-- The author is a Reuters Breakingviews columnist. The opinions expressed are his own --
By Pierre Brian?on
LONDON, Feb 25 (Reuters Breakingviews) - Switzerland may soon be as famous for its haste at freezing shady money as for its zeal for looking after it. After blocking bank accounts of the deposed Tunisian and Egyptian presidents, the country has done the same with what it calls the "possible assets" of Libya's Muammar Gaddafi, whose family fortune, according to the wildest estimates, may be in the tens of billions of dollars. But the problem of corrupt dictators isn't new, and would be better addressed ahead of time. It's nice to freeze the money. It would have been better not to accept it.
Doing so is not as tricky as it sounds. Banks and governments have the financial and legal tools to clamp down on dictators' looting of their countries' resources even while they're still deemed legitimate leaders. What is missing is the will to implement internationally-recognised rules on what diplomats working on money laundering call "politically exposed persons", or PEPs.
Those rules, agreed by all countries that are part of an international body called the Financial Action Task Force (FATF), impose a duty on banks to investigate whenever they suspect unusual financial activity by a political leader with past or present responsibilities. But in the case of sitting leaders, it seems that banks haven't been looking very hard.
Bankers argue that it is hard to trace the loot and identify its ultimate owner. This may be a problem. But if it is so hard to overcome, how come it is so easy to freeze the assets once a despot has been toppled?
Another serious problem is international politics. It's easy enough to freeze out discredited regimes like North Korea and Iran. But it would have been harder for, say, a French or Italian bank to treat Gaddafi as a pariah when he was setting up his tent in Rome or Paris before shaking hands with those countries' leaders.
From Africa to Central Asia and parts of Europe, the world is still rich with corrupt potentates. As long as western banks and governments deliberately look the other way and accept cash in the name of raison d'etat, there's little hope the looting will stop. But if they really wanted to change, they could start by applying the existing rules.
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CONTEXT NEWS
-- The Swiss government said on Feb. 25 that it had frozen "any possible assets" Libyan leader Muammar Gaddafi or his family might have in the country.
-- Libya's foreign ministry then demanded a proof that "the brother leader (had) funds or bank accounts in Switzerland or in any banks around the world".
-- "Politically exposed persons", or Peps, must be particularly investigated by banks, according to the money-laundering rules agreed upon by the 36 countries members of the Financial Action Task Force.
-- A 2009 World Bank report on "stolen asset recovery" and the need to strengthen preventive measures: http://www.assetrecovery.org/kc/resources/org.apache.wicket.Application/repo?nid=20d726d4-d8d8-11de-aed1-efa12ab4a114
-- FATF website: http://www.fatf-gafi.org/pages/0,2987,en_32250379_32235720_1_1_1_1_1,00.html
-- Reuters story: Switzerland says freezing any Gaddafi assets [ID:nLDE71N2IX]
-- For previous columns by the author, Reuters customers can click on [BRIANCON/]
(Editing by Peter Thal Larsen and David Evans)
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