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FROM THE - JOURNALS of Monte Friesner ~ Financial Crime Consultant for WANTED SA ~

Wednesday February 16, 2011 >

WANTED SA has been informed this morning that Bloomberg.com.- Switzerland’s decision to freeze any assets of former Egyptian President Hosni Mubarak was made faster than anywhere else as the Alpine nation no longer wants to be perceived as a place where dictators can stash money. Photographer: Bulent Kilic/AFP/Getty Images
Switzerland’s decision to freeze any assets of former Egyptian President Hosni Mubarak was made faster than anywhere else as the Alpine nation no longer wants to be perceived as a place where dictators can stash money.
Less than two hours after Mubarak’s resignation was announced on Feb. 11, the Swiss government said it blocked any funds belonging to him and his immediate entourage to avoid “possible misappropriation” of Egyptian state property.
“The old days are over,” said Theodore Greenberg, former chief of the money laundering section of the U.S. Department of Justice. “No despot, no dictator or other kleptocrat will easily be able to deposit dirty money. Switzerland as a favorite place for criminal or blood money should be a thing of the past, a topic for novels on money laundering or James Bond movies.”
Switzerland, where about 27 percent of the world’s privately held offshore wealth is managed, has tightened money- laundering rules to curb the inflow of illicit funds. The nation has returned about 1.7 billion francs ($1.8 billion) of dictators’ assets to their countries of origin, more than any other financial center of a comparable size, according to the government’s website.
The Mubarak decision follows the Jan. 19 move by the Swiss government to block “tens of millions” of funds held by former Tunisian President Zine El Abidine Ben Ali. The same day, Switzerland seized the funds of Ivory Coast leader Laurent Gbagbo who refuses to cede power to Alassane Ouattara, the internationally recognized winner of elections.
“It can’t be that right on our doorstep certain people misappropriate and pocket state funds,” Swiss foreign minister Micheline Calmy-Rey told NZZ am Sonntag newspaper on Feb. 13. “We need to make sure that no dirty money is being deposited.”
What Assets
The Swiss government is waiting for information from banks on whether 82-year-old Mubarak has assets in the country, according to spokesman Andre Simonazzi.
One third of the $1.5 trillion of assets held offshore by Middle Eastern and African elites is in Switzerland, according to research firm MyPrivateBanking in Kreuzlingen, Switzerland. About $225 billion of the total has been illegally obtained, said Steffen Binder, managing director at MyPrivateBanking. He declined to say what proportion of the illicit funds may be held in Switzerland.
Swiss banking secrecy rules “essentially place a higher value on the relation between bank and client than on morality,” according to historian Peter Hug. The initial laws that prohibited bankers from disclosing client information were enacted in 1934. They have been weakened over the past two years as countries, including Germany and the U.K., crack down on tax evasion among their citizens.
Stolen Property
The Feb. 1 introduction of a law easing the rules on the confiscation of dictators’ illegal possessions is a further sign of Switzerland’s efforts, according to Mark Vlasic, a professor of law at Georgetown University in Washington and a former member of the World Bank’s Stolen Asset Recovery Secretariat.
A day after the new regulation went into effect, the government started a procedure to seize the assets of former Haitian ruler Jean-Claude Duvalier. The legislation allows countries to obtain the restitution of a despot’s funds even without a conviction in a court of the home country.
Swiss money-laundering rules, revised in 1998, require money managers to clearly identify clients and those who might benefit from a transaction. Any suspicious transfer must be reported to authorities, and the funds must be blocked.
Open Door
The legislation is stricter than in many countries, according to Daniel Thelesklaf, the executive director at the Basel, Switzerland-based Basel Institute on Governance. In the U.S., the beneficial owner is often not known to the banks, leaving the door open for money laundering, he said.
“France and Britain have done much less than Switzerland” to get hold of assets from African and Middle Eastern dictators, said Mark Pieth, a professor of criminal law at Basel University and chairman of the Organization for Economic Cooperation and Development Working Group on Bribery in International Business Transactions.
Illicit assets of former leaders that were returned during the past 20 years include $683 million from the Philippines’ Ferdinand Marcos, $93 million form Peru’s Vladimiro Montesinos and $700 million from Nigeria’s Sani Abacha.
Even with the stricter rules, it’s often difficult to prove that money in Swiss banks is of illegal origin, said Christof Mueller, a St.Gallen, Switzerland-based lawyer, who specializes in money laundering cases.
‘Hotel Chain’
“Imagine an Arab leader’s brother-in-law who wants to deposit $100 million in a Swiss bank and says he has earned the money through his legally obtained stake in a hotel chain,” he said. “If his papers are watertight, it’s next to impossible to prove that he might have got the money through nepotism.”
It would have been difficult for Mubarak and his circle to withdraw funds from Switzerland as the so-called country risk rose immediately in Egypt with the mass protests, Mueller said.
“From that moment on, there was an automatic suspicion that someone could try to flee Egypt,” he said.
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