SWITZERLAND MUTUAL LEGAL ASSISTANCE IN PRACTICE SWISS FEDERAL

SWITZERLAND MUTUAL LEGAL ASSISTANCE IN PRACTICE SWISS FEDERAL

SWITZERLAND MUTUAL LEGAL ASSISTANCE IN PRACTICE SWISS FEDERAL OFFICE OF JUSTICE Pascal Gossin US DOJ and OAS Conference Miami April 2 to 5, 2006 forfeiting the proceeds of corruption 04/02/20 pascal Gossin 1 TOPICS OF DISCUSSION I. SWITZERLAND, AN ECONOMIC AND FINANCIAL CENTER II. MUTUAL LEGAL ASSISTANCE IN SWITZERLAND III. NEW TOOLS FOR MUTUAL LEGAL

ASSISTANCE IV. MUTUAL LEGAL ASSISTANCE IN PRACTICE V. PEP CONNECTIONS 04/02/20 pascal Gossin 2 I. SWITZERLAND, AN ECONOMIC AND FINANCIAL CENTER 04/02/20 pascal Gossin 3 I. SOME GENERAL STATEMENTS

- Federal State - 26 cantons 7 364 148 inhabitants 20.1 % foreign nationals Important financial sector (338 banks 11% of the Swiss gross domestic product) - World leader in private banking 04/02/20 pascal Gossin 4 Securities holdings in custody accounts 4003 billions CHF (2005) 14% 29% 32 % 25% Swiss private

Foreign institutional Foreign private Swiss Institutional 04/02/20 pascal Gossin 5 Market share of crossborder private banking (2004) 10 % 4% 6% 32 % 10 % 11 % 16 % 11 % 04/02/20 pascal Gossin Switzerland

Caribbean U.K. USA Luxembourg Hong Kong Channel Isl. Others 6 II. SWISS BANKING SECRECY Art. 47 of the Swiss Federal Law on Banks and Saving Banks 1 Whoever divulges a secret entrusted to him in his capacity as officer, employee, mandatory or liquidator of a bank, as person charged by the Banking Commission with an investigation or restructuring, officer or employee of a recognized auditing company or has become aware thereof in this capacity, whoever tries to induce others to violate professional secrecy,

shall be punished by imprisonment for not more than six months or by a fine of not more than SFr.50,000. 2 If the act has been committed by negligence, the penalty shall be a fine not exceeding SFr. 30,000. 3 The violation of professional secrecy remains punishable even after termination of the official or employment relationship or the exercise of the profession. 4 Still applicable are the Federal and Cantonal regulations concerning the obligation to testify and to furnish information to a government authority. 04/02/20 pascal Gossin 7

In addition to data protection and civil law,the Swiss banking secrecy is protected by criminal Law Can be lifted upon judicial order in legally defined cases: a) Civil law b) Debt collection and bankruptcy law c) Criminal and administrative criminal law d) Mutual legal assistance in criminal matters 04/02/20 pascal Gossin 8 No anonymous account relationship in Switzerland

No account, not even a numbered account, can be opened in Switzerland without an identity check Same due diligence rules (Know Your Customer) apply to any bank account opened 04/02/20 pascal Gossin 9 III. COMBATING MONEY LAUNDERING IN SWITZERLAND Extensive legislation - Articles 305bis and ter of the Swiss Penal Code - Money Laundering Act of 10 october 1997 Effective reporting system - immediate freezing of assets

- Financial Intelligence Unit Controled self-regulation of the financial intermediaries (other than banks and insurances) 04/02/20 pascal Gossin 10 Detection and Prosecution of a Money Laundering Offense Reasonable Suspicion Freeze and Report Financial intermediary Analysis Financial Intelligence Unit

Prosecution Judicial Authority 5 days 04/02/20 pascal Gossin 11 IV. SWISS LEGISLATION AGAINST CORRUPTION Swiss answer to foreign requests for assistance related to corruption offenses Successive flows of requests since 1990: Mani Pulite (Italy) French affaires (France) German (ParteispendenSkandal /Financing of political parties ). Increasing use of spontaneous information 04/02/20 pascal Gossin

12 V. PROSECUTION OF CRIMINAL OFFENSES IN SWITZERLAND. COMPETENCES Criminal Law: unified on federal level (Swiss Penal Code) Criminal proceeding law: 29 differents Codes ! Prosecution of offenses falls basically within the competence of the cantons. Tendency towards centralisation of the prosecution of certain offenses (corruption, Organized Crime, Money Laundering) Draft for an Unified Swiss Criminal Proceeding Code 04/02/20

pascal Gossin 13 II. MUTUAL LEGAL ASSISTANCE IN SWITZERLAND The Examiners applaud the great diligence with which the (Swiss) authorities grant mutual legal assistance in cases of economic and financial crime, including cases relating to bribery of foreign public officials, thus actively contributing to the fight against bribery engaged by the countries that have signed the OECD Convention. Report on the application of the Convention on combating bribery of foreign public officials in international business transactions, approved and adopted by the OECD Working Group on Bribery in International BusinesTransactions on 24 December 2004. The Swiss system of mutual legal assistance is generally satisfactory in its principles, and it is put to effect broadly. Financial action Task Force: Third mutual evaluation report on anti-money laundering and combating the financing of terrorism. Swiss report summary adopted on October 2005.

