended and how it matches the client’s risk profile.
FinSA / Switzerland
Switzerland intends to conceptually reshape the guiding principles of its financial centre in order to transpose the MiFID II, in particular, into national law. On 4 November 2015, the Federal Council adopted the dispatch on the Financial Services Act (FinSA) and on the Financial Institutions Act (FinIA). The FinSA governs the prerequisites for providing financial services and offering financial instruments. The FinIA makes provision for an activity-based, differentiated supervisory regime for financial institutions requiring authorisation. The FinSA and the FinIA shall serve to provide modern investor protection and are expected to come into force in 2018.
The Financial Market Infrastructure Act (FMIA) and the Financial Market Infrastructure Ordinance (FMIO), which have been in force since 1 January 2016, are also all part of the new Swiss financial market architecture. Consequently, new rules that are consistent with the applicable international standards in this area will apply in Switzerland for financial market infrastructures, such as trading venues and central counterparties, as well as for derivatives trading.