Luxembourg: Time for Introspection.

I remember the time of several great Luxembourg Statesmen: Joseph Bech and Pierre Werner who efficiently navigated the course between the conflicting interests of our bigger neighbors and Gaston Thorn, certainly exhibiting a different style, but as successful on the international scene as his two predecessors. And yet, despite their efforts not to hurt our neighbors’ sensitivities, they were not of the kind to give in easily when they neighbors pressured us. They very often actually avoided pressures quite artfully.

Recently, almost all our leaders got into a competition about who among them could blow his horn more forcefully, to protest a general assault on Luxembourg's banking secret. They promised the mother of all battles, and the echo from abroad promised the same.

I want to share a personal experience that I had with Pierre Werner that I never forgot. He was the father of the Luxembourg satellite company. That project was certainly not to the liking of French President François Mitterrand. When eventually the launch of the first Luxembourg satellite was scheduled, I traveled with the Crown Prince of Luxembourg and Mr. Werner to Kourou, French Guyana in December of 1988. The French officials in place were obviously uncertain about protocol arrangements, as French Presidential sensitivity was in the air. After the launch, the Crown Prince did two announcements, one in Luxembourgish and one in English, none in French. Pierre Werner told me that it was a missed occasion to mend the fences, which traditionally we would always try to do. He didn’t want to break any Limoges porcelain, and therefore got his satellite flying.

The shrill display of holy anger that our men in the arena exhibited lately demonstrates that they obviously skipped many classes from the great teachers mentioned above. They did break the Limoges set, and yet there is no banking secret anymore.

Some haven’t noticed yet and are still tooting their horns. What is Luxembourg to do? (And also Austria, Liechtenstein Switzerland, Cayman and all the others). Only one thing: COMPLIANCE.

There is no way around compliance with OECD standards to get off the grey list of tax havens. Eventually anti tax haven compliance requirements will merge with those of anti money laundering and counter terrorist financing.

There should be no weakness in Luxembourg’s overall compliance. OECD rules and FATF recommendations may be imperfect. Luxembourg’s compliance with them should be perfect. There is no room left for another blow at our reputation. OECD and FATF might be criticized for lax regulations. Luxembourg doesn’t have that luxury.

It would even be thoughtful to start preparing for yet another requirement in the future: avoiding the upcoming list of judiciary and regulatory havens. I’ll use my personal experience in Luxembourg as a demo, a practical guide through the concept of the judicial and regulatory haven, all the while poking some fun into it. Sorry, it will be in Luxembourgish mostly, on my blog that is peckvillchen.blogspot.com. That dirty linen cannot be washed in English.