Clean Slate
June 16, 2008
Like its Alpine neighbor Liechtenstein, which recently came under the spotlight in the wake of a German tax evasion scandal, Switzerland's fabled secrecy in banking matters has attracted ill-gotten fortunes from around the world for decades.
Swiss banks have woken up to the fact that being involved in shady dealings is not good for their reputation. The laws governing the opening of bank accounts have been tightened up. Swiss banks no longer offer their customers the protection of anonymity.
The tiny Alpine republic has joined the international campaign against money laundering. Switzerland has signed up to the United Nations Convention Against Corruption (UNCAC). Money that corrupt rulers stole from their state and deposited in Swiss bank accounts is being given back to its rightful owners. Some $1.6 billion (1.0 billion euros) has already been restituted over the past few years.
Berne is working together with the United Nations, the World Bank and dozens of other states in trying to improve asset recovery. Since 2001, states have been discussing how to boost international legal aid to facilitate the return of illegal monies.
Laws can be circumvented
But economist and author Gian Trepp believes that the laws against money laundering do not go far enough. "These days potentates don't just walk through the rear exit carrying a suitcase of money," he said. Instead, many set up a trust in Liechtenstein and pay the money in there. Then the money is invested in Switzerland.
"Money laundering still functions even though there are a lot of new regulations," said Trepp. "The regulations can all be subverted by working together with Liechtenstein trusts." He is also critical of the pace at which the money is being returned. "It is proceeding too slowly." The fight against corruption and money laundering has become too entangled in red tape, according to Trepp.
Haitian money frozen
Some 7.3 million Swiss francs (4.5 billion euros, $6.9 billion) deposited by the former Haitian dictator Jean-Claude Duvalier are still frozen in Swiss bank accounts. The formal owner of the money is a Liechtenstein trust set up by "Baby Doc" Duvalier's mother. Haiti has been demanding the return of the money since his overthrow in 1986.
The Caribbean nation accuses Baby Doc of systematically embezzling money from state companies and transferring it to Switzerland. But Switzerland is demanding that Duvalier is tried first in his home country and submit the right court order. This has still not taken place, in part because Haiti was ruled by an undemocratic military government between 1991 and 1994, the Swiss foreign ministry has said.
The Swiss government has frozen the Haitian funds until August 31, 2008. If Switzerland and Haiti do not reach an agreement by then, the money could still end up in the hands of the ex-dictator or his family. They claim the money is rightfully theirs.