Values and corporate management
Information checkedInformation geprüft Values and corporate management
The values of "integrity", "respectfulness", "excellence" and "pioneering" (see chapter "Strategy and organisation") form the basis for the corporate management of the LLB Group. Our Code of Conduct provides a reliable guiding framework for the value-based and responsible actions of all employees (see chapter "Employees"). We are guided by the needs of our clients and pay particular attention to meeting their security needs and our data protection standards for the use of the various distribution channels at all times (see chapter "Finance and risk management").
Corporate culture and value basis
The LLB Group's vision is encapsulated in the motto: "We set standards for banking with values." Our managers and employees are motivated to act in line with our values of integrity, respectfulness, excellence and pioneering. By living these values, our managers firmly anchor our value culture throughout the organisation. Our employees also learn more about our value basis through various "Live the brand" measures.
To keep up with changing markets and client needs, we rely on employees who are motivated to think for themselves and have the courage to initiate improvement processes. As part of the "Cultural journey" project, we encouraged our employees again during the reporting year to bring in ideas, to question their actions and to exchange views. The core topics of the cultural journey were addressed and developed further on the intranet, at employee appraisals and through offerings for managers. The topic of "Ownership and delegation" was an element in the target agreements for all employees. For every employee, what issues they champion and which overarching topics they take ownership of and promote was recorded.
Regulatory framework and developments
LLB considers it a top priority in a highly regulated business environment to closely monitor ongoing regulatory developments and, where possible and expedient, to play an active part in shaping developments as well as to prepare for the implementation of new requirements in good time. All of our employees contribute to the implementation of regulatory requirements and thus make an essential contribution to the success of the business and to the good reputation of LLB. The most important regulatory requirements and developments from the reporting year are summarised below. We have focused primarily on regulations that were of particular importance in the reporting year due to their topicality. Other regulatory requirements that are of relevance to the LLB Group can be found in previous annual reports.
Implementation of regulatory frameworks 2009–2020
- 3rd EU Anti-Money Laundering Directive
- Liechtenstein Declaration
- AIFMG Act
- Complete revision of DDA
- 4th EU Anti-Money Laundering Directive
- Refinement of c-border framework AEOI: Agreement signed by Liechtenstein / EU
- UCITS V
- Complete revison of IUA
- Implementation of AEOI
- Revision of Due Diligence Act (DDA)
- Markets in Financial Instruments Directive (MiFID) II
- General Data Protection Regulation (EU) (GDPR)
- EU Mutual Assistance Directive
- Deposit Guarantee Schemes Directive (DGSD)
- EU Payment Services Directive (PSD2)
- Implementation project FinSA / FinIA Switzerland
Financial centre strategy
In 2019, the Government published a comprehensive financial centre strategy designed to further enhance the competitiveness of the Liechtenstein financial centre. It reinforces that the path of tax compliance should continue to be pursued. The same applies to compliance with international rules and standards. The focus of the strategy is on unrestricted and equal access to markets and improving the framework conditions for innovative enterprises. In addition, the Government has set four strategic goals in order to meet international expectations in the area of combating money laundering and terrorist financing. Dialogue with key partner countries is to be intensified. Membership of international bodies such as the International Monetary Fund (IMF) is thus to be explored. The Government also attaches great importance to digitalisation and blockchain technology. With the Blockchain Act (Token and TT Service Providers Act, TVTG), Liechtenstein is the first country in the world to develop a legal basis for the token economy.
International tax topics
Disclosure of cross-border tax planning arrangements
According to the OECD, the lack of comprehensive and relevant disclosure about potentially aggressive or abusive tax planning strategies is one of the major challenges facing tax authorities. In this context, the EU, with the amendment to the EU Mutual Assistance Directive (Directive 2011 / 16 / EU – “DAC 6”) which came into effect in 2018, has introduced a disclosure requirement for cross-border tax arrangements directed at EU intermediaries (especially fiduciaries, lawyers, tax advisers and banks).
International cooperation on tax topics
The Principality of Liechtenstein is intent on creating an attractive tax system that takes account of European law and international developments. Hence, the Principality has implemented the international automatic exchange of information with 114 partner or reporting countries since the beginning of 2016. The FATCA agreement with the USA was concluded in 2014.
Plans for a digital tax
The OECD's plans for an internationally unified approach to digital taxation presented in autumn 2019 are not really progressing. It is unclear to what extent they will become more concrete and be realised.
Access to the EU market
Thanks to its membership of the EEA, Liechtenstein has unrestricted access to the internal European market. The internationally oriented fund location benefits in particular from this. It has a legal basis that is focused on clients and investor protection. The investment fund law comprises three pillars: the Act on Certain Undertakings for Collective Investment in Transferable Securities (UCITS Act, 2011), the Law on Alternative Investment Fund Managers (AIFM Act, 2013) and the Investment Undertakings Act (IUA), which was revised in 2016.
