Switzerland has long pursued a proactive policy in dealing with illicit assets deposited in Switzerland by politically exposed persons, both as a major international financial centre and as a committed actor in development cooperation.
Switzerland has a framework of measures to protect its financial centre and to freeze and repatriate illicitly acquired assets of politically exposed persons. It can act quickly to freeze assets in anticipation of investigative proceedings and mutual legal assistance, which are often lengthy and complex.
Switzerland’s proactive approach
Since the fall of Ferdinand Marcos in 1986, Switzerland has steadily refined its systems for dealing with the proceeds of corruption. Today, it plays a major role in international efforts to combat corruption and is a pioneer in the recovery and restitution of illicit assets.
Legal framework and partnerships
Switzerland has a comprehensive set of national, bilateral and multilateral legal instruments which apply to illicitly acquired assets held by politically exposed persons. In 2014, the government adopted a strategy on the freezing, confiscation and return of illicitly acquired assets of politically exposed persons. The strategy, which addresses the various administrative units involved in such cases, is intended to ensure that all national and international actors work together to repatriate the assets as quickly as possible.
At the UN and World Bank and in cooperation with the G7 countries, Switzerland is working at the international level to intensify cooperation between financial centres and countries of origin. Another important instrument, the Federal Act on the Freezing and the Restitution of Illicit Assets Held by Foreign Politically Exposed Persons, came into effect on 1 July 2016, allowing Switzerland to prevent the misuse of its financial centre.
Trust, dialogue and transparency
The successful restitution of illicitly acquired assets is only possible in the context of a partnership based on mutual trust and regular dialogue. The Swiss government works closely with the states concerned to establish appropriate procedures and control mechanisms. As each case is different, tailored solutions are found for each situation. Switzerland ensures transparency in the repatriation of assets so that they will be used to benefit the local communities deprived of precious public resources through acts of corruption and the misappropriation of funds.
What are the challenges?
The restitution of assets is a lengthy process with many political, legal and administrative hurdles. The successful repatriation of assets is always a delicate balancing act. Statutory time limits must be observed and opportunities provided to appeal decisions. Even in the case of illicitly acquired assets of politically exposed persons, fundamental rights such as property rights must not be restricted without observing certain rules. The proceedings must respect the rule of law and thus guarantee legal certainty, which means that the rules cannot be changed to suit each individual case. If they are to succeed, the proceedings must be supported by the government of the country in which the illicit assets originated.
How much money is involved?
Switzerland has returned nearly two billion dollars to countries of origin over the last 30 years. Hundreds of millions of US dollars more whose illicit provenance has not yet been established currently remain frozen in Switzerland. The World Bank estimates that USD 20–40 billion is pocketed annually by corrupt public officials.
Directorate of International Law annual event 2016
Freezing assets suspected of having been misappropriated with a view to returning them to the people of the states where they originated is an important aim which is more difficult to achieve than it seems. The Directorate of International Law’s Task Force Asset Recovery, which organised this year’s event, is the federal government unit which monitors asset recovery issues.
One of the task force’s responsibilities is to explain to the authorities in countries with very different legal and political systems how Switzerland’s system and the restitution proceedings work. For the head of the task force Pierre-Yves Morier, the topic was an obvious choice for this year’s event. The restitution of assets misappropriated by politically exposed persons is a topical political issue that has attracted the attention of the media. Moreover, 2016 marked the coming into force of the Federal Act on the Freezing and the Restitution of Illicit Assets Held by Foreign Politically Exposed Persons.
For this year's event, which focuses on the restitution of illicit assets, the FDFA has published a brochure explaining the development of the Swiss framework and presenting a dozen cases that made the headlines, including the Marcos family in the Philippines, Duvalier in Haiti and Abacha in Nigeria.