04/02/20 pascal Gossin 14 II.International Agreements in Practice. Trends Some subjects are overregulated and the wording differs from one convention to the other. Leads to problems in practice Execution of Convention is subject to domestic law. May deprive the convention from effectiveness (ex. freeze of assets) Relation between International public law and domestic law. The Swiss approach. Principle of favour Reciprocal influence between agreements 04/02/20

pascal Gossin 15 Your Swiss Partners Federal Office of Justice Examining magistrate of a Swiss canton Swiss Federal Authorities with judicial functions Tendency towards centralisation of the exe-cution (Swiss General Prosecutor) in organised crime, corruption and money laundering (international context) 04/02/20 pascal Gossin 16 CH:MLAT:Who is doing what

90 80 70 60 50 Cantons (82%) Attorney General (16%) FOJ (1%) 40 30 20 10 0 04/02/20 Swiss Customs (1%) 2004 pascal Gossin 17 Swiss Federal Office of Justice

Main activities of the legal assistance unit Transmission of requests for assistance and service of process Information Internet and lectures Surveillance (is a party in the legal assistance proceeding, can appeal court decisions) Centralised Execution of certain MLAT requests (USA, Italy, Art. 79a IMAC) 04/02/20 pascal Gossin 18 FOJ:Swiss Central Authority Cantonal magistrate

Requesting State FOJ Federal Authorities FOJ 04/02/20 pascal Gossin 19 MUTUAL ASSISTANCE PROCEEDING FOREIGN STATE DIRECT CONTACT - URGENCY - INTERNATIONAL TREATY FOJ SUMMARY EXAMINATION, Art. 78 IMAC CANTONAL AUTHORITY

PRELIMINARY EXAMINATION, Art. 80 IMAC EXECUTION DECREE ON ENTERING INTO THE CASE, Art. 80 a IMAC INCIDENTAL DECREE END OF EXECUTION SIMPLIFIED EXECUTION Art. 80c IMAC CONCLUSIVE DECREE Art. 80d IMAC Art. 80 e lit.b IMAC - seizure - presence of foreign officials CANTONAL APPELLATE AUTHORITY Art. 80e, let.a IMAC FEDERAL SUPREME COURT

Art. 80f IMAC FOREIGN STATE 04/02/20 pascal Gossin 20 THE WAY WE PROCEED Granting of assistance subject to one appeal proceeding Restricted possibilities of interlocutory appeal (seizure of assets and participation of foreign representatives during the execution of the request for assistance) Possibility of simplified execution Limitation in the use of information provided 04/02/20

pascal Gossin 21 III. NEW TOOLS FOR MUTUAL LEGAL ASSISTANCE 04/02/20 pascal Gossin 22 I. Art. 74a IMAC Handing Over [of Property] for the Purpose of Forfeiture or Return 1 Upon request, the objects or assets subject to a precautionary seizure may be handed over to the competent foreign authority after conclusion of the mutual assistance proceeding (art. 80d) for the purpose of forfeiture or return to the person entitled. 2 The objects or assets referred to in paragraph 1 include: a. instruments which served to commit the offence; b. products or profits of the offence, their replacement value and an illicit advantage;

c. gifts and other contributions which served to instigate theoffence or recompense the offender, as well as their replacement value 3 The handing over may intervene at any stage of the foreign proceeding, as a rule based on a final and executable order of the requesting State 04/02/20 pascal Gossin 23 4 However, the objects or assets may be retained in Switzerland if: a. the victim has his habitual residence in Switzerland and they have to be re-turned to him; b. an authority asserts rights over them; c. a person not involved in the offence and whose claims are not guaranteed by the requesting State shows probable cause that he has acquired rights over these objects and assets in good faith in Switzerland, or if he has his habitual residence in Switzerland, in a foreign country; or d. the objects or assets are necessary for a pending criminal proceeding in Swit-zerland or appear, because of their nature, to be subject to forfeiture in Switzerland. 5 Whenever somebody claims to have rights over the objects or

assets under paragraph 4, its handing over to the requesting State shall be suspended until the legal situation is clear. The objects or assets claimed may be handed over to the person entitled if: a. the requesting State agrees; b. in case of paragraph 4, letter b, the authority gives its consent; or c. the claim has been recognized by a Swiss court. 6 Article 60 shall apply to fiscal liens. 7 Not handed over pursuant to paragraph 1 are objects and assets to which Switzerland is entitled according to an asset sharing agreement based on the deral Act of 19 March 2004 on the sharing of confiscated assets 04/02/20 24 pascal Gossin pascal Gossin REPATRIATION OF ASSETS PROCEEDING REQUESTING JUDICIAL

