Knowledge
Glossary: family office & compliance
Key terms for family offices in Switzerland, Germany, Austria and Liechtenstein – from beneficial owner and CRS to look-through consolidation, each with practice notes. 75 key terms explained with practice notes and common mistakes – linked to the guides in which they appear.
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A
- Adverse media · negative news
- Publicly available reports about a person or company that point to money-laundering, corruption or other risks.
- Anstalt (Liechtenstein establishment) · establishment
- A Liechtenstein legal form without members, whose rights lie with the holder of the founder's rights; depending on its articles, it resembles either a company or a foundation.
- Audit trail · audit log
- An unalterable log that records who created, changed, approved or deleted which data and when.
- Automatic exchange of information · AEOI
- The annual automatic exchange of financial account information between tax authorities under the OECD's Common Reporting Standard.
B
- Beneficial owner · UBO, ultimate beneficial owner
- The natural person who ultimately owns or controls a company, foundation or trust, or on whose behalf a transaction is carried out.
- Beneficial owner under Austrian law · wirtschaftlicher Eigentümer
- The Austrian term for the beneficial owner under the Beneficial Owners Register Act (WiEReG) and the Financial Markets Anti-Money Laundering Act (FM-GwG).
C
- camt.053 · ISO 20022 bank statement
- XML format under ISO 20022 for electronic account statements, replacing the older SWIFT MT940 format.
- Capital call · drawdown
- A request by a private equity or infrastructure fund to its investors to pay in part of their committed capital.
- CARF · Crypto-Asset Reporting Framework
- The OECD standard for the automatic exchange of information on crypto assets, comparable to the CRS for financial accounts.
- Commercial character of a partnership (Germany) · gewerbliche Prägung
- German rule under which an asset-managing partnership is treated as commercial if only corporations are personally liable and manage the business (section 15(3)(2) Income Tax Act).
- Common Reporting Standard · CRS
- The OECD's global standard for the automatic exchange of information on financial accounts.
- Compliance package (Austria) · Compliance-Package
- Documents filed in the Austrian register of beneficial owners that obliged entities such as banks can access.
- Compulsory share · forced heirship share, Pflichtteil
- The minimum share of an estate protected by law for close relatives, which cannot be removed by will.
- Consolidated wealth · consolidated wealth reporting
- The overall view of a family's wealth across all banks, structures and currencies in one reporting currency.
- Controlling person (CRS) · beherrschende Person
- Under the CRS, the natural person who controls a passive non-financial entity – for trusts and foundations in particular the settlor or founder, the governing bodies, the protector and the beneficiaries.
- Controlling person (Swiss AML) · Kontrollinhaber
- For operating companies in Switzerland, the natural person who holds at least 25 percent of the capital or votes or controls the company in another way.
D
- DAC8 · Directive (EU) 2023/2226
- EU Directive (EU) 2023/2226, which requires crypto-asset service providers to report user data to the tax authorities from the 2026 reporting year.
- Data protection impact assessment · DPIA
- Prior assessment of the risks of data processing for the persons concerned; mandatory where a high risk is likely (Art. 35 GDPR, Art. 22 Swiss FADP).
- Discrepancy report (Germany) · Unstimmigkeitsmeldung
- Duty of obliged entities under the German Anti-Money Laundering Act to report discrepancies between their own findings and the transparency register (section 23a GwG).
E
- eGbR · registered civil-law partnership (Germany)
- A civil-law partnership (GbR) entered in the register of partnerships under the German Act to Modernise the Law on Partnerships (MoPeG), in force since 1 January 2024.
- Embedded family office · corporate family office
- A family office function located within the family business: employees of the company look after the family's private wealth alongside their regular work.
- Enhanced due diligence · EDD
- Additional measures where the money-laundering risk is higher, for example for PEPs, high-risk countries or unusually complex structures.
