Financial Crime World

Banking Law in Liechtenstein

Applicable Law

The banking sector in Liechtenstein is governed by various laws and regulations that ensure fair relationships between banks, customers, and other third parties. The primary applicable law is the Liechtenstein Civil Code (Allgemeines Bürgerliches Gesetzbuch – “ABGB”; LGBl. 1003/001).

Contract of Mandate

The contract of mandate is commonly used in banking transactions. Pursuant to § 1009 ABGB, the agent has a duty to act diligently and honestly, in accordance with their promise and the granted power of attorney.

  • The agent must transfer all benefits arising from the transaction to the principal, unless otherwise agreed upon.
  • They may use any means necessary or customary for the transaction, but if they exceed their authority, they will be liable for any consequences.

Customer Waiver

In the case of banks, investment firms, or asset management companies, customers are generally deemed to have waived their right to receive fees, commissions, or grants received by the bank from third parties, provided that the bank has complied with all disclosure obligations and the customer has instructed them to carry out the transaction after such disclosure.

General Terms and Conditions

Liechtenstein banks typically have their own General Terms and Conditions (GTCs) that govern their relationships with customers. GTCs must meet certain criteria to be valid and applicable, including not containing unusual provisions detrimental to the customer or causing a substantial imbalance of contractual rights and obligations.

  • The Consumer Protection Act (Konsumentenschutzgesetz – “KSchG”; LGBl. 2002/164) also applies and supersedes any provisions of the ABGB that are more favorable to customers.

Cross-Border Banking Activities

Banks may only take up business in Liechtenstein on the basis of a license issued by the Financial Market Authority (FMA). However, banks from EEA countries may provide services in Liechtenstein under the freedom to provide services, subject to notification by their home country’s competent authority.

  • Banks from third countries must establish a branch in Liechtenstein and obtain a license from the FMA.

Conciliation Board

The extrajudicial conciliation board (Schlichtungsstelle) was introduced by ordinance on October 27, 2009, to resolve disputes between customers and banks. The conciliation board acts as a mediator and encourages discussions between the parties to reach a mutually acceptable solution.

  • However, neither party is bound to accept the generated solution, and they are free to take further legal action if desired.