Ethics and governance in the European Financial centers

The Cercle de Cooperation this week published a study, the findings of which made the ABBL upset. Once again their reaction is pure wooden language.

The ABBL has acknowledged the study made for the “Cercle de cooperation”, which accuses Luxembourg of siphoning off considerable amounts of money from developing countries by illegal or at the least illegitimate means.

The ABBL underlines that the study insinuates that the Luxembourg financial centre features tax practices and mechanisms that would set it apart as a tax haven and implicitly accuses Luxembourg legal vehicles – notably investment funds – of being used to make the poorest countries even poorer. It also claims that finance professionals ignore their essential obligations of identifying their clients.

The ABBL’s bad faith is easy to demonstrate at two levels:

1)

To depreciate the study, ABBL observes that in the study the financial centre supposedly collected around 500 billion euros in defrauded money originating from developing countries, even though in Private Banking the centre manages a total that amounts to less than 300 billion euros.

But in the previous paragraph ABBL mentions investment funds, which amount around 1 500 billion euros. This does not take into account these assets in the total assets present in Luxembourg, nor does it consider other financial vehicles available. ABBL’s reaction is definitely entirely biased.

2)

Additionally, according to the CRF (the Luxembourg FIU), the total number of open STR files within the CRF increased appreciably in 2008 (+24.4%), this increase being however more moderate if we disregard a bank the activity of which is centred on the electronic field (+8%). As a result, small number of banks represent the majority of the declarations of the sector. A large number of banks file no or very few declarations of suspicion. (See report 2008)

There are 152 banks registered of which 75 only reported one or more STR (50%)

What I know is that these finance professionals that never ever reported any declaration of suspicion may ignore their essential obligations of identifying their clients.

The above are facts and not an unhealthy combination of gratuitous assertions, hearsay, half-truths and concocted lies (ABBL wording to comment the study)

What is extraordinary with these professionals in Luxembourg is that they are unable to make amend as they have developed an insulated culture that excludes any information that would contradict their reigning picture of the reality, their reality in the bowl.