Luxembourg has long been a major banking center, but in recent years that status has been threatened by charges that its banks condone money-laundering and tax evasion. The Grand-Duchy has now moved to assuage its partners in this respect while maintaining banking secrecy to protect the privacy of clients and discourage random fishing expeditions. Mr. Baden writes: On 13 March 2009 the Government of the Grand-Duchy of Luxembourg announced that Luxembourg would comply with OECD standards in terms of international exchange of information in tax matters. Since then a number of bilateral agreements have been signed. The national legislation will have to be adapted to allow the exchange of information to proceed as expected. Criticism against the Luxembourg financial sector and in particular against its banking industry has been long standing. Luxembourg has been hailed as a tax haven and much worse. With the onset of the global financial crisis at the end of 2008, the pressure generated by some countries, most notably Germany and France, with respect to Luxembourg's financial sector and in particular its banking secrecy has increased to such a degree that the Luxembourg government saw the need to yield, at least partly, to the pressure. When discussing the financial sector in Luxembourg, we must remember that the banking industry in the world has gone through dramatic legislative and regulatory changes over the last few decades and that often enough funds from criminal activities have been stashed in so-called tax havens. While Luxembourg's banking industry is not the saint among saints, it has adopted most regulations allowing for an effective prosecution against criminal funds.
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