Gretta Fenner
Publications and news by Gretta Fenner.
Publications
A Swiss–Peruvian asset recovery case boosts prospects for non-conviction based forfeiture (The Academy Bulletin)
In an article published in the inaugural issue of the Bulletin of The International Academy of Financial Crime Litigators, Oscar Solorzano and Gretta Fenner analyse a recent decision of the Swiss Federal Supreme Court, which cleared the way for returning funds tied to corruption to Peru. The decision sets an important precedent for the use of non-conviction based forfeiture laws to recover illicit assets in the absence of a criminal conviction. This is a crucial step in the fight against global corruption.
The Bulletin is a new publication from The International Academy of Financial Crime Litigators. It has been established to transmit the work of Academy Fellows, draw attention to matters of importance to the legal community and provide high-level analysis of cutting-edge issues in global financial crime investigations and litigation. The Basel Institute on Governance acts as Secretariat to the Academy.
Perspectives 3: Asset recovery and wildlife trafficking
Illegal wildlife trade (IWT) is in the global spotlight thanks to its alleged role in triggering the coronavirus pandemic. It is sparking vivid debate among communities of experts not just in conservation, but in business, finance, technology, anti-corruption forces and law.
One such debate is taking place in the ranks of litigation service providers and economic crime experts of the International Academy of Financial Crime Litigators and IWT specialists at the Basel Institute on Governance.
This short series presents their different expert perspectives on topics crucial to combating IWT.
In this edition, Gretta Fenner, Managing Director of the Basel Institute on Governance and Keith Oliver, Head of International at Peters & Peters Solicitors LLP together with his colleague Amalia Neenan, Legal Researcher, explore the role of asset recovery in combating wildlife trafficking. Gretta Fenner and Keith Oliver are Founding Fellows of the International Academy of Financial Crime Litigators.
Asset recovery in the light of covid-19 - five questions open to debate
This special analysis look at five initial areas for the asset recovery community to consider in the light of the covid-19 pandemic. It has been put together based on insights of the Basel Institute’s asset recovery team. It covers:
- Technology and the digital divide
- Legal and bureaucratic hurdles to recovering stolen assets
- Political will amid increased social pressures
- Raised stakes in ongoing debates, including over the use of returned assets
- The wider role of asset recovery in anti-corruption and sustainable development
The analysis is not meant to be exhaustive but to encourage feedback, debate and thinking outside the box.
Quick Guide 13: Financial crime in illegal wildlife trade
Every day, an unknown number of elephant tusks, rhino horn, pangolin scales and other wildlife products – alive and dead – cross the oceans in container ships and cargo flights for use in traditional medicine, crafts and the illegal pet trade. Rare trees are felled in ancient forests and shipped out under false certificates.
They leave behind the butchered carcasses of the last remaining animals of many species, scarred and emptied landscapes, legal livelihoods undermined by corruption and criminal activity, and communities ravaged by organised crime networks.
The Basel Institute is contributing to tackling illegal wildlife trade and its negative impacts on communities, economies and biodiversity from the angle of financial crime. This quick guide by our Managing Director Gretta Fenner gives an insight into our approach and how our various areas of expertise fit together to help solve this complex puzzle.
About this Quick Guide
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License. It is part of the Basel Institute on Governance Quick Guide series, ISSN 2673-5229.
Basel Institute newsletter – September 2019
View our September newsletter here.
Working Paper 24: It takes two to tango. Decision-making processes on asset return
This Working Paper presents findings from a research project that sought to better understand decision-making processes on the return of illegally obtained assets using the examples of past cases of returning assets that had been stolen from Kazakhstan, Peru and the Philippines. While previous papers on the subject of returning stolen assets and end-use of returned assets were based on third-party and desk research, the research feeding into this working paper is based on first-hand accounts collected through semi-structured interviews with key decision makers involved in these cases in the concerned states.
The key objective of the research was to better understand the motivations, considerations and processes that led to the decisions on how and for what purpose to use returned assets. In this context, the report in particular looks at a question often debated in asset recovery circles, namely whether there may be a power imbalance between requesting and requested states in these processes despite the fact that requesting states are legally empowered through the UN Convention against Corruption (UNCAC).
The potential existence of such a power imbalance has in the past often given rise to concern, as it is perceived to potentially compromise the fundamental principles of asset return of UNCAC and the sovereignty of the concerned states.
About this Working Paper
This paper is part of the Basel Institute on Governance Working Paper Series, ISSN: 2624-9650.
Working Paper 17: The role of donors in the recovery of stolen assets
Financial crimes such as corruption, fraud, and embezzlement generate significant profits, often at the expense of the public budget. These proceeds of crime are usually hidden outside of the country where the crime was originally committed, and laundered through complex financial and commercial transactions, often spanning across numerous jurisdictions.
Asset recovery – the process of identifying, restraining, seizing, and repatriating these assets to the countries from whence they were originally stolen – is one of the greatest challenges for the global anti-corruption movement. Asset recovery is also an essential development challenge, as it usually involves repatriating funds back to a developing country where they were stolen, and where they could be used to support development projects.
As a bridge between aid recipient and donor countries, donor agencies are uniquely positioned to support asset recovery initiatives. Interesting examples are emerging of how donors can support asset recovery by:
- supporting international standards and initiatives;
- providing technical assistance and capacity building (most often through third parties);
- encouraging policy coherence at home;
- helping build political will; and
- providing assistance during the asset repatriation phase.
About this Working Paper
This paper is part of the Basel Institute on Governance Working Paper Series, ISSN: 2624-9650.
Returning Stolen Assets - Learning from past practice
Before the adoption of UNCAC, there was no policy or international legal framework guiding the disposal and monitoring of repatriated assets. As a result, there were no globally accepted rules to follow when repatriating confiscated assets to requesting countries.
