The Swiss U-Turn on Asset Return Explained

Historically, a Swiss bank has been the bank of choice for corrupt leaders wanting to hide money. The reality is quite different today.  Just ask Tunisia’s ousted strong man Ben Ali, deposed Ukrainian president Victor Yanukovich, or the relatives of deceased former Haitian president Jean-Claude Duvalier, of the late Nigerian dictator Sani Abacha, or of Hosni Mubarak, the recently passed Egyptian president.  All believed money stolen from their nations’ citizens was safe in a Swiss bank.

At the time, they were not wrong. Dating back to when its secrecy rules protected the wealth of France’s Catholic kings from the prying eyes of nosey Protestant journalists, Swiss law permitted banks to take money with few questions asked and sanctioned those disclosing information about an account or its holder. Strict bank secrecy laws gave the Swiss financial industry an enormous advantage over other financial centers; it’s one reason why today financial services plays an outsized role in the Swiss economy — accounting for 10 percent of the GDP, twice the average of other OECD nations.

As the Duvaliers, Abachas, and Murabanks of the world learned to their chagrin  however, over the past decade Swiss policy has made a sharp U-turn.  Despite the weight of history and tradition, and the economic interest of so many Swiss citizens, current Swiss policy not only no longer condones the deposit of stolen assets in its banks, it now demands that banks and others in the financial services industry come to the aid of governments searching for money stolen by former rulers and cronies.  No other nation today goes to such lengths to help countries recover stolen assets.

Swiss lawyers François Membrez and Matthieu Hösli document this extraordinary change in Swiss policy in How To Return Stolen Assets: The Swiss policy pathway. Just published by the Geneva Centre for Civil and Political Rights, the two explain how Swiss  asset recovery law has turned Switzerland from the destination of choice for stolen funds into the least hospitable jurisdiction in the world.  The paper is an essential guide to Swiss law on asset recovery and provides a blueprint for other nations wanting nothing to do with stolen assets.

 

5 thoughts on “The Swiss U-Turn on Asset Return Explained

  1. Thanks for sharing this, Rick. The narrative is particularly interesting for me as a natural-born Swiss/naturalized American, who has for years hoped for this reversal. More generally, thanks for making available to us this useful blog.

  2. Thank you for an interesting blog. This case presents a really interesting example of a country combating corruption even when it is (arguably) not hurting them directly, but indeed benefitting the economy. I’m curious to know what has driven this change. Was the Swiss public a driving actor in turning around the asset recovery laws, was this a result of international pressure, or something else?

  3. The notion that “no other nation today goes to such lengths to help countries recover stolen assets” than Switzerland is a bold (indeed shocking) statement. And I look forward to reading the piece you’ve shared by François Membrez and Matthieu Hösli explaining how this all came out…

    While Switzerland should be commended for its efforts to enhance asset recovery, they’ve facilitated corruption in many other ways. For example, Switzerland still has some of the most protective data privacy laws in the country which, as a practical matter, have impeded many FCPA investigations and prosecutions. While kleptocrats might not feel as comfortable keeping their money in Swiss banks as they did a few decades ago, they likely feel plenty comfortable keeping their servers (and, by extension, their lawyers) there.

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