Since January 1, 2020, Liechtenstein has enforced the Blockchain Act (TVTG), creating a comprehensive legal structure for cryptocurrencies and related services.
Subsequent amendments to the Due Diligence Act (SPG) and the Due Diligence Ordinance (SPV) have integrated the Financial Action Task Force (FATF)'s crypto Travel Rule.
In Liechtenstein, the Travel Rule obliges VASPs to exchange detailed transaction-related personal information for all virtual asset transfers above the minimum threshold of 1 Swiss Franc (CHF). This includes the full names, wallet addresses, and other identifying information of the transaction's originator and beneficiary.
VASPs in Liechtenstein must register as outlined in the TVTG, with the Financial Market Authority (FMA) having three months to respond to registration applications. All VASPs must also verify the identities of counterpart VASPs, particularly when dealing with high-risk jurisdictions, and implement enhanced due diligence measures. These requirements apply to both domestic and cross-border transfers.
For Originators:
For Beneficiaries:
In case the required Travel Rule data is missing, incomplete, or delayed, the beneficiary VASP must implement risk-based procedures to identify and rectify gaps, potentially suspending or rejecting the transfer until compliance is achieved.
In Liechtenstein, VASPs like cryptocurrency exchanges and wallet services must adhere to the Travel Rule, supervised by the Financial Market Authority (FMA). This regulation is crucial for preventing money laundering and terrorism financing.
Here’s what they need to do:
VASPs must register and get licenses as per the Trustworthy Technologies Act (TVTG), with the FMA reviewing and approving these applications. This ensures that all VASPs meet high regulatory standards and contribute to a secure financial system.
Exchanges must monitor all transactions, especially those involving unhosted wallets that let owners directly control their private keys. This includes collecting extra information on these wallets during high-risk transactions to prevent illegal activities.
For this, VASPs must conduct laser-focused diligence and use blockchain analytics tools to verify the wallets' ownership in transactions. Additionally, transactions involving these wallets must be scrutinized using blockchain analysis tools to ensure they do not facilitate money laundering or terrorist financing.
Both sending and receiving VASPs need to develop policies tailored for managing transfers involving unhosted wallets. These policies must focus on thorough verification and monitoring to align with local and international regulations.
Liechtenstein enforces a low threshold for the Travel Rule, requiring compliance for transactions as small as 1 CHF. This is in contrast to places like the United States, where the threshold is $3,000, and Singapore, where it's S$1,500. The European Union, on the other hand, is exploring the idea of applying the FATF Travel Rule to all crypto transactions, regardless of amount.
Since implementing the FATF Travel Rule in 2020, Liechtenstein requires detailed verification for cryptocurrency transactions over 1 CHF. This is in sharp contrast to the higher thresholds in the United States and Singapore and the potential for no minimum in the European Union. Liechtenstein's strict approach aims to safeguard financial transactions and prevent illegal activities like money laundering and terrorism financing within its borders.
In Liechtenstein, the FATF Travel Rule applies to all cryptocurrency transactions above 1 Swiss Franc (CHF).
VASPs must collect and verify full names, wallet addresses, and additional identifying information such as a physical address, ID document number, customer identification number, or date and place of birth for both originators and beneficiaries in Liechtenstein.
VASPs must use blockchain analytics tools to verify the ownership of unhosted wallets and conduct enhanced due diligence to prevent illegal activities in Liechtenstein.
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Veriscope, the compliance infrastructure on Shyft Network, empowers Virtual Asset Service Providers (VASPs) with the only frictionless solution for complying with the FATF Travel Rule. Enhanced by User Signing, it enables VASPs to directly request cryptographic proof from users’ non-custodial wallets, streamlining the compliance process.For more information, visit our website and contact our team for a discussion. To keep up-to-date on all things crypto regulations, sign up for our newsletter and follow us on X (Formerly Twitter), LinkedIn, Telegram, and Medium.