Even after the adoption of UNCAC, global practice regarding the disposal of repatriated assets remains unclear. Indeed Article 57 (5) of UNCAC does not provide clear guidance in relation to the final disposal of confiscated assets.
The selected case studies in Peru, Nigeria, Kazakhstan and Angola explore the proactive and innovative practice of Switzerland in the past decade in recovering, repatriating and monitoring stolen assets.
These four cases, which are different from various aspects, in particular the types of the mechanism of monitoring, are insightful and yield some important lessons. The lessons drawn in the respective cases highlight the successes achieved as well as some challenges encountered. The Swiss experience has influenced reflection on existing policies and legislation regarding the disposal and monitoring of repatriated assets, including in the context of the introduction by the Federal Council of the Restitution of Illicit Assets Act (RIAA 2011) and, in May 2013, the opening of a consultation procedure on the draft of a new federal act on the freezing and restitution of potentates’ assets.
This selection of case studies has been drafted as background document to the two-day workshop on Returning Stolen Assets, organised by the Basel Institute on Governance’s International Centre for Asset Recovery (ICAR) in collaboration with the Directorate for Public International Law of the Swiss Federal Department of Foreign Affairs (FDFA/DPIL) in October 2013 in Küsnacht/Zürich, Switzerland.
Emerging Trends in Asset Recovery
Street protests in the ‘Arab Spring’ countries have illustrated that public demand for recovering stolen assets has grown exponentially, as have expectations by concerned populations and governments. From a topic discussed in expert forums, it has thus become a topic of the people. The question is: Have practitioners and policy makers delivered on these expectations?
Clearly, since the ratification of the UN Convention against Corruption (UNCAC) ten years ago, much progress has been made in streamlining respective legal and institutional frameworks. On the other hand, we also find that practical successes on the ground remain few and far apart, and largely limited to a handful of countries.
This book asks why and, through the voice of renowned practitioners from a broad range of affected countries, analyses challenges that remain, identifies new stumbling blocks that have cropped up, and discusses practical solutions that are being tested with a view to overcoming these.
The book is published by the Basel Institute on Governance’s International Centre for Asset Recovery (ICAR).
Practical hurdles to effective international recovery of stolen assets
The Indonesian “Direktorat Jenderal Hukum Dan Perjanjian Internasional” (Directorate General of Law and Treaty) published a book in its series “Opinio Juris” featuring the article “Practical Hurdles to Effective International Recovery of Stolen Assets” written by Gretta Fenner Zinkernagel and Anja Roth.
News and blog
FCPA Blog: How seizing sanctioned assets can strengthen the rule of law
This blog was originally published on the FCPA Blog, which was discontinued in February 2024. Hundreds of billions of dollars of Russian assets sit frozen in bank accounts, buildings, and harbors, thanks to the unprecedented financial sanctions rolled out since the full-scale invasion of Ukraine on February 2022. Understandably, states holding large quantities of Russian assets are under political pressure to permanently seize these and redirect the money to support Ukraine. But political pressure and rule of law are different things, and permanently seizing those assets is not as easy as some make it sound. Hence the debate that is currently raging: should states be able to confiscate those assets purely on the basis that they have been sanctioned? A dangerous path Our recent working paper From Sanctions to Confiscation While Upholding the Rule of Law examines this debate in depth. It considers the justifiability and legality of new legislative mechanisms that allow a state to permanently seize an asset purely because its holder is under sanction. Canada has already included such a mechanism in its Special Economic Measures Act , though it is yet to be tested in court. In brief, our analysis concludes that any mechanisms used to confiscate assets need to be in line with the rule of law. They must respect established legal rights and afford due process. If they do not, states open themselves up to legal challenges and the possibility of having confiscation orders overturned after years of wrangling in higher courts. A better way The good news is that most states already have established pathways to target assets that are frozen under sanctions. In the working paper, we highlight how both criminal and civil non-conviction-based forfeiture mechanisms can be used to target assets where they can be linked to offenses such as sanctions violations, money laundering, or organized crime. The U.S. has long used civil forfeiture mechanisms to confiscate assets where it can be demonstrated to a civil standard of proof that the assets were derived from or used in criminal activity. Such mechanisms do not require a criminal conviction before they can be applied. This makes them a powerful option to target the assets of kleptocrats adept at sidestepping criminal prosecutions. Another option to seize financially sanctioned assets would be unexplained wealth or illicit enrichment legislation. Since such laws reverse the burden of proof onto a person to demonstrate the lawful sources of their assets, states would not need to acquire evidence of criminal activity from potentially uncooperative jurisdictions. Not all countries, however, have non-conviction-based forfeiture or unexplained wealth mechanisms. Where they do, their scope varies widely, and international cooperation is a challenge. Introducing, applying, and cooperating in the context of these laws would go a long way to targeting those frozen assets. Strengthening systems Beyond maximizing the toolkit to target assets frozen under sanctions, states can also make smaller but necessary adjustments to maximize the potential of their laws. These may include broadening the scope of relevant terms such as “property” or “money laundering” or ensuring that non-conviction-based forfeiture mechanisms apply to the widest possible definition of “unlawful conduct.” As the U.S. has done, states may also need to amend laws governing the end use of seized assets to permit them to be redirected to the victims of aggression rather than returned to the aggressor state from which they were stolen. Beyond legislation, states could improve domestic and international coordination by establishing specialist law enforcement task forces such as the U.S. Task Force KleptoCapture and the Russian Elites, Proxies, and Oligarchs Task Force. And as anti-corruption advocates have argued for many years, allocating adequate resources to these efforts so that they can actually be effective is fundamental. Bolstering defenses against kleptocracy Strengthening and applying established asset recovery mechanisms will not only increase the chances of successfully seizing assets in the long run. It will also uphold the rule of law that the Ukrainians are fighting for. Beyond that, concerted efforts to strengthen asset recovery mechanisms and cooperation will aid in the broader fight against corruption and related financial crimes. Corruption is a national security issue and a global security imperative. Stopping corruption is key to stopping kleptocracies from gaining illegitimate power and influence – and, as we have sadly seen, using that to launch illegal wars and to corrupt the rules-based order.
