According to Nicolas Mackel, CEO of Luxembourg for Finance (LFF), abolishing the bank secrecy laws for non-residents was a necessity: “It allowed Luxembourg to continue working. If we hadn’t done this, we would have simply become a pariah. And a bad reputation would have negatively affected other activities.”
LFF is constantly working on improving Luxembourg’s reputation, which has over the years suffered due to the bank secrecy laws and the taxation of businesses. A quarter of the LFF team works exclusively on communication, publication, social media, and their overall online presence.
Since becoming CEO, Mackel has acted as a national and international spokesperson for Luxembourg’s financial sector. When asked about persisting criticism in relation to Luxembourg’s business practices, he explained that so-called holding firms have not disappeared despite many international tax reforms.
Mackel noted: “They contribute, for instance, a quarter of business taxes and a quarter of municipal taxes in Luxembourg. Why is that still so significant and important? Because international investments cannot be completed without such societal structures.”
LFF has continuously grown since its inception and currently employs 19 people. Mackel elaborated: “We are tasked with opening up new markets, both geographical and thematic ones. This means that LFF helps financial actors, such as banks, funds, and insurances, find clients in new countries, but also develop new products.”
Another task of LFF is to improve the attractiveness of Luxembourg’s financial sector. The agency’s annual budget amounts to €6.25 million, of which the government covers 80% and the private sector 20%. Their strategy is set by an administrative council, which is presided by Minister of Finance Yuriko Backes.
Over the past couple of years, digitalisation has been a focal point for LFF and will continue to be so in the future. This affects products, applications, digital payments, as well as internal procedures.
However, Mackel believes there is no danger of jobs being cut: “There still has to be a person compiling all these programmes, someone implementing and applying them. These are new jobs.”
Finding new talents remains one of the biggest challenges for LFF. Mackel argues that investments have to be significantly increased so that the Grand Duchy can remain competitive, especially when it comes to the training of people.
He noted: “We want to attract foreign actors because we benefit when they develop activities here, but they have the choice of going somewhere else.” Changing EU regulations on sustainability represent a similarly challenging problem, according to Mackel.
Nevertheless, the LFF CEO believes that proper regulation is “existential for humanity. If we fail to achieve the Paris goals, we will no longer exist at some point, or at least not the way we are used to right now. But, one can sense that the entire financial industry is evolving in that direction, which is why we need an international and sophisticated financial sector.”
