Ethics and governance in the European Financial centers

The ABBL this month published its comments relating to the draft law to transpose the third directive (Directive 2005/60/EC of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing).
The third Directive on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing aims to incorporate the June 2003 revision of the Forty Recommendations of the Financial Actions Task Force (FATF) into EU legislation.

Bankers' comments are definitely more responsible than comments at the time of the transposition of the second directive.

Especially they underline and deplore that Luxembourg will not tranpose all the provisions by the end of the year.

This is not serious for a center that communicates that it is at the Forefront of the Fight Against Financial Crime.

So is not seriousfrom the audit leader the absence of country report on economic crime.




Draft law
ABBL comments

In three recent articles I have commented PwC Luxembourg press release published last week:
Surprising PwC Luxembourg
PwC Global Economic Crime Survey
PwC Luxembourg and Corporate Social Responsibility


Time is up to lead to three conclusions, based on this press release, for the job of external auditor.

1) An audit firm cannot communicate on its growth as value like a vulgar commercial private company. Such a value involves risks to reach commercial objectives and can lead the staff to fail to fulfil the professional deontology not to lose the client or to gain clients. The external auditor has a legal assignment which definitely requires a reserve in the communication.

2) Audit reports are not for the client (who pays) but for the investors, the market and more generally the stakeholders. It is them that must trust the auditor's report. Aiming at clients’ confidence unfortunately does not guarantee the quality (ethics) of the work because the client can trust the auditor especially to condone fraud : after all Luxembourg is a small place where bankers stated officially that “offences such as forgery, use of forgery, false balance sheets, use of false balance sheets or unauthorised use of corporate property should not be included. These are offences with financial connotations which are confused with laundering for the sole purpose of applying exceptional powers to these vague offences”. This is the deep business culture.

3) An audit firm that censors clients’ economic criminality (including money laundering) in a small country that boasts a large financial sector cannot inspire confidence with stakeholders. If it is unable to speak freely about economic criminality while having strong commercial objectives, how can stakeholders be certain that issues will be raised in the framework of the audit assignments? The absence of country report is very significant of situations that definitely impair or tend to impair the independence.

Luxembourg unfortunately concentrates all dysfunctions of the financial sector and of the audit professions worldwide. And because of the small size compared to the growth of the business, dysfunctions are amplified so is amplified that “Code of conducts” or “philosophies” are a charade.

What counts is making money, always more money without shame.

"Fricum prior omnia"

GRECO held its 34th Plenary Meeting in Strasbourg, from 16 to 19 October.

The Group adopted the Addenda to the First Round Compliance Reports on Bosnia and Herzegovina and Malta, as well as the Addendum to the First Round Final Overall Assessment Report on Georgia and thus concluded the first round compliance procedures in respect of these three countries; the Group also adopted the Second Round Compliance Reports on Albania, the Netherlands, Spain and “the former Yugoslav Republic of Macedonia”. GRECO noted with satisfaction that the authorities of Georgia and Spain authorise the publication of their respective reports and invited Albania, Bosnia and Herzegovina and “the former Yugoslav Republic of Macedonia” to authorise as well, as soon as possible, the publication of their reports.

GRECO held a tour de table on Rules and guidelines regarding revolving doors / pantouflage, including special presentations by intervenors from France, Latvia, the United Kingdom and the United States of America. The summary of the tour de table will soon be available on GRECO’s homepage.

Finally, GRECO discussed possible options for action to be taken in respect of the International Anti-corruption Day (9 December 2007).


Source : GRECO website