Illicitly Acquired Assets (PEPs)

Switzerland has a fundamental interest in ensuring that no illicit assets of Politically Exposed Persons (PEPs) – so-called potentate funds – enter its financial centre. Switzerland's proactive policy has made it an international leader in this domain.

The phenomenon of potentate funds involves cases in which foreign PEPs and persons with close links to them illicitly enrich themselves by appropriating assets either through corruption or as a result of other criminal activities, and deposit them in financial centers outside their country of origin.

PEPs are persons who exercise prominent public functions abroad, specifically heads of state and government, senior politicians at national level, and senior officials in the government, judiciary, military and parties at national level, as well as in the highest bodies in state-owned companies of national importance.

The cornerstones of Swiss policy on dealing with potentate funds are contained in the strategy adopted in 2014. For a number of reasons it is in Switzerland's interest not to serve as a depository for potentate funds:

Commitment to the rule of law and to fight impunity, for years, Switzerland has demonstrated its commitment to the rule of law and supported the fight against impunity. These principles are enshrined in the Swiss Confederation’s foreign policy strategy 2012-2015.

Promoting transparency as a donor country in international development cooperation

Potentate funds are an important development policy issue. The World Bank estimates that each year the channeling of potentate funds from developing countries to foreign financial centers causes losses totaling between USD 20-40 billion. As a donor country in an international development cooperation context, Switzerland believes it is important that financial support to partner countries be transferred in keeping with the principles of transparency and good governance and, as far as possible, in a way that prevents any abuses.

Reputation and integrity are two key factors in global competition between financial centers. Switzerland does not wish to serve as a depository for assets acquired by PEPs through corruption and other criminal activities. 

The proactive policy pursued by Switzerland in returning illicit assets has earned it a leading role in this field. Over the last 20 years Switzerland has successfully returned approximately USD 1.8 billion of potentate funds to their countries of origin.

Over the course of 25 years, Switzerland has become a world leader in the field of recovery of illegal assets held by former heads of state and other PEP. The expansion of expertise in and commitment to asset recovery issues was prompted by the events that followed the overthrow of Philippine dictator Ferdinand Marcos in 1986. The Swiss government reacted to the news within hours by invoking emergency constitutional powers to freeze all assets held by members of the Marcos regime with Swiss financial intermediaries. This immediate and determined action laid the foundation for the subsequent restitution, via official mutual assistance channels, of more than US$600 million to the new and democratically elected Philippine authorities. Potentate funds again became a major issue during the events of the Arab Transition. The Federal Council reacted immediately and, at the beginning of 2011, froze assets deposited by the toppled Tunisian, Egyptian and Libyan rulers.

In Switzerland today, there is broad political consensus about determined and proactive action on the part of the authorities against illicit assets held by former heads of state and other PEPs. Switzerland has no interest in its financial sector being abused to conceal assets of dubious provenance that should be used to benefit local populations in the form of state-run programs and projects. Questions of reputation and integrity have become key factors in the global competition among financial centers. Switzerland has proven its commitment to tackling the underlying problems not only by its active participation in international initiatives but also in the number of cases that have been resolved worldwide. Over the past 25 years, Switzerland has returned to their countries of origin a total of US$1.7 billion in assets acquired unlawfully by PEPs. The World Bank puts the total value of PEP assets returned during the same time period at US$4–5 billion. As the world’s seventh-largest financial center, Switzerland is thus well ahead of other countries in terms of the restitution of unlawfully acquired assets.

Experience has shown that asset recovery cases raise complex legal issues across several jurisdictions. Resolving these issues demands close and unwavering partnerships between the states involved, including the states of origin, as well as a considerable degree of tenacity and perseverance. The dynamic application of the existing legal framework can go a long way toward simplifying efforts via international mutual assistance channels and speeding up restitution. In most cases, innovation and creativity play a decisive role in asset recovery. By its very definition, however, innovation is a process. Each case that is resolved offers new insights that allow the authorities concerned to review their procedures, amend them as necessary, and develop new approaches for the future. Switzerland has a fundamental interest in ensuring that its financial sector is not used as a hiding place for assets of unlawful origin. Since the Marcos case in 1986, Switzerland has gathered a great deal of experience in the field of asset recovery and has refined its national legal framework accordingly. Regular contact with the competent authorities of partner states has been an important part of this development. Switzerland plans to continue this dialogue through knowledge and experience sharing and will maintain its commitment in this area.