Ethics and governance in the European Financial centers

European Commission issues first report on implementation of savings taxation Directive.
There is an interesting difference between the french version and the english version on a critical issue. The word “fraude” in French, which means ‘fraud” in english is translated by “evasion” in the English text.
Jurisdictions that have banking secrey rules and tax advantages underline the difference between tax evasion and tax fraud to justify their legal framework.




A selective application of the "look through" approach could, however, be considered for payments to specific categories of legal entities and arrangements established in targeted jurisdictions outside the EU, likely to be used for tax evasion by EU resident beneficial owners. A list of those jurisdictions and their relevant entities and arrangements would then have to be annexed to the Directive.

Une application sélective de l’approche «par transparence» pourrait toutefois être envisagée pour les paiements en faveur de certaines catégories spécifiques de personnes morales et constructions juridiques établies dans des juridictions ciblées, situées en dehors de l’Union européenne, susceptibles d’être utilisées à des fins de fraude fiscale par les bénéficiaires effectifs résidant dans l’Union. Dans ce cas, il conviendrait d’annexer à la directive une liste de ces juridictions et des personnes morales et constructions concernées



Recent cases of tax evasion, involving non-EU countries already cooperating with the EU on taxation of savings, have shown that, where the “paying agent upon receipt” concept is not consistently implemented, room is left for abuse and distortions

Des cas récents de fraude fiscale, impliquant des pays tiers coopérant déjà avec l’Union européenne dans le domaine de la fiscalité de l’épargne, ont montré qu’une application incohérente de la notion d’«agent payeur à la réception» ouvre la porte à des abus et à des distorsions de concurrence.


English text
French text

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)