Let's take the small Alpine principality of Liechtenstein, so long plagued by allegations that its banks are being used to launder money for organised crime and drug traffickers. The situation was compounded in June when it was included on the Financial Action Task Force (FATF) blacklist of 15 nations accused of failing to cooperate in the fight against money laundering.

Liechtenstein has finally bowed to international pressure, which has come from all corners, not least the German government. Its secret service described the tiny principality, sandwiched between Austria and the eastern border of Switzerland, as a "paradise for money launderers". The FATF report was the final straw.

Liechtenstein hasn't made a grand announcement about its change of heart with a great trumpet fanfare - in fact, it's been pretty quiet about it. The Liechtenstein Bankers Association wrote a letter to the government saying that from now on, whenever anyone came to open an account they must reveal whose money it was.

Liechtenstein Justice Minister Heinz Frommelt has reiterated that the principality is to make every effort to stop money laundering saying: 'It is 100 per cent in our own interest to make sure there is no illegally earned money in Liechtenstein.' In addition to the banning of anonymous accounts, making it impossible for clients to preserve their identities by going through intermediaries or lawyers, Liechtenstein is to set up a special division of the police to focus on organised crime, and also create an office where cases of money laundering can be reported. However, it is obviously hard for Mr Frommelt to let go of the fact that banking secrecy is synonymous with his country. He said 'Our banking secrecy is a philosophy that we grow up with. Tax evasion is not a criminal offence here.'

But the concessions made by Liechtenstein are not enough for some. Some investigators want Liechtenstein banks to open their books. Such a step is possibly unthinkable, yet it would have been welcomed by the likes of the Serious Fraud Office in the UK and accountants Arthur Andersen when they were investigating the distinctly dodgy ruins of the late Robert Maxwell's empire, trying to trace missing pensioners' funds but unable to break through the brick wall of Liechtenstein's trusts. The banks' cause has not been helped by the more recent Abacha scandal, which has now rolled on to Liechtenstein bringing with it accusations that millions of dollars stashed away by the late Nigerian dictator Sani Abacha are now languishing in Liechtenstein's bank vaults.

The pressure applied by the FATF has played a large part in closing the Alpine route to banking secrecy, but there are still a few jurisdicitons which will welcome money without asking too many questions, and these are outside Europe. However, given mounting external pressure and anti-money laundering initiatives, it is probably only a question of time before they start moving down the same road as Liechtenstein and Switzerland.