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Returning ‘Politically Exposed Persons’ Illicit Assets from Switzerland – International Law in the Force Field of Complexity and Conditionality

Research correspondent Giulio Nessi reviews an article dealing with the international law implications of illegally acquired assets being transferred to Switzerland by ‘Politically Exposed Persons.’

The process of returning the proceeds of corrupt practices perpetrated by ‘Politically Exposed Persons’ (‘PEPs’) remains a complex one in spite of the increasing attention devoted by the international community to the fields of anti-corruption and, specifically, to asset recovery. The growing consensus which built up since the 1990s on the latter issues has in fact led several international and regional bodies to establish far-reaching international norms and standards. However, the on-going experience with the repatriation of assets to some of the states affected by the so-called ‘Arab Spring’ (i.e. Tunisia, Egypt and Libya) has shown the significant limits of the domestic regulations, both in developing and developed countries.

The present article by Richter and Uhrmeister focuses on the asset recovery’s ‘three pillar approach’ elaborated by Switzerland, whose important financial sector is often used by corrupt PEPs to hide and invest their illicitly-acquired gains. Firstly, the two authors set the scope of their research by considering the relevant international standards (especially the two UN Conventions against Transnational Organized Crime [2000] and Corruption [2003]) as well the domestic legislation adopted by the Swiss authorities in the realm of mutual legal assistance and restitution of assets (i.e. the Federal Acts on International Mutual Assistance in Criminal Matters [1981] and on the Restitution of Assets of Politically Exposed Persons obtained by Unlawful Means [2010]). Through a comparison of the latter bodies of norms, the article then critically assesses the compliance of the Swiss legal system with the international legal framework and highlights the major shortcomings of the Swiss approach. Particular emphasis is laid by the authors on the actual restitution of the stolen assets to the ‘victim’ states and on the extent the conditionality imposed by the Swiss legislation to return corrupt assets may breach international law principles. Lastly, the article concludes by contending that states involved in the asset recovery process such as Switzerland should follow the principle of ‘just and fair solution’ elaborated at the international level in the context of lost art.

The topic touched by the present article is particularly significant in the current debate about asset recovery because Switzerland is commonly regarded as having a relatively active role in freezing, confiscating and returning assets of corrupt PEPs, but at the same time it keeps emerging as one of the financial centers where the world’s leaders transfer and invest their ‘dirty’ assets. The authors thus shed some light on the limits of the Swiss legislation in the field of asset recovery and on their broader implications for the global fight against grand corruption. Furthermore, the paper raises some fundamental questions (e.g. ‘Is it all about Switzerland’s reputation?’), and gives precious indications as to the way ‘haven’ States for corrupt PEPs may improve their compliance with international norms and the effectiveness of their asset recovery policy.

Abstract

This article deals with the international law implications of illegally acquired assets being transferred to Switzerland by ‘Politically Exposed Persons.’ Involving a variety of issues in the context of grand corruption and subsequent money laundering, the problem has long transcended the domestic law sphere and has become an issue of major concern to the international community. Switzerland has not only acceded to all relevant international treaties and initiatives but has also adopted a new approach in its national law allowing for the return of assets. This article seeks to assess the relevant Swiss law, particularly the new 2010 Act on the Restitution of Illicit Assets, in the framework of international law standards on the freezing, confiscation and final returning of illicit assets in order to evaluate the effectiveness of regulation in a matter of global concern. It concludes, on the basis of the international law principle of repatriation that States Parties to the relevant treaties must account for not having repatriated illicit assets effectively within a reasonable period of time; and that more ‘success control’ is needed.

Article reference

D. Richter and P. Uhrmeister, “Returning ‘Politically Exposed Persons’ Illicit Assets from Switzerland – International Law in the Force Field of Complexity and Conditionality”, German Yearbook of International Law 56 (2013), 457-499. 

Author : Dadmar Richter and Patrick Uhrmeister

02 Dec 2014


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ABOUT THE REVIEWER

Giulio Nessi

GIULIO NESSI

Institution(s): Bocconi University of Milan. Research field: Public International Law, Transnational Criminal Law, and European Human Rights Law Read More...

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