Bank safe deposit box tenants to be registered in Liechtenstein
Note: This article does not claim to be comprehensive, nor does it represent explicitly legal advice. The content is intended to be read as guidance only. For authoritative, legally binding information, we recommend you contact a lawyer of your choice.
Investors who secure assets in bank safe deposit boxes in Liechtenstein should expect increased Financial Market Authority regulation by October 2021. More customer data will be stored, meaning banks must keep a safe deposit box register. This follows implementation of the 5th EU Anti-Money Laundering Directive, which also affects Liechtenstein as one of the EEA’s 27 member states.
Being a member of the European Economic Area (EEA), the Principality is obliged to implement the 5th Directive of the European Union’s Money Laundering Act (GwG), which came into force on 09 July, 2018. A general implementation took place on 01 January 2021 by the national authorities. However, due to the impact of the coronavirus pandemic, the Financial Market Authority (FMA) responsible for Liechtenstein delayed full implementation until autumn 2021. As a result, banks must now allow the FMA to have direct electronic access to customer master data in the future. This, of course, also includes information about customer safe deposit boxes.
The new legislation is expected to take effect in October 2021. However, it can be safely assumed that various financial institutions will seek to implement these state requirements well before the official deadline. Investors who value their anonymity do not have a great deal of time left to find alternative providers of safe deposit box facilities.
Data protection at Swiss Gold Safe (Liechtenstein) Ltd
Private storage providers in Liechtenstein are an effective alternative to keeping a safe deposit box at a bank. For example, Swiss Gold Safe (Liechtenstein) Ltd does not fall under the new regulations and is thus not obliged to grant direct access to its customer data. Nevertheless, as a private storage company it is still subject to the Due Diligence Act (DDA) which was introduced to combat money laundering, organised crime and the financing of terrorism. This means that our Liechtenstein subsidiary will implement in-depth clarification of clients and authorised persons, and must now identify all beneficial owners.
The FMA audits the competent application of the Money Laundering regulations, and client data will still be known only to Swiss Gold Safe (Liechtenstein) Ltd. So nothing will change for clients as regards matters of privacy and data protection: The company is still only obliged to collect this additional data.
Storage facilities outside the EU and EEA
Clients for whom even this dilute form of EU regulation, as implemented by Swiss Gold Safe (Liechtenstein) Ltd, is still a step too far, will now only be able to use storage facilities in countries outside the EU/EEA area of jurisdiction. And safe deposit box facilities in independent Switzerland are recommended for this purpose. Swiss Gold Safe Ltd maintains a safe deposit box facility in Altdorf, in the Swiss Canton of Uri.
Here, investors from all over the world can use registration-free and bank-independent safe deposit boxes . Rental arrangements do not require a bank account in Switzerland or in any other country. The annual fees can also be paid in cash as well as by other payment methods, so the concept of a completely anonymous safe deposit box can virtually be achieved, because the customers data is only stored by the provider. In addition, Swiss Gold Safe Ltd does not have to meet any reporting obligations towards government agencies. There is also absolutely no obligation to participate in the automatic exchange of information (AEOI; sometimes also called common reporting standard CRS) protocols. And neither will there be any requirement to comply with the FATCA Agreement (Foreign Account Tax Compliance Act) between Switzerland and the USA.
The background to this is that a private storage company like Swiss Gold Safe simply offers the purely physical storage of precious metals and other valuables. There is no precious metal trading as such, and therefore no financial intermediary activity which would otherwise trigger an obligation to provide information. Nevertheless, a private provider must not indulge in money laundering and terrorist financing, because supporting these illegal activities would be committing a criminal offence.
The special features of Swiss law
Under Swiss law, only the owner need be aware of the content and value of a safe deposit box. Nevertheless, it is customary for all financial institutions to connect the safe deposit box to a customer account – for example to collect annual fees. As a result of this practice, banks invariably accumulate such customer data. In Switzerland, unlike Liechtenstein, there is no obligation to keep a safe deposit box register, but banks are nevertheless obliged to automatically exchange information via financial accounts. In cases where there are grounds for suspicion, the Federal Tax Administration (FTA) can then insist that this stored customer data be released.
However, the duty to provide information does not undermine the banking confidentiality which still applies to safe deposit boxes in Switzerland. Safe deposit boxes are not bank accounts, so the associated data remains protected from automatic access by third parties, and stored asset values are not recorded.