Switzerland has returned millions in ill-gotten dictator loot under a four-year-old law, but the problems aren't going away anytime soon, author Balz Bruppacher writes.

«A good horse only jumps as high as it needs to,» is how Swiss criminal law professor Frank Meyer put it in an analysis of 2016’s law on dictator money. Since the 1950s, Switzerland keeps repeating the pattern: expending the minimum amount of effort in order to avert the worst outcome for managing money for the world’s strongmen.

What have we learned? First, it is an illusion to believe that a financial center can completely avoid dirty money – unless Switzerland gives up its ambition to compete as an international center for money management.

Bribery in Sharp Focus

Relinquishing its status was never an option for the alpine nation, even following the intense pressure on banking secrecy and UBS’ crisis. «The government and the private sector both believe that cross-border wealth management will remain at the heart of Switzerland’s financial center for the foreseeable future,» Bern said in a strategic paper late in 2009.

The other side of the coin is that Switzerland emerged at the center of some of the world’s largest money-laundering scandals of the last decade. Several billion in corrupt money passed through its banks, bringing systemic bribery in countries including Brazil (Petrobras and Odebrecht) as well as Asia (1MDB) into focus.

Bin Salman Sends Shockwaves

Swiss banks play a central role in the siphoning from Malaysian state fund 1MDB as well as a graft network connected to the daughter of Uzbekistan’s former president. The source of the ill-gotten funds – the second lesson for Switzerland – seems to be shifting towards Asia.

Switzerland’s wooing of the super-rich in China, which is generating billionaires three times as fast as the U.S., represents a massive compliance challenge. Saudi Arabia delivers valuable lessons: Crown Prince Mohammed bin Salman’s 2017 incarceration of hundreds of the kingdom’s elite in Riyadh’s Ritz Carlton on suspected corruption charges sent shockwaves through Swiss finance.

Swiss Silence on Shakedown

One was Prince al-Waleed bin Talal, a super-wealthy Saudi with close ties to Switzerland. Swiss banks lodged more than one hundred notices of suspected money laundering surrounding Saudi wealth of over 7 million Swiss francs, according to government data.

Switzerland’s prosecutor was alerted, but to this day no funds were frozen nor was a criminal investigation opened. Thanks to deft negotiating behind the scenes, Switzerland was able to sweat out the matter until bin Salman dropped the accusations (after taking as much as $100 billion off the alleged perpetrators).

Lebanon Back-and-Forth

Lebanon represents the next hot spot which may backfire for Switzerland: as much as $2 billion reportedly made its way to Swiss offshore accounts, amid a financial and economic crisis. The Middle East nation lodged a request for legal assistance in January, which Swiss officials turned down pending further details from Lebanon.

Bern wants specifics from Beirut of the alleged source of the offshore funds as well as where they were deposited, the Swiss government explained recently in parliament. The 2016 law on dictator money isn’t enough to block Lebanese funds pre-emptively, the government said (noting it is following political developments closely).

More Regulation vs Support

This leads to the third lesson: less proactive Swiss officials. If Bern adopted a cooler, more regulated approach to its financial center following the 2008/09 crisis, banks can now rely on support and empathy from their government and supervisors.

Finance minister Ueli Maurer has flown the flag for Switzerland’s finance industry, leading banker delegations to China and the Middle East. Domestically, he is adept at interpreting what the burgeoning fintech industry wants and needs to thrive. His willingness to cozy up to finance blurs the lines to state-run industrial policy.

Lawyers in Crosshairs

It also makes it all the more important for Switzerland to adhere to international standards for financial and white-collar crime – as well as for genuinely independent supervisors. The government’s ordinance on financial market draft law raise uncomfortable questions in this respect, as does a March parliamentary decision to eschew a tightening of anti-money laundering law.

Surprisingly, opposition to these two measures came not from finance lobbyists, but from lawyers fearful of additional duty of care rules. Last year’s governmental anti-money laundering report speaks volumes on what remains to be done: just five of a total of 7,705 suspicious activity reports in 2019 were lodged by lawyers or notaries.

Last but not least, Switzerland risks renewed reputational damage from an ugly scandal involving its attorney general, Michael Lauber.


SchatzkammerBalz Bruppacher is a decorated Swiss journalist and author of «Die Schatzkammer der Diktatoren,» a book on dictator money in Switzerland (in German only). The 69-year-old economist was responsible for the Associated Press’ domestic service from 1983 until 2010. He has written extensively about money laundering, including for «Neue Zuercher Zeitung,» and taught at Swiss journalism school MAZ.