EU General Data Protection Regulation (EU GDPR)
With the introduction of the EU General Data Protection Regulation, the European Union has harmonised the rules on collecting and processing personal data by companies and public authorities, putting it in a global leadership position. The rules have applied in Liechtenstein, too, since the end of May 2018. LLB has implemented these requirements Group-wide. Content-wise, the EU GDPR provides in particular for the "right to be forgotten", under which a person can have the data controller erase their data from the web. With the one-stop-shop mechanism, a person can notify the data protection authorities in their member state directly of any data breaches, regardless of where the breach occurred. The regulation also includes a right of access for individuals concerning the processing of their personal data and sets out requirements for contractual arrangements in relation to the processing of data by third parties and the transmitting of personal data to EU third countries. LLB has established corresponding rules which are applicable throughout the Group and made the necessary organisational and technical adjustments.
Data protection laws in Switzerland and Dubai (DIFC)
The Swiss Data Protection Act was completely revised in 2020 and partially aligned with the EU GDPR. But it retains its own basic concept. The Federal Council has not yet set the date for the entry into force of the new rules.
In the Dubai International Financial Centre (DIFC), the new Data Protection Law came into force on 1 July 2020. It sets an important benchmark for data protection in the Middle East and largely aligns the legal situation with the EU General Data Protection Regulation, which is gradually becoming an international benchmark.
Protection against money laundering and terrorist financing
Liechtenstein has a zero-tolerance policy towards money laundering and terrorist financing. As a member of the EEA, Liechtenstein has implemented the 4th EU Anti-Money Laundering Directive. The 5th Anti-Money Laundering Directive regulates transparency with regard to beneficial owners as well as risks relating to virtual currencies. It also tightens and harmonises the criteria for assessing high-risk third countries. These international requirements have been implemented domestically through the Due Diligence Act and the Due Diligence Ordinance.
Compliance with international standards
The Financial Intelligence Unit (FIU) serves as the country's central authority for obtaining and analysing information that is necessary to recognise money laundering, predicate offences for money laundering, organised crime and terrorist financing. It represents Liechtenstein in the Committee of Experts on anti-money laundering and terrorist financing in the EU. The current version of the FIU Law of 2017 and the adaptations made to the Due Diligence Act ensure Liechtenstein is fully legally compliant with the international standard.
In 2002, 2007 and 2013/2014, the International Monetary Fund (IMF) and Moneyval (the Council of Europe's Committee of Experts) assessed to what extent the Liechtenstein provisions on anti-money laundering and combating the financing of terrorism meet the standards laid down by the Financial Action Task Force (FATF 40 + 9 Recommendations). The IMF and Moneyval attested positively to Liechtenstein's standards in combating money laundering and financing of terrorism in their last report. Liechtenstein carried out the National Risk Assessments (NRA) in 2016/2017 and updated them in 2020, not least because Moneyval will be conducting its country assessment in autumn 2021 and will be evaluating the effectiveness of measures in preventing money laundering and terrorist financing.
Deposit guarantee schemes and investor compensation
Bank Recovery and Resolution Directive (BRRD)
With the Recovery and Resolution Act (RRA), Liechtenstein has significantly improved its financial stability, in that a statutory mechanism is available to counteract the "too big to fail" risk of large, systemically important banks in a crisis. The EEA country has thus transposed the Directive 2014 / 59 / EU on the recovery and resolution of financial institutions (the Bank Recovery and Resolution Directive (BRRD)) into national law. On 1 January 2017, the Liechtenstein Financial Market Authority (FMA) created an operationally independent organisational unit acting as a resolution authority. Its primary objectives are to avoid significant adverse effects on the stability of the Liechtenstein financial market and to protect client funds and client assets. Systemically important banks in Liechtenstein, of which LLB AG is one, are required to draw up a recovery plan. The recovery plan contains an analysis of measures determined as part of an overall bank stress test that can be taken to restore its financial position under various crisis scenarios.
Deposit Guarantee Schemes Directive (DGSD)
The DGSD requires EEA member states to recognise at least one national guarantee scheme that is responsible for the implementation of the deposit guarantee scheme at banks. All banks must belong to a deposit guarantee scheme which is supervised by a national authority. In Liechtenstein, this function is assumed by the FMA. The new Deposit Guarantee and Investor Compensation Act (DGICA) entered into force in 2019.
In the event of a compensation case, the Deposit Guarantee and Investor Compensation Foundation PCC (EAS) would ensure that the financial consequences for depositors and investors are at least mitigated by covering depositor claims from eligible deposits up to CHF 100'000 and investor claims up to a maximum of CHF 30'000. Eligible deposits are all kinds of account balances as well as call money and time deposits.
