800 zombie trusts linked to Russia discovered in one country

In Liechtenstein, around 800 legal entities linked to Russian assets are in a “frozen state” — they formally exist but are not functioning due to a lack of management.

According to the Financial Times, hundreds of trustees and directors have resigned in the last six months, fearing US sanctions. The Liechtenstein authorities have set up a special working group to tackle the problem of zombie trusts.

The country is facing a serious financial crisis due to the mass resignation of managers of trusts and funds linked to Russian assets.

The problem arose after the US tightened sanctions.

The crisis has affected trusts with assets worth billions of dollars: yachts, planes, real estate, and cash. Most of these structures belong to non-sanctioned Russian citizens living in France, Italy, Dubai, and other countries.

“We are talking about multi-billion dollar zombie trusts without management. And there is no solution yet. I have never seen anything like this,” said a lawyer from Vaduz.

The problem began when the US warned Liechtenstein of possible secondary sanctions against local financial institutions working with Russian clients. The principality's financial regulator (FMA) responded with a “zero tolerance” policy, recommending that companies sever ties with problematic clients.

Without a quick solution, the problem could spread to the entire financial sector, which is the backbone of Liechtenstein's economy.

The Ministry of Justice is working to find liquidators and appoint new managers for the “orphaned” structures, but the process is complicated by legal restrictions and the risk of further sanctions.

Source: New Voice, Financial Times