Pressure grew on Liechtenstein on Tuesday to ease its bank secrecy rules in the wake of a German tax scandal centred on the Alpine tax haven.
The Organisation for Economic Co-operation and Development in Europe, which co-ordinates global efforts to reduce tax haven secrecy, added its voice to calls by Angela Merkel, German chancellor, and the European Union for greater financial transparency.
Angel Gurria, the secretary general of the OECD, said Liechtenstein’s secrecy rules were a “relic of a different time”.
He was speaking on the eve of a visit on Wednesday to Berlin by Otmar Hasler, Liechtenstein’s prime minister, who is due to meet Ms Merkel for talks that have been overshadowed by tension over Germany’s foreign intelligence agency activities in the principality.
Liechtenstein’s Crown Prince Alois on Tuesday accused Germany of mounting an “attack” on the principality. He condemned as “unacceptable” Berlin’s decision to allow its BND intelligence agency to pay more than €4m ($5.9m, £3.7m) for bank client data allegedly stolen by a former Liechtenstein bank employee.
A German finance ministry spokesman said the BND move was not an attack on Liechtenstein but an “effort to catch German criminals”.
The spat is the first international political fallout from one of Germany’s largest tax evasion investigations which, according to prosecutors, involves 750 people suspected of holding undeclared trusts in Liechtenstein. Klaus Zumwinkel resigned last week from his position as head of Deutsche Post after raids by investigators on his home.
Prosecutors on Tuesday raided a Munich branch of UBS, the Swiss bank, although a spokeswoman said the target was a client, not the bank. A branch of Dresdner Bank was also raided on Monday, bank officials said. And investigators confiscated data on Tuesday from private banks in Hamburg and elsewhere. The authorities have yet to charge anyone.
In an apparent sign it was giving way to international pressure, a spokesman for the Liechtenstein government said it would on Wednesday announce a “toughening of controls” on banking, including extra powers for financial regulators.
This would be an “active move in the direction” of demands for more transparency and financial information exchange made by the OECD, the spokesman said, adding that the timing of the changes and the German scandal was a “coincidence”.
Jeffrey Owens, the OECD’s chief tax havens expert, said the changes would only make a difference if Liechtenstein “were now ready to sign tax information exchange agreements with Germany and other countries”.
The Liechtenstein spokesman said its bid to join the EU’s border-free Schengen zone was on ice, as Brussels was linking it to demands for banking openness.