Ethics and governance in the European Financial centers

The Times and other media have reported that a federal court took the unprecedented step of demanding that the Swiss bank hand over the names of as many as 20,000 of its customers

The US law requires a US taxpayer to report all financial accounts in a foreign country if the total value of the accounts exceeds $10,000. Failure to report a foreign account can lead to a penalty of up to 50 per cent of the amount in the account at the time of the violation.This is the first time that the US courts have authorised such a request over a foreign bank and the move could put it on a collision course with the authorities in Switzerland, where it is illegal for banks to disclose confidential information without client approval because of the banking secrecy.

In a statement, the bank said: “UBS takes this matter very seriously and is working diligently with both Swiss and US government authorities, consistent with Swiss law and the legal frameworks for intergovernmental cooperation and assistance.”

G8 Leaders have committed to take steps to ensure that the global financial markets implement the highest international transparency standards and other measures to protect against criminal abuse. With ample evidence that the system is misused for corrupt purposes, the G8 must intensify efforts to promote greater transparency in cross border capital flows and to better coordinate controls to deter and detect the illicit transfer of funds through the global financial system.

Dishonest people and companies may still make money through tax havens.

G8 governments should accelerate implementation of their commitments to fighting financial crimes and money laundering and to ensure transparency in onshore and offshore centres by taking the following actions:
• Make tax evasion through offshore accounts a predicate criminal offence under relevant anti-money laundering law and make every effort to expose and prosecute such crimes;
• Promote international coordination to deter such crimes and to make the placement of illicitly obtained proceeds in offshore bank accounts as risky as possible;
• Call on the IMF, FATF and other international governmental organisations to publish information and assessments of countries’ compliance with antimoney laundering and transparency standards and require financial
institutions to take that information into account;
• Adopt stronger transparency rules for the global financial markets that effectively prevent the abuse of legal schemes (such as trusts, company services and foundations) for purposes of hiding illicit transfers of funds
across borders while still protecting legitimate concerns about privacy;
• Coordinate regulations to ensure that international accounting standards require disclosure of special purpose vehicles and other off book entities and annual reports of multinationals identify and justify strategies for transactions involving offshore centres; and
• Require greater transparency of asset-backed securities to prevent fraud; adopt and fully apply FATF anti-money-laundering requirements; and increase transparency of entities or funds (including hedge funds).

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An interesting conference took place in Luxembourg a few days ago.

It was organised by PRiM (the association of Risk Management Professionals in Luxembourg) in association with POG (the Personnel Officers' Group) and Hudson on a topic which is becoming of increasing importance : People Risk.

Unfortunately the critical point of the topic for Luxembourg was not on the agenda : why dishonest professionals in Luxembourg are knowingly hired and supported when ethical professionals are fired or repudiated in the recruitment process ?

This support of dishonest professionals was underlined by the CSSF in its annual report 2004 and is unfortunately still verified on the field in crossed public and official sources (judiciary and corporate registration) that are the visible part of the iceberg .

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