FCPA Blog: Basel AML Index – Going beyond the money laundering leaderboard
This blog was originally published on the FCPA Blog, which was discontinued in February 2024. Last week’s publication of our 10th annual Basel AML Index – which assesses money laundering risks around the world and ranks jurisdictions on how well they’re addressing them – has triggered two types of response. As usual, people first want to see how their country is doing on the AML/CFT “league table.” How is the country ranked compared to its neighbors? Has the risk score gone up or down? Sadly, the answer to that last question is: mostly up. The average global money laundering risk score increased slightly this year from 5.22 to 5.3 out of 10. This kind of league table response hits headlines, but it misses the point. The point of the Basel AML Index is to illuminate weaknesses in national, regional, and global financial systems that leave them open to abuse by money launderers, those financing terrorism, and other criminals. After all, the fight against corruption and money laundering is not a competition but a team effort. Some of the weaknesses revealed by the Basel AML Index are caused by the continuous evolution of financial crime typologies. Ten years ago, for example, cryptocurrencies were barely heard of; now, as our report explores, regulators and reporting entities are scrambling to get on top of the risks. In other areas, not all jurisdictions are scrambling enough. Our analysis, for example, supports growing concerns that beneficial ownership transparency is not being implemented as fast or as effectively as it should be. This is not only a problem for law enforcement seeking information on suspected criminals or for financial institutions trying to conduct customer due diligence in the dark. It undermines global efforts to combat corruption and money laundering because it leaves opaque spots on the world map where criminals can set up anonymous corporate structures to launder their illicit money. Then we have the blind spots. This year, we have shone a light on money laundering risks beyond the financial sector. Data-crunching shows that lawyers, accountants, real estate agents, and other designated non-financial businesses and professions DNFBPs continue to underperform on compliance with AML/CFT standards. Tighter regulations, more supervision, and credible enforcement are urgently needed to close that gap. Lastly, and most disappointingly, weaknesses that we have pointed out year after year since the first edition of the Basel AML Index have barely been addressed. The effectiveness of AML/CFT systems is the elephant in the room here. On average, countries assessed by the FATF for the effectiveness of their AML/CFT frameworks score a woeful 30 percent. This means it is still all too common for jurisdictions to have laws and institutions in place that are largely compliant with FATF Recommendations yet ineffective in practice. Tired of repeating this message, this year, we looked more closely at the data to see whether the problem was prevention, enforcement, or both. We saw that jurisdictions consistently score even worse for the prevention of money laundering than they do for enforcement. Why this is, is an excellent question to ask and a hard one to answer. Unlike for enforcement, there is very little hard data to measure the effectiveness of preventive measures. Smart governments, or those that mean what they preach, will look at this and invest more resources in preventing money laundering and terrorist financing. A fire contained is always better than an arsonist caught when the house has burnt down. This obviously shouldn’t come at the expense of enforcement because arsonists also have to be caught and punished. And if all players in government and the private sector work to better understand and address their money laundering risks – as well as keep up with global trends like those above – maybe, just maybe, all countries will creep up the Basel AML Index league table next year.
Don’t let a kleptocrat’s war destroy Ukraine’s reconstruction
Ukraine’s recovery will require billions of dollars – so leaders pledging reconstruction funds need to ensure Ukraine’s anti-corruption defences are up to the task. A joint opinion article by Gretta Fenner, Managing Director, Basel Institute on Governance and Andrii Borovyk, Executive Director, Transparency International Ukraine. View it in Ukrainian here. The ongoing Russian war of aggression against Ukraine is causing unspeakable human tragedy. In addition, it is destroying the country’s economy and essential infrastructure. Rebuilding these won’t bring back those who died under Russian bombardments, but it will be critical for Ukraine’s recovery. And it is critical for Europe and the world; the war has only too dramatically illustrated how vulnerable and inter-dependent we all are. On July 4 and 5 in Lugano, Switzerland, the Ukraine Recovery Conference will see leaders from around the world pledge hopefully billions to finance this recovery. It is estimated that up to USD 1 trillion will be needed, a sum likely to increase as the war wages on. We applaud this and hope that these will not remain pledges, but that the urgently needed funds will be made available swiftly and generously. But in our recommendations to those leaders, we stress that where there is money, there is temptation. We highlight the need to prioritise the leadership selection process of Ukraine’s formidable anti-corruption institutions, including courts, use transparent procurement systems for reconstruction efforts, and strengthen the asset recovery systems so that they can help fuel the reconstruction efforts. Every reconstruction effort brings with it massive corruption potential. In this regard, Ukraine will be no different from any other country which has seen a massive influx of funds as a result of natural disaster or war. Think Afghanistan, think Iraq, think the 2004 Indian Ocean tsunami. Anti-corruption has been high on Ukraine’s political agenda before the war. But even with significant reforms since 2014, the country is far from ready to withstand the inevitable attack by kleptocrats, organised criminal groups and corrupt officials at all levels who see a golden opportunity in Ukraine’s tragedy. Long before the Kremlin decided to invade Ukraine, it had been waging another war in Ukraine. This war pits the rule of law against the kleptocratic Soviet past which the Kremlin today wholeheartedly embraces as a vision for its present and future. Well aware that its legitimacy quickly crumbles when other countries with similar history make moves in the opposite direction, it has invented the Kremlin playbook to stop any such attempt in its tracks. With the help of willing local enablers, it exports corruption to infiltrate the target countries’ governance, to deprive them of their resources and to destabilise their social fabric. Ultimately it destroys their statehood to the extent that in some of them, it is today those Russian sponsored kleptocratic enablers who are in charge; elected governments are kept around for a thin veneer of legitimacy. Ukraine needs military support to fight back the Russian aggression, save its people and regain its territorial integrity. But Ukraine also needs anti-corruption weapons so that it can fight the kleptocratic Kremlin in this parallel war. If corruption is allowed to go unchecked, Ukraine’s reconstruction would hand a massive victory to those who benefit from this subversive kleptocratic war. Talking about corruption is never pleasant. Admitting that a country has corruption risks makes many squirm. But if we want to truly honour the heroic Ukrainian people and their sacrifices, corruption must be squarely at the centre of planning and implementation of recovery. We urge world leaders to keep in mind these recommendations. Because if we don’t, then we allow the Kremlin to destroy Ukraine not once, but twice. And because nothing would undermine the Kleptocratic Kremlin more than a Ukraine that is able to rise from the ashes with integrity. See our joint recommendations in full in English, download the shorter infographic or view the recommendations in Ukrainian. The blog post is available in Ukrainian here: НЕ ДОЗВОЛЬТЕ ВІЙНІ КЛЕПТОКРАТІВ ЗАВАДИТИ ВІДБУДОВІ УКРАЇНИ.
