LIECHTENSTEIN Law and Practice Contributed by: Lukas-Florian Gilhofer and Mathias Bitschnau, Ospelt & Partner Attorneys at Law Ltd
• heightened supervisory activity by the FMA, includ - ing targeted reviews of sanctions compliance at regulated institutions; • increased awareness of the risk of sanctions circumvention, in particular through third country connections; • strengthened international co-operation within the framework of FATF and the Egmont Group; and • growing demand for specialised compliance ser - vices and training in the field of sanctions law. In addition, the phenomenon of so-called “orphaned legal entities” – triggered by the extraterritorial effect of US OFAC sanctions, which has led numerous Liechtenstein fiduciaries to resign from mandates with Russian connections – has emerged as one of the most pressing structural challenges for the Liechten - stein financial centre. The aim of the measures cur - rently under discussion is to restore the legal capac - ity of affected foundations and establishments and to ensure that asset management structures can be properly continued or wound up in full compliance with applicable sanctions law. 1.3 Key Industries Sectors in Liechtenstein particularly affected by sanc - tions regulations include: • the financial sector (banks, insurance companies, fund companies and asset managers); • the fiduciary sector (trustees, foundations and establishments); • the legal and advisory sector (lawyers, tax advisers and auditors); and • the export sector – in particular companies with supply chains or customer relationships in sanc - tioned countries or with sanctioned persons. Sectors in which sanctioned individuals are – or were previously – active are equally affected, as third-party actors such as fiduciaries, banks and legal advisers refuse to engage with any natural or legal person even remotely connected to them, regardless of whether that connection is purely historical or indirect in nature. The fiduciary sector has been hit hardest by the tight - ening sanctions regime. Trustees face direct regula - tory and liability pressure from both the Liechtenstein
Chamber of Professional Trustees (THK) and the FMA. Resignations from mandates with Russian connec - tions have frequently been driven by regulatory con - siderations rather than by an actual sanctions risk on the client’s part. Each case requires individual analysis and a legally sound path to resolution. Even where trustees resigned under regulatory pres - sure or as a precautionary measure, the affected foun - dations and establishments often continue to hold substantial assets yet are no longer able to act. This has created an increased need for legal intervention and a growing volume of mandate requests. While the process of restoring the legal capacity of such entities – or winding them up in an orderly manner – can be complex, a well-established practice has developed in Liechtenstein in recent months that allows these situ - ations to be handled efficiently and in full compliance with applicable sanctions law. 1.4 Overview 1.4.1 Types of Sanctions Liechtenstein implements both individual sanctions, targeting natural and legal persons, and sectoral sanc - tions, decided at the UN and EU levels and transposed into national law through autonomous adoption. Individual sanctions include the freezing of funds and economic resources belonging to listed persons and organisations, as well as travel restrictions in the form of bans on entry and transit. Sectoral sanc - tions encompass goods and technology embargoes – including export control measures for dual-use items and military equipment – service prohibitions with respect to financial, transport, IT and advisory servic - es provided to sanctioned countries or persons, and sector-specific measures targeting particular areas of the economy such as energy and defence. These sanctions are based on resolutions of the UN Security Council as well as on measures adopted by the EU, which Liechtenstein implements within the framework of the EEA Agreement and through bilat - eral arrangements with Switzerland. 1.4.2 Scope of Sanctions Liechtenstein implements both individual sanctions, targeting natural and legal persons, and sectoral sanc -
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