Liechtenstein lifts bank secrecy in U.S. deal

By John O'Donnell and Huw Jones

FRANKFURT/BRUSSELS (Reuters) - Offshore haven Liechtenstein has agreed a landmark deal with the U.S. to drop bank secrecy in cases of tax evasion and could make similar concessions in the European Union, a diplomat from the Alpine nation said.

Prince Nikolaus, a member of Liechtenstein's ruling royal family who brokered the deal, told Reuters on Wednesday the tiny principality had agreed a "significant" change to bank secrecy rules that entitles the U.S. to bank account information when probing a tax dodge.

The prince said he was prepared to grant similar concessions within the European Union but wanted double-taxation agreements as well a commitment by countries to deal leniently with citizens that had hidden money from the taxman in Liechtenstein.

"We accept that more cooperation is necessary because there is more acute pressure," the prince, the brother of Liechtenstein's ruling monarch and the country's ambassador to Brussels, told Reuters by phone from Brussels.

"People understand better today than a year ago that this is a hot issue," said the prince. "It is of high political importance to many countries. Money is a rare species for states -- they need every penny."

Liechtestein is together with Monaco and Andorra one of three countries blacklisted by the Organisation for Economic Cooperation and Development and was the target of a German investigation into thousands of citizens suspected of parking untaxed income in the principality.

The deal brokered with Washington, due to be signed this month, means banks in Liechtenstein could be forced to hand over bank account information to the U.S. authorities should they suspect tax evasion.

Previously, the U.S. had to prove a deliberate tax fraud -- a standard so high it made bank accounts in the small country impenetrable to outsiders.