Ukraine Recovery Conference: Anti-corruption as a critical condition for sustainable recovery
On 4–5 July in Lugano, Switzerland, the Ukraine Recovery Conference will see leaders from around the world pledge hopefully billions to finance Ukraine's post-war recovery and reconstruction. Will they be talking about corruption? Every reconstruction effort brings with it massive corruption potential. Anti-corruption has been high on Ukraine’s political agenda before the war. But even with significant reforms since 2014, the country is far from ready to withstand the inevitable attack by kleptocrats, organised criminal groups and corrupt officials at all levels who see a golden opportunity in Ukraine’s tragedy. Together with Transparency International Ukraine, we at the Basel Institute on Governance have developed recommendations to the leaders who will be gathering in Lugano. Representatives from our organisations will be there to advocate for the reforms we recommend. In the recommendations, we highlight the need to: prioritise the leadership selection process and reforms of Ukraine’s formidable anti-corruption institutions, including courts; use transparent procurement systems for reconstruction efforts; strengthen asset recovery systems so that money stolen through corruption in the past can be used to help fuel reconstruction efforts. See the full recommendations here, download the infographic or view the recommendations in Ukrainian.
Annual Report 2021: Defeating corruption for peace, prosperity, equality and dignity
Foreword to our Annual Report 2021. When the year 2021 ended, we were cautiously breathing a sigh of relief. It seemed that the pandemic was starting to get under control in a growing number of countries, and that we could turn our full attention again to the other pandemic, corruption. Little did we know that not even two months would pass until the world would be stunned by another earthquake. One that would fundamentally shake our belief in principles which are so central to our work, and indeed everyone’s life. Of course this is not the first time that international law and convention is trampled on, or that global governance seems to have lost its meaning. But wars are not something you compare or rank in levels of horror. War is always wrong. Our first and foremost hope is that the military aggression in Ukraine ceases, that the killing and destruction stops, and that Ukrainian territorial integrity is preserved. The impact of the war is of course felt worst in Ukraine, but also across the entire world. And as is so often the case, the most vulnerable societies suffer the most, be it from global food and energy insecurity, from redirected development aid, or from the impacts on geopolitical stability. Importantly, we cannot and should not ignore what this war is teaching us about corruption. It has never been more obvious that corruption is a fundamental threat to our societies, to national and international security, and to every citizen. Corruption is not “just” an illegal means to do business or beef up a public servant’s salary. Corruption is a strategic weapon, used to buy geopolitical influence, to capture entire economies and to subjugate people. This corruption is often very subtle, employed strategically over a prolonged period of time. The links between money and effect are often so convoluted and remote that they are hard to see or prove. If so many people had to die, had to flee, had to lose everything they ever owned, in Ukraine and in the many other corruption-driven wars, at least let us make sure that the world finally wakes up to this reality and starts acting for good. No more wilful blindness or tacit complicity; no more impunity in exchange for trade or political loyalty; and no more dominance of national interests over global goods. At the Basel Institute, we are more committed than ever to do our part in what must be a global war – the only war that is ever justified – against corruption. We count on you, our donors, our partners, to work with us and pass the message on: that defeating corruption is fundamental to achieving a world of peace, prosperity, equality and dignity. Read the Annual Report 2021
Mozambique’s tuna bonds scandal: yes it’s about money, but more than that – it’s about human lives
The so-called “tuna bond” corruption scandal in Mozambique has drawn international attention. Twenty people are facing corruption and money laundering charges in the country. Swiss bank Credit Suisse has agreed to pay USD 475 million in fines and write off USD 200 million in debt owed by Mozambique as part of a series of settlements with regulators in the US, UK and Switzerland for its role in the affair. Daniel Hofer of Swiss broadcaster SRF spoke to our Managing Director Gretta Fenner about the scandal on 20 October, shortly after the news of the Credit Suisse settlements was released. See the interview transcript in German on the SRF website or our own English translation below: Mozambique’s Attorney General’s Office has declared war on corruption and sought help from Switzerland, from the Basel Institute on Governance. The non-governmental organisation advises authorities worldwide on how to take action against bribery and financial crime. According to Managing Director Greta Fenner, the scandal surrounding the Credit Suisse loans has not only had economic consequences for Mozambique. SRF News: To whom did the Credit Suisse money ultimately go? Greta Fenner: The money went to very different parties. USD 200 million were lost in bank fees. Three former Credit Suisse employees have admitted to accepting bribes. It is assumed that a number of politicians and officials in Mozambique also took bribes. The party that has probably profited most from this scandal and the illegally obtained funds is the company Privinvest. This is a shipbuilding company owned by a French-Lebanese billionaire who orchestrated this whole scenario. What did this company do with the rest of the money? We don’t have a full picture of this yet. An international audit report has shown that at least half a billion dollars is completely unaccounted for. And I have already mentioned the bank fees and the bribes. Some money was indeed used to buy ships and other things related to the investment project. However, the ships were never used and are rotting away in Mozambique’s ports. Also, they were not bought at normal prices but at hugely inflated prices. This was a devastating affair for Mozambique. What are the consequences for the economy? The promised benefits for Mozambique were not realised at all. There was no added value. Instead, a