BANKING SYSTEM OF USA With nearly 90,000 branches and 371,000 automated teller machines (ATMs), US banking system

is the largest in the world. As of September 30th 2004, US banks had US$9.88 trn in assets and US$5.98 trn in total loans. US banking is more diverse than in most Western countries. Despite ongoing consolidation, vigorous competition exists within the vast banking community, which includes financial holding companies that operate nationwide, dominant regional banks and smaller independents. Large foreign banks also continue to expand in the US market. Federal Reserve The Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded. Today, the Federal Reserves duties fall into four general areas: - conducting the nations monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates; - supervising and regulating banking institutions to ensure the safety and soundness of the nations banking and financial system and to protect the credit rights of consumers; - maintaining the stability of the financial system and containing systemic risk that may arise in financial markets; - providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nations payments system. A network of twelve Federal Reserve Banks and their Branches (twenty five as of 2004) carries out a variety of System functions, including operating a nationwide payments system, distributing the nations currency and coin, supervising and regulating member banks and bank holding companies, and serving as banker for the U.S. Treasury. The twelve Reserve Banks are each responsible for a particular geographic area or district of the United States. Each Reserve District is identified by a number and a letter. Besides carrying out functions for the System as a whole, such as administering nationwide banking and credit policies, each Reserve Bank acts as a depository for the banks in its own District and fulfills other District responsibilities. Member Banks The nations commercial banks can be divided into three types according to which governmental body charters them and whether or not they are members of the Federal Reserve System. Those chartered by the federal government (through the Office of the Controller of the Currency in the Department of the Treasury) are national banks; by law, they are members of the Federal Reserve System. Banks chartered by the states are divided into those that are members of the Federal Reserve System (state member banks) and those that are not (state nonmember banks). State banks are not required to join the Federal Reserve System, but they may elect to become members if they meet the standards set by the Board of Governors. As of March 2004, of the nations approximately 7,700 commercial banks approximately 2,900 were members of the Federal Reserve System - approximately 2,000 national banks and 900 state banks. Member banks must subscribe to stock in their regional Federal Reserve Bank in an amount equal to 6 percent of their capital and surplus, half of which must be paid in while the other half is subject to call by the Board of Governors. The holding of this stock, however, does not carry with it the control and financial interest conveyed to holders of common stock in for-profit organizations. It is merely a legal obligation of Federal Reserve membership, and the stock may not be sold or pledged as collateral for loans. Member banks receive a 6 percent dividend annually on their stock, as specified by law, and vote for the Class A and Class B directors of the Reserve Bank. Stock in Federal Reserve Banks is not available for purchase by individuals or entities other than member banks. Supervisory Function of the Federal Reserve The Federal Reserve has responsibility for supervising and regulating the following segments of the banking industry to ensure safe and sound banking practices and compliance with banking laws: - bank holding companies, including diversified financial holding companies formed under the Gramm-Leach-Bliley Act of 1999 and foreign banks with U.S. operations; - state-chartered banks that are members of the Federal Reserve System (state member banks); - foreign branches of member banks; - Edge and agreement corporations, through which U.S. banking organizations may conduct international banking activities;

- U.S. state-licensed branches, agencies, and representative offices of foreign banks; - non- banking activities of foreign banks. Although the terms bank supervision and bank regulation are often used interchangeably, they actually refer to distinct, but complementary, activities. Bank supervision involves the monitoring, inspecting, and examining of banking organizations to assess their condition and their compliance with relevant laws and regulations. When a banking organization within the Federal Reserves supervisory jurisdiction is found to be noncompliant or to have other problems, the Federal Reserve may use its supervisory authority to take formal or informal action to have the organization correct the problems. Bank regulation entails issuing specific regulations and guidelines governing the operations, activities, and acquisitions of banking organizations. Anti-Money-Laundering Program To enhance domestic security following the terrorist attacks of September 11, 2001, Congress passed the USA Patriot Act, which contained provisions for fighting international money laundering and for blocking terrorists access to the U.S. financial system. The provisions of the act that affect banking organizations were generally set forth as amendments to the Bank Secrecy Act (BSA), which was enacted in 1970. The BSA requires financial institutions doing business in the United States to report large currency transactions and to retain certain records, including information about persons involved in large currency transactions and about suspicious activity related to possible violations of federal law, such as money laundering, terrorist financing, and other financial crimes. The BSA also prohibits the use of foreign bank accounts to launder illicit funds or to avoid U.S. taxes and statutory restrictions. The Department of the Treasury maintains primary responsibility for issuing and enforcing regulations to implement this statute. However, Treasury has delegated to the federal financial regulatory agencies responsibility for monitoring banks compliance with the BSA. The Federal Reserve Boards Regulation H requires banking organizations to develop a written program for BSA compliance. During examinations of state member banks and U.S. branches and agencies of foreign banks, Federal Reserve examiners verify an institutions compliance with the record-keeping and reporting requirements of the BSA and with related regulations, including those related to economic sanctions imposed by Congress against certain countries, as implemented by the Office of Foreign Assets Control.
