VADUZ, March 5: The International Monetary Fund accused Liechtenstein of not doing enough to fight financial crime despite recent progress, increasing pressure on the country to reform its secretive banking sector.

Tiny Liechtenstein at the centre of a tax dodging scandal in Germany that has rapidly spread to other countries had made “significant progress” towards standards to fight money laundering and terror financing, the IMF said.

But it remained vulnerable to criminals abusing corporate structures to launder money, the report said, and Liechtenstein should also improve effectiveness when reporting on suspicious activities.

“In identifying high-risk customers and beneficial owners, excessive discretion is provided in the law to financial institutions and there is no explicit requirement for enhanced due diligence,” the report said.

Liechtenstein, a principality wedged in between Austria and Switzerland, became the focus of a scandal over secretive bank accounts after Germany paid an informant millions of euros for client data from a bank in Liechtenstein.

European Union finance ministers agreed on Tuesday to speed up a review of the bloc’s savings tax rules after the spat between Germany and Liechtenstein.

Liechtenstein has made clear it will stick to its strict banking secrecy rules, but has countered criticism in recent weeks, with politicians and bankers saying it has already reformed its financial centre substantially. Liechtenstein’s Prime Minister Otmar Hasler pointed to the report as proof of that.

“This all shows we that we are on the right track, it is a policy that we have consistently followed and we will continue to do so,” Hasler told a news conference.

The IMF took Liechtenstein off its financial crime black list in 2001, but the country is still widely regarded as a tax haven, amongst others by the Organisation for Co-operation and Economic Development.—Reuters