Germany agrees to share information about secret bank accounts Read more: Germany agrees to share information about secret bank accounts

German has assured finance minister Pranab Mukhejee that it would pass on information about Indian citizens holding secret bank accounts.

The assurance came at a bilateral meeting between Mukherjee and German finance minister Wolfgang Schaeuble on the sidelines of the meeting of the G20 finance ministers and central bank governors that concluded here on Saturday.

Mukherjee appreciated the role of Germany in providing information about Indian citizens having secret bank accounts in the LGT bank of Liechtenstein.

Germany has earlier provided names of some Indians having secret accounts in the Liechtenstein Bank.

"German finance minister ... assured him (Mukherjee) that as and when they have such information, they will pass it on to the Indian government", said a release.

Germany, it added, has also agreed to revise Double Taxation Avoidance Agreement (DTAA) and incorporate clauses to facilitate exchange of information between the law enforcement agencies of the two countries.

The negotiations to amend the DTAA will start soon, the release said, adding Mukherjee has requested for early amendments to the tax treaty.

Under the existing treaty, Germany cannot share information for non tax purposes.

German tax authorities, Mukherjee added, need to share information with India's Enforcement Directorate, a body that deals with offences relating to violation of foreign exchange laws.

Raising similar issues with French minister for economy, industry and employment Christine Lagarde, Mukherjee said there was need to put pressure on tax havens to share information to prevent money laundering.

Mukherjee also recalled the commitment of the French minister to share information on Indian monies in Swiss banks, the release said.

The finance minister asked his French counterpart to initiate early negotiations for amending the DTAA between the two countries.

Lagarde said the French team was working on the amendment proposed by India on the DTAA and the issue of providing information for tax purposes would be discussed shortly with Indian administration.

The two leaders also discussed a number of bilateral and multilateral issues and underlined the need for greater engagement between the two countries in the fields of energy, nuclear power, water treatment etc.

Source: The Times of India

Liechtenstein Implements 3rd Money Laundering Directive

by Ulrika Lomas, Tax-News.com, Brussels


Liechtenstein has set out the goal of applying leading standards in the fight against money laundering and financing of terrorism by implementing the 3rd EU Money Laundering Directive of the EU, according to the jurisdiction's government.

The government revealed in a posting on its website that the adoption of the directive, a recommendation of the IMF, will be transposed into national law by way of a revision of the Due Diligence Act.

"The Liechtenstein financial centre can only assert itself in the tightened international competition among business locations if the highest international standards are followed in the application of the law. The evaluation by the IMF gave Liechtenstein good marks with respect to implementation and application of the international standards for the prevention and suppression of money laundering," the government stated.

The IMF report also issued several recommendations to improve the prevention of criminal acts. For instance, the IMF voiced some doubts whether the scope of the defensive measures is already extensive enough to fully cover the relevant FATF recommendations. In the fight against financing of terrorism, the IMF suggested modifying the definition of the offense, so that it covers all elements set out in the International Convention for the Suppression of the Financing of Terrorism.

However, the Liechtenstein government stated that at the time the IMF assessment was published in autumn 2007, it was already planning the implementation of the 3rd EU Money Laundering Directive and the anti-money-laundering recommendations of the FATF, as well as the FATF Special Recommendations for the suppression of terrorist financing.

A report and draft law by the Liechtenstein government are now available for implementation of the EU directive and the FATF Recommendations into national law. Other recommendations, such as enhancing the efficiency of international legal assistance and introducing the criminal liability of legal persons, will be incorporated into other ongoing legislative projects.

The Due Diligence Act originally entered into force in 2004 as part of implementation of the 2nd EU Money Laundering Directive, but the Government plans to expand due diligence obligations under the new revisions to include not just the core area of the financial sector, but also professions such as statutory auditors, accountants, and tax consultants.

Hitherto, the scope of the act has been limited to the acceptance and safekeeping of third-party assets and the formation of domiciliary companies. Under the revised law, it will be expanded to include relevant activities of natural and legal persons who, within their enterprises, are responsible for the formation of companies, exercise the function of general manager of a company, or make a domicile available.

