Critic of Liechtenstein’s Trust Law

Discrimination of Beneficiaries

Unfortunately, the changes in the law do not touch the core of the problems of the Trustee Act. Beneficiaries of Liechtenstein trusts (trusts) continue to be grossly disadvantaged. The legal position of discretionary beneficiaries must be massively improved – similar to the foundation.

They will in fact

  • no party status in judicial supervisory proceedings,
  • no judicially enforceable information rights and
  • has not granted any party status in criminal proceedings against trustees.

The whole thing boils down – even under the new law – to a multi-organ failure in trust governance. A greater control deficit or loss of control is hardly conceivable. Foreign experts can only continue to shake their heads. The Liechtenstein system still has nothing to do with trust in the English sense.

Necessary improvement measures

Information obligation

The legal status of beneficiaries must be greatly improved. They urgently need party status to ensure a minimum of transparency. Clauses should be introduced that trustees must actively inform beneficiaries. Otherwise, there is a risk of dormant accounts and assets.

Whistleblower regulation

Whistleblowers are insiders in companies who publicize potentially criminal activities of these companies. Many questionable practices would have remained undiscovered without whistleblowers. They must be able to confide in authorities and courts with impunity in order to uncover crimes or irregularities. In Liechtenstein, there is an urgent need for a large leniency program, such as existing in Austria (§209a ff StPO).

Mandatory fidelity insurance/excess insurance

Most of the victims of crimes committed by trustees in recent years go away financially empty-handed. The unfaithful trustees may go to jail, but they file for bankruptcy and have no money to compensate their bounced clients. As a result of this intent, most liability insurances are getting out; the current legal minimum insurance of CHF 1 million is by far not sufficient in most cases anyway. No one is stepping in, not even the state. This can only be compensated for by fidelity insurance or excess insurance, as prescribed and made mandatory by other professional groups – e.g. Austrian bar associations. Only then can one speak of effective customer protection.

Party status for victims in criminal proceedings

Since victims and their lawyers make very important contributions to the fight against crime and the investigation of crime, it would be imperative that the law be amended to give them a party status in criminal proceedings. Otherwise, the new supervision would remain a paper tiger and “window dressing” to make the government look good.

Amendment of the Trust Act

In the March 2020 session of the State Parliament, the motion to amend the Trustee Act in agenda item 17 was adopted by 19 votes in favor and passed by resolution. This law is subject to the reservation[1] and the unused expiry of the Referendum deadline in force since 1 July 2020, otherwise on the day after the announcement. [2]

The amendment provides for a shift in the competence of the control mechanisms from the Professional Ethics Committee of Liechtenstein Trustees to the FMA. Although the Liechtenstein Chamber of Professional Trustees largely agrees with the tightened Professional Trustees Act, it tried in vain to combat the following points:

  1. Examination of the annual reports by the FMA
  2. Examination of conflicts of interest by the FMA
  3. Risk management by the FMA

Regarding point i.: In this respect, Art. 61b par. 3 now provides that the auditor or auditing company must submit the audited annual account together with the audit report to the FMA. [3]

Regarding Points ii. and iii.: These two points were previously regulated by the Professional Ethics Committee. In the eyes of the Government of the Principality of Liechtenstein, the Professional Ethics Committee is not up to the task and she even spoke of an “imperceptible Effectiveness”. [4]

The Landtag did not implement these wishes of the trustees and rejected their objections. These points improved the situation. But essentially, a whole series of serious deficits and problems remain completely unaffected by the amendment.

The government, which came under pressure due to the negative examples mentioned in the introduction, was called upon to act to prevent further damage to the reputation of the Liechtenstein financial centre[5] and to reform the Trustee Act. The impression is to be conveyed that the government is aiming for “credible abuse control” and “effective customer protection”.

But in doing so, the law resembles more a Potemkin village – big good sounding words, but without any serious meaning behind them. New provisions such as “internal control” (Art 22b) or “risk management” (Art 22c) were introduced.

But if you read the text of the law more closely, it quickly becomes clear that these are trivialities. The built-in reservation – Art. 21a para. 1 let. b, Art. 21b and Art. 22a to 22c do not come into force until 01.01.2021 – also reinforces the accusation of „Window Dressing“.

[1] Reservation concerns Art. 21a para. 1 let. b, Art. 21b and Art. 22a to 22c; these provisions enter into force on 01.01.2021

[2] Status 03/12/2020

[3] Government Statement to the Parliament of the Principality of Liechtenstein, BuA No. 6/2020, Chapter I Point 3

[4] vgl.;art173,413105 Status


[5] vgl

[6] Proprietary trading as defined in the Amending Act is defined in Art. 3 para. 1 let. f (emphasis not on the original):

“Transactions in which a self-interest of the trustee or the trust company exists on the basis of a financial, personal or business relationship or an employment relationship, which gives rise to the suspicion that the independence of the trustee or the trust company could be endangered.

[7] vgl. arch%26filter1%3dvt%26filter2%3dVernehmlassungsbericht&sh=-1811429704 page 47

[8] vg.l. earch%26filter1%3dvt%26filter2%3dVernehmlassungsbericht&sh=-1811429704 page 49 – 50

[9] h%26filter1%3dvt%26filter2%3dVernehmlassungsbericht&sh=-1811429704