The IMF gets Liechtenstein very wrong indeed

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The IMF has issued a report on its web site today but which is dated 21 March 2008. It is entitled ‘ Liechtenstein: Assessment of Financial Sector Supervision and Regulation’. It forms part of the IMF’s regulatory review process. These are the reports which most tax havens use to claim that they are incredibly well regulated.

The review was actually undertaken in 2007. It is almost amusing to note how wrong it is. The executive summary says

The financial sector in Liechtenstein provides primarily wealth-management services, including banking, trust, other fiduciary services, investment management, and life insurance. The industry is expanding, including in the nonbanking areas, particularly investment undertakings and insurance. The success of the financial services industry reflects in part the not insignificant role of quality supervision and regulation.

We now know that this is completely untrue. We all know that the financial sector in Lichtenstein is involved in the provision of tax evasion services. Like every tax haven its sole purpose for existence is to undermine the regulation of other states, so I am hardly been contentious in saying that.

The the very next paragraph says:

The establishment of the Financial Market Authority (FMA) as the unified, independent regulator in January 2005 was a huge step for the financial services industry. This assessment has observed the substantial progress achieved in establishing a modern supervisory and regulatory regime. The FMA’s ability to share information with domestic and foreign regulatory authorities works well in practice, and the capacity and willingness to cooperate has been demonstrated in the interactions by the FMA and other authorities with their foreign counterparts.

And yet we know that Lichtenstein is refusing to co-operate with other nation states. That was why Germany had to buy data.

The list of recommendations that the IMF makes is substantial and includes such basic items is making tax evasion and terrorist financing a crime. In the light of that the apparent warm words in the executive summary are a complete illusion which will however be reported in the press.

Like all tax havens Liechtenstein exists with the intention of assisting people to break the law in their own country. That is its business model. That is the trade that those who operate their assist. They are the suppliers of corruption services. It is time that the IMF spell this out in black and white.