Background

The Principality of Liechtenstein is a country with a rich history situated in the heart of Europe along the river Rhine and bordered by Switzerland and Austria. In 1719, the two fiefdoms of Schellenberg and Vaduz, having previously been purchased by Prince Johann Adam Andreas von Liechtenstein, were united to form the Principality of Liechtenstein.

Ranked amongst the most politically stable countries in the world by the World Bank, Liechtenstein‘s geopolitical stability is not only a result of its proximity to Switzerland and Austria but also of its political system as a constitutional hereditary monarchy where the royal family is both well-connected and widely respected. Liechtenstein’s current head of state, Prince Hans-Adam II, the thirteenth Prince of Liechtenstein, has passed on his rule to his eldest son, Hereditary Prince Alois of Liechtenstein.

Unlike many other small financial centres, Liechtenstein’s GDP is supported by a strong industrial sector making up approximately 40% of the national GDP. As a member of the European Economic Area, Liechtenstein also adheres to rules laid down by the European Union and enjoys easy access to the European capital markets.

With sophisticated laws and regulations, an AAA rating from Standard & Poor’s and a pool of experienced practitioners to draw from, Liechtensetein has long been a well-suited platform to create Wealth Structures.

Statutory Framework

The statutory framework in respect of trusts and companies consists primarily of the Persons and Companies Act (Personen- und Gesellschaftsrecht) which is referred to in short as the “PGR” and the Law on Trust Enterprises of 10 April 1928 (Gesetz über das Treuunternehmen) referred to as the “TrUG”. Liechtenstein’s company law is harmonised with EU legislation as a result of Liechtenstein’s membership in the EEA.

The Due Diligence Law (Sorgfaltspflichtgesetz or “SPG”) and the Due Diligence Ordinance (Sorgfaltspflichtverordnung or “SPV”) in their present format set out the gold standard of KYC obligations applicable to banks and financial institutions as well as attorneys, individual trustees, trust companies and representatives or members of the management of trust companies who are licensed under art.180a of the PGR.

The policing of adherence to due diligence laws is a task given to the Financial Market Authority (“FMA”) which was established in 2005. The FMA is an independent, integrated financial market supervisory authority operating as an autonomous institution under public law. It reports exclusively to the Liechtenstein Parliament, and is thus independent of the Government and the financial market participants.