Published by Global Banking & Finance Review®
Posted on May 30, 2025
4 min readLast updated: January 23, 2026
Add as preferred source on GoogleLiechtenstein faces US pressure to manage Russian-linked trusts, affecting its financial sector and highlighting ongoing sanctions challenges.
By John O'Donnell and Oliver Hirt
VADUZ, Liechtenstein (Reuters) -Liechtenstein is examining tightening control of scores of Russian-linked trusts abandoned by their managers under pressure from Washington, according to several people familiar with the matter.
The country, one of the world's smallest and richest, is home to thousands of low-tax trusts, hundreds of which have links to Russians, two of the people with direct knowledge of the matter said, putting it in the crosshairs of Western efforts to sanction Moscow.
Since Russia's invasion of Ukraine, the U.S. Treasury has sanctioned several individuals and trusts in Liechtenstein it said were linked to Russian oligarchs, including Vladimir Potanin, and a long-time ally of Russian President Vladimir Putin, Gennady Timchenko.
The U.S. Treasury had no immediate comment.
Potanin's Interros holding company did not respond to a request for comment, while Timchenko could not be reached.
That sanctioning has prompted other directors fearing such punishment to quit hundreds of Russian-linked trusts, according to several people familiar with the matter, exposing a far wider problem with Russian money in the tiny country with a population of about 40,000.
The episode, in a sleepy Alpine enclave ruled by a billionaire royal family, also shows how deep and opaque Russia's business ties to Europe remain more than three years after Russia's invasion of Ukraine.
It is a setback for the microstate that had long sought to shed its image as a safe haven for foreign wealth.
The mass resignations have put scores of trusts in limbo, essentially freezing swathes of Russian wealth. The trusts are the linchpin for fortunes, including yachts or property, that are scattered around the globe.
Their suspension puts that property beyond reach, a further potential lever over Russia, amid attempts by U.S. President Donald Trump to strike a peace deal.
Reuters has spoken to several people with direct knowledge of these events, who asked not to be identified because of the sensitivity of the matter.
They outlined how a push by Washington had led scores of directors to quit trusts with links to Russia and how the government was scrambling to resolve the crisis.
Liechtenstein's newly elected government is seeking to fix the issue, according to people familiar with the matter, underscoring the continued pressure from Washington over Russia sanctions, despite U.S. President Donald Trump's earlier suggestions he could ease them.
Liechtenstein also sees its handling of sanctions enforcement as something that could influence its government's efforts to lower newly imposed U.S. tariffs on exports, said one person with direct knowledge of the discussions.
A Liechtenstein government official said 475 trusts were affected by the defections, although added that not all were linked to Russians or sanctioned individuals.
That official said Liechtenstein's justice department was seeking to install new managers to 350 trusts, while 40 were being liquidated and unsuccessful attempts had been made to appoint a liquidator to further 85 trusts.
This episode strikes at the trust industry, a critical pillar of Liechtenstein's roughly 770 billion franc ($930 billion) financial centre that underpins the country's economy.
Local banks, the government official said, were also affected, without elaborating.
Banks are particularly vulnerable because the United States has the power to throttle them by cutting off their access to the dollar, threatening a wider crisis.
The episode has confronted the country with its biggest crisis since 2008, when leaked customer data at LGT Bank, owned by the country's princely family, exposed widespread tax evasion.
The government is now examining options to centralise the management of the deserted trusts under its watch and tightening supervision of trusts.
The Liechtenstein official also said the country's authorities were in contact with their international counterparts and that no trust assets would be released to sanctioned individuals.
Liechtenstein, sandwiched between Switzerland and Austria, is dominated by its royal family, whose castle towers over the parliament. It is tied closely to Switzerland, using its franc currency, but also enjoys freedom to do business in the European Union's single market.
The country, criticised for hiding the fortunes of the wealthy in the past, had reformed and joined the International Monetary Fund.
Once home to roughly 80,000 tax trusts, it now hosts about 20,000, said two people familiar with the matter - equivalent to roughly one trust for two residents.
Pressure on Liechtenstein follows a similar push against neighbouring Austria and Switzerland.
($1 = 0.8273 Swiss francs)
(Additional reporting by Reuters Moscow bureau, editing by Elisa Martinuzzi and Tomasz Janowski)
Under pressure from Washington, Liechtenstein is examining tightening control of Russian-linked trusts abandoned by their managers due to U.S. sanctions.
A Liechtenstein government official stated that 475 trusts were affected by the defections, although not all were linked to Russians or sanctioned individuals.
The government is exploring options to centralize the management of deserted trusts and tighten supervision over them to address the crisis.
Local banks are particularly vulnerable as the U.S. can restrict their access to the dollar, which could lead to a wider financial crisis.
This episode represents Liechtenstein's biggest crisis since 2008, when leaked customer data exposed widespread tax evasion at LGT Bank.
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