On Thursday, Switzerland’s parliament refused to amend the law governing ill-gotten bank profits seized by Bern.
At the request of the government, parliamentarians in the House of Representatives rejected a proposal led by centre-left politician Carlo Sommaruga, the Swiss-based Bruno Manser Fund, and two Malaysian non-governmental organisations (NGOs), Reuters reported.
The parliamentarian and NGOs had urged the Swiss authorities to return to the Malaysian people CHF104 million ($110 million) of illicit profits linked to the 1Malaysia Development Berhad (1MDB) state-run investment fund corruption scandal.
But Swiss Foreign Affairs Minister Ignazio Cassis told parliamentarians that the proposal was too broad, and violated the separation of powers between the government and the courts.
The NGOs had criticised the fact that Switzerland currently has no legal basis to return the looted money to the Malaysian people. The 1MDB sovereign fund is the focus of money-laundering investigations in at least six countries, including Switzerland and the United States.
The NGOs also argued that profits from corruption abroad that are confiscated in Switzerland should be treated in the same way as the assets of foreign leaders and returned according to the same principles. The restitution of looted funds of so-called “foreign politically exposed persons (PEPs)” is governed by the 2016 Foreign Illicit Assets Actexternal link.
Cassis said the current law allowed repatriation of assets seized from toppled regimes.
Over the past two years, the Swiss federal authorities have confiscated more than CHF350 million linked to corruption cases in Brazil, Nigeria and Malaysia.
Malaysian Prime Minister Najib Razak, along with his entourage, is accused of having siphoned off hundreds of millions of Swiss francs from the 1MDB sovereign fund, which he himself created in 2009. Part of this sum was paid into Swiss bank accounts.
In 2013, the Swiss Financial Supervisory Authority (FINMA) alerted the BSI private bank about the risks of dealing with certain clients linked to the Malaysian fund, and in May 2016, FINMA confiscated CHF95 million of ill-gotten gains.
In July 2016, Swiss banks UBS and Falcon Bank were fined in Singapore for failings in the fight against money laundering linked to this case. Singapore shut down the local units of BSI Bank and Falcon Bank due to failures of money-laundering controls and improper conduct by senior management.