Ethics and governance in the European Financial centers

An analysis of the websites of the CSSF (www.cssf.lu) in Luxembourg and the SFBC (www.ebk.admin.ch) in Switzerland demonstates that the body responsible for the control of the financial sector in Switzerland has no problem to communicate on issues in the framework of press releases or bulletins, which is not the case in Luxembourg where issues are usually either denied or dropped. Hence, the CSSF is unfortunately mute on issues : no example will be provided because this blog is not intended to chuck names. but only to assess if regulation may be effective.

Examples of press releases in Switzerland :
SFBC_orders_removal_of_bank’s_general_manager.2.pdf
SFBC_Reprimands_UBS_over_US_Dollar_Banknotes_Trading.2.pdf
SFBC_has_withdrawn_its_pending_investigation_against_Mr_J...

Examples of Bulletin in Switzerland :
bull47_Suisse.pdf



Due to the exemplarity thanks to the transparence on issues, the financial sector may be much more ethical in Switzerland than in Luxembourg.

The number of reports on suspicious transactions submitted to the Money Laundering Reporting Office of Switzerland (MROS) decreased for the second consecutive year in 2005. Most financial intermediaries under duty to report seemed to have less reason to suspect shady money transactions. Similarly, the number of reports from banking institutions decreased for the first time since the duty to report was introduced. As in previous years, the money transfer services accounted for almost half of the reports submitted. In its country assessment, the FATF evaluated MROS favorably.
While the number of reports received in 2004 had declined by 4.9 percent to 821 compared to the previous year, the number of reports further decreased by as much 11.2 percent to 729 reports in 2005. In 2005 MROS registered 11 percent, or 43, fewer reports filed by money transfer services―the business sector that accounts for the largest business volume― than in 2004.
In 2004, 75 percent of the sum total of reports was forwarded to the appropriate prosecuting authorities for further investigation. Of a total of 729 reports received by MROS in 2005, 504 reports (69 percent) were forwarded.
In 2005, the Financial Action Task Force (FATF) assessed the Swiss financial center and the measures for combating money laundering and terrorism financing for the third time. Also assessed was the cooperation of MROS with financial intelligence units of other nations. Taking into account the particular circumstances under which MROS operates, the FATF certified MROS as efficient and professional , an assessment that translates into »largely compliant« with FATF standards.

Declarations_of_suspicion_CH.pdf

FATF-GAFI_CH.pdf

Both Switzerland and Luxembourg have the same requirement for professionals in their law : all the guaranties of an irreprocheable activity i.e. all the guaranties of proper conduct of business operations :
- for Switzerland, see notably article 3 of Federal Act of 8 November 1934 on Banks and. Savings Banks and article 3 of Federal Act of 24 March 1995 on Stock Exchanges and Trading in Securities.
- for Luxembourg see articles 7 and 19 of the Law of 5 April 1993 on the financial sector, as amended.


We may state three observations :
- The wording is similar
- The requirement is stricter than the audit requirement that whould be a "raisonnable assurance" of an irreprocheable activity.
- the word irreprocheable itself is more extensive than licit and accept no drift in the behevior.


It seems that Switzerland is much more serious in the implementation of the requirement :
- thanks to a stronger communication and transparence on the issue that can be traced on the Web with a search engine,
- thanks to evidences of the implementation, especially in public judgements.

There are no evidence of an actual implementation in Luxembourg, especially on www.codeplafi.lu, which is the official extensive database, of all laws, regulations and circulars governing the regime and the activities of banks, of investment firms and other professionals of the financial sector, of insurance and reinsurance companies, the financial markets and instruments and the Luxembourg monetary status as well as to indications on case law and writings. We find only the text of the law and regulation. Most cases that are presented are relating to Bank secrecy.

On the opposite, there are many evidence that the system is actually living in Switzerland beyond the official texts. There is especially a circular that summerise the requirement and the implementation including law cases. This document is unfortunately available only in French and German.
Irreprocheable_activity_French_text_.pdf
Irreprocheable_activity_German_text_.pdf