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Deaf-mute politicians and professionals

I explained last week that a country cannot base its growth on banking secrecy, tax evasion and frauds in general.

This is less and less accepted worldwide, German Finance Minister Peer Steinbruck' statement about Liechtenstein but as well Switzerland, Luxembourg or Austria being the last example after American Senators, Transparency International.

A financial center needs credibility and in this context its politicians needs to be clever for the sustainability of the center.

I am afraid this is not the case in Luxembourg where nothing has changed in the business culture as demonstrated by parliamentary questions.

Eight Months months ago to face the American Senators' Stop Tax Haven Abuse Act MP Laurent Mosar asked "What necessary steps are planed to protect the interests of the financial center?" instead of asking the relevant question which is "What is to be done to correct the dysfunctions which definitely harm the reputation of the financial center?"

Last week, we could read in the Press MP Lucien Thiel's interview about Peer Steinbruck' statement. Lucien Thiel is the former chairman of the Luxembourg Bankers' Association (ABBL), the association that explained in the framework of the transposition of the second directive that offences such as forgery, use of forgery, false balance sheet, use of false balance sheet or unauthorised use of corporate property are vague and ambiguous (See ABBL report 2003 page 22 for instance). A couple of sentences of this interview Lucien Thiel that is is French are worth translating :

Ce n'est pas notre devoir de contrôler si le contribuable a été honnête: It is not our duty to control if the tax payer was honest
What about AML provisions? I guess it is not banks’ duty to control if money is laundered.

Il existe toujours un secret bancaire, le Luxembourg n'est pas obligé de communiquer les informations de ses clients. : Banking secrecy remains : Luxembourg is not compelled to communicate its clients'data.
What about international cooperation?

In two sentences Luxcien Thiel explains that Luxembourg actually does not care of the fight against fraud and of the international cooperation.

This feeling is shared by politicians. A member of the opposition last week asked a question that fustigate "German Finance Minister's allegations".

Everyone is forgoting that there is a proved permissiveness in Luxembourg that weakens the sustainability of the center.
The point to qualify as tax haven a financial center is neither banking secrecy nor attractive tax rules even these are clues.

The critical point is permissiveness because of conflicts of interests not to say corruption: because of this corruption, nobody is willing to tighten up the ship on issues that are hushed up and nobody is willing to eliminate negligent people : This is not responsible because of the small size emphasizes dysfunctions.

Mosar, Thiel and Wagner's statements are a message for other countries: up yours! Let us make money! This a collective responsibility.

I guess the FATF enjoys Luxembourg's generous grant.

Read more about the topic : Swiss and Luxembourg tax havens next in firing line

07:45 Posted in Luxembourg | Permalink | Comments (0)


IMS Luxembourg (an update)

A couple of days ago IMS Luxembourg published a press release.
The society is alive despite the lack of events in 2007.
There are new members (24 registered and 20 in the pipe) which is a good thing.
Unfortunately they did not change the areas of interest that are rather limited for a financial center as I already explained.
Especially areas like AML and ethics that are critical areas for CSR in the financial sector, are ignored to focus on money given.

Know more (french)

15:21 Posted in Luxembourg | Permalink | Comments (0)


The stake of the right tone at the political level

In this blog I analysed many “red flags” visible in public sources in Luxembourg.
Unfortunately in this financial center every issue is hushed up with the complicity of a captive press that is not independent enough to do its duty of watchdog.

With the dubious grant to the FATF whereas services critical for AML-CFT like Justice (see the report Petita Pro Nova Justitia ) or Police or Tax are unfortunately not given the relevant means for a country that boasts such a large financial sector, we can understand better the reason why things have not changed as they should have done for the sake of the center and why there is a kind of headlong flight, the grant to the FATF being the last visible stupidity as it definitely may call into question every future favourable report on Luxembourg.

Bad example, bad behaviours, negligence are actually given at a political level and professionals (bankers, auditors, regulatory body) only fit with this political tone.

This is exactly what wrote the FATF : "corruption, and poor governance arising from corrupt institutions (such as the judiciary, the police, or regulatory authorities) and/or individuals, can substantially blunt the effectiveness of an AML/CFT system" (Cf. annual report 2005-2006, paragraphs 32 and 33)

The FATF underlined in the report the “critical need to develop appropriate strategies to deal with the issue”.

Developing appropriate strategies to deal with the issue is definitely making pressure to change the burnt leaders to ensure that people will change their behaviour for the international effort to combat money laundering and terrorist financing be credible, which is no longer the case.

07:55 Posted in Luxembourg | Permalink | Comments (0)