With this expansion of due diligence, Liechtenstein says that it is confronting the danger that money laundering and terrorist financing may move to non-regulated areas.

The scope of due diligence continues to include banks and investment firms, investment undertakings and life insurances, the post office and exchange offices. The law will henceforth also cover casinos, real estate brokers, auditors, auditing companies, professional trustees, and lawyers, to the extent that they engage in financial transactions. Due diligence also covers persons and companies dealing in goods, if payment is made in cash and the amount exceeds CHF25,000 (EUR15,500).

The Government is also adopting international standards concerning the reporting requirement in the case of suspicion of money laundering and terrorist financing. In future, a reporting requirement under the Due Diligence Act will apply not only in the case of existing business relationships and completed transactions, but also in the case of attempted transactions.

"The Government is convinced that the reporting requirement in the attempt phase will enhance the level of knowledge of the FIU (Financial Intelligence Unit) with respect to critical phenomena in the financial center, thereby strengthening the early-warning system provided by the defensive measures," the government argued.

"Liechtenstein wants to take a leading position in the fight against crime and to meet international obligations. Especially in connection with the current debate concerning the protection of privacy, the Government has made clear that criminals cannot benefit from this protection," it added.

Source: Tax-News

Liechtenstein bank data expose Indian tax evaders

John Samuel Raja D / New Delhi August 18, 2008

The Indian government has received sensitive information from its German counterpart regarding tax evaders, who have channelled money in a tax haven bank in Liechtenstein, a small European country known for hosting such banks, and it is unwilling to make these details public.

It is not known at this point of time whether the information exchanged between the two countries contain details of account holders from India.

It all started in February this year, when a former employee of LGT Bank in Liechtenstein sold data on about 1,400 people to tax authorities across the world. This was followed by investigations by Germany, the US, the UK, Australia, Italy and others. After receiving the stolen data, the German government initiated action against around 600 taxpayers for possible tax evasion. It has reportedly offered to provide data to any country that seeks information.

Subsequently, India’s finance ministry wrote its first letter to German authorities in February 2008 seeking information on Indian account holders and followed it up with another letter in June 2008, the government disclosed in a reply to a Right to Information (RTI) application filed by the Indian-chapter of Transparency International.

When Transparency International asked for copies of correspondence between the two governments and the list of account holders in LGT Bank, the finance ministry replied saying that the exchange of information between India and Germany is covered under Double Taxation Avoidance Agreement (DTAA), which prohibits countries from sharing information.

“It’s not acceptable that the government is not disclosing the correspondence with the German government,” said Anupama Jha, executive director of Transparency International India.

In an e-mail response to a questionnaire sent to them, LGT Group said Indian authorities have not contacted them so far. “Due to client confidentiality laws, we are unable to disclose any client names. Also, with regard to stolen client data, we do not provide any nationality break-downs”, LGT spokesperson Christof Buri said. The German government did not respond to the questionnaire.

If the German government had given details of Indian account holders in LGT Bank, which is owned by the princely house of Liechtenstein, it will help domestic tax authorities to investigate tax evasion for money deposited in tax haven destinations. Tax haven locations thrive mainly because of difference in tax rates, often levying nil or very low taxation. Banks that operate in these locations are alleged to create complex offshore structures that will enable their clients to hide the assets from tax authorities.

This sort of tax evasion, according to a report prepared by the US senate sub-committee last month, had estimated that it cost US taxpayers $100 billion every year. LGT Group was one of the two entities named in the report.

But LGT denied the charges, saying, “Liechtenstein has very strict money laundering and KYC (Know Your Customer) regulations in place, and clients of LGT Group (as of any other Liechtenstein bank) are obliged to disclose the beneficial owner and have to give detailed information regarding the source of their assets”. But it said LGT is neither responsible for nor in control of the tax compliance of its customers.

LGT Group is a wealth and asset management group with or $91.5 billion of assets under its management.

Source: Business Standard