AUTHORITY MLAT FOR FREEZE AND EVIDENCE REQUESTED JUDICIAL AUTHORITY STAGE I TRANSMISSION OF EVIDENCE CONFISCATION REQUESTING JUDICIAL AUTHORITY MLAT FOR ASSET RECOVERY DECISION 1 GATHERING OF EVIDENCE FREEZE DECISION 2

HANDING OVER OF ASSETS STAGE II REQUESTING N JUDICIAL AUTHORITY W HANDING OVER OF ASSETS REQUESTED JUDICIAL AUTHORITY E S 04/02/20 pascal Gossin 25 Main cases of return of funds since 1990 (Geneva, Zrich, Swiss Federal Office of Justice)

(Most of the cases are corruption and embezzlement of public funds cases). Zrich Philip. USD 700'000'000.Russia CHF 2'000'000.Germany CHF 300'000.Peru USD 77'000'000.- Status 01.01.2006 Geneva

FOJ France CHF 1'600'000. Italy CHF 15'700'000.Spain CHF 18'260'000. Ukraine CHF 14'000'000. Argentina CHF 7'500'000.Brasil CHF 4'000'000. Nigeria USD 216'000'000.- USA USD 8'000'000.Jordan USD 6'400'000.Nigeria USD 490000000.-

04/02/20 pascal Gossin 26 II. Art. 67a IMAC: Spontaneous Transmittal of Information 1 An authority prosecuting offences may spontaneously transmit to a foreign authority prosecuting offences information or evidence that it has gathered in the course of its own investigation, when it determines that this transmittal is of a nature: a. to permit the opening of a criminal proceeding; or b. to facilitate a pending criminal investigation. 2 The transmittal according to paragraph 1 does not have any effect on the criminal proceeding pending in Switzerland.

3 The transmittal of evidence to a State with which Switzerland does not have an international agreement shall be subject to authorization by the Federal Office. 4 Paragraphs 1 and 2 do not apply to evidence that is within the scope of secrecy. 5 Information that is within the scope of secrecy may be transmitted if it is of a nature to enable the foreign State to present a request for mutual assistance. 6 A record shall be made of any spontaneous transmittal. 04/02/20 pascal Gossin 27 Spontaneous transmittal of information

Need to add conditions of use Difference between evidence and intelligence Need to control the flow of information transmitted Seldom used so far (40 cases/ year in Switzerland) 04/02/20 pascal Gossin 28 IV. MUTUAL LEGAL ASSISTANCE IN PRACTICE IN SWITZERLAND 04/02/20 pascal Gossin

29 What we are good at Search and seizure Repatriation of assets Spontaneous information Sharing of assets 04/02/20 pascal Gossin 30 What we are critized for Limited assistance in tax matters (only tax fraud and only in mutual legal assistance) Lengthy execution (partly) due to extensive appeal possibilities and large standing for appeal 04/02/20 pascal Gossin 31

TIPS towards effectiveness Domestic law on mutual legal assistance All crime approach No treaty requirement for granting assistance No absolute reciprocity requirement In line with conventional obligations In line with AML legislation 04/02/20 pascal Gossin 32 V. PEP CONNECTION 04/02/20 pascal Gossin 33 1. LEGAL ASSISTANCE V. PEPS Swiss Connection

Bokassa Centralafrican Republic Marcos Philippines Duvalier Haiti Strssner Paraguay Ceausecu Romania Siad Barr Somalia Traor Mali Ruzkoi Russia Berlusconi Italy Claes Belgium Mulroney Canada

Garcia Perou Woo South Korea Bdi Ivory Coast 04/02/20 pascal Gossin Salinas de Gortari Mexico Al-Thani Qatar Benazir Bhutto Pakistan Mobutu D.R. Congo Layne Ethiopia Abacha Nigeria

Montesinos Perou Nazarbaiev Kasakstan Suharto Indonesia Borodin Russia Lazarenko Ukraine Perez Philippines Menem Argentina Maluf Brazil 34 2. Legal assistance in the case ABACHA et al. Swiss Characteristics for success Uge amounts frozen in Switzerland Example of effectiveness of the Swiss antimoney laundering legislation Nigeria represented by a Swiss lawyer Coordination between the Office of Justice

and the magistrate Speedy treatment of the legal assistance proceeding (Task Force) Priority Repatriation of assets through the Bank for International Settlements Nigeria both requesting State as well as Civil party in the Swiss criminal proceeding 04/02/20 pascal Gossin 35 3. Legal assistance in the case ABACHA et al. Swiss Characteristics for success Application of the Swiss provision against organized crime (reversal of the burden of proof) Denial of the satnding to appeal of the account holder if the account is opened under a false identity

Use of the result obtained in the domestic criminal proceeding to support the request for assistance 04/02/20 pascal Gossin 36 Conclusion Keys for success in international financial investigations against the proceeds of crimes such as corruption To find the proceeds: effective anti-money laundering legislation To get hold of the proceeds: immediate freeze To respect due process rules: appeal possibilities

To finalize the case: effective repatriation or confiscation provisions 04/02/20 pascal Gossin 37

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