USD Requirements for Investment Firms Soar
In a move to bolster financial stability, Liechtenstein’s Financial Market Authority (FMA) has announced that investment firms must now have a minimum capital of at least $840,000 or its equivalent in euros. This comes as part of a broader effort to ensure the financial health and integrity of banks and investment companies operating in the country.
Rules Governing Bank Relationships with Customers
In Liechtenstein, there is no specific law governing relationships between banks and their customers. Instead, the general rules and provisions on contracts and legal transactions outlined in the Liechtenstein Civil Code (ABGB) will apply. This means that banks will be held to a high standard of professionalism and transparency when dealing with their clients.
Key Points
- No specific law governs relationships between banks and customers
- General rules and provisions on contracts and legal transactions apply
- Banks must maintain a high standard of professionalism and transparency
Contract of Mandate
The contract of mandate is often used in banking relationships, where a bank acts as an agent for its customers. Under this arrangement, the bank has a duty to act diligently and honestly on behalf of its client, transferring all benefits arising from the transaction to the principal. However, if the bank exceeds the scope of its authority or engages in unethical behavior, it may be held liable for any resulting damages.
General Terms and Conditions
Liechtenstein banks typically have their own General Terms and Conditions that govern relationships with customers. These terms must meet certain criteria to be valid and applicable. For example:
- Unusual provisions cannot be imposed on customers unless they are clearly disclosed in advance
- Contractual provisions that create a substantial imbalance between the parties will be void
Cross-Border Banking Activities
Banks seeking to operate in Liechtenstein must obtain a licence from the FMA. However, banks from countries within the European Economic Area (EEA) may also provide banking services in Liechtenstein under the freedom to provide services, provided they notify the FMA in advance. Banks from outside the EEA may only operate through a branch in Liechtenstein, subject to FMA approval.
Key Points
- Banks must obtain a licence from the FMA to operate in Liechtenstein
- Banks from the EEA can provide banking services with prior notification
- Banks from outside the EEA must operate through a branch and obtain approval
Conciliation Board
In response to growing concerns about financial disputes between customers and banks, the Liechtenstein government has established an extrajudicial conciliation board. This board provides a mediated process for resolving disputes, encouraging discussions between parties and leading them towards a mutually acceptable solution. While neither party is bound by the outcome, they are free to pursue further legal action if necessary.
Conclusion
The new regulations aim to ensure that banks operating in Liechtenstein operate with transparency, integrity, and a commitment to their customers’ interests. By raising the minimum capital requirements for investment firms and introducing stricter rules governing bank relationships, the FMA is working to maintain the country’s reputation as a reliable and attractive destination for financial services.