BANKING SYSTEM OF LUXEMBOURG The financial sector contributes about 25% of the Grand Duchy of Luxembourg's GDP, 40% of government tax receipts, and employs 9% of the national workforce. The Commission de Surveillance du Secteur Financier (CSSF) is the competent authority in charge of the supervision and regulation of the financial sector. The objectives of the CSSF include: promoting a favorable market framework in accordance with applicable laws; protecting the stability of the financial sector as a whole; guaranteeing the quality of internal control systems; enhancing risk management procedures; acting on behalf of the public interest. The CSSF represents Luxembourg at an international and European Union level on negotiations with regard to the financial sector and is responsible for coordinating the execution of any international regulation or recommendation at a national level. The Central Bank of Luxembourg supervises the activities of banks, financial establishments and other professionals in the financial sector, such as stock brokers, investment managers, financial advisers and investment funds. There are no restrictions on foreign ownership and no restrictions on repatriation of capital and profits. Luxembourg's banking system is sound and strong. As of October 31, 2004, a total of 167 banks were operating, with estimated total Balance Sheet assets of EUR 688 billion and approximately 22,500 employees. The banking sector relies on skilled, multilingual employees from cross-border regions of Belgium, France and Germany. Many of its employees also come from a number of well-established European communities (Italian, Portuguese, Spanish, UK, Dutch, Scandinavian). There is freedom of exchange and movement of funds for all purposes within the banking system.

Private banking has developed into one of the main businesses of the Luxembourg banking system. Luxembourg has a large share of offshore private banking wealth, estimated at 6%-8% of the worldwide total. Luxembourg also attracts large amounts of investment funds. This fee-generating business has become very important, and Luxembourg ranks among the three leaders in the world in terms of net assets managed. All major European and international financial institutions are represented in Luxembourg.

BANKING SYSTEM OF DENMARK Since 1982, the Danish money and capital markets have under-gone a process of internationalization, and today they fulfill all of the EU requirements regarding the free movement of capital and cross-border trade in financial services. One of the main features of the Danish financial market is a very large bond market, relative to the countrys size, stemming from an unusually widespread issuance of mortgage credit bonds. Danish banks have become increasingly concentrated over the past decades. The number of banks reached its peak in the 1950s, with about 160 commercial banks and 475 savings banks. Since the mid-1980s, their number has fallen sharply; in 1989, six of the largest banks merged into two large commercial banks, Danske Bank and Unibank. The most recent major mergers were Danske Banks merger with BG Bank, Denmarks third-largest bank, and Unibanks merger with the Finnish-Swedish bank Merita Nordbanken to form Nordea. Both took place in 2001. At the end of 2002, Denmark had 186 banks. At that time, the five largest banks collectively had a market share of 81 per cent, as measured by lending volume. The banking sector in Denmark runs on state-of-the-art technology, as is evident in the services it offers both in the domestic market and abroad. Denmark has always been dependent on foreign trade, and the business policies of its banks have therefore been internationally oriented. Four Danish banks have foreign branches, and a number of foreign banks either are directly represented in Denmark or have announced plans for cross-border services here. Banking business is governed by the Danish Banking Act, and banks operate under the supervision of the Danish Financial Supervisory Authority, which is a directorate under the Ministry of Business and Industry. Denmarks National bank is an autonomous institution whose objective is to maintain a secure monetary system and to facilitate and control the circulation of money and the lending activities in the country. The central bank is responsible for Danish monetary policy, for the tactical management of government debt and currency reserves, and for issuing notes and coins. Current Denmark's banking system is open to foreign competition and largely independent of government. The same rules apply to commercial and savings banks, and banks may provide services in a wide variety of areas including mortgage financing, stock trading, leasing, factoring, investment, real estate, and insurance. As of the end of 2004, there were about 160 banks, in Denmark, with the five largest accounting for 82 percent of market turnover. Danske Bank is the largest bank in Denmark and a leading player in the Scandinavian financial markets. Nordea is the second largest bank in Denmark with a nationwide network of 344 branches. The assets of the two largest banks, Danske Bank