Privacy invasion

zoom

NÜTZI: The Liechtenstein case is a disaster for private banking centres all over the world.

Europe's private banking centres are struggling to keep clients' accounts confidential, following state-sponsored data theft.

Private bankers in Switzerland have been shaken by a breach of client privacy in Liechtenstein, another major European private banking centre.

At the end of February, it emerged that German authorities had paid US$6.2 million to an employee of Liechtenstein's LGT Banking Group for account information that helped to provide evidence of tax evasion among hundreds of German citizens.

LGT said its clients withdrew $96.4m in the week that the espionage was revealed, and the Swiss private banking industry has also been unsettled by the news.

Thomas Sutter, head of communications at the Swiss Bankers Association, said that the espionage case had not resulted in large numbers of clients moving their accounts from Liechtenstein to Switzerland.

"At the moment, we do not see any changes in the flow of the money," he told Arabian Banking & Finance in a statement. "Clearly in the longer term, money flows are related to changes in the regulatory framework."

He added: "German authorities have not made any official demands towards Switzerland. We do have treaties with Germany as well as with the European Union that guarantee the confidentiality of clients to Swiss banks.

However, other bankers were more concerned. Hans Nützi, CEO of Switzerland's third-largest private bank, Clariden Leu, which opened its Dubai office last month, told ABF: "It is a disaster.

It is very negative for the reputation of Liechtenstein, and also the overall private banking market, not only in Liechtenstein but in Switzerland and other parts of the world.

Clariden Leu purchased a small German bank last year in order to offer onshore banking services there, but Nützi said that none of its clients had been affected by the current German investigation.

He said that Clariden Leu followed the laws and regulations in all countries in which it operates, but pointed out that in the LGT case illegal means were used to gain client data.

Clariden Leu has two major booking centres, in Switzerland and Singapore. As a result of the espionage case, Nützi said that a growing number of the bank's clients were showing interest in booking their accounts in Singapore.

The bank has looked into ways of ensuring the security of its clients' data. Nützi said: "We did not discuss this with other banks, but we discussed this in our group. We have to know exactly who, in which department, has access to what kind of client data.

The bank has made sure that it knows which of its 1500 members of staff have access to sensitive ownership and account information, and is implementing procedures to prevent staff downloading or printing out data that could compromise its clients' privacy.

Nützi says it is not just private banks that should be concerned by the precedent of a European government endorsing data theft: research companies also need to put data protection policies in place, in case their staff are approached to download sensitive information.

There could still be more for Europe's banking centres to worry about. Last month, Germany pressed the European Union to increase the transparency of financial centres such as Liechtenstein, Andorra and Monaco, which could be used by citizens of other European countries to hide taxable assets.

Finance ministers from all of the EU's 27 member states - with the exception of Austria and Luxembourg - showed support for new rules that would close tax loopholes.

Print | Email | Discuss this article |

READERS' COMMENTS

View all comments (0)

Have your say

Click here to post a comment

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Security Code *
Please click post only once - your comment will not be published immediately.

MORE FROM ARABIANBUSINESS.COM