The Commission for Security and Cooperation in Europe, also known as the Helsinki Commission, has issued a harsh criticism of Switzerland’s role in hiding Russian assets.
“Switzerland, long known as a destination where war criminals and kleptocrats often hide their loot, is one of the main supporters of Russian dictator Vladimir Putin and his minions. After looting Russia, Putin and its oligarchs use Swiss confidentiality and banking secrecy laws to hide and protect the proceeds of their crimes,” the agency said .external linkeitherexternal linkit’s a statement.
Testimony was heard at Thursday’s Commission hearing from Pieth, Miranda Patrucic, deputy editor-in-chief of the Organized Crime and Corruption Reporting Project , and Bill Browder, a financier. accusing Swiss prosecutors of botching a money laundering investigation in Russiaexternal link, and that it is related to the death of his lawyer, Sergei Magnitsky.
Pieth told the Commission that the lawyers take advantage of Swiss legal loopholes to prevent attempts to trace Russian assets.
“Help Hide Funds”
This was his testimony in full:
“We know that Switzerland is a small country. However, it is home to a sizeable financial complex and is probably the largest commodity trading center in the world.
At the same time, this country has a long tradition of secrecy. In short, it is one of the largest tax havens in the world.
I am particularly interested in the role of introducers and facilitators, often lawyers who hide behind attorney-client privilege. Of course, there is nothing to blame if they act as traditional lawyers defending the interests of their clients But, on the other hand, it is equally clear that lawyers who invest money on behalf of their clients do not act as lawyers, but as financial operators.
The Panama Papers, the Pandora Papers and other leaks have shown, however, that there is an intermediate sector, those that, without touching the money, are dedicated to creating money laundering structures (shell companies, offshore accounts, etc.). They are not affected by AML [anti-money laundering] legislation. But they nonetheless help hide the funds of, say, Russian oligarchs, as those leaks have shown.
To take an example, the Russian cellist [Sergei] Roldugin, a friend of Putin’s since school, suddenly got a quarter of Bank Rossiya and a quarter of the fortune of a Russian tank manufacturer. The people who helped him access and hide these assets are a Zurich law firm (names can be provided).
These structures prevent banks and authorities from determining who the real owners of assets are. They are a real danger to the success of the sanctions system against Russia.
So what should we do?
In Switzerland, just over a year ago, Parliament, under pressure from industry lobbies , refused to subject these facilitators to anti-money laundering legislation. Of course, if we had clear evidence of sanctions breaches and money laundering, the Swiss authorities could intervene, but as the example of Bill Browder has shockingly demonstrated, law enforcement can be ineffective and sometimes partisan.
Waiting for Switzerland to redouble its efforts to regulate facilitators, the United States has a role to play: obviously, when these facilitators undermine US sanctions, the DOJ [the Department of Justice] could intervene. More directly, the facilitators, whose names are known, could be placed on the sanctions list or these lawyers could be subjected to a visa ban.
Overall, I think Bill’s suggestion to review US-Swiss law enforcement relations if the new Attorney General doesn’t get the message from the Magnitsky case is of great interest.”
diplomatic reaction
When Russia invaded Ukraine, Switzerland’s initial response was not to impose sanctions, as it might violate the Alpine country’s policy of neutrality. But the Swiss government was forced to pivot after national and international pressure, and is now applying European Union sanctions against Russian individuals and entities.
Swiss authorities have so far frozen 7.5 billion francs ($7.7 billion) of assets. Yet the Helsinki Commission, funded by the US government but acting independently, remains unhappy. Although it has no formal authority to make decisions on the world stage, the Helsinki Commission, made up of 18 US parliamentarians and representatives from the Departments of State, Defense and Commerce, wields some influence over US foreign policy.
Swiss media reports that public accusations by the Helsinki Commission have caused consternation in the Swiss government. The Luzerner Zeitung newspaper reported that Swiss Foreign Minister Ignazio Cassis objected to the remarks .external linkwith a phone call to his American counterpart, Antony Blinken.
For his part, Swiss government spokesman André Simonazzi strongly rejected the Helsinki Commission’s accusations.