San Marino banks seek to polish thuggish image

R.A. Hettinga rah at shipwright.com
Thu Jun 21 09:35:05 PDT 2007


<http://www.ibtimes.com/services/pop_print.htm?id=29637&tb=bh>


International Business Times

San Marino banks seek to polish thuggish image


By Lisa Jucca

Posted 21 June 2007 @ 06:56 am EST

 

Residents from the seaside resort of Rimini on Italy's Adriatic coast
quietly admit that a short drive to nearby microstate San Marino has
allowed many to hide cash from the taxman for decades.

Landlocked inside Italy, this dwarf nation of 30,000 people has earned a
reputation of turning a blind eye to ill-gained money and allowing fake
companies to launder the cash.

But the heyday of tax-hopping and stashing away dodgy money may be over as
the Most Serene Republic of San Marino is carrying out a quiet financial
revolution -- with the intent of leaving some bad habits behind.

"If we have to give up dodgy money we will," said Secretary of State for
Finance Stefano Macina.

"Those who come here to organize a tricky business or bring funds from the
Mafia will be at risk."

A global crackdown by watchdogs makes criminal money a risky business for
banks, while wealthy clients at the same time are no longer happy sitting
on a pile of undeclared cash, looking for legal ways to lower tax and boost
returns.

There are no checks at the border of this idyllic, hill-top stronghold of
bank secrecy and anyone can walk into a bank and open an anonymous account
with few questions asked.

Such habits meant that criminal organizations like the Mafia turn to the
mini-republic for money laundering, experts like Pierluigi Vigna, a former
chief prosecutor of Rimini, told a San Marino conference this month.

Fearing it would be cut out from competing in the global marketplace, San
Marino began a complete overhaul of its financial system six years ago that
sent a buzz across the medieval steps of its sleepy streets.

"Two years ago we just were not presentable," said Antonio Valentini, the
chairman of the newly created central bank of San Marino, which says it is
the world's oldest republic.

It then created an independent central bank charged with watching its
financial sector, and the Paris-based OECD has removed it from a black-list
for tax havens that includes Andorra, Liechtenstein and Monaco.

San Marino is also taking steps to adopt tougher anti-money laundering
rules, to crack down on bearer accounts and to make it tougher for
foreigners -- mostly Italians from nearby provinces -- to elude payments of
value added tax.

PAST SCANDALS

San Marino is holding bilateral talks with governments and central banks in
Italy and other European Union countries that will allow it to sell
financial products abroad and let its 12 banks open branches outside the
tiny state.

"What was the image of San Marino up until recently? They saw us as a band
of thugs," said Marino Maiano, chairman of the Banca di San Marino, the
country's second largest bank.

"But it is partly our fault as we have been unable to project the right
image when we had some scandals."

Yet, opening up to the world for a country that has made its fortune on
bank reservedness is not an easy task, in particular when the interlocutor,
the Italian central-left government, is promoting a policy of
zero-tolerance against tax evasion.

"This scarce willingness to communicate externally is part of our DNA, but
it has somewhat penalized us," said central bank head Valentini.

San Marino officials believe their new co-operative approach will allow it
to compete against more advanced low-tax financial centers such as
Luxembourg, Ireland and Switzerland.

They also hope to convince Rome there will be a positive effect on the
surrounding Italian regions if Italians begin to divert more investments to
San Marino.

Removing bank secrecy is, however, out of the question -- leaving in place
one magnet for funds that are helping other offshore financial centers such
as Switzerland.

"We know that up until Bologna, it's still easier to drive to San Marino
than to Switzerland," says a San Marino-based private banker, asking not to
be identified.

-- 
-----------------
R. A. Hettinga <mailto: rah at ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'





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