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Wind vane government on banking secrecy

The Luxembourg government cannot be taken with serious in the debate about banking secrecy. In a couple of days 3 contradictory messages were communicated.

On 3 February, Luxembourg Prime Minister Jean-Claude Juncker implied before Italian media he was open to discuss the abolition of banking secrecy with the European Commission.

On 20 February, Luxembourg minister for foreign affairs and immigration and Luxembourg's Deputy Prime Minister Jean Asselborn said in Switzerland that banking secrecy needs to be redefined, but abolishing it abruptly is not in Europe's interest

On 25 February, Luxembourg minister for justice and budget Luc Frieden said in Austria that Luxembourg and Austria were ready to take part constructively in a discussion in the EU and the OECD [Organisation for Economic Co-operation and Development] on how to improve international co-operation on cross-border tax evasion, but banking secrecy is not up for negotiation

Who is expressing the actual thought of the Luxembourg government on banking secrecy?

How the jurisdiction can it inspire confidence with the stakeholders all the more than some PSF are using professional secrecy in an abusive way in doing what will be called obstruction to justice in the USA?

09:55 Posted in Luxembourg | Permalink | Comments (0)

UBS Wins Lawsuit : clear and pragmatic law and regulation means risk before the court

Bloomberg has reported that UBS AG won a ruling in a Luxembourg lawsuit filed by Banca Intermobiliare SpA seeking to force the release of 5.1 million euros ($6.5 million) from an account belonging to a fund that had invested with Bernard Madoff.
Banca Intermobiliare SpA argued UBS had a duty to pay it after sending the Italian bank a confirmation for a redemption request from the British Virgin Islands-based Groupement Financier fund made before Madoff was arrested Dec. 11.
As Bloomberg observed, While this decision was the first to deal with UBS as an account holder rather than as custodian, it may show that the regulator’s statement against UBS has “limited” influence on the courts.
It is positive as it demonstrates that Justice in Luxembourg is independant.
But it is negative as well as it confirms that what professional and politicians in Luxembourg said about the investor's protection is a charade : clear and pragmatic law and regulation means risk before the court.

08:13 Posted in Luxembourg | Permalink | Comments (0)


They make a molehill out of a mountain

The CSSF has yesterday published a press release (in French) about its investigation.
Olivier Sciales translated the findings :

The CSSF ordered UBS (Luxembourg) S.A. within a three-month-period :

1) to put into place the necessary infrastructure (i.e. all sufficient human and technical means and internal rules in order to carry out all the duties and tasks related to the function of custodian bank of a Luxembourg undertaking of collective investment in accordance with the law of 20 December 2002 on undertakings of collective investments, as amended from time to time (the "Law of 2002") and Circular IML 91/75. UBS (Luxembourg) S.A. is required to provide evidence of such adequate guarantees to the CSSF within a period of 3 months as of the date of notification of the decision of the CSSF to UBS (Luxembourg) S.A. It is important to note that the CSSF mentioned that the wrongful execution of the obligation of "due diligence" constitutes a serious breach of the supervisory duty (devoir de surveillance) of a custodian bank and can consequently constitute a violation of a contractual obligation in view of the legal provisions imposed by the Law of 20 December 2002. Article 36 of the Law of 2002 provides that "the depositary shall, be liable, in accordance with Luxembourg law to the shareholders for any loss suffered by them as a result of its wrongful improper performance thereof".

2) to analyse and rectify all the structures and procedures in place in relation to its supervisory duty (obligation de surveillance) as custodian bank and UBS (Luxembourg) S.A. shall pay damages in case of breaches to the above-mentioned supervisory duty as custodian bank imposed upon by Luxembourg law, without prejudice to any contractual provisions to the contrary and/or as the case may be any court decision.

The CSSF said it continues to probe the Madoff affair and is looking at depository banks and verifying that every intermediary have conducted their business according to Luxembourg law.

Nothing about the CSSF itself
Nothing about the auditor
Nothing about the perfectibility of the Luxembourg law

07:43 Posted in Luxembourg | Permalink | Comments (0)

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