huge mountain of debt was created. A recent report calculated that the cost so far is about USD 11 billion. This is equivalent to the country's entire gross domestic product of 2016. The economic consequences will cost many people their lives, or already have. The same report has also found that over two million people have been pushed into poverty – and that’s in a situation where the country is already struggling with the coronavirus crisis, with catastrophic natural disasters and with terrorism. It is important to understand that these scandals are of course at first sight about money, but more importantly they cost many people their lives. And very sadly, nobody is ever held accountable for these lives. So there have been no consequences for the political leaders so far? In Mozambique, there are currently criminal proceedings against 20 suspects. They are accused of various crimes: money laundering, taking bribes, abuse of office, etc. The case is still ongoing. What’s interesting is that these are completely public and are permanently broadcast on radio and television. People on the street are constantly talking about it. That is positive. One can hope that this publicity will lead to a reasonably clean trial. But there are also those that raise doubts as to whether all those responsible are actually in the dock. That will probably never be conclusively clarified. Background: Credit Suisse and the Mozambique case In 2013, Credit Suisse organised USD 1 billion in loans for two Mozambican state-owned companies. The money was intended to buy ships for the coastguard and for tuna fishing. But part of the money flowed into private pockets. Money was laundered and bank employees, public officials and politicians took bribes. The deals were done through the British subsidiary of Credit Suisse, bypassing the head office in Zurich. This should no longer be possible in the future, as the Swiss Financial Market Supervisory Authority FINMA has demanded that henceforward, the group's top management must check transactions like these itself. For the time being, Credit Suisse must also disclose all new credit transactions with economically weak countries. The British financial supervisory authority and the US judiciary also had their sights set on Credit Suisse because of Mozambique. In a settlement, Credit Suisse has now accepted to pay a fine of USD 475 million. In addition, it must write off debts owed by the country to the tune of USD 200 million.
Annual Report 2020: On fighting the pandemic of corruption
Published today, our Annual Report celebrates the achievements of our teams and partners around the world that we are most proud of in 2020. It also reveals some of the hurdles we were challenged to overcome together. There are many of both, and a lot more stories and highlights in between. This year's report offers deep dives into some of our key focus areas. Our International Centre for Asset Recovery explains why we are supporting the use of non-conviction based forfeiture mechanisms to recover stolen assets, why our training team has launched a new open course on cryptocurrencies and AML compliance, and how Mozambique established a new Asset Recovery Office with our support. Meanwhile, our Public Governance team reveals why networks, not just individuals, are crucial to understanding and countering corruption. The report sets out the new strategy we have launched to address Green Corruption – the corruption and other financial crimes that drive environmental degradation. The popularity of our Corrupting the Environment webinar series, which we are offering together with the OECD, has demonstrated the breadth and depth of interest in this field. In the contributions from our Compliance and Collective Action teams on their work with the private sector, we explore how state-owned enterprises can address their corruption and antitrust risks. We also illustrate efforts to create guidance on reporting on the effectiveness of anti-corruption compliance programmes, with the example of a Collective Action initiative between healthcare companies. In Peru, our 30+ Public Finance Management specialists are breaking new ground with their innovative training approach, using social media and peer-to-peer learning. We also look at what the Basel AML Index revealed about money laundering trends in 2020, the role of virtual training beyond the pandemic thanks to our new Basel LEARN virtual learning platform, and how lockdown opened up fresh opportunities to maximise the potential of open-source intelligence, including through our Basel Open Intelligence search tool. Throughout the Annual Report, it is clear that our achievements depend greatly on the efforts of our partners and donors. And so this is also a chance for us to thank them warmly and to demonstrate some of the impact we are having together on the fight against corruption around the world. Please flick through and stop to read, to think and to send us your ideas and insights – by email, over social media or in any other way. Foreword "We must revive the global social contract to fight the pandemic of corruption" begins the foreword by Gretta Fenner, Managing Director, and Mark Pieth, President of the Board. They continue: While medical research has been quick to develop protection against Covid-19, another pandemic continues to rampage humankind and our attempts at stopping it continue to fall short. We are talking about the widespread disease of corruption, which has become deeply rooted in our societies, and which plagues our communities, their social cohesion and economic wellbeing. It leaps effortlessly between public officials and businesses regardless of political colour, nationality or sector, helped by professional middlemen and rule-free blind spots where dirty money can go on holiday. This has never been more apparent than when the two pandemics met. Initial research seems to indicate that corruption levels rose to even higher levels during the pandemic. It might also be that seeing its deadly consequences from closer quarters made it more visible. What is certain is that more people are seeing through the corruption fog. Political protests and toppled governments around the world show that more people are upset about it, and that is a good development. Those of us who work in the light can only fight a threat that is seen. The ophthalmologists in this case are the many individuals, the journalists, civil society activists, researchers and law enforcement officials who, courageously and often at great risk, are standing up to corruption and dragging it into the daylight. This