NOTE: the following is an article written by the AFP’s Andre Lehmann
Liechstenstein will remain a major financial centre even after the easing of its banking secrecy rules, thanks to its know-how in wealth management, its ruling prince says.
AFP
“For years we have acquired in-depth knowledge in the area of wealth management,” Prince Alois von und zu Liechstenstein told AFP in an interview in his castle overlooking the capital Vaduz.
In March, the principality agreed to conform to standards set by the Organisation for Economic Co-operation and Development regarding fiscal transparency.
That effectively ended decades of banking secrecy upon which Liechstenstein – sandwiched between Austria and Switzerland, with a population of 35,000 – built its financial service industry.
Still on the OECD grey list of tax havens, Liechstenstein has signed a number of bilateral agreements – most recently with Britain – on exchanging tax information.
Wealth under management in Liechstenstein fell 19 per cent last year to €148.4 billion due to the global financial crisis and the fallout over the theft of data from the LGT banking group.
But Prince Alois, 41, was optimistic.
“Liechstenstein is going to remain an attractive place,” given its status as “a paradise of stability from a political and economic point of view,” he said.
He also pointed to foundations, trusts, pension and investment funds, and the insurance sector, which have given a second wind to the principality.
The principality – a member of the European Economic Area since 1995 – is part of the European single market without being inside the European Union.
“It is hard to predict which sector is going to grow in the future,” Prince Alois said, “but I would not be surprised if the financial services sector is going to experience a boom.”
Liechstenstein, where the financial sector accounts for 29 per cent of gross domestic product, nevertheless is playing catch-up.
Historically discreet, it found itself under scrutiny in Europe last year after a former LGT employee sold a compact disc with data about bank clients to the German secret service.
Scandal in Germany ensued, leading to the resignation of the chief executive of Deutsche Post, Klaus Zumwinkel amid suspicions of tax fraud.
Liechstenstein remained in the line of fire, notably from Germany, over banking secrecy, until it revised its policy in March.
“We had already prepared before March 12 a reorientation of the financial market,” the prince said, adding that “it was foreseeable that there would be changes everywhere”.
“Of course, we were irritated by the attitude” of the German authorities, and relations with Berlin were “tense,” he said, but the signing in July of an agreement with Germany on exchanging tax information “has straightened the situation”.
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