LIECHTENSTEIN: Financial Sanctions and Embargoes Raise Questions for Local Intermediaries and International Clients

Introduction

In recent weeks, international sanctions have been at the forefront of global attention. In Liechtenstein, the implementation of these sanctions has raised numerous questions for local financial intermediaries as well as international clients and advisors.

Legal Basis for Implementing Sanctions in Liechtenstein

The legal basis for implementing international sanctions in Liechtenstein is the Law on the Enforcement of International Sanctions (International Sanctions Act, ISA). This legislation enables the country to enforce United Nations (UN) and European Union (EU) sanctions. According to the ISA, Liechtenstein automatically adopts UN sanctions lists and relevant amendments, making changes to these lists legally binding in the country.

Financial Intelligence Unit (FIU) Newsletter Service

The FIU offers a newsletter service for international sanctions updates, providing timely information on changes to UN sanctions lists. Additionally, Liechtenstein may independently implement EU sanctions through ordinances based on the ISA.

Coercive Measures

The government has implemented various coercive measures at the national level to enforce these sanctions, including:

• Restrictions on transactions in goods and services
• Payment and capital transfers
• Travel bans
• Licensing and reporting obligations

Recent Developments: Ukraine-Related Sanctions

In recent times, the situation in Ukraine has led to significant changes in Liechtenstein’s sanctions landscape. In particular, the country has imposed sanctions regarding trusts and similar legal arrangements.

• Establishing trusts or providing registered offices for these entities is prohibited if they have Russian citizens or natural persons resident in Russia as settlors or beneficiaries.
• Acting as a trustee, nominee shareholder, manager, secretary, or in a similar function for such trusts or similar legal arrangements is also prohibited.
• However, the government may grant exemptions from these prohibitions under certain circumstances, including:
  • Humanitarian activities
  • Civil society initiatives promoting democracy and human rights
  • Charitable non-profit organizations

Compliance Requirements

In light of these sanctions, it is essential for financial intermediaries and international clients to understand their obligations and compliance requirements. The FIU has published guidance on frequently asked questions regarding sanctions in connection with trusts and similar legal arrangements and applications for exemptions.

Contact Information

For more information on Liechtenstein’s stance on financial sanctions and embargoes, please contact Carmen Oehri.