is a tremendous help for our work, and we hope that our effort helps them. But many of these anti-corruption heroes still fight a lonely battle. What’s more, they are faced with the overwhelming resources and power of the grand transnational corrupt networks that, collectively, stifle sustainable development and undermine the economic and social wellbeing of our societies. To amplify the work of the many courageous people and organisations, nation states, global enterprises and governance bodies should be coming together. But instead, what we see and what is of major concern is an increasing breakdown of global solidarity and a return of increasingly divisive and at best nationalistic domestic and global politics. So we urge politicians and business leaders to revitalise the global social contract – which is competently guided by the Sustainable Development Goals – by showing true and courageous leadership that disregards geographical, social, economic or other borders. But before we are misinterpreted: We are not waiting for another global leaders’ declaration; there are plenty of those. We are waiting for these key stakeholders to really do what they preach. And in doing so, to ask more of themselves and of each other than ever before. This means not just meeting but going beyond the requirements of international treaties and standards. Those who risk their lives to fight corruption, and those who lose their lives because of corruption, every day, in every corner of the world, deserve at least that. So, as we rightly celebrate the healthcare workers and other providers of essential services that are helping their fellow citizens get through the Covid-19 pandemic, let us also celebrate – and actively support – those individuals who resist, stand up and fight against corruption. We have done our best to do just that throughout last year, and we will continue on this mission, hopefully with more backing from true leadership, for the good of everyone in this world. Download our Annual Report 2020
A make-or-break moment: Gretta Fenner urges Ukrainian political leaders to speed up asset recovery and remove obstacles to combating corruption
At a high-profile speech at the Ukraine 30 Forum last week, the Basel Institute's Managing Director Gretta Fenner emphasised that it is critical that Ukraine swiftly and professionally concludes the asset recovery processes started after the Revolution of Dignity. She also urged the country to fully empower its anti-corruption institutions and reduce the hurdles that have been put in their ways. High levels of corruption continue to drain the country's resources and threaten its democracy. Initiated by President Volodymyr Zelensky in February 2021, the Ukraine 30 Forum is a platform for discussion between the public and private sectors, civil society and other experts in the run-up to Ukraine's 30th anniversary of independence on 24 August 2021. Since February, the forum has tackled a range of critical topics including coronavirus, the justice system, education, digitalisation and national security. Gretta spoke immediately after President Zelensky and Prime Minister Denys Shmyhal on 15 June, on the second day of the Forum's special session on "An economy without oligarchs". Her full speech is below in English and can be viewed on YouTube here in Ukrainian and here in English starting at minute 30:30 . Mr President Prime Minister Excellencies, ladies and gentlemen And most importantly: Dear friends from Ukraine It is a privilege to speak to you this morning and to be part of Forum 30 which leads up to the celebration of 30 years of independence of Ukraine in August. I am sorry I cannot be with you in Kyiv today, especially as I was in your beautiful capital just last week. But let’s come to the topic of today: Corruption and asset recovery. Talking of these topics in the context of celebrating your country’s independence is very pertinent, because independence and the fight against corruption are closely entwined. If a country is captured by vested interests and corrupt crime groups, then democracy is at stake, and I believe you would all agree that democracy has been the goal of Ukraine’s independence. Second, it is crucial that anti-corruption institutions can act independently. If they are at risk of undue political or economic interference, they lose their ability to effectively combat corruption. Third, when grand corruption is widely present, criminals steal large amounts of public assets. As a result the country lacks resources to invest in important public services and infrastructure. The country and its people are impoverished, and they become dependent on foreign aid. Reducing corruption and getting stolen assets back is important for Ukraine because the country urgently needs this money to build schools, hospitals, roads, and to invest in job creation. But it is important for another reason too: Asset recovery is considered a particularly powerful weapon against corruption. And when I say corruption here, I mean grand corruption, the kind that siphons of millions and billions from your country. If law enforcement is successful in depriving criminals of their stolen assets, the crime of corruption is all of a sudden much less attractive. And while it is important to put corrupt people in prison when found guilty, it hurts them a lot more if you also take their money away. The efforts of Ukraine since 2014 to recover stolen assets are therefore very important from both a social and economic development perspective, and from a criminal justice perspective. My organisation, the Basel Institute on Governance, has had the privilege of supporting Ukraine in its efforts to recover stolen assets since 2014, when very shortly after the Revolution of Dignity, the Office of the Prosecutor General asked us to assist with finding and recovering the money that was stolen by former President Yanukovych and his allies. This cooperation was reinforced with the signing, last year at the occasion of the visit to Ukraine of then Swiss President Simonetta Sommaruga, of a tripartite agreement between Switzerland, the Office of the Prosecutor General and NABU, underscoring the cooperation of Switzerland, Ukraine and my organisation to recover stolen assets. Since 2014, Ukraine has recorded progress, but the progress has sometimes been slower than we would hope. The first very positive development immediately after the Revolution of Dignity was the international reaction. Switzerland, which by the way finances our work in Ukraine, the European Union and other important jurisdictions, have immediately frozen assets