Federal Department of Foreign Affairs FDFA

A dynamic Swiss policy on restitution of illicit assets

Switzerland has signed a trilateral restitution agreement with Peru and Luxembourg. Having played a pioneering role in the restitution of illicit assets held by foreign politically exposed persons, the country has continued to refine its approach over the course of three decades. The restitution of USD 16.3 million from Switzerland will serve to fund projects in Peru aimed at strengthening the rule of law and the fight against corruption.

Restitution procedures are often lengthy. They include several important steps between the preventive freezing of assets and the recovery agreement.

Switzerland has been involved in the fight against corruption and the restitution of illicitly acquired assets held by foreign politically exposed persons (PEPs) for more than 30 years. It has put in place a robust prevention framework to ensure that illicitly acquired assets are not deposited in Switzerland and developed an arsenal of repressive measures to identify, freeze, confiscate and return PEPs' assets. These measures require cooperation between the state of origin of the assets and Switzerland, the procedures for which are often protracted and complex.

Switzerland has extensive experience

In 1986, Switzerland took a decisive step towards preventing the abuse of its financial sector when the Federal Council froze assets held by the Philippine dictator Ferdinand Marcos just a few days after he was deposed. This was unprecedented at the time and done on Switzerland's own initiative without any prior request from the Philippines. Some 18 years and 60 court rulings later, a total of USD 684 million had been returned to the Philippines.

As regards Peru, meanwhile, the story begins in the early 2000s. Even before President Alberto Fujimori's government fell, some Swiss banks froze accounts belonging to Vladimiro Montesinos Torres, head of Fujimori's intelligence service, on their own initiative. The Public Prosecutor's Office of the Canton of Zurich opened criminal proceedings, ordered the freezing of accounts and immediately notified the Peruvian authorities, which drew up a number of mutual legal assistance requests based on the information received. A close judicial cooperation between the two countries was established, leading to the return of USD 93 million in total between 2002 and 2006. With further confiscation procedures having recently been concluded in Peru in this same context, Switzerland is now in a position to return additional assets amounting to approximately USD 16.3 million.

Years of experience in the restitution of illicitly acquired assets held by PEPs have helped Switzerland to create, refine and perfect an innovative apparatus. This has inspired other states and led to the emergence at the international level of guiding principles and best practices for the restitution of PEPs' assets that provide a framework for negotiating restitution agreements. In particular, they stipulate that there must be a dialogue between the state of origin and the restituting state, that the money returned must benefit the population of the state of origin and that existing mechanisms must be prioritised in order to prevent duplications. In a number of recent restitution agreements, therefore, Switzerland and the state of origin have joined forces with international organisations such as the World Bank and the United Nations to take advantage of their established structures in the state of origin.

The advantages of a trilateral agreement

A specific feature of the agreement with Peru and Luxembourg is that Switzerland has associated itself with another country in a position to return PEPs' illicitly acquired assets, namely Luxembourg. There are several advantages to two states joining forces in this way: adding the amounts to be returned together makes it possible to fund programmes on a larger scale; it is more efficient to negotiate a single, trilateral agreement than two separate ones between Switzerland and Peru and between Luxembourg and Peru; the three partner states benefit from each other's experience to ensure greater effectiveness; and they present a united front in the fight against corruption, sending out a strong political signal.

Federal Councillor Ignazio Cassis signs a document. On his desk appear the flags of Switzerland (on his right), Peru and Luxembourg (on his left).
Ignazio Cassis signed a trilateral agreement with Peru and Luxembourg on the recovery of illicit assets that belonged to Vladimiro Montesinos. © FDFA

Restitution of assets benefits affected populations

There are currently few countries worldwide restituting illicitly acquired assets held by PEPs as Switzerland does. In addition to systematically restituting these assets, Switzerland makes every effort to ensure that they do not flow back into the vicious circle of corruption. It negotiates restitution solutions that improve living conditions for the population, strengthen the rule of law and aid the fight against impunity in the state of origin.

