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To depreciate Rainer Falks’ study, ABBL observes that in the study the financial centre supposedly collected around 500 billion euros ($723 billion) 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 ($434 billion).


But in the previous paragraph ABBL mentions investment funds. The 300 billion does not take into account these assets in the total assets present in Luxembourg, nor does it consider other financial vehicles available. For funds we have 1,706 billion euros ($2469 billion) as at 31 July 2009.


So we have roughly 2,000 billion euros ($2895 billion), of which 500 billion euros ($723 billion) might be defrauded money originating from developing countries (25%)


ABBL’s press release was definitely entirely biased



Egide Thein provided a very interesting calculation.


Although the full extent of the transfers of illicit funds or assets is impossible to measure with precision, there can be very little doubt that corruption and the laundering of proceeds derived from corruption has a cancerous effect on economies and politics around the globe. The International Monetary Fund (IMF) has estimated that the total amount of money laundered on an annual basis is equivalent to three to five per cent of the world’s gross domestic product (GDP), globally at $800 - $ 2,000 billion per year (figures for 2002)


Transparency International and Kroll consider that international corruption, on contracts only, generates at least $500 billion annually, or 10% of those contracts.


Considering these facts and figures, it is statistically plausible to estimate that dirty money is spread across financial centers worldwide on a pro rata base to other deposits


One estimates the total deposits in private banks in the world to be over $ 15.500 billion.


It suffices to estimate the percentage held by institutions in Luxembourg, say 10% for ease of calculation, which is realistic, especially in adding all the other forms of deposits.

There is a great risk therefore there are also

- 10% of worldwide bribes (or $ 50 billion) and

- 10% of global money laundering (or $ 80 - $ 200 billion).




The above are rough figures because the data are under banking and professional secrecy (and detractors of Rainer’s study are not of good faith as they are those who support banking and professional secrecy and do not like truth and transparency) but they are realistic enough for smart professionals to make amend and admit possible failures in the regulation.


But they cannot go back to their own decisions as they decide what is to be enforced for the regulation:


“The Luxembourg Investment Fund Industry has regularly had a very close and direct say on the evolution of the Luxembourg prudential regulatory environment governing the collective Investment Industry (...) This influence has been exerted directly and indirectly by the lobbying initiatives taken on the level of the different professional associations, be it ALFI or ABBL, but also and more importantly, trough a direct association with the Luxembourg Supervisory Authorities by means of a number of standing committees" (Rafik Fischer, Vice Chairman, ALFI, in 2005)


This abnormal influence on the regulator by the regulated beyond consultative opinion is confirmed by the CSSF itself: "The internal committees assist the CSSF in the analysis of the development of the different financial sector segments, give their advice on any question relating to their activities and participate in the drawing-up and the interpretation of regulations relating to their specific field."


In other words professionals in Luxembourg require what they want in the regulation whatever matter (AML, tax, audit...) and whatever area (requirements, sanctions...)



07:06 Posted in Luxembourg | Permalink | Comments (1)


it's really graet and usefull information thank you

Posted by: issa | 09/09/2009

The comments are closed.