and Nordea Danmark, amounted to approximately USD 259 billion in 2003 corresponding to approximately 73% of the total assets in the Danish banking sector. The major Danish banks are rated by international agencies and the creditworthiness is very high by international standards. BANKING SYSTEM OF LEBANON Starting with the independence of Lebanon in 1943 and continuing with the establishment of the Banque du Liban in 1964, the banking system in Lebanon prospered. The pronounced difference between foreign and domestic Lebanese banks had been relatively reduced as the former no longer greatly monopolized the foreign financing of Lebanon, contributed to its domestic financing, and began competing for local deposits. In fact, the Lebanese banking system witnessed the entry of 13 foreign banks -- Arab Bank Ltd. (Jordan),

British Bank of the Middle East (Great Britain), Rafidain Bank (Iraq), Saudi National Commercial Bank (Saudi Arabia), Algemene Bank Nederland (Netherlands), Chase Manhattan (USA), The First National City Bank (USA), The Eastern Bank Ltd (Great Britain), Jordan National Bank (Jordan), Societe Tunisienne de Banque (Tunisia), Moscow Narodny Bank Ltd. (Great Britain), The Bank of America (USA), Habib Bank Overseas Ltd. (Pakistan)-- and more than 40 Lebanese banks of which the Eastern Commercial Bank (currently known as the Banque de la Mediterrannee), Banque Libanaise pour le Commerce, Banque Sabbagh, Banque G. Trade (currently known as Credit Lyonnais), Banque du Liban et D'Outre Mer, Intra Bank, Federal Bank of Lebanon, Banque Belgo-Libanaise (currently known as Societe General LibanoEuropeene de Banques), Banque Saradar, Bank of Beirut and the Arab Countries, Banque Joseph Lati et fils, Beirut Ryad Bank, Banque Pharaon et Chiha, Mebco Bank, Byblos Bank, Credit Libanais, Banque Beyrouth pour Le Commerce, Banque Audi, Bank of Kuwait and the Arab World, Banque Geagea, Banque du Credit populaire, Adcom Bank, Rif Bank, and Beirut Universal Bank. In the period prior to the establishment of the Banque du Liban, banks operating in Lebanon were classified by the Ministry of Finance into three categories. The above mentioned approved banks whose guarantees were accepted by the Lebanese government, non-approved banks whose guarantees were not accepted, and discount houses. Since 1964, and by virtue of the Code of Money and Credit, a list of banks operating in Lebanon has been issued by BDL in January of every year. Prior to that year, the Lebanese banking system was characterized by the absence of specific banking regulations and supervision. Banks merely abided by the Code of Commerce which regulated commercial business, with the exception of the Bank Secrecy Law enacted in 1956. Regulations, supervision, and control were only introduced with the enactment of the Code of Money and Credit and the establishment of BDL, which was granted regulatory and supervisory authority over the banking system as part of its function to safeguard its soundness. Currently, regulations governing the establishment and activities of Lebanese commercial banks, branches of foreign banks, specialized banks, Lebanese financial institutions and foreign financial institutions, representative offices of foreign banks, and brokerage firms are available. All are supervised by the Banking Control Commission which is an independent supervisory body established at the BDL in 1967. The banking system is sound and enjoys a high capital adequacy ratio of about 19 percent, more than double the recommended ratio set by Basel I (eight percent). The Central Bank- Banque du Liban and the Association of Banks have set up a committee to prepare the banking sector for compliance with Basel II recommendations concerning capital adequacy. Encouraged by the Central Bank, the Lebanese banking sector continues to consolidate. Over twenty-five bank mergers have taken place in the past decade, and additional mergers are anticipated after Parliament approves a revised Bank Merger Law. International firms established in Lebanon such as BNP/Paribas, Credit Suisse First Boston, HSBC, Citibank and Merrill Lynch remain active. Many sectors are dominated by traditional businesses in the hands of commercially powerful families. The Government is trying to improve the transparency of such firms in order to help solidify an emerging capital market for company shares. As of September 2004, the total assets of Lebanon's five largest commercial banks were estimated at USD 35.2 billion, or 60.5 percent of total bank assets in Lebanon. About 25.8 percent of total loans are estimated as non- performing according to September 2004 statistics. However, banks continue to maintain more than two-thirds provisions against non-performing loans, while the remaining provision is covered by adequate collateral. The Financial Action Task Force (FATF) decided to end formal monitoring of Lebanon in October 2003 in recognition of Lebanon's sustained efforts to implement its anti-money laundering regime. In July 2003, Lebanon joined the Egmont Group of Financial Intelligence Units, which promotes international cooperation in the fight against money laundering. On November 30, 2004, a Lebanese Central Bank official was elected to a one-year term as President of the newly established Middle East and North Africa (MENA) Financial Action Task Force (FATF), which seeks to promote best practices in combating money laundering and terrorist financing in the region. The Lebanese banking system is endowed with several characteristics that promote the role of Beirut as a regional financial center, in terms of ensuring protection for foreign capital and earnings. Free Exchange System and Free Movement of Capital and Earnings

