Ethics and governance in the European Financial centers

The FATF recently issues its typologies report on the real estate sector. This first FATF in-depth study of the sector examines its vulnerabilities to misuse for money laundering and terrorist financing.

The FATF provides an interesting list of red flags (pages 34-37). Unfortunately these experts do not take into consideration red flags relating to the management or the audit firm of a real estate company, that are visible especially in Luxembourg the small country where everydoby knows everyone and that is self regulated:

- Knowingly appointing a dishonest managing director (recent judiciary sources) that definitely do not comply with the requirement of professional standing,
- having a "commissaire" (auditor) that is neither member of the charered accountants nor of the chartered auditors : in Luxembourg anyone may be auditor.
- having a "commissaire" that is audited by an auditor in a far tax haven (for instance a company located in Luxembourg audited by a company located in the BVI...)
- ...



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The Council of Europe’s Group of States against Corruption (GRECO) has published recently its Joint First and Second Round Evaluation Report on Switzerland (link to the report). The report is made public with the agreement of the country’s authorities.
GRECO has issued 13 recommendations, in total, to Switzerland in the above-mentioned areas. Measures taken to implement these recommendations will be addressed by GRECO in the context of a specific compliance procedure in the second half of 2009.




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The European Commission has decided to pursue infringement procedures against 15 Member States for failure to implement the Third Anti-Money Laundering Directive in national law. The Commission will send formal requests to Belgium, Czech Republic, Germany, Greece, Spain, Finland, France, Ireland, Luxembourg, Malta, the Netherlands, Poland, Portugal, Sweden and Slovakia. These formal requests take the form of "reasoned opinions", the second stage of the infringement procedure laid down in Article 226 of the EC Treaty. If there is no satisfactory reply within two months, the Commission may refer the matter to the European Court of Justice. The Directive should have been implemented by 15 December 2007.

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