US – Switzerland accused of hiding Russian assets

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US – Switzerland accused of hiding Russian assets   Switzerland is accused by a US commission of concealing Russian assets.  Mark Pieth, a Swiss anti-corruption expert, has provided testimony to an influential United States government commission that has accused Switzerland of concealing Russian assets in its jurisdiction. He asserted that Swiss lawyers have complete discretion in assisting oligarchs in concealing the source of their income.

The Helsinki Commission, also known as the Commission for Security and Cooperation in Europe, has issued harsh criticism of Switzerland’s alleged complicity in the concealment of Russian assets in the European Union.

 

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US – Switzerland accused of hiding Russian assets

 

In addition to being a popular hiding place for war criminals and kleptocrats, Switzerland has long been seen as a key enabler of Russian ruler Vladimir Putin and his allies. External link “After plundering Russia, Putin and his billionaires conceal and preserve the proceeds of their crimes using Swiss confidentiality rules,” the organization stated External link.

 

 

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Pieth, Miranda Patrucic, deputy editor in chief at the Organized Crime and Corruption Reporting Project, and Bill Browder, a financier who accuses Swiss prosecutors of botching a Russian money laundering investigation External link that resulted in the death of his lawyer, Sergei Magnitsky, testified before the Commission during a hearing on Thursday.

Pieth informed the Commission that lawyers take use of legal loopholes in Switzerland in order to prevent efforts to track down Russian financial assets.
“Assistance in concealing funds”

 

 

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Here is the complete text of his testimony:

Switzerland is a small country, and we are aware of this. At the same time, it serves as a significant financial center, and it is widely considered to be the world’s largest commodity trading center.

At the same time, this country has a historical culture of concealment dating back hundreds of years. In a nutshell, it is one of the world’s largest offshore financial havens.

I am particularly interested in the role of introducers and enablers, who are typically lawyers who operate under the cover of attorney-client confidentiality. Now, there is nothing wrong with them acting as traditional lawyers and defending the interests of their clients in this manner. For their part, it is also evident that lawyers who invest money on behalf of their clients are not working in the capacity of lawyers, but rather as financial operators.

The Panama Papers, the Pandora Papers, and other leaks, on the other hand, have revealed that there is a sector in the middle, namely individuals who, without touching money, are participating in the creation of money-laundering organizations (shell companies, offshore accounts etc.). There is no AML [anti-money laundering] regulation that applies to them. Despite this, as the recent leaks have demonstrated, they assist in the concealment of funds held by oligarchs such as those in Russia.

 

 

 

 

For example, the Russian cellist [Sergei] Roldugin, a former classmate of Putin’s, acquired a one-fourth stake in Bank Rossiya and a one-fourth stake in a Russian tank manufacturer overnight – the individuals assisting him in accessing and concealing these assets are lawyers from a Zurich-based law firm (the names can be supplied).

Banks and authorities are hampered in their efforts to identify the genuine beneficial owners of assets when such structures are used. They pose a serious threat to the long-term viability of the sanctions regime against Russia.

So, what should we be doing at this point?

Due to pressure from business lobbyists, the Swiss Parliament has only recently rejected to subject these facilitators to anti-money laundering regulations (in March 2021). Although the Swiss authorities could potentially act if we have convincing evidence of sanctions evasion and money laundering, as Bill Browder’s case has sadly proven, law enforcement can be ineffective and often politicized when it comes to these matters.

 

 

 

 

While the United States waits on Switzerland to redouble its efforts to regulate facilitators, the country has a role to play: Obviously, the DOJ [the Department of Justice] has the authority to act in cases where these enablers undermine US sanctions. In a more direct manner, you could place the enablers, whose names are known, on a sanctions list, or you might bar these lawyers from traveling to the United States.

 

 

 

 

 

Overall, I believe Bill’s idea to examine law enforcement cooperation between the United States and Switzerland has substance, particularly if the new Attorney General fails to grasp the message the Magnitsky case is conveying.”
Reaction on a diplomatic level

In reaction to Russia’s invasion of Ukraine, the Swiss government first decided not to apply sanctions because doing so would be a violation of the Alpine nation’s principle of neutrality. However, as a result of internal and international pressure, the Swiss government was obliged to reverse course and now imposes European Union sanctions against Russian individuals and entities.

 

The Swiss authorities have frozen assets worth a total of CHF7.5 billion ($7.7 billion) so far. Nonetheless, the Helsinki Commission, which is funded by the United States government but acts independently, is unhappy with the results. In spite of the fact that it lacks formal decision-making authority on the international stage, the Helsinki Commission, which is comprised of 18 US parliamentarians as well as representatives from the United States Departments of State and Defense, as well as the Department of Commerce, has some influence on US foreign policy.

According to Swiss media reports, the public accusations leveled by the Helsinki Commission have prompted unease in the Swiss government about the allegations. With a phone call to his US counterpart Antony Blinken, Swiss Foreign Minister Ignazio Cassis expressed his opposition to the statementsExternal link, according to the Luzerner Zeitung newspaper in Switzerland.

The charges of the Helsinki Commission were categorically denied by Switzerland’s government spokesperson, André Simonazzi.

Swiss authorities are carrying out all of the punishments that have been decided by the Federal Council and the European Union. Swiss state television RTS quoted him as saying, “Switzerland has no reason to be ashamed of the manner it implements sanctions when compared to other countries.”

 

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