The Lebanese currency is fully convertible and can be exchanged freely with any other currency. Moreover, no restrictions are put on the free flow of capital and earnings into and out of the Lebanese economy. Tax Exemptions Both article 16 of law No. 282 dated December 30, 1993 and article 12 of decree No. 5451 dated August 26. 1994, offer exemptions from income tax on all interest and revenues earned on all types of accounts opened in Lebanese banks. The Free Banking Zone On the first of April 1975, decree No. 29 established a free banking zone by granting the Lebanese government the right to exempt non residents' deposits and liabilities in foreign currency from : - the income tax on interest earned, - the required reserves imposed by the Banque Du Liban by virtue of article 76 of the Code of Money and Credit, - the premium of deposit guarantee imposed on bank deposits to the profit of the National Deposit Guarantee Institution. Opening of Joint Accounts The law of December 1961 allows for the opening of joint accounts. These accounts are opened in the name of several persons and can be used by any one of these persons. In case of death of any one of the account owners, his/her partner can use the account without being subject to heirs procedures. In case one of the account holders is declared bankrupt, the account becomes the ownership of the bankrupt party, unless it is proven otherwise. The bank can't do any clearing for the different accounts of any account holder without the written approval of all other partners. The lifting of bank secrecy on the account is non operational without it being declared by all partners. In case any litigation occurs among the different holders of the account, the bank shall freeze the account from the day it receives notification of the litigation and until it is settled by the courts. Banking Secrecy in Lebanon The banking secrecy, institution inherent to the Lebanese banking system, is governed by the provisions of the law dated September 3, 1956.This law submits to the "absolute" specific banking secrecy, all the banks duly authorized to undertake a banking activity in Lebanon as Lebanese joint-stock companies or as branch of foreign banks. The banking secrecy is absolute in favor of the clients of the above-mentioned banks which cannot disclose to any private person or any administrative, military or judicial authority, the names of their clients, their assets and any fact brought to their knowledge relating to their clients operations (opening of a current account, safe box lease etc.). This ban applies, not only to the banks directors and employees, but also to any person who, by reason of its quality or function, has knowledge of the books, operations and banking correspondence such as Notaries Public, lawyers or auditors. Accordingly, the banking secrecy can be opposed to the Lebanese tax authority and no distrait can be carried out on the assets deposited in the banking establishments without the written authorization of their owners. The intentional breach of the banking secrecy and even the beginning of such a breach- exposes its author to pursuits and penal sanctions, being noted that the criminal prosecution cannot be initiated unless the client institutes proceedings. However, there are some exceptions to the principle of the banking secrecy, which are restrictively provided for by the Lebanese law: 1 - The banking secrecy can be lifted by a prior written authorization of the bank's client, his heirs, legatees. If this authorization is specified in an agreement between the bank and its client, it cannot be withdrawn unless by the common agreement of the contracting parties. The banking secrecy can be lifted as well in case the client is declared bankrupt, or in case there is litigation between him and the bank with regard to their banking relations. 2 -Under the banking secrecy and for the safeguard of their investments, banks may communicate between themselves information relating to the debtor accounts of their clients. 3 - Furthermore, banks cannot oppose the professional secrecy to the requests of the judicial authorities in the scope of lawsuits relating to the pursuits against persons assuming public charges for illicit enrichment, under very restrictive terms determined by specific Lebanese law. 4 - As previously mentioned, the banking secrecy cannot be opposed to the heirs and/or legatees of the bank's client, pertaining to non-joint accounts and other operations of the client with the bank. The residuary

