We are pleased to announce that Earl Fiduciary AG has been granted with a FINMA licence to act as a professional trustee. The company will be supervised by the Oversight Organisation for Asset Managers and Trustees (AOOS).

The Swiss Financial Institutions’ Act (FinIA) and related Ordinance on Financial Institutions (FinIO), which came into effect on 1 January 2020, class professional trustees as financial institutions, which are subject to strict licensing requirements and supervision by the FINMA. With effect from 1 January 2023, all Swiss trustees must meet and maintain certain high standards, firstly as regards capital adequacy and, secondly, as regards their organisation and conduct. Trustees must from hereon ensure separation of the functions of governance, supervision and control from management, implement proportionate risk management procedures and ensure that their staff are suitably knowledgeable and skilled for their roles.

Implications of FINMA licensing

The new licensing requirements are rigorous and appear far more stringent than the requirements set in other jurisdictions, which impose trustee licensing.

The FINMA oversees trustees’ compliance with the new rules by adopting a risk-based, rather than a “one-size-fits-all” approach. The FINMA evaluates whether or not a given trustee meets the necessary standards after undertaking a detailed analysis of the trustee’s business activities and assessing their competence through the corresponding skills and knowledge base of their staff. Trustees that invest in non-bankable assets such as operational businesses, real estate or assets which are considered “exotic” (for example, ships, aircraft, works of art, digital assets) and/or which administer trusts governed by the laws of multiple jurisdictions, or where settlors and beneficiaries are domiciled and/or resident in multiple jurisdictions – which intrinsically indicate greater business risk for the FINMA – are required to demonstrate that they have the appropriate know-how and access to the necessary expertise. Trust companies like Earl Fiduciary AG, which frequently administer complex structures, often involving multiple jurisdictions with assets in multiple asset classes, can expect to be subject to rigorous supervision.

What are the benefits for settlors and beneficiaries?

The new Swiss trustee licensing requirements serve to enhance the protection of the interests of beneficiaries of trusts administered in Switzerland. The very high standards of professionalism expected of trustees, the high degree of regulatory scrutiny to which they are now subject, and the centrality of privacy to the financial institutions’ licensing regime, which notion is enshrined in the Swiss constitution, should provide settlors and beneficiaries alike with great peace of mind.

We view these developments as an important step forward for both Earl Fiduciary AG as a company and the Swiss trust industry as a whole.

Please do not hesitate to contact us if you have any questions regarding our regulation and licensing.