A major crisis has erupted in Liechtenstein, a tiny Alpine principality with a population of about 40,000, as one of the country’s key financial pillars — its trust system — has come under intense pressure. According to Reuters, citing sources familiar with the matter, the government is now considering tightening control over hundreds of Russian-linked trusts after their managers resigned en masse under pressure from Washington.
A Blow to an Offshore “Haven”
Liechtenstein, one of the world’s wealthiest nations, has long attracted foreign capital thanks to its low-tax policies. The country hosts tens of thousands of trusts, and according to Reuters, hundreds of them are connected to Russian beneficiaries. These structures own assets scattered around the world — from real estate and yachts to investment portfolios.
The situation escalated after the U.S. Treasury sanctioned several individuals and trusts registered in Liechtenstein. Among those targeted were entities linked to billionaire Vladimir Potanin and longtime ally of Russian President Vladimir Putin, Gennady Timchenko. As Reuters reports, Potanin’s company did not respond to a request for comment, and Timchenko could not be reached.
Fear of similar penalties prompted many trust managers to resign, impacting at least 475 trusts. Of those, 350 are currently without administration and require new managers. Another 40 are in the process of being liquidated, and attempts to appoint liquidators to 85 more have failed.
Financial Isolation for Russia’s Elite
This mass exodus has effectively frozen a vast amount of Russian wealth abroad. Trusts once served as a legal shield for Russian oligarchs to control international assets discreetly. Now, these assets are locked away — becoming a powerful tool of leverage against the Kremlin amid efforts by President Donald Trump to broker a peace deal in Ukraine.
“The Liechtenstein government is scrambling to resolve the crisis,” said sources familiar with the matter. Authorities have also stressed that no trust assets will be returned to sanctioned individuals.
Political Pressure and Economic Risks
Liechtenstein has faced international scrutiny before. In 2008, a major scandal erupted after client data was leaked from LGT Bank — owned by the ruling princely family — revealing widespread tax evasion. The current situation again raises questions about the transparency and resilience of the principality’s financial system.
Local banks are also vulnerable. The United States holds the power to cut them off from the dollar system — a move that could trigger a wider banking crisis. “This could be Liechtenstein’s most serious challenge since 2008,” a government official told Reuters.
Despite earlier signals from President Trump suggesting a potential easing of sanctions, the U.S. is maintaining pressure. According to Reuters, Liechtenstein sees its strict compliance with sanctions as a possible bargaining chip in negotiations to reduce newly imposed U.S. tariffs on its exports.
A Reputation Reconsidered
Once known for its financial secrecy, Liechtenstein was home to nearly 80,000 trusts — roughly two per resident. In recent years, the country reformed its financial system, joined the International Monetary Fund, and reduced the number of active trusts to about 20,000. Still, as the current crisis reveals, the issue of opaque foreign capital has not been fully resolved.
“Liechtenstein is once again at the center of Western efforts to isolate Russian wealth. This is not only a challenge to its banking sector but a test of the country’s entire financial structure,” Reuters concludes.
Similar pressure has already been felt by neighboring Austria and Switzerland. Now, Liechtenstein must demonstrate its readiness to adapt to a geopolitical landscape where finance and politics are inseparably intertwined.
This article was prepared based on materials published by Reuters. The author does not claim authorship of the original text but presents their interpretation of the content for informational purposes.
The original article can be found at the following link: Reuters.
All rights to the original text belong to Reuters.
