The Federal Council adopts the dispatch to Parliament concerning a federal act on the freezing and restitution of illicitly acquired assets of foreign politically exposed persons
Bern, 21.05.2014 - Today, the Federal Council has adopted the dispatch to Parliament concerning a federal act on the freezing and restitution of illicitly acquired assets of foreign politically exposed persons (PEPs). The draft law takes over existing legislation and practice and reworks them into a single body of law. In parallel to the legislative work, the Federal Council has stepped up its efforts to establish a more efficient framework for international cooperation on the restitution of illicitly acquired assets of PEPs.
In connection with the events of the Arab Spring, the Federal Council issued several freezing orders against PEPs directly based on the Federal Constitution at the beginning of 2011. In March 2011, the Federal Parliament adopted a motion obliging the Federal Council to create a formal legislative basis on the freezing of such assets. The Federal Council then instructed the Federal Department of Foreign Affairs to draw up a draft law to this effect. In May 2013, the consultation procedure was launched on the first draft of a federal act on the freezing and restitution of illicitly acquired assets of PEPs.
The draft law comprehensively governs the freezing, confiscation and restitution of illicit assets of PEPs, thus reflecting Switzerland's current practice in this area. It is designed 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 centres. It contains provisions on preventive freezing for the purpose of temporarily securing PEPs assets, and it 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. Lastly, the draft law provides for the possibility of taking targeted measures to support the country of origin in its efforts to recover illicitly acquired assets. In addition, it establishes two further developments on matters of practice to take concrete experiences into account. The draft law has also been considerably reworked on several points to take account of the comments and issues raised during the consultation procedure. These concern in particular implementation of the duty to report with regard to frozen assets (creation of a single point of contact with the Money Laundering Reporting Office Switzerland) and the exchange of information with foreign authorities.
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. 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.
Parallel to the legislative work, the Federal Council has stepped up its efforts to improve international coordination in cases of illicitly acquired assets of PEPs. Switzerland has gained much experience in this area over the last 25 years. It would like to use this experience to participate in setting future standards of cooperation among financial centres in the field of the restitution of the illicit assets of PEPs and to structure this work more efficiently. It bases its work on two UN mandates dating from 2013 which are largely based on Switzerland's proposals. The first set of guidelines was developed within the framework of an expert seminar that Switzerland organised together with its partners, the International Centre for Asset Recovery and the Stolen Asset Recovery Initiative of the World Bank, in Lausanne from 26 to 28 January 2014.
In addition to the federal act, the Federal Council has also approved a strategy on the freezing, confiscation and restitution of assets of foreign PEPs (asset recovery). It is designed for use by those units of the federal administration that deal with the illicit assets of PEPs and serves to optimise coordination among Swiss authorities.
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