The new Swiss law on potentates is an important signal to criminal leaders of this world, writes Lukas Wiedemann: unlawfully acquired money isn't welcome anymore in Switzerland.
The Swiss financial market in past years and decades was used by dictators to hide away their illicitly acquired assets. This unfortunately was the reality. Both banks and the government therefore had to find ways to give back frozen assets on Swiss accounts to the often suffering populations after the fall of the authoritarian rulers.
Out of the $4 to $5 billion in assets paid back globally, about $1.8 billion came from Switzerland. A remarkable share. The country has clearly demonstrated its will to contribute to the restitution of dictators' assets.
Legal Certainty
In a bid to create legal clarity, the Swiss Bankers Association has helped put in motion the writing of a law. The new Foreign Illicit Assets Act on the one hand describes the methods applying to the treatment of potentate assets and on the other creates legal certainty in the handling of «politically exposed persons» (PEP), the potential «future» potentates.
The events subsumed under the headline of Arab Spring have made plain the need to act. The Swiss government froze about one billion francs by use of emergency law and those assets now await their return to Libya, Egypt, Tunisia and Syria. Using emergency law systematically however is unsatisfactory and thus the need for a legal framework.
The new Foreign Illicit Assets Act, which came into force on July 1, 2016, covers the most important aspects. These are:
- no limitation period to stop lawyers from drawing out the procedures on tactical grounds;
- reverse onus clause (the person affected by a freeze has to proof that the assets haven't been acquired illicitly);
- closer cooperation between Switzerland and the countries affected (Switzerland can now pass on the bank data of potentates before even a request for administrative assistance has been lodged).
Deterrence
The law also created a legal framework within which a person affected by a freeze retains his rights. The most important aspect however is the deterrent effect of the new law: potentates need to know that assets stolen from their own people aren't safe in Switzerland.
The government and the financial industry with this law show their willingness to actively prevent potentates from abusing the Swiss financial market. These assets aren't welcome here and they will be returned to the population of the country of origin with due regard to the rule of law.
A Model Law
Switzerland has done its homework – the World Bank experts qualified it as a model law. Let's hope that other financial markets follow suit.
Lukas Wiedemann is a scientific expert in ‹Retail Banking› and ‹Capital Markets› at the Swiss Bankers Association.
