Ethics and governance in the European Financial centers

Luxembourg is not willing to implement the automatic exchange of tax information in the European Union despite this is exactly what is targeted in the Savings Directive and agreed to by the Luxembourg Government as observed by the US Senate one year ago:

“Au niveau européen, il existe une pression pour un abandon total du secret bancaire. Or, si des mesures plus strictes sont adoptées seulement en Europe, nous serions défavorisés face à d'autres centres financiers comme Singapour” (free translation : At the European level, there exists a pressure to give up banking secrecy. However, should stricter rules be adopted only in Europe, we would be disadvantaged vis-à-vis other financial centers like Singapore” the former Chairman of ABBL said a couple of weeks ago.

He is right. But I had commented that I wish he had a much more European collective view on the issue

Since the article the ABBL and its president confirmed that they refuse what was agreed to in the Savings Directive: For example « je refuse un échange d'informations automatique onéreux, peu efficace et excessivement intrusif, ceci ne comporte en aucun cas un refus d'application d'une directive alors que nos banques 1'appliquent à la lettre chaque jour qui passe. » (free translation : I refuse an expensive automatic information exchange, not very effective and excessively intrusive, this does not at all mean I refuse the application of a directive which our banks apply with accuracy each day which passes.), Jean Meyer Chairman ABBL has just said in the Lëtzebuerger Wort, in an open letter to my attention.

Luxembourg banks would apply the directive with accuracy each day which passes? What about the fact that The European Commission has just referred Luxembourg to the European Court of Justice over its incorrect application of the Savings Directive?

I am afraid such blatant biased view of the reality actually sows the doubt and depreciates Luxembourg’s credibility (Jean Meyer’s wording in his open letter).

However the issue raised about Singapore and other alternative centers is perfectly right and there is a solution, a definitive solution.

The solution is to have Clearstream and similar organizations under public control to be able to identify all the transfers to Singapore or other jurisdictions in order to detect and sanction tax evasion.

By nature the activity of Cleastream and other similar companies cannot belong to the strict private sector because there is a kind of mission of general interest for every state whose economic development rests on the banking system. It follows that a public control is mandatory to regulate the flows worldwide and protect the Luxembourg financial center.

Thanks to the Luxembourg clever bankers who raised a true problem, this solution should be considered and they cannot seriously oppose it, as this is an effective answer to their fears about Singapore.