Corruption has a devastating impact on a nation's development and its political, social and economic stability. It weakens democracy and causes poverty to spread through the population. Switzerland is aware of the detrimental effects of corruption and endeavours to fight against it and facilitate the recovery and restitution of stolen assets in line with its commitment to the 2030 Agenda for Sustainable Development – a priority for Swiss foreign policy. This is vital to the cohesion of Switzerland's foreign policy.

Three Peruvian programmes funded by repatriated assets

The funds returned to Peru will be allocated to three programmes set up by the Peruvian government with the aim of strengthening institutions in the country that protect the rule of law, combat corruption and money laundering, seize assets and fight organised crime. Specifically, the programmes will help Peru's courts, attorney general and Ministry of Justice and Human Rights to improve training for anti-corruption staff and to digitise and standardise their procedures.

The intention is to give the country's citizens access to a modern, effective and predictable justice system, and the programmes will be monitored to ensure quality in implementation and compliance with the terms of the restitution agreement.

International cooperation and dialogue essential

Over the course of many years, Switzerland has established a robust apparatus for fighting corruption that makes it possible to freeze, confiscate and return illicitly acquired assets held by PEPs. However, cooperating with the state of origin, which is indispensable, has not always been simple. This is sometimes due to an inadequate justice system, whereas in other instances there is a lack of political will to cooperate with Switzerland.

Cooperation with Peru in connection with the Montesinos affair has proven considerably easier. The former Peruvian Minister of Justice and Human Rights, conscious of the highly symbolic importance of the former intelligence chief's assets for the country's population, offered in 2016 to enter into talks with Switzerland on how the assets would be put to use after their restitution. In 2017, Peru set up a multi-sectorial working group comprising representatives of the various national authorities involved in the restitution. Its mission is to ensure the internal coordination required for the negotiations over the restitution of assets located in Switzerland and Luxembourg to go smoothly. The working group significantly enhanced the negotiation process and is an excellent example of best practice. During the negotiations, a genuine partnership took shape between Peru, Switzerland and Luxembourg. The three countries share the same interests: ensuring that crime does not pay and that the population affected ultimately benefits from the returned assets.

The Swiss judicial arsenal: four key dates

1981: The Federal Act on International Mutual Assistance in Criminal Matters authorises Switzerland to engage in mutual legal assistance with any country, including those with which it has not signed a bilateral agreement. This is the first clear sign of Switzerland's commitment to fighting corruption throughout the world.

1997: The Federal Act on Combating Money Laundering and Terrorist Financing requires Swiss banks to verify their customers' identities and to systematically establish the identities of the beneficial owners of assets deposited in Switzerland. It is preventive legislation aimed at protecting the Swiss financial sector from abuse.

2003: While Switzerland is intensifying its cooperation with various countries in Africa, Asia and the Americas, the United Nations Convention against Corruption is adopted. Being a pioneer in this field, Switzerland plays an active role in drafting the Convention as leader of the working group tasked with writing the chapter on asset recovery. The Convention enters into force in Switzerland in 2009.

2016: The Federal Act on the Freezing and the Restitution of Illicit Assets held by Foreign Politically Exposed Persons enters into force on 1 July 2016. It governs in particular the freezing, confiscation and restitution of illicitly acquired assets held by PEPs when cooperation under the Federal Act on International Mutual Assistance in Criminal Matters fails.

Restitution is an important pillar of Swiss policy on combating illicitly acquired assets. To date, Switzerland has returned approximately USD two billion in illicitly acquired assets of politically exposed persons (PEPs) – more than any other financial centre.

  • Duvalier, Haiti, (USD 6.5 million) ongoing
  • Turkmenistan, 2020 (1.3 million USD)
  • Abacha II, Nigeria, 2017 (USD 321 million)
  • Kazakhstan II, 2012 (USD 48 million)
  • Angola II, 2012 (USD 43 million)
  • Kazakhstan I, 2007 (USD 115 million)
  • Angola I, 2005 (USD 24 million)
  • Abacha I, Nigeria, 2005 (USD 700 million)
  • Marcos, Philippines, 2003 (USD 684 million)
  • Montesinos I, Peru, 2002 (USD 93 million)
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