MiFID II / Liechtenstein
The Liechtenstein banking centre and thus also LLB implemented the Markets in Financial Instruments Directive (MiFID II). It simplifies cross-border financial services and allows investment firms, banks and stock markets to 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 accompanying Regulation (MiFIR), which has been in force since January 2018, brought significant changes compared to the previously applicable laws. These include the strengthening of investor protection and improving the integrity and transparency of the financial markets. High-frequency trading is subject to regulation and supervisory oversight; position limits in commodities trading are strict. Throughout the EU, consultations at bank branches and consultations by telephone must record and document in a comprehensive manner why a financial product was recommended and how it matches the client's risk profile.
FinSA / Switzerland
In November 2019, Switzerland decided to follow a balanced and modern overall approach to investor protection with the adoption of the Financial Services Act (FinSA) and the Financial Institutions Act (FinIA). A corresponding implementation project is underway. The two acts aim to create a level playing field for financial intermediaries and to improve client protection. The FinSA contains rules of conduct towards clients that financial service providers must comply with. It also provides for prospectus requirements and requires a basic information sheet for financial instruments that is easy to understand. The FinIA essentially standardises the authorisation rules for financial service providers.
Rules of the game in the EU payment systems market
For LLB, the harmonisation and the digitalisation of the European payment systems market are important topics. As an EEA country, Liechtenstein adopted the second EU Payment Services Directive (PSD2) in 2019. The revised Payment Services Act came into force on 1 October 2019. The PSD2 introduces new information and liability rules for payment service providers that are aimed at improving customer protection. It also requires strong customer authentication and limits the scope of previous exemptions. In this connection, two new types of financial intermediary, namely the payment initiation service provider and the account information service provider, have been created. At LLB, the adjustments required to implement the PSD2 have been made.
EU Mortgage Credit Directive
The Directive 2014 / 17 / EU on credit agreements for consumers relating to residential immovable property has been in force in the EU member states since 2014. It creates a single legal framework for the granting of mortgage credit agreements to consumers in the internal European market. As a member of the EEA, Liechtenstein is obliged to transpose this directive into national law. This will happen with the Mortgage and Real Estate Credit Act, which will enter into force on 1 April 2021. The directive serves to protect consumers taking out loans to buy residential property. Under the directive, the banks are subject to various obligations when granting a loan. These include, in particular, (pre-)contractual information requirements, creditworthiness assessment requirements and qualification requirements for bank employees involved in granting loans.
LLB has implemented the act in a timely manner. The provisions have been incorporated into the relevant processes, with the consultation process being particularly affected.
Capital adequacy requirements
Revision of EU banking regulation
With the Capital Requirements Regulation (CRR) and the revised Capital Requirements Directive (CRD IV), a first part of the Basel III standard was implemented in Europe in 2014. The CRR and the CRD IV entered into force in Liechtenstein in February 2015. The new EU banking package, which was published by European legislators on 20 May 2019, implements further key elements of the Basel III framework, which was essentially completed at the end of 2017, at European level through amendments to the CRR (CRR II) and CRD (CRD V). The CRR II is applicable in the EU from June 2021, while the CRD V had to be implemented by the EU member states by 28 December 2020. It is expected to come into force in Liechtenstein in 2022. With the Bank Recovery and Resolution Directive (BRRD), European legislators have introduced minimum requirements for the recovery and resolution of credit institutions. The BRRD was transposed in Liechtenstein in a timely manner through the Recovery and Resolution Act (RRA). Minimum requirements for own funds and eligible liabilities (MREL) are defined within the framework of the BRRD in a move to increase the liabilities that could be bailed in in the event of resolution (bail-in capital). This should increase the resolution capacity and reduce the risk of having to resort to public funds for resolving banks. Within the framework of the BRRD II, which is part of the current EU banking package, the regulations on resolution and MREL are being updated and expanded. The implementation of the BRRD II and the determination of the MREL are still pending in Liechtenstein.
Transparency Regulation and Taxonomy (Regulation in the sustainability sector)
The EU wants to redirect capital flows towards sustainable investments and anchor sustainability in risk management. These objectives stem from the Sustainable Finance Action Plan adopted by the European Commission in March 2018. This affects LLB AG, LLB Austria, as well as other institutions in Liechtenstein and Switzerland. The background to this is the gradual tightening of requirements in the European Economic Area (EEA) for regulatory realignment to secure EU market access for Swiss financial service providers as well as the growing expectations of all market participants. The LLB Group is following developments closely and taking the steps that are necessary to meet the new requirements. For instance, in the second half of 2020, the "Sustainability" Group project focused, on the one hand, on strategic aspects and, on the other, on regulatory developments in the EU, the EEA and Switzerland. Specifically, the necessary preparatory work was undertaken to implement the requirements of the regulation on sustainability-related disclosures in the financial services sector (SFDR) and the new requirements of the so-called EU Taxonomy Regulation.