Government Takes Aim at Deposited Foundations
In 2021, Liechtenstein faces its fifth country evaluation by Moneyval, assessing the country's progress both in implementing anti-money laundering measures and in its overall compliance with international standards regarding the prevention of money laundering and the financing of terrorism. In this context, the government recently proposed abolishing the anonymity of deposited foundations' Commercial Register entries and enhancing the authorities' access to basic information.
Traditionally, Liechtenstein foundation law distinguishes between 'registered' and 'deposited' foundations. Deposited foundations do not have to be registered in the Commercial Register. Rather, notification of basic information – such as the foundation’s name, address, and the foundation’s council members – must be made to the Office of Justice maintaining the Commercial Register. As this information does not qualify as register data, third parties cannot access it unless they are able to furnish prima facie evidence to a claim against the foundation (a so-called 'justified interest'). This guarantees a high degree of confidentiality for deposited foundations.
In the light of the upcoming Moneyval assessment, the government now plans to abolish the difference between the treatment of registered and deposited foundations. The government (erroneously) argues that the Financial Action Task Force – upon whose work Moneyval predominantly relies – would require public access to the basic information on deposited foundations as a means to fight money laundering and the financing of terrorism. The information to be published includes neither the names of the founder nor the beneficiaries of a foundation. Nonetheless, many foundations bearing their founder's own name or their family name may become exposed to third parties without such third parties having to establish any ‘justified interest’ in the said information.
As a second means to fighting money laundering, the government seeks to provide the authorities with better access to relevant information. Law enforcement authorities already enjoy unrestricted access to the basic information on deposited foundations. However, this shall be upgraded to an on-demand access.
It remains to be seen whether the Liechtenstein legislature will adopt both legislative proposals. Whilst the authorities undoubtedly need to have access to relevant information in order to fulfill their duties, the public availability of basic information can safely be considered an inappropriate tool for fighting money laundering. After all, it is not for the public to prosecute criminals. Nonetheless, in light of these recent attempts to widen access to information, foundation councils should consider whether their foundation’s basic information reveals to the public information that they would not wish to share, and should react accordingly.
For further information, please contact Philipp Konzett.
