Payments
Payments
Liechtenstein has strong treaty ties to the two economic and currency areas of Switzerland and the European Union. In the financial services sector, Liechtenstein's monetary union with Switzerland and its membership in the European Economic Area (EEA) are of particular note. The Currency Treaty with Switzerland of 1980 not only made the Swiss franc the legal tender of Liechtenstein, but also made certain Swiss legal and administrative provisions applicable. The Swiss National Bank (SNB) serves as Liechtenstein's central bank. This also entails that certain financial intermediaries such as banks have reporting obligations to the SNB on grounds of monetary policy. Nevertheless, supervision of all financial service providers licensed in Liechtenstein is exclusively the responsibility of the Financial Market Authority (FMA) Liechtenstein. The Currency Treaty is a bilateral agreement under international law that is regularly updated and adjusted where necessary.
Liechtenstein has been a member of the European Economic Area (EEA) since 1995, allowing it to take part in the EU single market. The EEA joins the 27 members of the European Union and the three EEA/EFTA States (Liechtenstein, Iceland, and Norway) together in a single market. All citizens have the right to exercise the four freedoms, namely the free movement of goods, persons, services, and capital. Maintaining the homogeneity of the single market is an extremely dynamic process. A key prerequisite for this is the ongoing incorporation of EU acts with EEA relevance.
These two memberships have different effects on Liechtenstein and its financial services sector. The CHF monetary union, for instance, means that Liechtenstein is also connected to Swiss payment systems. This year, Liechtenstein will join Switzerland in switching to the new ISO 20022 payment transactions standard. At the same time, Liechtenstein as an EEA member must also implement and apply EU law relating to payment services, such as the EU Transfer of Funds Regulation for the full traceability of transfers of funds.
In recent years, the Swiss financial centre has worked intensively on harmonising payment services. The switch to the international ISO 20022 standard creates a sustainable basis for even simpler and more cost-effective processes. In particular, it brings standardisation of the multitude of existing standards, procedures, formats, and payment slips. The interfaces between the system operators SIX Interbank Clearing and PostFinance will also be standardised. This has a significant impact on Liechtenstein banks, since the overwhelming share of their payments is processed via this system.
In addition to the technical challenges, regulatory questions also need to be addressed. The focus here is on Regulation (EU) 2015/847 on information accompanying transfers of funds. Unlike Switzerland, Liechtenstein as an EEA member is required to transpose this regulation into national law. Since Switzerland must be regarded as a third country from the perspective of this EU regulation, it is important for the new Swiss payment services system to be compatible with the regulation.
In Liechtenstein, the following laws and ordinances are heavily impacted by adjustments to measures governing payment services and must be updated continuously: Banking Act, Ordinance on the Financial Services Conciliation Board, Due Diligence Act, and Payment Services Act.