Ethics and governance in the European Financial centers

Among the exhibit document provided in the framework of the investigation, the US Senate published a transaction that is worth commenting in a couple of words.


The text of the exhibit

YYY Bank
Luxembourg Branch Office
XXXXXXXXXXXXXXXX
L-XXXX Luxemberg



Statement of Beneficiary

Subject e transfer / deposit / check / transfer of securities
In the amount of: approx. USD 1,200,000
To account nr. XXXXXXXXXXXXXXX
Account holder: ZZZ, B.V.I.
Rubric (if appl.) XXXXXX
Bank YYY, Succursale du Luxembourg
Date of Transaction no later than 12/31/2000

The undersigned NNN management Limited, Tortola, as Managing Director of the company ZZZ, Tortola, B.V.I.

Hereby declares

(X) that the following beneficiar(ies) is/are entitled to the above-referenced transaction:

Last name/First name : XXXXXXXXXXX
DOB: XXXXXXX
Resident in Boca Raton, FL 33496, USA

( ) that the asset in question are of rightful origin and do not stem from illegal drug or weapons trade or other criminal activities

The undersigned understands that the bank is obligated to provide the competent authorities with information upon request in so far as provided by Luxemburg legislation.

Place / Date: Vaduz, 10/31/00/ soh NNN management Limited
NFE
Signature



Attachment: copy of beneficiary’s personal ID.


Comment

The case involves Liechtenstein, the subsidiary in Luxembourg of a Swiss bank and the BVI.

The amount is important: around 1 454 000 EUR (1 EUR = 0,8252 USD late 2000)

The box that confirms that the asset in question are of rightful origin and do not stem from illegal drug or weapons trade or other criminal activities is not ticked, which may mean that the undersigned did not commit himself/herself to abide by the requirements.

The control is limited as it is in so far as provided by Luxemburg legislation.

The story demonstrates that companies located in the BVI (or similar jurisdictions) may be a risk for the Luxembourg financial center (or other centers as well). Any business registered in Luxembourg with a connection with the BVI wants analysing:

1) who is involve as shareholder and/or appointed managing director in the company(ies) registered in Luxembourg to assess the risk:
- is he/she a competent professional,
- does the professional gather every guarantee of irreproachable conduct, irreproachable being larger than a word like licit.

2) the wording of the Object of the company to assess if it is large enough for management do whatever activity he/she wants, which may result a fraud (activity very far from the object...).

3) the auditor, to see on the one hand if he/she is a regulated professional in Luxembourg (either by the IRE or the OEC) and on the other hand if the auditor’s auditor is as well a regulated professional in Luxembourg.


The analysis allows identifying red flags for which it is required to tighten up the ship for the reputation of the Luxembourg Financial Center.