or particular devisees or legatees continue the person of the deceased and dispose of the same rights vis-vis the bank including the right to examine and request from the latter any information relating to the accounts (non-joint) held with the bank and to the operations undertaken over same, provided however that the banking secrecy covering the accounts and operations of other clients is not violated. Joint accounts however, operating with the signature of one of their holder, remain covered by the banking secrecy vis--vis the heirs of the deceased whose rights in the joint account are not devolved to his heirs but to the co-holder of the account who is entitled to use freely all the account. Therefore, the bank is not authorized to provide the heirs of the deceased holder with any information unless expressly provided for to the contrary in the contract for the opening of the account. The Banque du Liban The Banque du Liban was established by the Code of Money and Credit promulgated on 1st August 1963, by Decree no. 13513. It started to operate effectively on 1st April, 1964. BDL is a legal public entity enjoying financial and administrative autonomy. It is not subject to the administrative and management rules and controls applicable to the public sector. Its capital is totally appropriated by the State. The BDL is vested by law with the exclusive right to issue the national currency. As stipulated by article 70 of the Code of Money and Credit, the BDL is entrusted with the general mission of safeguarding the national currency in order to ensure the basis for sustained social and economic growth. This mission consists specifically in : - the safeguard of monetary and economic stability; - the safeguard of the soundness of the banking sector; - the development of money and financial markets; - the development and regulation of the payment systems and instruments; - the development and regulation of money transfer operations including electronic transfers. Development and regulation of the clearing and settlement operations relative to different financial and payment instruments and marketable bonds. BANKING SYSTEM OF SWITZERLAND The banking system is characterized by strict regulations. All banks and bank-type finance companies must be registered with the Federal Banking Commission, which, together with the Swiss National Bank, exercises a relatively tight control over their functioning. The Federal Banking Commission also controls Switzerlands international bank note trading business. As a result, all banks wanting to conduct banknote business have to obtain clearance from the commission. In a recent push towards liberalization of the financial markets, certain provisions for banking and financial services were changed. Banking fees were liberalized, including the freeing of brokerage fees from the cartel. The banking sector provides over a third of the tax revenue from all companies and approximately a fifth of the taxes paid by companies and individuals combined. Banking in Switzerland is extremely diverse, even though it is based on the principle of universal banking. Several bank groups are now fully or partially specialized: The "big" banks The two "big" banks - UBS AG and the Credit Suisse Group - together account for over 50% of the balance sheet total of all banks in Switzerland. UBS AG is the world's leader in wealth management and also Switzerland's leading bank for individual and corporate clients. It is also an important global player in investment banking and the securities business. The Credit Suisse Group is a globally-active financial services provider. Besides offering comprehensive financial advice to private clients, it offers solutions through the Winterthur insurance company to pension and insurance questions and as a financial intermediary it also serves global companies and institutions as well as public corporations. Cantonal banks Formerly one to two per canton, there are today a total of 24 Cantonal banks (in Switzerland's 26 cantons and half-cantons); Cantonal banks are semi-governmental organizations with a state guarantee. Liberalization is currently underway with respect to the state guarantee. Despite their close connection to the

state, cantonal banks must comply with commercial principles in their business activities. Their objective, according to cantonal law, is to promote the canton's economy. Field of activity: engaged in all banking businesses; emphasis on lending/deposit business. Regional banks and savings banks Smaller universal banks with an emphasis on lending/deposit business. These banks voluntarily restrict their activities to one region. Advantage: customer proximity -- they are acquainted with local circumstances and with regional business cycles. The Raiffeisen Group The Raiffeisen Group consists of affiliated independent banks with strong local roots and which are organized along cooperative lines. They have a history of more than a century. The Raiffeisen banks have the highest number of branches in Switzerland and they are all affiliated to the Swiss Union of Raiffeisen Banks. The Union has the strategic leadership of the whole Group and is responsible for