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Global Economy

"Target for war criminals and kleptocrats"? Switzerland defends itself against US allegations

The Swiss government has vehemently defended itself against new allegations from the USA that it is an aide to Russian President Vladimir Putin with its business relationships with Russian oligarchs.

Swiss anti-corruption expert Mark Pieth has testified before an influential US government commission, the "Helsinki Commission"*. She accuses Switzerland of hiding Russian assets and violating international sanctions against Russia. According to observers ("dpa"), the Swiss judiciary was portrayed as corrupt at the hearing.

"Long known as a destination for war criminals and kleptocrats to hide their loot, Switzerland is a leading forerunner of Russian dictator Vladimir Putin and his cronies. After the sack of Russia, Putin and his oligarchs used Swiss secrecy laws to steal the proceeds of their… to hide and protect crimes," according to the Commission. It is to monitor compliance with the agreements of the Organization for Security and Co-operation in Europe (OSCE).

Pieth's conclusion: Lawyers would exploit loopholes in Swiss law to thwart efforts to uncover Russian assets. A gray area…

Mark Pieth, (Swiss) Professor of Criminal Law and Criminology:

"… where the lawyers don't touch money, but build so-called structures for their clients, shell companies, offshore accounts. And so on. That's dangerous because it helps money laundering."

The official written statement from the Swiss government:

"The Swiss government rejects the allegations in the strongest possible terms. When it comes to implementing the sanctions, Switzerland is in a very good position by international comparison. It is in constant contact with all relevant actors at home and abroad, including the USA, and contributes to this contribute to a sanctions regime that is as complete as possible."

Pieth described the reaction as "thin-skinned". It would be better to take the criticism seriously, he said.

Mark Pieth, Professor of Criminal Justice and Criminology:

"The problem is that the Americans want to say at some point, now we need the names. And suddenly the Swiss turn around and say yes, but bank secrecy and even more so attorney-client privilege prevent us from revealing these names."

According to media reports ("SRF"), he continued: "The problem is that oligarchs and other interested parties – I am thinking of the Russian state bank – had funds in Switzerland and we cannot find them because they are behind so-called letterbox companies and offshore accounts -places are hidden." Lawyers and consultants are not obliged to provide information about the beneficiaries of such accounts. The Lawyers and Money Laundering Act must be changed accordingly.

CHF 200 BILLION IN SWISS ACCOUNTS

After initial hesitation, Switzerland adopted almost all of the EU sanctions against Russia. In April, the authorities announced the freezing of 7.5 billion Swiss francs (about 7.2 billion euros) in the accounts of sanctioned Russians.

The Bankers Association assumes that up to 200 billion Swiss francs (around 192.5 billion euros) of Russian funds are in Swiss accounts.

*The Commission on Security and Cooperation in Europe (CSCE), also known as the US Helsinki Commission, is an independent agency of the US government. It was established by the US Congress in 1976 to monitor and promote compliance with the Helsinki Final Act and other commitments of the Organization for Security and Co-operation in Europe (OSCE).

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