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Switzerland Finalizes International Asset Recovery Act

by Ulrika Lomas, Tax-News.com, Brussels

26 May 2014


The Swiss Federal Council has submitted a draft federal act to parliament, which governs the freezing, confiscation, and restitution of illicitly acquired assets of foreign politically exposed persons (PEPs). The Federal Council has also stepped up efforts to establish a more efficient framework for international collaboration on asset recovery, and is seeking to participate in the drawing up of future standards on financial center cooperation.

The draft law is "to be applied in cases where leading figures enrich themselves through corruption or other criminal means and deposit these illicitly acquired assets in offshore financial centers." The law was drawn up at the beginning of 2011, in the wake of the Arab spring, after the Federal Council issued several freezing orders against PEPs. In March 2011, Switzerland's federal parliament adopted a motion obliging the Federal Council to create a formal legislative basis for such action.

The proposed legislation lays down the conditions under which such illicit assets can be confiscated by a court within the framework of an administrative procedure, as well as the principles on which confiscated assets can be returned to the country of origin. It also provides for the possibility of taking targeted measures to support the country of origin in its efforts to recover illicitly acquired assets.

The Swiss Federal Administration said the draft law has been considerably reworked after comments during the consultation procedure, concerning in particular the duty to report frozen assets through the creation of a single point of contact with the Money Laundering Reporting Office Switzerland, and the exchange of information with foreign authorities.

The Administration explained that: "With the new federal act on the freezing and restitution of illicitly acquired assets, the Federal Council will have a formal legal basis to deal with cases of illicitly acquired assets of foreign PEPs. The new law strengthens the democratic legitimacy of the Federal Council's policy in this field. It enumerates the conditions that must be fulfilled to order the freezing of assets, thus meeting the requirements demanded by parliament and other circles. It enhances legal certainty and the transparency of the actions of the state."

It added: "Following the prolongation in January 2014 of the constitutionally based freeze on the assets of members of the entourage of ousted presidents Ben Ali (Tunisia) and Mubarak (Egypt), the Federal Council is legally obliged to submit the dispatch concerning a federal act on the freezing and restitution of illicitly acquired assets of foreign PEPs to the federal parliament before the summer recess."

In addition to the federal act, the Federal Council has also approved an asset recovery strategy to assist units of the Federal Administration that deal with such cases and to optimize coordination among Swiss authorities.

TAGS: court | tax | law | international financial centres (IFC) | offshore | legislation | Egypt | Switzerland | Tunisia | standards

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