the Groups risk management. The Union also coordinates the Groups activities, provides on-the-ground framework conditions for the business activities of the individual local banks (e.g. IT, infrastructure, refinancing) and advises and supports them in all matters so they can concentrate on their core business, namely advising clients and selling banking services. The Raiffeisen Group is one of Switzerlands leading retail banks and has significantly increased its market share over the past few years. Private banks Among the oldest banks in Switzerland. Legal form: individually owned firms, collective and limited partnerships. Private bankers are subject to unlimited subsidiary liability with their personal assets. Field of activity: asset management, chiefly for private clients; as a rule, private banks do not publicly offer to accept savings deposits. Foreign banks Foreign-control means that over half of the company's votes are held by foreigners with qualified interests. Origin of banks: Europe, predominantly EU (over 50%), Japan (around 20%). Fields of activity: foreign business (share of foreign assets in the balance sheet total is 70%), asset management. Other banks This bank group includes banks with various business objectives, such as: institutes specializing in the stock exchange, securities and asset management businesses; commercial banks: as a rule, these are universal banks for which mortgage investments play a significant role, in addition to commercial loans to trade, industry and commerce; and consumer credit institutes: institutes specializing in small loans (to private individuals and the industry). There are more than 600 banks operating in Switzerland. Practically all major international banking institutions are represented there. BANKING SYSTEM OF ANDORRA Banks and other financial institutions in Andorra are regulated by the Andorran National Financial Institute (INAF) under the Law Regulating the Financial System of 1993. Andorran banks are all members of the Agrupacio de Bancs Andorrans, which operated a system of self-regulation until the regulatory law was passed in 1993. The banks have very conservative policies, and high solvency ratios: depositors' funds are guaranteed under a 1997 law, but no Andorran bank has ever defaulted on its depositors. There are currently only 7 banks in Andorra. Foreign banks are prohibited from opening branches and this is unlikely to change. Banking in Andorra is very efficient and Andorran banks have ties to Swiss banks. The banking entities established in the Principality basically offer traditional universal banking services. Over the last few years, some of the entities have started to progressively integrate new technology into the service they render to customers. At present, all entities in the country offer the possibility of customers carrying out certain banking transactions on the internet. The Andorran banking system is made up of the following entities:

 Andorra Banc Agrcol Reig, SA Banc Internacional, SA Banca Mora, SA Banca Privada dAndorra, SA CaixaBank, SA Crdit Andorr, SA BancSabadell dAndorra, SA Banca Mora, SA and Banc Internacional, SA. operate jointly and present consolidated financial statements and other data. These two banks are known as INTER-MORA, whereas Andorra Banc Agrcol Reig, SA appears as ANDBANC. BancSabadell dAndorra, SA started operations in June 2000 and the Government authorized its creation on 15 December 1999 in accordance with the Law regulating new Andorran banking entities dated 30 June 1998. The above mentioned banking entities operate in all the main urban areas of the country through an extensive network of branches. The banking practices are very advanced and it is possible to open an account (in person only) within an hour. A minimum deposit is required and this ranges from bank to bank. For example an account can be opened with $ 100. Funds can be transferred to the account in any currency and an account can be numbered as opposed to named. It is possible to write a cheque in any currency irrespective to the currency of the account. Major debit and credit cards are issued by all banks. Andorran banks can also offer a mailbox and address facility, where all the customers mail can arrive. This can expedite mail delivery and can keep private address confidential. Also some individuals prefer to increase their privacy by having an account and mail facility with the bank in the capital Andorra la Vella while residing in another Parish or abroad. This can be inconvenient at times, but it can enhance anonymity. There are no restrictions on money transfer. All banks implement procedures to deter money laundering. The days of individuals arriving to Andorra with suitcases full of money are long gone. Banks ensure that they undertake due diligence to know their clients. Banks in Andorra also offer more sophisticated services for the high net worth individuals. Additionally, they will also offer mortgages for property purchase in Andorra. There are no withholding taxes at the present. However, OCED pressure to Andorra may change this in the future. This point should be regularly