FATF AML Deficiency List
Offshore Finance Center
US Dept of State Money Laundering assessment
Non - Compliance with FATF MER Recommendations
Liechtenstein is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Liechtenstein was undertaken by the Financial Action Task Force (FATF) in 2007. According to that Evaluation, Liechtenstein was deemed Compliant for 7 and Largely Compliant for 14 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for 5 of the 6 Core Recommendations.
US Department of State Money Laundering assessment (INCSR)
Liechtenstein was deemed a Jurisdiction of Primary Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR) but has not been included since. Key Findings from the last report are as follows: -
The Principality of Liechtenstein is the richest country on earth on a GDP per capita basis. It has a well-developed offshore financial services sector, relatively low tax rates, liberal incorporation and corporate governance rules, and a tradition of bank secrecy. All of these conditions contribute significantly to the ability of financial intermediaries in Liechtenstein to attract funds from abroad. Liechtenstein’s financial services sector includes 16 banks, 117 fund/asset management companies, 381 trust companies/trustees and 44 insurance companies. The three largest banks in Liechtenstein manage 85 percent of the country’s $125 billion in wealth.
The business model of Liechtenstein’s financial sector focuses on private banking, wealth management, and mostly nonresident business. It includes the provision of corporate structures such as foundations, companies, and trusts that are designed for wealth management, the structuring of assets, and asset protection. In recent years Liechtenstein banking secrecy has been softened to allow for greater cooperation with other countries to identify tax evasion. There are no reported abuses of non-profit organizations, alternative remittance systems, offshore sectors, free trade zones, or bearer shares.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index N/A
World Governance Indicator – Control of Corruption 96
Despite its small size and lack of natural resources, Liechtenstein has developed into a prosperous, highly industrialized, free-enterprise economy with a vital financial service sector and the third highest per capita income in the world, after Qatar and Luxembourg. The Liechtenstein economy is widely diversified with a large number of small businesses. Low business taxes - the maximum tax rate is 20% - and easy incorporation rules have induced many holding companies to establish nominal offices in Liechtenstein, providing 30% of state revenues.
The country participates in a customs union with Switzerland and uses the Swiss franc as its national currency. It imports more than 90% of its energy requirements. Liechtenstein has been a member of the European Economic Area (an organization serving as a bridge between the European Free Trade Association and the EU) since May 1995. The government is working to harmonize its economic policies with those of an integrated Europe.
Since 2008, Liechtenstein has faced renewed international pressure - particularly from Germany and the US - to improve transparency in its banking and tax systems. In December 2008, Liechtenstein signed a Tax Information Exchange Agreement with the US. Upon Liechtenstein's conclusion of 12 bilateral information-sharing agreements, the OECD in October 2009 removed the principality from its "grey list" of countries that had yet to implement the organization's Model Tax Convention. By the end of 2010, Liechtenstein had signed 25 Tax Information Exchange Agreements or Double Tax Agreements. In 2011, Liechtenstein joined the Schengen area, which allows passport-free travel across 26 European countries.
Agriculture - products:
wheat, barley, corn, potatoes; livestock, dairy products
electronics, metal manufacturing, dental products, ceramics, pharmaceuticals, food products, precision instruments, tourism, optical instruments.
Exports - commodities:
small specialty machinery, connectors for audio and video, parts for motor vehicles, dental products, hardware, prepared foodstuffs, electronic equipment, optical products.
Imports - commodities:
agricultural products, raw materials, energy products, machinery, metal goods, textiles, foodstuffs, motor vehicles.
Investment Climate - US State Department
The Swiss Federal Government has a laissez-faire attitude towards foreign investment, allowing Switzerland’s 26 cantons (i.e. states) to largely shape the country’s investment policies. This federal approach to governance has helped the Swiss maintain long-term economic and political stability, a transparent legal system, an extensive and reliable infrastructure, efficient capital markets and an excellent quality of life for the country’s 8 million inhabitants. Many U.S. firms base their European or regional headquarters in Switzerland, drawn to the country's low corporate tax rates, productive and multilingual work force, and famously well maintained infrastructure and transportation networks. In 2015, the World Economic Forum once again rated Switzerland the world's most competitive economy – the country’s seventh consecutive #1 ranking. That high ranking not only reflects the country’s sound institutional environment, but also Switzerland’s ubiquitously high levels of technological and scientific research and investment.
With very few exceptions, Switzerland welcomes foreign investment, accords it national treatment, and does not impose, facilitate, or allow barriers to trade. According to the OECD, Swiss general public administration ranks #1 globally in output efficiency, while Switzerland’s public administration enjoys the highest public confidence of any national government in the OECD. Switzerland’s judiciary system is equally effective and efficient, posting the shortest trial length of any of the OECD’s 34 member countries.
Many of Switzerland's cantons make significant use of financial incentives to attract investment to their jurisdictions. Some of the more aggressive cantons have occasionally waived taxes for new firms for up to ten years; however, this practice has been criticized by the European Union and is consequently likely to be phased out between 2018 and 2020. Individual income tax rates vary widely across Switzerland’s 26 cantons. Corporate taxes also vary depending upon the country’s many different tax incentives. Zurich, which is sometimes used as a reference point for corporate location tax calculations within Switzerland, has a rate of around 25%, which includes municipal, cantonal, and federal tax.
Some formerly public Swiss monopolies continue to retain market dominance despite partial or full privatization. As a result, foreign investors sometimes find it difficult to enter these markets. Additionally, the OECD ranks Switzerland’s educational, healthcare and agriculture costs and subsidies as high when rated against output. The Swiss agricultural sector remains one of the best protected and heavily subsidized markets in the world. Despite heavy government support (direct payments comprise two thirds of an average farm income), Switzerland’s agricultural sector has the second lowest productivity among OECD members.
Switzerland is one of four members (together with Iceland, Liechtenstein, and Norway) of the European Free Trade Association (EFTA), an intergovernmental trade organization and a free trade area that operates in parallel with the European Union (EU) and participates in the EU's single market. With one million EU citizens living in Switzerland, 400,000 Swiss citizens living in the EU, and the EU accounting for the majority of Switzerland’s trade, the EU remains a critically important relationship for the Swiss. The Swiss public’s approval of a February 9, 2014 public referendum restricting immigration into Switzerland has, however, deeply strained current relations with the EU. While not a member of the EU, Switzerland remains politically bound to the European Union through its EFTA relationship, membership in the Schengen Area, and a series of more than 120 bilateral treaties. A “guillotine clause” in Switzerland’s many agreements with the EU stipulates that if one agreement is terminated or compromised, such as the free movement of people conditions in the Schengen Agreement, then the entire body of bilateral treaties will be null and void.
The implementation of the constitutionally binding February 9th, 2014 referendum on immigration restriction – which is set to enter into force by 2017 -- could therefore have enormous economic implications for Switzerland, particularly if it is implemented in violation of the Free Movement of Persons agreement. The Swiss government is currently in discussions with the EU on resolving this matter, with very little indication of a solution to date.
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