Swiss Trust: The Swiss Trust Company That Does Not Exist

Every few weeks, somebody asks me about Swiss trust companies. He has read on the internet that a Swiss trust company is almost a bank: that it can hold clients’ money, open accounts anywhere, issue notes, sell insurance and take on as many clients as it likes. Sometimes he has already been offered one, for sale.

I have been a Swiss lawyer for more than thirty years. So let me save you some money.

Swiss trust companies are to Swiss law what the Loch Ness monster is to Scotland. They feed a lot of conversations and articles. There is not one gram of truth in them.

Swiss law has no trust

Switzerland is a civil law country. The trust is a common law institution, and Swiss law has no trust of its own.

What Swiss law has is:

• The fiduciary agreement. A contract under the rules on mandates in the Code of Obligations, by which one person holds assets in his own name for somebody else.
• The foundation. A legal entity under the Civil Code, with its own assets dedicated to a purpose.

Since 1 July 2007, Switzerland has applied the Hague Convention on the law applicable to trusts. A trust created under foreign law, English or Jersey law for example, is recognised in Switzerland. But it remains a foreign trust, governed by foreign law.

The Federal Council looked at creating a trust under Swiss law. On 15 September 2023, it decided not to go ahead.

So where does “Swiss trust” come from?

• Translation. A Swiss accounting and fiduciary firm is a “fiduciaire” in French and a “Treuhand” in German. Both are often translated, badly, as “trust company”. A Treuhand does bookkeeping, tax returns and company administration. It is not a trust.
• Marketing. The expression speaks to clients who know trusts from home, and it sounds like private banking.
• Company names. Several companies in the Swiss commercial register have “Swiss Trust” in their name. A name gives no rights. Calling a company Swiss Chocolate does not make its articles of association taste of chocolate.

How Swiss trust companies are sold

One Swiss sales page offers a “Swiss trust company” that you buy outright. It lists its powers: lending and borrowing, issuing promissory notes and medium-term notes, opening accounts “with any bank worldwide” with sub-accounts for third parties, accepting and investing funds on behalf of customers, owning banks and brokers, reinsurance, annuities and insurance bonds, acting as trustee and investment adviser. What you can do with it, the page says, is “limited only by your imagination”.

At the bottom, in small print, the same page says the company is not a bank, insurer, lender, broker, payment institution or deposit-taker, and that it offers none of those services.

The small print is the only part that is right.

• Accepting customers’ funds needs at least membership of an SRO. Taking deposits from the public needs a banking licence.
• Professional lending falls under the Anti-Money Laundering Act.
• Running insurance, reinsurance or annuity business needs a FINMA licence under the Insurance Supervision Act; selling it as an independent intermediary needs registration with FINMA.
• Issuing notes to investors raises banking and prospectus questions.
• Owning a bank needs clearance from that bank’s own regulator.
• No bank anywhere opens an account because a company has “trust” in its name.

The limit is not your imagination. It is the law.

What decides what a Swiss company can do

In Switzerland, a company can do financial business because of what it is authorised or supervised to do. Not because of its name, and not because of the purpose written in its articles. There are three layers:

• FINMA licence. Banks, securities firms, fund management companies and insurers are licensed and supervised directly by FINMA.
• FINMA licence with a supervisory organisation. Portfolio managers and trustees hold a FINMA licence and are supervised day to day by a supervisory organisation (SO).
• SRO membership. Payment services, currency exchange, lending, many crypto services and other financial intermediaries that need no licence must join a self-regulatory organisation (SRO), which supervises their anti-money laundering compliance. Since 1 October 2026, certain advisers (company formation agents, domiciliation providers, fiduciaries acting on real estate or non-operating companies) must join one too. See SRO or Licence: Which Do You Need?

A company with “trust” in its name and none of these can do no more than any other Swiss company.

Do not confuse it with the FINMA trustee licence

There is one real thing with “trust” in it. Since the Financial Institutions Act came into force in 2020, a trustee, meaning a person who professionally administers a trust’s assets for its beneficiaries, needs a FINMA licence and is supervised by a supervisory organisation (Financial Institutions Act, Article 17). More on this in the Swiss trustee licence.

That licence exists, and it is a real prudential licence. It lets you act as trustee of trusts governed by foreign law. It does not create a Swiss trust, and it does not turn a company into a quasi-bank.

What you probably want instead

Most people looking for a Swiss trust company want one of three things:

• A Swiss company that can handle clients’ money: an SRO-affiliated financial intermediary, for payments, exchange, crypto, lending or escrow. You can set one up or buy one.
• Asset protection or estate planning: a foreign trust with a licensed Swiss trustee, or a Swiss foundation, depending on your family and your tax position.
• A bank-like business: a banking or FinTech licence from FINMA, which is a very different project in time and capital.

If you have been offered a “Swiss trust company”, ask the seller one question: which SRO membership or FINMA licence does this company actually hold? Then check the answer on FINMA’s public register.

Not sure which route fits your project? Write to us at insight@fintechlex.com. We will tell you what you need, and what you do not.