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Banking Regulation in Liechtenstein

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The financial sector in Liechtenstein is regulated by the Financial Market Authority (FMA), which was established in 1994. The FMA’s primary goal is to ensure the stability and integrity of the financial system, as well as protect investors and consumers.

Licensing Requirements

To operate a bank in Liechtenstein, an institution must obtain a licence from the FMA. This requires meeting certain capital requirements:

  • Banks: 10 million Swiss francs (approximately $11 million USD)
  • Investment firms: 5 million Swiss francs (approximately $5.5 million USD)

Initial Capital

The initial capital of a bank or investment firm must be at least:

  • 1 million Swiss francs (approximately $1.1 million USD) or the equivalent in euros or US dollars

The FMA may reduce this amount in exceptional cases, taking into account the nature and scope of the institution’s business.

Rules Governing Banks’ Relationships with Customers

The Liechtenstein Civil Code (ABGB) governs the relationship between banks and their customers. This includes provisions related to contracts and legal transactions. The contract of mandate is a common type of contract used in banking, which requires the agent to act diligently and honestly on behalf of the principal.

Key Provisions

  • Contracts must be in writing and signed by both parties
  • The bank has a duty to act in good faith and with due care
  • The bank may not disclose confidential information about its customers without their consent

Cross-Border Banking Activities

Banks from within the European Economic Area (EEA) may provide services in Liechtenstein if they have notified the FMA prior to their first-time activity. Banks outside the EEA must establish a branch in Liechtenstein and obtain a licence from the FMA to provide banking services.

Conciliation Board

The extrajudicial conciliation board was introduced in 2009 to settle disputes between customers and banks. The board acts as a mediator, encouraging discussions between the disputing parties to reach a mutually acceptable solution. Neither party is bound to accept the generated solution, and they may take further legal measures if necessary.

General Terms and Conditions

Banks in Liechtenstein typically have their own General Terms and Conditions (GTCs), which must meet certain criteria to be valid and applicable. Unusual provisions that are detrimental to customers or would not be expected due to the circumstances of the contract are not enforceable unless the bank has explicitly informed the customer.

Consumer Protection Act

The Consumer Protection Act (KSchG) contains more favourable provisions for customers, superseding applicable provisions of the ABGB.