Liechtenstein Will Resist Moves To End Bank Secrecy, Says Prince

by Ulrika Lomas, Tax-News.com, Brussels

21 March 2006

Liechtenstein is unlikely to dispense with its coveted banking secrecy laws any time soon because such a measure would probably not be approved if put to a referendum, according to Prince Alois, ruler of the Principality.

Prince Alois told Bloomberg News in an interview published on Monday that banking secrecy is "very firmly anchored" in Liechtenstein and any proposed watering down of current laws to satisfy the OECD and the FATF would therefore be rejected when put to a referendum - a necessary measure under the Principality's constitution.

"I don't think a draft law or international accord proposing to scrap bank secrecy would be successful in the foreseeable future. The people would reject it in a referendum," Prince Alois stated.

Financial services constitutes about 30% of Liechtenstein's gross domestic product; according to the recent progress report on anti-money laundering initiatives across the globe, by the US State Department, Liechtenstein’s well-developed offshore financial services sector, relatively low tax rates, liberal incorporation and corporate governance rules, and tradition of strict bank secrecy have contributed significantly to the ability of financial intermediaries in Liechtenstein to attract funds from abroad.

However, the report went on to note that these same factors have historically made the country attractive to money launderers.

"Rumours and accusations of misuse of Liechtenstein’s banking system persist in spite of the progress the principality has made in its efforts against money laundering," the report stated.

Recommended