- Executor (Germany and Austria) · Testamentsvollstrecker
- In Germany, the person designated by the testator to carry out testamentary dispositions and administer the estate (sections 2197 et seq. Civil Code).
- Executor (Switzerland) · Willensvollstrecker
- In Switzerland, the person appointed in a will or inheritance contract to carry out the last will and administer the estate until it is divided (Art. 517 et seq. Civil Code).
- Exit taxation (Germany) · Wegzugsbesteuerung
- German taxation of unrealised gains on shares in corporations, from a holding of 1 percent, when a person moves their residence abroad (section 6 AStG).
F
- Family foundation · Familienstiftung
- A foundation whose purpose lies predominantly in the interest of one or more families.
- Family pool (Germany) · Familienpool
- A family partnership or company – usually a GbR, KG or GmbH & Co. KG – through which parents transfer assets to their children gradually while retaining control.
- FATCA · Foreign Account Tax Compliance Act
- US law under which foreign financial institutions must report accounts of US persons to the US tax authority, the IRS.
- FATF · Financial Action Task Force, GAFI
- International body that sets standards for combating money laundering and terrorist financing and assesses how countries implement them.
- Fictitious beneficial owner (Germany) · fiktiver wirtschaftlich Berechtigter
- Under section 3 of the German Anti-Money Laundering Act, the legal representative, managing partner or partner deemed to be the beneficial owner if no natural person with control can be identified.
- FinIA (Switzerland) · Financial Institutions Act, FINIG
- Swiss act which, among other things, requires portfolio managers and trustees to obtain a licence from FINMA.
- Forms A, K, S and T · VSB forms, CDB forms
- Standardised forms used by Swiss banks to establish the beneficial owner: A in general, K for controlling persons, S for foundations and T for trusts.
- Foundation entry tax (Austria) · Stiftungseingangssteuer
- Austrian tax on contributions to a private foundation, generally 2.5 percent of the assets contributed.
- Founder's rights (Liechtenstein) · Gründerrechte
- For a Liechtenstein Anstalt, the entirety of the rights to decide on the Anstalt – transferable and inheritable unless the articles provide otherwise.
- Four-eyes principle · dual control
- Control principle under which important transactions, such as payments, are checked and approved by a second authorised person.
G
- Gift notification (Austria) · Schenkungsmeldung
- Austrian duty to notify the tax office of gifts above EUR 50,000 between relatives within one year, or above EUR 15,000 between other persons within five years (section 121a Federal Fiscal Code).
- goAML · UNODC reporting software
- Software developed by the United Nations through which obliged entities submit suspicious activity reports electronically to the financial intelligence units.
H
- Hague Trust Convention · Convention on the Law Applicable to Trusts and on their Recognition
- International convention governing the recognition of trusts in states without their own trust law; in force for Switzerland since 1 July 2007.
- High-risk country · high-risk jurisdiction
- A country with strategic deficiencies in combating money laundering and terrorist financing, in particular according to the FATF lists.
I
- Inheritance contract · pact on succession, Erbvertrag
- A contract on succession between the deceased-to-be and other persons which – unlike a will – binds all parties to it.
- Inheritance substitute tax (Germany) · Erbersatzsteuer
- German tax that charges the assets of domestic family foundations every 30 years as if they passed to two children.
- Interim tax (Austria) · Zwischensteuer
- Tax on certain investment income of an Austrian private foundation at the corporate income tax rate, credited when the foundation later makes distributions.
- Internal rate of return · IRR
- Money-weighted return that takes into account the size and timing of all cash flows – common for private equity and real estate.
K
- KYB · know your business
- The application of KYC checks to companies and other legal entities, including their ownership and control structure.
- KYC · know your customer
- All the checks with which an institution identifies its clients, establishes their beneficial owners and assesses the risk of the relationship.
L
- Lasting power of attorney · Vorsorgeauftrag, Vorsorgevollmacht
- A declaration by which a person determines who will represent them if they lose the capacity to make their own decisions.
