Liechtenstein Trustees Fleeing Due to Imposed United States Sanctions
Wealthy Russian Assets Freeze Liechtenstein's Financial Sector Amidst US Sanctions
Liechtenstein, a tiny European nation known for its robust financial sector, is facing a severe crisis as US sanctions target foundations with connections to wealthy Russians. The sanctions have caused an exodus of trustees from these foundations, leaving hundreds of them frozen and on the brink of dissolution.
The US Office of Foreign Assets Control (OFAC) has placed several foundations and their trustees on its sanctions list, imposing financial restrictions that result in frozen bank accounts, disabled mobile phone connections, and decreased customer activity. This has forced many trustees of Russian-linked foundations to resign out of fear of being added to the list.
As a result, approximately 475 foundations are now in a precarious situation, with around 350 having not yet expired re-appointment deadlines, 85 with suspended procedures, and 40 already ordered for liquidation. Not all of these foundations have Russian connections.
The crisis has put the Liechtenstein government under pressure to find solutions for the distressed foundations while maintaining compliance with US sanctions. Proposals include providing legal certainty to lawyers willing to wind down foundations and placing abandoned foundations in a winding-down bank or under the supervision of the Liechtenstein Financial Market Authority (FMA).
The US sanctions are impeding Liechtenstein's efforts to distance itself from its reputation as a haven for questionable funds, a reputation that has lingered since the Klaus Zumwinkel scandal. However, admission to the International Monetary Fund (IMF) suggests progress in emergence from this label.
The sanctions threaten to restrict Liechtenstein's access to the dollar system, a crucial element for its export-oriented economy. loss of correspondent banks could prove fatal for local banks cooperating with these institutions, such as LGT, VP Bank, or LLB.
The government is working closely with the US to resolve this issue and continually assess potential solutions. The new Liechtenstein government hopes for a resolution with Donald Trump, who is believed to have the potential to end the conflict and remove the issue from the table.
Sources: ntv.de, Oliver Hirt and John O'Donnell, rts
Key Implications:- The US sanctions have resulted in hundreds of foundations being frozen, with substantial assets at stake, including luxury real estate and yachts.- Liechtenstein's financial sector is under regulatory pressure to tighten controls over these foundations to prevent assets from being returned to sanctioned individuals.- The crisis threatens Liechtenstein's access to the dollar system and the potential withdrawal of correspondent banks could prove detrimental to local banks.- The sanctions target trusts linked to Russian oligarchs close to President Putin, highlighting the depth of Russia's business ties with Europe despite ongoing sanctions.
- The employment policy of trustees in Liechtenstein's financial sector is under strain due to the US sanctions, with many resigning amidst fears of being added to the OFAC sanctions list.
- The community policy of Liechtenstein is in a delicate position, as the sanctions have affected over 475 foundations, including those without direct Russian connections, potentially impacting the nation's business, politics, and general-news landscape.