suspected of having been stolen by the regime of former President Yanukovych. The intention of this international action to freeze these assets was to give Ukraine time to investigate the underlying crimes, to prove that the money stems from corruption, and ultimately to confiscate it so that it can be returned to Ukraine. But these freeze orders are not open-ended. And foreign countries cannot return the money to Ukraine without the help of Ukraine. Through our work, we were able to help advance the cooperation between Ukraine and the countries where assets have been frozen. These countries have provided Ukraine with information about the bank accounts and with other evidence. But now the ball is largely in Ukraine’s camp. It’s the Ukrainian institutions that need to finish investigating and then prosecute the cases, and the Courts that need to confirm the criminal origin of these assets. Only then can the other countries release the funds and the money can be returned to Ukraine. And with that money, schools can be built, or roads, or hospitals. Time is of the essence now; we may have another two or three years until most freezes will expire. That means that Ukrainian institutions have to work at full speed, and have to be allowed to do so, so that we can see successful prosecutions and confiscations in Ukrainian Courts. For this, Ukraine does have the necessary institutions, and this is another positive development that has happened since the Revolution of Dignity. In addition to the OPG, these include, as you know well, the National Anti-Corruption Bureau and the Special Anti-Corruption Prosecutor, two institutions with which we work closely and who are very important for this country. There is also ARMA and the National Agency for Corruption Prevention, and the State Bureau for Investigations. In this context I am particularly pleased to confirm that we have just signed a cooperation agreement with SBI last week when I was in Kyiv. And of course, very important, the High Anti-Corruption Court. These institutions are all very important, but they have an incredibly difficult job. Investigating cases of grand corruption is extremely challenging; expertise in the field of asset recovery is very rare; and the criminals are using their still vast resources to pay for some of the most experienced defence attorneys to make the job of NABU, SBI or OPG ever more difficult. On top of that, it has been hard to watch how over the years, a whole range of home-grown obstacles was put in the way of these critical institutions and how they continue to suffer greatly from instability brought to them from the outside: In the seven years that we have been supporting Ukraine, we have worked with five Prosecutors General, some of which were more, some less reform oriented. This is a real problem for the stability of this key institution, and has at times definitely had a negative impact on its performance. Adding to this problem is the fact that key anti-corruption institutions have not had a chief for a prolonged period. The positions of Heads of SAPO, of ARMA and of SBI have been vacant for far too long, and the selection process for Head of SAPO is in serious trouble. This is not to suggest that the Acting Heads of these institutions are not doing a good job; they are doing a very good job in many cases. But it adds to the instability, and it puts into question the will of some to enable these institutions to be effective. And last but not least, as you know, there have been something like 18 attempts to remove the current Director of NABU from his position. And nobody will make me believe that this is because he is so bad at his job; rather, I would argue it is because he is a threat to those who have reason to fear him and NABU. In addition to that, we have had one backlash after the other when it comes to reforming Ukraine’s legislative framework. The decision by the Constitutional Court to rescind the asset declaration law is very problematic for example. The law on illicit enrichment, which was passed in Parliament just recently, is a poor replacement for the previous law. It has serious weaknesses, as confirmed by the Venice Commission, and it will make it extremely hard for investigators and prosecutors in their efforts to stem out corruption. And finally, ample evidence of serious corruption in the Ukrainian Court system may well be the final straw to Ukraine’s efforts to recover the billions of hryvnia that have been stolen, stolen from Ukraine, stolen from the people of Ukraine. So this is a make or break moment. If we are not successful in recovering these stolen assets, then people will lose patience, they will lose hope, and they will lose trust in this country’s institutions, again. Because it will seem to people that the corrupt continue to get away with their crime. And it can seem like an invitation to others to also steal. Corruption may seem only one of the many problems this country has to grapple with. But you should remember that corruption is at the heart of pretty much any other problem you are facing. Corruption fuels conflict and is known as a serious threat to national security; corruption fuels organised crime; corruption destroys the health system; corruption leads to poor education; corruption leads to poverty. It is no exaggeration when we say that in many ways, corruption kills. Mr President, Prime Minister, ladies and gentlemen. This is a critical time. The international community, and my institution included, continues to support you in your efforts to fight corruption and recover stolen assets. But we must see sincere effort in Ukraine; we must see that there is an end to the undermining of the independence of key institutions; we must see these institutions with strong leadership; we must urgently re-instil independence, impartiality and professionalism in the Court system; and we must pass legislation that is up to international standards and that can work, not legislation that undermines the anti-corruption drive. This is what we hope to see from the politicians in this country, and I sincerely hope that they will show that they have the best interests of the country – and of the Ukrainian people – at heart. I trust and know that you do, Mr President, Prime Minister. We are here to help, and together with our partners in NABU, at OPG and at SBI, with our partners in Switzerland and across the world, we will continue to stand by your country’s side to end impunity for corruption and hopefully return many of the stolen assets to Ukraine, so they can be used for the benefit of the people of Ukraine. I thank you.
