Regulation, Supervision and Transparency
In November, 2004, Liechtenstein's Financial Services Authority announced that following Parliament's approval in June of the new Law (Organization Act) on Supervision of the Liechtenstein Financial Market, the new, independent, and integrated Financial Market Authority created by the Act would commence operations on 1 January 2005.
The new single authority assumed the functions and responsibilities of the three existing regulatory bodies, namely the Financial Services Authority, the Due Diligence Unit, and the Insurance Division of the Office of Economic Affairs. The FMA also took over the existing staff of the three authorities.
Under the auspices of the legislation, the Financial Market Authority assumed responsibility for safeguarding the stability of the Liechtenstein financial market, the protection of customers, the prevention of abuses, and the implementation of and compliance with recognized international standards.
The core responsibilities of the FMA encompass the supervision and regulation (on behalf of the Government) of the Liechtenstein financial market, although the FMA is independent of the Government and of the financial market participants under its supervision.
The Law on Asset Management (Asset Management Act, AMA) entered into force on 1 January 2006. This Act lays the foundation for asset management companies as new, internationally recognized financial intermediaries. The FMA supervises implementation of the Asset Management Act and the related ordinances as well as compliance with regulations.
In response to its inclusion on the FATF money laundering blacklist in 2000, Liechtenstein enacted new money laundering legislation, including a new regulation in relation to the the law on the duty of care, which came into force on January 1 2001. The government has also abolished the existing privilege of trustees and lawyers by which they do not have to disclose the identity of their clients to banks where funds are invested.
On March 12, 2009, Liechtenstein recognized the OECD standard on tax cooperation as binding. The government's goal was to conclude and sign at least 12 Tax Information Exchange agreements (TIEAs) by the autumn of 2009 and to advance negotiations on additional double taxation agreements. OECD-compliant TIEAs and double taxation agreements have been signed with the United States, France, Germany, the United Kingdom, Ireland, and Luxembourg. By the end of 2010, 23 OECD-compliant tax agreements had been signed by Liechtenstein. Liechtenstein has also agreed to implementation of the OECD standard as part of the multilateral European Union Anti-Fraud Agreement and thus with all 27 member states of the EU.
Liechtenstein has also signed a special agreement with the UK that will give UK taxpayers with undisclosed accounts in the Alpine jurisdiction the opportunity to disclose income at a reduced penalty, or face having their accounts shut down.
The so-called Liechtenstein Disclosure Facility (LDF) agreement was signed at the same time as the TIEA between the two countries. Launched on September 1, 2009, it will run until March 31, 2015. Under the agreement, Liechtenstein financial intermediaries will have to review all clients, identifying those who need to confirm their tax position with the UK tax authority, HM Revenue and Customs (HMRC) and advising them to do so within a specific time frame.
Where a UK investor confirms to the intermediary that they are cooperating with HMRC, the financial intermediary can continue to provide financial services to that person. Where a UK investor cannot confirm that they are cooperating with HMRC, the financial intermediary must withdraw financial services in Liechtenstein or apply various “sanctions.” The Liechtenstein government stated at the time of the agreement that a new law would be introduced oversee this process.
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