Trustees under the Financial Institutions Act

The licensing requirement

Before 2020 Swiss trustees were not subject to prudential supervision. Those who acted as financial intermediaries had to join a self-regulatory organisation for anti-money laundering purposes, but nothing required them to obtain a licence, to hold capital or to demonstrate a proper organisation. Many were members of professional associations such as the Society of Trust and Estate Practitioners (STEP), whose Swiss branches offered training and professional standards. FinIA ended this situation. Under Article 17(2) FinIA a trustee is a person who, on the basis of the instrument establishing a trust within the meaning of the Hague Convention, manages assets on a commercial basis for the benefit of the beneficiaries or for a specified purpose, or disposes of them. Such a trustee requires a FINMA licence and is subject to ongoing supervision by a supervisory organisation, in the same way as a portfolio manager.¹

The introduction of licensing for trustees made Switzerland one of the few jurisdictions without its own trust law that nevertheless regulates trustees prudentially. The Federal Council justified the step by the need to align Swiss practice with international standards and by the reputational risk that unregulated trustees posed for the financial centre as a whole. It also had a competitive dimension. A Zurich trust company licensed by FINMA can present itself to clients and to foreign regulators on a similar footing to a Jersey trust company licensed by the Jersey Financial Services Commission. The licensing requirements are those of Articles 18 to 23 FinIA: a minimum capital, adequate organisation with separation of management and control once the business reaches a certain size, qualified managers with the necessary experience, guarantees of irreproachable business conduct and professional indemnity insurance or equivalent financial security.²

Private trust companies

For families that wish to control the trustee of their own trust, the private trust company is the usual instrument in common law jurisdictions. It is a company whose sole business is to act as trustee of the trusts of one family and whose shares are held by the family, often through a purpose trust. FinIA and FinIO accommodate this structure. The family ties exemption applies to trustees in the same way as to portfolio managers, and the ordinance extends it expressly to private trust companies when they serve only persons with family ties and are controlled by family members or by a purpose trust established by a family member. The Schellenberg Wittmer newsletter cited above summarised the conditions: private trust companies are exempted when family-controlled, which requires either ownership by family members or control through a purpose trust established by a family member.³ A private trust company incorporated in Switzerland can therefore act as trustee of a family trust without a FINMA licence. It remains subject to the AMLA if it acts professionally within the meaning of that Act.

In practice, families that settle in Zurich often keep their private trust company offshore and use the Zurich family office as its administrator. This arrangement preserves the established structure, which may have been in place for decades, while bringing its day-to-day management to the place where the family lives. It requires care in two respects. First, the administrator must not itself become a trustee within the meaning of Article 17(2) FinIA by taking decisions that belong to the trustee. Second, the trust company must not become tax resident in Switzerland through its effective management, a risk discussed in the preceding section.

The supervisory organisations and the development of practice

The supervisory organisations authorised by FINMA oversee licensed trustees in the same manner as portfolio managers. Their audits cover compliance with the licensing conditions, the anti-money laundering duties and, for portfolio managers, the rules of conduct of FinSA. FINMA reported in March 2025 that the number of cases escalated by the supervisory organisations for preliminary investigation had increased significantly in late 2024.⁴ This two-tier structure, which the previous chapter described in detail, is still young. Its effect on the trustee profession will become clearer as the first cycles of supervisory audits produce findings, and as FINMA begins to use its enforcement powers against licensed trustees. For the time being, the licence has had its most visible effect at the entry point. A number of small trustees and administrators in Zurich chose to sell their business, to merge with larger firms or to confine themselves to activities that do not require a licence, while the larger firms invested heavily in compliance staff.

Notes

1. FINMA, “Portfolio managers and trustees”, https://www.finma.ch/en/authorisation/portfolio-managers-and-trustees/; see also Schellenberg Wittmer, “Neue Pflichten für Trustees und Family Offices”, January 2020, URL as above, which discusses the definition in Article 17(2) FinIA. ↩
2. Arts. 18–23 FinIA (SR 954.1), bilingual edition, https://www.droit-bilingue.ch/de-fr/9/95/954.1-index.html, and the corresponding provisions of FinIO. Under Art. 22 para. 1 FinIA the minimum capital of portfolio managers and trustees is CHF 100,000, paid in cash, https://www.droit-bilingue.ch/de-fr/9/95/954.1-22-25.html. ↩
3. Schellenberg Wittmer, “Neue Pflichten für Trustees und Family Offices”, January 2020, URL as above. ↩
4. FINMA, press release of 11 March 2025, URL as above. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.