The idea of such a law grew out of the difficulties faced by the Swiss authorities in efforts to return assets frozen in Switzerland following the failure of criminal proceedings at the national level, as in the cases of Mobutu and Duvalier.
The new act governs the freezing, forfeiture and restitution of the assets of politically exposed persons and their close associates in cases where a request for mutual assistance in criminal matters cannot produce an outcome owing to the failure of state structures in the requesting state. The RIAA provides a solution that is subsidiary to the Swiss Federal Act on International Mutual Legal Assistance in Criminal Matters. It provides for an alternative solution to that of criminal proceedings for the restitution of assets in that it makes possible the confiscation of assets that are clearly of illicit origin without need for the prior conviction of the PEP concerned.
To accomplish this, the Federal Council can instruct the Federal Department of Finance (FDF) to take legal action before the Federal Administrative Court for the forfeiture of frozen assets. The subsequent judgement, against which an appeal can be submitted before the Federal Supreme Court, permits if necessary the forfeiture of assets of unlawful origin which have been frozen pending their restitution to their state of origin by means of a transparent procedure, unless the legal origin of the assets has been demonstrated by the PEP.
The assets thus forfeited will then be returned by the Confederation to the country of origin for the benefit of the population through the financing of programmes of public interest. The application of this law will help to strengthen the rule of law and to combat impunity.
Certain heads of state and high-ranking government officials enrich themselves at the expense of the state and, by embezzling public monies, hinder the development of the national economy. These so-called "potentate funds" often leave the country of origin and find their way to international financial centres. It is in the fundamental interest of Switzerland that such assets of criminal origin not be invested in the Swiss financial centre.
Switzerland reacted to this situation at the end of the 1980s following a number of high profile cases (Marcos, Abacha, Montesinos). Thanks to its proactive policy for the restitution of such assets, Switzerland has established itself as a leader in this context. In concrete terms, Switzerland has developed a two-pronged system based on prevention and mutual legal assistance. The prevention aspect has been strengthened through cooperation with the banking sector. The Federal Act on the Prevention of Money Laundering is one of the main instruments of this two-pronged system which imposes due diligence obligations ("know your customer") on the banks and other financial service providers. The latter are also under an obligation to report any suspicious transactions. The second "prong" is based on the Federal Act on International Mutual Legal Assistance in Criminal Matters which allows for cooperation with other states to enable the seizure and restitution of assets of illicit origin. If, despite the various precautionary measures, illicit assets do find their way to Switzerland these must be identified and returned to their country of origin.
On the whole, this system has produced good results. Over the past 15 years it has enabled the Confederation to return some CHF 1,700 million -- far more than any other financial centre. This new Act completes the instruments at Switzerland's disposal and confirms the Confederation's position as leader and pioneer for the restitution of assets of illicit origin.
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