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WT/TPR/S/208Trade Policy Review Page 114

Switzerland including the currency union, favourable tax arrangements, and strict bank secrecy.  Bank secrecy (Article 14 of the Banking Act) covers all business relations between the bank and its customers and is not limited in time.  However, bank secrecy is lifted in criminal cases (such as arms or narcotics trafficking, corruption, terrorism, money laundering, and tax fraud). Liechtenstein's legislation distinguishes between tax evasion and tax fraud;  the former is the omission to declare income or assets to the tax authorities, while the latter is any tax-related fraud, such as the submission of forged documents to the authorities.  In the case of tax evasion, bank secrecy is upheld, even after a request from foreign authorities, as tax evasion is not considered a criminal offence under Liechtenstein law.  However, breach of bank client confidentiality by bank employees is a criminal offence.  

2.

Following several years of stagnation, total assets deposited at Liechtenstein's banks have grown strongly since 2004, reaching Sw F 171 billion in 2007 (Table IV.10).  In addition to the 15 banks (of which six are foreign owned), there are 448 investment undertakings (240 foreign owned), 84 authorized trustees, and 277 trust corporations.  The banking subsector is highly concentrated, with three banks accounting for 89% of total banking assets.

Table IV.10

Liechtenstein banking indicators, 2000-07

(Sw F million, unless otherwise indicated)

No. of banks

Balance sheet total

Net profit

Total deposits

2000

14

36,963.5

549.1

112,679.8

2001

17

34.788.0

443.8

105,655.7

2002

17

32,665.4

251.8

96,194.2

2003

16

34,908.3

331.8

103,466.9

2004

15

34,205.2

423.6

106,988.9

2005

15

38,175.6

742.9

128,718.7

2006

15

43,377.0

626.9

160,925.1

2007

15

49,694.3

721.7

171,447.9

Source:Amt für Volkswirtschaft (2008), Statistiches Jahrbuch 2007/2008;  and information provided by the Liechtenstein authorities.

3.

As a result of Liechtenstein's participation in the EEA, all its banking, securities, insurance, and accounting legislation is based on EC legislation, although financial institutions (mainly banks) are also required to meet the accounting rules of the Swiss Federal Banking Commission due to the monetary union between both countries.

4.

The Banking Act of 1992 and the corresponding Banking Ordinance, as amended, are the main legal instruments governing the banking subsector and investment firms.48  The Financial Market Authority (FMA), established in January 2005, is responsible for supervising banks, investment firms, investment undertakings, trustees, lawyers, accountants, and auditors.  Banks and investment firms require a licence from the FMA in order to commence operations and may only take the legal form of limited companies (Aktiengesellschaft).49  The head offices and the principal management must be domiciled in Liechtenstein.  The minimum required fully paid-up capital is Sw F 10 million for banks and Sw F 1.5 million (or the equivalent in euros or U.S. dollars) for investment firms, but, in practice, the FMA requires Sw F 20 million for banks and Sw F 3 million

48 LLG 1992, No. 108, as amended;  and LLG 1994, No. 22, as amended.

49 Exceptions may be granted by the FMA .

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