- LEI · legal entity identifier
- A globally unique 20-character identifier for legal entities under ISO 17442.
- Look-through consolidation · look-through
- Consolidation of wealth across several structural levels, pro rata according to the shareholding percentages.
M
- MOIC · multiple on invested capital
- The ratio of current value plus distributions to invested capital – it shows how many times the capital has been multiplied.
- Money laundering reporting officer · MLRO, Geldwäschebeauftragter
- The person at management level responsible for compliance with anti-money-laundering rules; mandatory in Germany for certain obliged entities under section 7 GwG.
- MROS · Money Laundering Reporting Office Switzerland
- The Swiss Money Laundering Reporting Office within the Federal Office of Police (fedpol); it receives suspicious activity reports from financial intermediaries.
- Multi family office · MFO
- A service provider that looks after the wealth and affairs of several unrelated families.
O
- Ongoing monitoring · ongoing due diligence
- Continuous review of a business relationship and updating of client data throughout its duration.
- Opting out of the audit (Switzerland) · opting-out
- Waiver of the limited audit for Swiss companies with no more than ten full-time positions on annual average, with the consent of all shareholders (Art. 727a Code of Obligations).
P
- Participation deduction (Switzerland) · Beteiligungsabzug
- Swiss reduction of profit tax on income from participations of at least 10 percent or with a market value of at least CHF 1 million.
- Passive non-financial entity · passive NFE
- Under the CRS, an entity that is not a financial institution and mainly earns passive income such as interest, dividends or rent.
- Politically exposed person · PEP
- A person who holds or has held a prominent public function, as well as their family members and persons known to be close associates.
- Private asset structure (Liechtenstein) · PAS, Privatvermögensstruktur, PVS
- Liechtenstein tax status for legal entities that exclusively manage their own assets passively; they pay only the minimum income tax.
- Private foundation (Austria) · Privatstiftung
- Austrian legal form under the Private Foundations Act for permanently dedicating assets to a purpose set by the founder.
- Protector · trust protector
- A person or body that supervises the trustee of a trust or the board of a foundation and holds certain consent rights.
Q
- Qualified electronic signature · QES
- An electronic signature based on a qualified certificate from a recognised provider, which has the same legal effect as a handwritten signature.
R
- Risk-based approach · RBA
- Principle under which the scope and depth of due diligence depend on the specific money-laundering risk.
S
- Screening · sanctions and PEP screening
- Checking persons and companies against sanctions lists, PEP databases and negative media reports.
- Single family office · SFO
- An organisation that manages exclusively the wealth and affairs of a single family.
- Source of funds · SoF
- The origin of the specific assets brought into a business relationship or transaction.
- Source of wealth · SoW
- How a person's total wealth came about, for example through entrepreneurship, inheritance or employment.
- Suspicious activity report · SAR, suspicious transaction report
- A report by an obliged entity to the national financial intelligence unit when there are indications of money laundering or terrorist financing.
T
- Tax identification number · TIN
- The number issued by the country of tax residence to identify a taxpayer.
- Tax residence · tax domicile
- The country in which a person is subject to unlimited tax liability because of residence, stay or other criteria.
- Time-weighted return · TWR
- A return measure that neutralises the effect of contributions and withdrawals and thus measures the performance of the asset management.
- Transaction monitoring · payment monitoring
- Ongoing comparison of payments and asset movements with the risk profile of a business relationship, in order to detect and clarify anomalies.
- Transparency register · Transparenzregister
- Central register of the beneficial owners of companies and other legal entities.
- Trust · common law trust
- A legal relationship under common law in which a settlor transfers assets to a trustee, who manages them for the benefit of beneficiaries.
V
- Virtual family office · outsourced family office
- A family office with a small core that coordinates and oversees external specialists such as portfolio managers, tax advisers and trustees.
W
- WiEReG · Austrian Beneficial Owners Register Act
- Austrian act on the register of beneficial owners kept by the Federal Ministry of Finance.