monitored by individuals who reside there or who have substantial cash deposits in Andorran banks. The Andorran banks maintain complete financial secrecy. The development of the Andorran legal regulations on the basis of the principles enshrined in the Constitution of 1993 has been one step more in the recognition of the institution of bank secret, which benefits from explicit protection. In this way bank secret is structured as a duty or obligation imposed on bankers and their servants. This duty or obligation constituted by bank secret is defined as a form of professional secret as is clear from a systematic interpretation of article 226 of the Andorran criminal code. This article 226 of the criminal code provides for sentences of up to 7 years' imprisonment for bank administrators or employees who reveal confidential information relating to customers. In June, 2004 Andorra was obliged to accept the EU's Savings Tax Directive, and as from July, 2005, imposed a withholding tax of 15% on returns on savings paid to citizens of Member States of the EU, of which 75% will be remitted onwards to the States concerned. The Andorran financial system is, contrary to appearances, highly regulated. Several laws have been introduced to provide a solid legal framework for the system. Various legal documents regulate the system, such as the law on payments made by financial institutions of 27 November 1993, the law on the regulation of the coefficient of mandatory investments of 22 August 1994, the law on the protection of banking secrecy and the prevention of money-laundering or products derived from crime of 11 May 1995 or the law on the regulation of criteria for the solvability and liquidity of financial institutions of 29 February 1996.

BANKING SYSTEM BAHAMAS The Bahamas is one of the financial centers of the Caribbean, with approximately 350 banks and trust companies registered in the country. A financial service produces some 15 percent of GDP and is the second-largest industry after tourism. The government seeks to attract foreign banks, and the financial sector is extremely open to foreigners. The government is under extreme pressure from the Organization for Economic Co-Operation and Development (OECD) and others to tighten regulation of the offshore financial sector. Growing from a tiny offshore tax haven comprised of a few branches of foreign banks in the mid-sixties to world banking powerhouse the country's legislation and regulatory structure, comparatively highly-skilled workforce, and its stable government have attracted the some of the most prestigious financial institutions from around the globe. Air transportation, modern infrastructure, including a telecommunications system, support most kinds of business operations. The asset base of the Bahamas' banking center is in excess of $200 billion, positioning it among the top ten countries in the world, behind the USA, the UK, Japan, Switzerland and others, with Capital-asset ratios average 11%. Private banking, portfolio management, and mutual fund administration have gained in importance in recent years, reinforcing the international community's recognition of the Bahamas as a safe repository of the financial assets of both individuals and corporations. Over 350 banks and trust companies from thirty-six different countries, including the United Kingdom, Switzerland, France, the United States, Canada, and Japan, are currently licensed to conduct business within or from the Bahamas. Many are branches or subsidiaries. Licensees include a very active offshore banking community, with almost one hundred Euro Currency branches of international banks and trusts, as well as 168 Bahamian incorporated institutions. Over 60% of all the banks licensed within the Bahamas, offer trust services in addition to their regular banking operations. The banking community of the Bahamas is supervised by the Central Bank of the Bahamas, which attempts to maintain a regulatory environment conducive to investment opportunities, while ensuring the high standards of conduct, as developed by the Basil Committee on Banking Supervision. The self-regulatory code of conduct of the Association of International Banks and Trust Companies (AIBT) also deters the use of financial operations for criminal activities and upholds the principles of bank secrecy. The Central Bank of The Bahamas The Central Bank of The Bahamas was established on June 1, 1974, to carry out the independent monetary policy and financial sector supervisory functions entrusted upon The Bahamas after political independence from Great Britain in 1973. Prior to the establishment of the Bank, there was the Currency Board set up in 1919, which was restricted mainly to issuing currency. The Currency Board era spanned the early evolution of The Bahamas' emergence as an international banking center during the 1960s, and the corresponding challenges posed by the inadequacies of legislation to properly regulate and supervise these activities. Although some relief was provided by the Banks and Trust Companies Regulation Act (1965), which enjoined stringent licensing and operating requirements on