Ethics and governance in the European Financial centers

Anti-money laundering and combating the financing of terrorism (AML/CFT) was highlighted by the Council of Europe Moneyval Committee’s adoption of the third round mutual evaluation report on the Principality of Monaco, which was prepared following IMF and FATF methodology.

The report follows the on-site visit of financial and legal experts in the Principality in 2006. It states among others that "the Principality has a satisfactory legal framework to combat money laundering and terrorist financing.” […] Overall, the Monegasque FIU is effective and the driving force behind the AML/CFT national efforts. Monaco has designated competent authorities to investigate and prosecute money laundering and terrorist financing offences […]. Measures for domestic and international co-operation are generally comprehensive as well. "

It is said page 12 that 381 declarations of suspicion were reported in 2007, of which 213 from banks (56%).
It seems that there are no declarations from registerd auditors but chartered accountants reported 7 declarations.
In 2007, the number of Suspicious Transaction Reports received by SICCFIN slightly dropped by 3.5% (395 declarations in 2006).

Read press release

The CRF, the Luxembourg FIU, this week published its last annual report. The release was announced by the government and the IRE (the regulatory body of registered auditors) with no comments.
The Luxembourg Bankers’s Association, the ALFI and the CSSF did not communicate on the release of the report.

What the FIU wrote is interesting and demonstrates that some professionals do not do their duty, which is not a surprise when observing "red flags" of permissiveness and the trend to hush up issues.


Page 10

Declarations of suspicion from professionals in the investment funds industry are very rare, this despite the global economic evolution of the sector.

In other words the number should have been growing while the sector was growing.

The Chartered Accountants operated in 2007 some 18 declarations of suspicion i.e. 6 declarations moreover than in 2006.

Chartered Accountants did a good job.

The number of declarations operated by the “réviseurs d’entreprises” (i.e. the registered auditors) stagnated on a very low level of 4 declarations in 2007, for a profession that has several hundreds of members

Registered auditors are not credible in their declarations of suspicion. But it is true that reporting a declaration of suspicion definitely means loosing clients’ and probable prospects’ confidence, which is not compatible with the objective of growth as explained by the local leader audit firm.

Page 12

The spontaneous co-operation with the CRF on behalf of lawyers, notaries, real-estate agents, tax and realtors of great value was non-existent in 2007

Lawyers, notaries, real-estate agents, tax and realtors of great value do not care of their duty.

Page 14

As noted in the former reports, a great number of banks does not proceed if not very little to declarations of suspicion.
The causes of this phenomenon were not identified by the CRF which does not have competence to carry out systematic controls on the field in order to check the respect of their professional obligations by the banks not having declared a suspicion during the year under examination


Read report (French)

A Luxembourg-based companies was quoted in the media in the framework of a corruption scheme.
As Secure Finance, quoted by Transparence International France explains, Eurolux Gestion, which is based in Luxembourg would have been used to bypass the OECD Anti-Bribery Convention.
A Luxembourg-based company was used as the starting hub, then the money went to Ireland, then the Isle of Mans, then the Bahamas, then the Caïmans Islands and finally the BVI.

Is it a surprise ?

Definitely not when analysing the Corporate Registration were many "red flags" are perfectly visible.

The other Luxembourg-based company that is quoted in the media - Heine - does not seem to exist in the Corporate Registration.

I will focus on Eurolux Gestion :

Eurolux gestion was created on 18 Decembre 1998 by SIMKER LIMITED, an Isle of Man-based company.
COMPAGNIE DE SERVICES FIDUCIAIRES S.A. based in Luxemboug was appointed statutory auditor.
The publication in the Corporate Registration took place on 5 January 1999.

On 8 october 1999 a Panamean-based company was appointed administrator to replace the Isle of Mans-based administrator. The publication in the Corporate Registration took place on 7 December 1999.

On 3 juillet 2002, an extraordinary meeting decides the turnover of 3 administrators and the appointment of new stautory auditor is appointed. The publication in the Corporate Registration took place on 18 September 2002.

On 21 October 2002, an extraordinary meeting appoints a new statutory auditor located in the BVI : ERACO Ltd, société de droit des Iles Vierges Britanniques, ayant son siège à Tortola, Akara Building 24 De Castro Street, Wickhams Cay I, Road Town a été nommée commissaire aux comptes en remplacement de SOCIETE DE REVISION CHARLES ENSCH S.A. ayant son siège social 124, route d’Arlon à L-1150 Luxembourg. The publication in the Corporate Registration took place on 2 December 2003.

On 17 November 2003, an extraordinary meeting appoints nex administrators and a new statutory auditor to replace SOCIETE DE REVISION CHARLES ENSCH S.A already replaced : La société COMPTABILUX S.A., ayant son siège social, 1, place du Théâtre, L-2613 Luxembourg a été nommée Commissaire aux comptes de la société en remplacement de la SOCIETE DE REVISION CHARLES ENSCH, démissionnaire.

COMPTABILUX S.A does not seem to be a member of the IRE or the OEC. A BVI-based company is a shareholder.


Administrators and statutory auditors should have been appointed for a 6-year-period. Why the turnover ?
Why the delay to publish the decisions of the extraordinary meeting dated 21 October 2002 : 14 months ?
Who was the statutory auditor between 21 October 2002 and 17 November 2003 ?

As I already said, the Corporate Registration in Luxembourg is full of anomalies that are a threat for the reputation of the center in the current international context.

Unfortunately nobody is willing to tighten up the ship because of the "system".

Forewarned Is Forearmed !