The report, based on an assessment of the FMA carried out by the IMF in 2007, was published last month and the Liechtenstein government announced on Monday that overall, it gives "good marks" to the Liechtenstein authorities.

The government, which is under pressure from onshore governments to open the financial centre up to more international scrutiny, also pointed out that the IMF had certified the Principality's high standards for countering money laundering and terror financing in its general report on the Liechtenstein financial centre, which was published in March.

According to the government, the report concluded that the FMA has made substantial progress on the path toward a modern and internationally recognized supervisory authority, while information exchange and cooperation between the FMA and foreign supervisory authorities is functioning smoothly.

The IMF classifies Liechtenstein as an Offshore Financial Centre (OFC), since many Liechtenstein financial intermediaries mainly offer services to non-residents. At the end of 2007, the FMA counted 2,089 financial intermediaries subject to FMA supervision.

The IMF assessment of banking supervision was carried out on the basis of the recommendations by the Basel Committee on Banking Supervision, while securities supervision was analysed with respect to compliance with the standards of the International Organization of Securities Commissions (IOSCO).

However, given the financial and company services offered by the Liechtenstein financial sector, the IMF that certain money laundering risks remain.

In addition to the specializations in wealth management, fiduciary services, and life insurance products, the Liechtenstein financial centre has experienced an expansion in non-banking services over the past few years, including investment undertakings and insurances.

About 90% of business is offered to non-residents, who are attracted by access to discreet and flexible legal forms, bank secrecy, and attractive tax possibilities in a stable and well-regulated environment. While the government said that risk-based counter-measures are being used by the supervisory authorities to combat the risks of money laundering and terror financing, the IMF cautioned not all available measures yet meet the required standards. The IMF inspectors expect Liechtenstein to be able to close these remaining gaps with its implementation of the 3rd EU Money Laundering Directive.

The IMF also noted in its 2008 report that the Liechtenstein authorities have made substantial progress toward compliance with the Financial Action Task Force (FATF) recommendations since the jurisdiction's removal from the FATF 'blacklist' in 2001. It also found cooperation among national authorities in the fight against money laundering and financing of terrorism to be effective, and their capacity and willingness to cooperate internationally to have improved significantly.

But to achieve further improvements, the IMF called for the legal foundations for information exchange with foreign supervisory authorities to be strengthened. The IMF also criticized the available legal remedies, which it warned may delay the surrender of information.

Nonetheless, the IMF's conclusions were welcomed by Prime Minister Otmar Hasler, who noted that the government's decision to create the FMA was a major step towards bringing financial supervision into line with international practices.