Ethics and governance in the European Financial centers

A new European Union (EU) law obliging travellers to declare cash comes into force soon. It is being introduced to help combat money laundering, says the UK's HMRC.

As from 15 June 2007, people who are either entering the EU from a non-EU country, or are travelling from an EU to a non-EU country and are carrying 10,000 Euros or more (or the equivalent in other currencies) will be required to declare the cash to at the place of their departure from, or arrival in, the EU. In the case of the UK, the rules will be enforced by HMRC.

Forms on which to make the declaration will be available at ports or airports and will also be downloadable from the HMRC internet site. Travellers could face a penalty of up to GBP5,000 if they fail to comply with the obligation to declare, or provide incorrect or incomplete information.

Dave Humphries, Head of Criminal and Enforcement Policy (HMRC) said: "The declaration system is one means of providing information to assist HMRC in targeting movements of criminal cash more effectively."

The EU cash declaration scheme derives from European Parliament and Council Regulation No. 1889/2005 and comes into effect in all EU Member States on 15 June 2007. "Cash" not only means currency notes and coins but also bankers'
drafts and cheques of any kind (including travellers' cheques).

The declaration form will be produced with a carbon backed top copy so as to allow travellers to have a duplicate, which officers of HMRC may ask them to produce as evidence of having made a declaration.

HMRC officers will not detain properly declared cash if they have no reason to doubt its legitimacy. However, cash may be seized under the Proceeds of Crime Act 2002 if an officer has reasonable grounds to suspect that it is either the proceeds of, or is intended for use in, unlawful conduct.

Source Tax-news.com

The CRF (Cellule de Renseignement Financier), which is the FIU in Luxembourg this month published its report for 2005 and 2006.
The report is very positive as it does not hide issues and especially :
- the fact that legally the attempt of laundering is not punishable in Luxembourg as concluded by judges in a judgement dated 12 October 2006
- the fact that the word "knowingly" that was added to the law of 12 November 2004 has increased the risks.

But on the other hand it does not give the same ethical version as professionals and politicians in Luxembourg.

See report in french

French civil society organisations have last month published a brochure about Tax and judicial havens
By combining arrangements able to hide the origin of funds and a refusal to cooperate with the international community in tax and criminal investigations, the tax and judicial havens offer a privileged interface between the world of legitimate financial transactions and money of criminal origin. They therefore constitute an encouragement to international bribery and to the development of criminal networks: money from the drug trade, from prostitution, from terrorism, arms trafficking, flags of convenience, etc. It comes as no surprise, then, that they have been used on a large scale in the majority of financial scandals of the last few years (e.g. Enron).
The brochure rates the harmfulness taking into account various criteria: banking secrecy, no or little taxes, easiness to create companies, practice of trusts, limited judicial cooperation.

As far as the centres in the framework of this blog are concerned the rating is the following (the higher the figure out of 100, the more harmful the country):

Gibraltar: 94,90
Cyprius, Liechtenstein, Guernsey, Jersey: 89,80
Isle of Man: 88,10
Monaco: 86,45
Ireland: 76,35
Switzerland: 76,20
Malta: 79,70
Luxembourg: 69,8

The authors observe that the ratingis based on a subjective assessment of the legal framework and that the relevance of the veight given to each criterion my vary depending on the goals of the "user" of the tax haven.

Read the brochure (French)