The Liechtenstein government has set up an emergency task force to tackle the problem of trust funds, paralyzed by EU sanctions against Russia, the Financial Times (FT) reported.
Several organizations have been added to the sanctions list due to alleged links to Russians. Amid US warnings of possible secondary sanctions, Liechtenstein’s Financial Market Authority (FMA) has instructed fiduciaries to sever ties with Russian clients, saying it was the only appropriate way to control risks.
As a result, trust directors have resigned en masse, leaving the organisations without leadership.
“These are floating zombie trusts worth billions of dollars. And there is still no resolution. I have never seen anything like it,” a lawyer for several trusts told the FT.
Government data seen by the FT shows that around 350 organisations are unaccounted for and another 40 are in early liquidation. The newspaper said that according to officials and lawyers, the total number of affected organizations could reach 800.
The crisis could undermine Liechtenstein's status as a major financial center, as confidence in the principality is based on its perceived ability to protect clients from geopolitical instability.