Liechtenstein prince's bank raided

Prince Hans-Adam II's brother is the bank's president

By Europe business correspondent Patrick Bartlett

Police in Liechtenstein announced on Friday they had raided the offices of a bank owned by the principality's ruling family, as part of an investigation into money-laundering.

Police in the capital Vaduz said a group of 20 officers from Liechtenstein and neighbouring Austria conducted a search of the LGT bank on Thursday.

They seized documents and electronic data related to accounts held at the bank.

The raid follows a six month investigation into money-laundering which has shocked the small Alpine community ruled by Prince Hans-Adam II.

His brother Prince Philip is president of the LGT bank's administrative council.

Money-laundering suspicions

Police said they wanted to establish whether any bank staff were aware of illegal transactions.

Locals fear the scandal will harm the principality's reputation as a financial centre

The raid followed the arrest in Liechtenstein earlier this year of several financial managers on fraud and other counts.

It is believed they may have used the bank for money-laundering deals amounting to tens of millions of Swiss francs.

One of the men in custody is a leading Liechtenstein politician.

The investigation was launched after the leaking of a German secret service report, linking trust fund administrators to dirty money from Colombian drugs cartels.

Led by Austrian prosecutor Kurt Spitz, investigators are also examining claims of money-laundering for the Russian mafia.

The allegations have caused consternation in the tightly-knit principality, which is one of the world's leading off-shore banking centres.

The government in Liechtenstein is concerned the scandal could harm the principality's reputation as a financial centre, following earlier criticism of lax banking supervision.