Gretta Fenner's address at the UNGASS 2021 plenary session
The following statement by the Basel Institute's Managing Director, Gretta Fenner, was aired at the Special Session of the UN General Assembly against Corruption on 4 June 2021. Watch the video here. Excellencies, Ladies and Gentlemen, I thank you for the opportunity to deliver a short statement on behalf of the Basel Institute on Governance. We welcome the political declaration as a text that provides useful guidance. In particular, we welcome those parts of the text that go beyond previously agreed language, many of which reflect the recommendations that our organisation has made in the context of the consultation process. Among those, we in particular welcome that paragraph 11 calls upon member states to go beyond the minimum in relation to criminalisation, with a special reference to illicit enrichment, and the paragraphs that encourage states to adopt regimes for both conviction and non-conviction based confiscation. We are encouraged that the political declaration recognises that states do not yet live up to their commitment to afford each other the widest measure of cooperation when it comes to investigating corruption and recovering stolen assets. In many countries international cooperation remains burdened by unnecessary bureaucracy and sometimes procedural law that would appear to be biased in favour of the defence. We are also encouraged that member states in paragraph 6 have endorsed the notion of Collective Action as an important emerging norm in corruption prevention. Finally, we are gratified that the declaration refers strongly to the importance of independent law enforcement and the critical role played by non-state actors. The gist of this document gives thus reason for hope. But the reality is that on most days, the fight against corruption still feels like a very steep uphill battle. The levels of corruption remain incredibly high, and not a single country is spared. Of course in parts this is the consequence of positive developments. The media and civil society as well as bolder law enforcement action have helped us to see corruption better, and to understand its consequences better. More people are upset about it. And we should celebrate these successes, and in particular the many courageous individuals, in law enforcement, in the media and ordinary people who resist, who stand up and protest; many of them at great personal sacrifice. But corruption is a very resilient and adaptive disease. We are no longer only dealing with the kind of corruption that involves stealing from state coffers or paying someone off. This means purely legal and technical solutions are just not enough. We must understand the political economy of corruption, and we must invest in education so that still more people are able to see through the corruption fog. Second, corruption has become even more globalised. It is a spiderweb connecting politicians and businesses regardless of political colour or nationality, aided by nifty middlemen and the still many blind spots on the world map. This stands in stark contrast with the increasing break-down of global solidarity and governance, marked by misguided references to national sovereignty and masked by the excuse of bureaucracy. It makes it virtually impossible for law enforcement to stand a chance. The criminals are laughing; we make it so easy for them. So we must ask more of you, and you must ask more of each other. First, we ask that you truly endorse the strong language encouraging countries to go beyond the mere minimum. Don’t be held back because others may not go as far as you want to. Show true leadership, not comparative leadership. Second, please, for once, be ready to be fully accountable. For the fight against corruption to succeed we need a lot, but what we don’t need is another political statement that is not followed through. So I call upon you all to allow for full and public scrutiny of what you will do to implement the commitments made today. Those who risk their lives to fight corruption, those who lose their lives because of corruption, every day, in every corner of the world, they deserve that. I thank you.
What the FinCEN leaks reveal about systems to fight financial crime – BBC interview with Gretta Fenner
In an interview with BBC journalist Razia Iqbal on Newshour on 21 September, the Basel Institute’s Managing Director Gretta Fenner gave her perspective on the unfolding FinCEN Files story. Here is a brief summary. The story does not come as a surprise to those of us in the anti-corruption community, she said. But it’s too easy to simply blame the banks for “allowing” money laundering to take place. This means ignoring 50 percent of the problem. We must also talk about the shortcomings in the current regulatory and supervisory framework. We must also acknowledge that the problems FinCEN Leaks reveals are not new. A blame game will not solve them; only courageous and committed action will. The role of Financial Intelligence Units Today most financial institutions invest large amounts of resources in transaction monitoring and customer due diligence in an effort to comply with anti-money laundering and counter terrorist financing AML/CFT regulations. If they flag suspicious activity, they are obliged to submit a Suspicious Activity Report SAR to the relevant Financial Intelligence Unit FIU . FinCEN, from where the leaked files emanate, serves as the FIU in the United States. FIUs are responsible for assessing the report and deciding whether any further action is needed, such as compiling a dossier and escalating it for further investigation by law enforcement. A tension – no easy option A number of media reports about the FinCEN leaks gave the impression that it is up to the banks to decide what to do once a SAR is filed. This is a wrong perception. What happens once a SAR is filed is defined by law. But the laws vary from one country to another. The most challenging question in this context is whether the law should instruct the bank to proceed with the transaction while the SAR is being assessed, or to freeze the assets and for how long? during this process. Financial institutions and regulatory authorities have debated this matter for decades. The tension comes from risks inherent in both options. If you block a transaction or freeze a bank account, you risk tipping off the suspect. If you continue business as usual while the transaction is assessed, you risk that the money disappears, perhaps transferred into a non-cooperative jurisdiction where it’s impossible to find it again. Capacity gaps in FIUs and enforcement Public frustration about the banks’ behaviour is understandable. But it should be met with equal frustration about systems failures on the public side. While requirements for transaction monitoring and customer due diligence are increasing, leading to a growing number of SARs being filed, many FIUs do not have the necessary resources, tools and procedures to meaningfully and swiftly analyse reports. This makes the money laundering prevention and detection system a hit and miss game. A way forward An important part of the solution is to focus more on risks than on quantity. In other words, FIUs should increase their capacity to conduct strategic analysis of SARs so that both reporting and analysis focuses on major risks instead of just producing more and more data. Financial institutions, FIUs and law enforcement must also explore other ways of sharing intelligence in a timely, proactive and strategic manner. Both of these require reporting entities, FIUs and regulators to develop a joint vision instead of falling prey to the pointless blame game. FinCEN leaks must be used as a trigger for serious dialogue around how to overhaul the prevention and detection system and the processes around them. At the end of the day we all want the same outcome: a more strategic, powerful and swifter way for banks and other reporting entities, FIUs and law enforcement to work together to stop financial crime. More Listen to the interview here on BBC Sounds available until 19 October . The story starts at minute 14:00, and the interview with Gretta Fenner at 17:30. The latest edition of the Basel AML Index, which measures the risk of money laundering and terrorist financing around the world, highlights systemic failings in the quality of AML supervision. This is another part of the story of why AML/CFT systems are not working. In our quick guide to the role of FIUs in asset recovery, Senior Asset Recovery Specialist Thierry Ravalomanda gives a brief overview of the different types of FIUs and how they support anti-corruption and asset recovery efforts. It’s available in English, French, Spanish and Portuguese.