FMA Liechtenstein Regulatory Entity
The Financial Market Authority, FMA, is the main agency for financial regulation in Liechtenstein. It is an independent and non-segregated financial market supervisory authority that operates under public law.
It regulates all financial market supervisors in Liechtenstein. In addition to that, the Financial Market Authority (FMA) is responsible for setting and enforcing financial regulations.
It aims to encourage and assist the development of systematic, non-discriminatory and transparent financial markets.
Table of contents
- FMA mission
- History of FMA
- FMA regulated entities
- Roles of FMA in financial regulation
- Core functions of FMA
- Supervision bureau
- Strategy development and management bureau
- Policy and markets bureau
- International affairs
- European cooperation
- Global integration of FMA
- Anti-money laundering and combatting the financing of terrorism
- Bilateral cooperation
- Bottom line
FMA mission
As one of the main regulatory bodies in Liechtenstein, it is a part of FMA’s mission to ensure the stability of markets according to the legislative mandate. On top of that, FMA aims to protect clients and disallow abuses.
It aspires to create a balanced financial system where markets can be regulated efficiently on a fair basis. An effective regulation system is crucial for the economic welfare of a country.
The purpose of FMA is to provide a safe environment while promoting the economic and national well-being of the country.
History of FMA
On January 1, 2005, Financial Market Authority was launched as an independent and non-segregated financial market supervisory authority. Financial markets are such an integral part of the economy of Liechtenstein that they constitute almost a quarter of the GDP.
The government and parliament of Liechtenstein promised themselves to bring about an independent and well-functioning regulatory body.
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FMA regulated entities
The Financial Market Authority, Liechtenstein regulates the following entities to ensure the provision of an unbiased and transparent financial system:
- Banks
- Insurance companies
- Credit card companies
- Mortgages
- Financial market supervisors
- Financial market laws
- Financial market ordinances
- Financial market guidelines
- Anti-money laundering
- Anti-financing terrorism
- Pension Funds
- Investment Companies
- Asset Management Companies
- Other Financial Intermediaries
Roles of FMA in financial regulation
As the prime regulatory services provider in Liechtenstein, Financial Market Authority (FMA) holds authority over the banks, insurance companies, credit card companies, and the financial market laws.
The main goal is to ensure a stable and equitable financial system. On top of that, FMA also ensures that the financial market abides by all international laws and the laws in Liechtenstein.
FMA plays an integral part in the stability of Liechtenstein’s economy. Therefore, the institute works to form such laws and policies equally beneficial to both the depositor and the investor.
In addition to that, FMA is responsible for preventing crimes and money laundering within the financial system.
Below are some prominent roles that FMA has to perform to fulfil the responsibilities mentioned above:
- Constant and fair supervision
- Granting of Licenses
- Combat abuses and set punishments for violations
- Regulate wit stakeholders
- Meeting international standards while keeping in mind the competitiveness of the Liechtenstein financial market
- Extend dialogue and reasoning with fellow international regulatory bodies
- Establish itself as an independent and internally organized institute concerning the principles of the private sector.
- Make a team that goes along perfectly.
Core functions of FMA
The regulatory framework of FMA aims to combat the current challenges faced by the financial market. Therefore, they have to respond to the threats effectively and take suitable measures.
The core functions of FMA have been divided into three bureaus for a better understanding.
- Supervision Bureau
- Strategy Development and Management Bureau
- Policy and Markets Bureau
Supervision bureau
As the name suggests, this bureau is responsible for supervising the system and ongoing services.
To gain the investor’s confidence, it is important to monitor market participants’ compliance, conduct, and competency.
The supervision can further be divided into four categories that are:
- Scope and classification
- Individual risk assessment
- Review and supervision of ICAAP
- Overall assessment and supervisory measures
Strategy development and management bureau
This department is responsible for devising strategies for policies, look over the financial sectors. On top of that, it also has to manage the administrative responsibilities of the financial system.
The intention is to raise the investor’s confidence by providing a well-organized system and compensating whenever needed.
Policy and markets bureau
The department deals with policymaking and licensing. In addition, it is responsible for forming a regulatory framework that complies with both the international law as well as the law of Liechtenstein.
It has significant control over the market. This bureau deals with transgressions accordingly. When any market participant violates the laws, FMA has the power to punish them for their conduct. The punishment can be in financial penalties, certain prison time following the crime they have conducted or limiting their operations.
International affairs
Most of the clients and markets that FMA Liechtenstein works with are international. FMA is a strong regulatory body which is why it has global ties. The globalization of financial markets brings greater challenges that require stronger international cooperation.
European cooperation
The FMA Liechtenstein’s international cooperation is largely influenced by its membership in the European Economic Area (EEA). As a member of EEA, FMA is bound to implement all European laws regarding financial markets in its national law.
Global integration of FMA
Financial Market Authority, FMA is a member of many other significant global supervisory bodies. Therefore, it is crucial to strengthen their international ties.
It is a part of the International Organization of Securities Commission (IOSCO), the International Association of Insurance Supervisors (IAIS), the International Organization for Pension Supervision (IOPS), to name a few.
Anti-money laundering and combatting the financing of terrorism
FMA, Liechtenstein is represented in the Moneyval committee of the Council of Europe for AML/CFT.
Bilateral cooperation
In addition to keeping ties with multilateral cooperation globally, especially the European market, FMA Liechtenstein also maintains contact with foreign partner authorities.
For example, bilateral relations with Switzerland are particularly close because of the currency treaty.
Bottom line
To sum it all, the Financial Market Authority Liechtenstein came into existence to regulate and supervise various financial sectors in the region. It has been doing the job effectively over the years.
The institute has contributed to the national economy by regulating the local financial market and strengthening international economic ties.
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