banks, it was felt that a more substantive institutional authority was required to oversee the rapidly expanding banking sector. This need for an alternative institutional arrangement with statutory powers became even more apparent amid the turbulent developments in global financial markets, marked by the 1967 devaluation of the Pound Sterling, to which the local currency was linked. Based on the emerging strong trade linkages with the United States, the Government de-linked the Bahamian dollar (formerly the pound) from its peg with the Pound Sterling, and established the currency on par with the United States' dollar. This action, however, resulted in massive exchange rate losses for banks, which, in the absence of alternative domestic investment opportunities, held most of their assets in sterling balances. These events led to the demise of the Currency Board, which gave way to the establishment of the Bahamas Monetary Authority (BMA) in 1968. The Authority assumed the aggregate foreign exchange risks of the country by redeeming domestic banks' surplus foreign currency balances for Bahamian dollars, instituted a voluntary system of reserve requirements for clearing banks, and began auctioning Government Treasury bills as an alternative domestic investment for financial institutions. Despite having an expanded role, including supervisory authority, a serious shortcoming of the BMA was the absence of the legal authority to employ active monetary policy measures. This fundamental weakness came into sharp focus during the late 1960s, when the Authority was unable to exercise control over

domestic credit expansion in order to correct the worsening balance of payments position. A decade later in the 1970s, the deficiency was further heightened, when the global economy battled the worldwide recession, brought on by the OPEC oil crisis. These and other developments led to the eventual establishment of a Bahamian central bank. The Central Bank fills the traditional roles as issuer of legal tender, banker to both domestic banks and the government, and regulator and supervisor of the banking sector. As supervisor of banks, the Central Bank promotes the soundness of banks through the effective application of international regulatory and supervisory standards. These standards were completely revamped during 2000 and 2001 - in response to global multi-lateral initiatives - to heighten the fight against money laundering and other criminal abuses within the international financial system. The results have been evident both in terms of the Bank's approach to licensing new financial institutions, as well as in a more enhanced supervisory framework for financial institutions. Important features of the new regulatory regime now include broader and more uniform supervision of bank and non-bank financial activities, and stronger mechanisms for international cooperation among Bahamians and similarly placed foreign supervisory and law enforcement agencies. In all, the Bank's overall policy objective is the promotion of a stable economic environment conducive to high levels of domestic production, employment and growth. Bahamas Financial Services Board (BFSB) Bahamas Financial Services Board (BFSB), launched in April 1998, represents an innovative commitment by the financial services industry and the Government of The Bahamas to promote a greater awareness of The Bahamas' strengths as an international financial center. The Board is a multidisciplinary body that embraces active contribution from individuals within government, banking, trust and investment advisory services, insurance and mutual fund administration as well as interested legal, accounting and management professionals. The BFSB represents and promotes the development of all sectors of the industry, including: banking, private banking and trust services, mutual funds, capital markets, investment advisory services, accounting and legal services, insurance, and corporate and shipping registry. In addition to its coordinated programs to increase confidence and expand knowledge of The Bahamas among international businesses and investors, the private sector-led BFSB will continue to consult with government to develop new initiatives to meet the rapidly changing demands of international financial markets. The Bahamas' long-standing tradition of democracy (one of the oldest in the hemisphere), and independent stability since 1973, have been significant attributes in the development of our financial services sector. BFSB is guided by the same principles. It does not supplant existing financial services associations that continue to serve individual professional groups within the industry as they have in the past. Rather, the Board complements them, drawing much of its strength from close intra-industry participation and collaboration. The Board's costs, including those of an experienced, active, full-time executive director, are shared by government and the private sector through membership fees. Board members are elected to twoyear terms by individuals or representatives of organizations active in one of the areas of interest covered by BFSB.