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Crime and Punishment in Liechtenstein: A Country Profile

NCJ Number
International Journal of Comparative and Applied Criminal Justice Volume: 33 Issue: 2 Dated: Fall 2009 Pages: 325-348
Matthew Pate
Date Published
24 pages
This paper presents an overview of Liechtenstein's historical foundations and government structure, with a focus on its criminal justice institutions and the global implications of laws governing its financial institutions.
Although this tiny nation encompasses only 61.7 sq. miles and has only 35,200 inhabitants, it has been at the center of international affairs and has a long history as a European crossroads. Due to its limited possibilities of internal trade, Liechtenstein's economy is highly dependent on exports and the inflow of foreign capital. Consequently, the economy is more exposed to external influences than those of larger countries. This has caused the Liechtenstein government to reconsider its position regarding both internal legal regulations and its role as a member of the global criminal justice community. Liechtenstein has long been viewed as an excellent place to conduct business. It has a low tax rate, accommodating laws of incorporation and corporate governance, and well-known secret banking practices. These features have attracted funds from abroad, and according to the U.S. State Department, "these same factors have historically made this country attractive to money launderers." Also, in the wake of the terrorist attacks of 9/11, Liechtenstein, along with several other micro-states, were forced to acknowledge (at least tacitly) that its secretive banking practices inadvertently served to fund terrorist activities. Whether motivated by international diplomatic pressure or economic necessity, the Liechtenstein government reformed its national banking practices and reasserted its position as a responsible participant in global affairs. In October 2001, Liechtenstein established the Financial Intelligence Unit as an early warning system for potential abuse of the country's banking practices. In July 2002, the United States signed a mutual aid treaty with Liechtenstein designed to combat money laundering, terrorist funding, and other suspect financial activities. 1 table, 17 notes, and 59 references