Liechtenstein hit by Russia-linked ‘zombie trust’ crisis

Liechtenstein is facing a crisis involving hundreds of “zombie trusts,” financial entities that are legally still active but have no one managing them. These trusts, many linked to wealthy Russians, have been left in limbo after directors and managers resigned en masse due to pressure from U.S. sanctions related to Russia’s invasion of Ukraine.

Although Liechtenstein adopted European Union sanctions, recent U.S. actions went further, warning financial institutions they could face penalties for working with certain Russian clients, even if those clients aren’t officially sanctioned. As a result, Liechtenstein’s financial regulators told firms to cut ties with any risky clients, which led to a wave of resignations that left up to 800 trusts with no one in charge. These trusts contain a wide range of assets, from millions in cash to yachts and luxury properties, and are now frozen.

The situation is threatening Liechtenstein’s reputation as a stable financial center. The government has set up an emergency task force to try to solve the issue by appointing new directors or liquidators, but the legal complexities and fear of U.S. or Russian retaliation have made progress difficult. Officials acknowledge that many more trusts could be affected if a solution isn’t found soon.

For more information see Mercedes Ruehl “Liechtenstein hit by Russia-linked ‘zombie trust’ crisis,” Financial Times, July 6, 2025.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.