The FMA Liechtenstein is integrated into the European System of Financial Supervision. It consists of the European Systemic Risk Board (ESRB) and the three European supervisory authorities: the European Banking Authority (EBA) headquartered in London, the European Insurance and Occupational Pensions Authority (EIOPA) headquartered in Frankfurt, and the European Securities and Markets Authority (ESMA) headquartered in Paris.
The supervisory structure is based on two foundational pillars: macroprudential supervision by the ESRB and microprudential supervision by a network consisting of the European and the national supervisory authorities.
The three European supervisory authorities work within a network and in consultation with the existing national supervisory authorities, in order to ensure financial soundness at the level of the individual financial institutions as well as client protection. The European financial supervisory authorities are for this purpose endowed with the following powers in particular:
- development of binding technical standards;
- enactment of guidelines and recommendations;
- direct powers of supervision vis-à-vis national authorities (or secondarily vis-à-vis financial market participants) in the event of
a) violation of Union law (including technical standards);
b) cases of crisis (as defined by the Council);
c) differences of opinion between national authorities in cross-border cases;
d) issuing of warnings and provisional prohibition of certain financial activities where the integrity of the financial markets or the stability of the financial system is threatened;
- obtaining of requisite information concerning financial market participants;
- immediate supervisory powers for ESMA with respect to rating agencies.
The FMA Liechtenstein is a full member of the EBA, ESMA, and EIOPA. As a non-member of the EU, Liechtenstein and the FMA do not have the right to vote in the bodies of these financial supervisory authorities, however. In light of the two-pillar structure of the Agreement on the European Economic Area (EEA), the EFTA Surveillance Authority is given the power to enact binding measures applicable to the national supervisory authorities of the EEA/EFTA States and the financial intermediaries domiciled in the EEA/EFTA States. The power to enact non-binding measures applicable to the national supervisory authorities and financial intermediaries both of the EU and of the EEA/EFTA States remains with the European financial supervisory authorities. Thanks to the powers vested in it, the EFTA Surveillance Authority may take measures directly affecting the national supervisory authorities of the EEA/EFTA States and, in certain cases such as extreme crisis situations, even directly affecting the financial intermediaries domiciled in an EEA/EFTA State. In such cases, the EFTA Surveillance Authority acts on the basis of draft decisions prepared by the European financial supervisory authorities either of their own accord or at the request of the EFTA Surveillance Authority itself. For the EEA/EFTA States, legal recourse against those decisions is available not through the Court of Justice of the European Union, but rather through the EFTA Court.
The EEA/EFTA States have not granted the ESRB its own power to enact binding measures. Liechtenstein has observer status at the ESRB. The Ministry for General Government Affairs and Finance represents Liechtenstein in this regard.
Apart from the European supervisory authorities mentioned above, Liechtenstein has observer status in the following Level 2 committees:
- European Banking Committee (EBC);
- European Securities Committee (ESC);
- European Insurance and Occupational Pensions Committee (EIOPC);
- Committee on the Prevention of Money Laundering and Terrorist Financing (CPMLTF);
- European Financial Conglomerate Committee (EFCC).
These committees support the European Commission in the elaboration of technical implementing provisions for the framework legislation enacted by the EU bodies at Level 1. These committees also advise the Commission on technical questions. As an EEA member, Liechtenstein has observer status in the committees. The observer status allows the FMA to gain first-hand background information about ongoing regulatory projects at the European level.