The cards have been on the table for some time, and now the moment has come for Liechtenstein, finally, to close the door on banking anonymity. The Liechtenstein Bankers Association announced at the end of last week that their formal agreement to comply with, and enforce, the abolition of banking anonymity will take effect from October 1st.
From that time, all intermediaries (who, it is estimated, are responsible for one-third of Liechtenstein's bank accounts) will be required to reveal the names of the depositors they represent. The banks will then perform their own identity checks of their customers, but a message of warning to existing clients who wish to retain their anonymity - the new regulations do not apply solely to new account holders; current customers' identities will also be investigated.
The Liechtenstein Bankers Association has stated that its members hope to complete their checks by the end of next year, but it does stress, unequivocably, that any further account details will remain under normal banking secrecy agreements. Even so, the Bankers Association says it expects some clients may refuse to reveal their identity and choose to withdraw their funds.
The new system of identifying the names of depositors, known as "Know Your Customer", has been in force for some time but is currently non-obligatory - until October 1st that is.
Just as the demise of the anonymous account will be mourned by many an investor, so too will it be welcomed by institutions such as the OECD and FATF. Liechtenstein, previously one of Europe's most secretive tax havens, has now fulfilled a commitment it made three months earlier. For a year now, the Alpine principality has found itself to be the focus of intense international scrutiny over allegations that its banks were used to launder money by organised crime and drug barons. But things came to a head in June this year, when the FATF blacklisted Liechtenstein as one of 15 nations accused of failing to co-operate in the fight against money laundering.
In support of the Bankers Association, the government has implemented new legislation which will tighten the law and close any loopholes that depositors and their intermediaries could take advantage of : 'with the new policy, the bankers association is acting decisively to counter the criticism against Liechtenstein with concrete measures,' states the Association. Reiterating the government's stance, Justice Minister Heinz Frommelt has said 'it is 100 per cent in our own interest to make sure there is no illegally earned money in Liechtenstein.'
The pressure placed on Liechtenstein by the FATF has played a major part in removing banking anonymity, but there remains some tax jurisdictions outside Europe which will welcome depositors money without compromising their identity. However, given the mounting international scrutiny and the implementation of anti-money laundering initiatives, times are changing and perhaps it is just a question of time before they begin to come under the same amount of pressure as Liechtenstein.
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