Stefan Mbiyavanga
Publications and news by Stefan Mbiyavanga.
Publications
La recuperación de los activos Venezolanos en Suiza
In this chapter of a report by Transparencia Venezuela, *Estrategias jurídicas para la recuperación de activos venezolanos producto de la corrupción *(“Legal strategies for recovering Venezuelan assets that are the proceeds of corruption”), Oscar Solórzano and Stefan Mbiyavanga devise asset recovery strategies in Swiss law from a practical angle. They also identify the most important authorities in all four phases of the asset recovery process: identification, seizure, confiscation and restitution.
The aim of the report is to gather perspectives from asset recovery experts in the US, Spain and Switzerland that could serve Venezuelan authorities once their country has undergone a democratic transition.
Although the report is principally conceived for the particular case of Venezuela, most of the insights are also useful for authorities and practitioners in other countries looking to recover assets in Switzerland.
The chapter is on pp 73-107 of the full report and is in Spanish only.
Working Paper 31: Applying the Swiss Anti-Money Laundering Act to gold refineries
Switzerland is the world leader in gold refining. Of the roughly 2,200–3,100 tonnes of raw gold imported into the country each year, the majority is destined for Swiss gold refineries. Together these companies are estimated to refine 50–70 percent of the world’s gold production, transforming it into gold bars, semi-finished products and other goods.
The imported gold loses all traces of its origin during the refining process. Due to the high-quality manufacturing standards of Swiss refineries, and the fact that they possess all of the pertinent accreditations, the gold can afterwards be traded as “Swiss” gold on international financial markets without restrictions.
At the same time, the international gold trade is enormously vulnerable to money laundering operations by drug cartels and other forms of organised crime networks, terrorist organisations, and kleptocrats. As the world centre of gold refining, Switzerland is highly exposed to these money laundering risks.
This Working Paper first analyses money laundering risks in the gold trade, supported by examples. This is followed by an overview of the gold refineries’ due diligence obligations under existing self-regulation and the Swiss Anti-Money Laundering Act (AMLA). It is shown that the self-regulation models have, at best, mixed success and that the core business of the refineries is not subject to the AMLA. Finally, the paper sets out the pros and cons of applying the AMLA obligations to the core business of Swiss refineries.
About this Working Paper
This paper is part of the Basel Institute on Governance Working Paper Series, ISSN: 2624-9650. It is also available in German: Die Unterstellung von Goldraffinerien unter das Geldwäschereigesetz.
Working Paper 31: Die Unterstellung von Goldraffinerien unter das Geldwäschereigesetz
Die Schweiz ist der global wichtigste Standort für die Raffination von Gold. Jahr für Jahr werden circa 2200-3100 Tonnen Rohgold in die Schweiz importiert. Der Grossteil der Importe ist auf die Geschäftstätigkeit der hiesigen Goldraffinerien zurückzuführen. Sie sollen gemeinsam rund 50-70% der weltweiten Goldproduktion in die Schweiz importieren, um daraus Goldbarren, Halbfabrikate und andere Güter herzustellen.
Durch den in der Schweiz erfolgenden Raffinationsprozess verliert das importierte Gold sämtliche Spuren seiner Herkunft. Aufgrund qualitativ-hochstehender Fertigungsprozesse, sowie der internationalen Akkreditierung der Schweizer Raffinerien, ist es nach dem Raffinierungsprozess als “Schweizer” Gold auf den internationalen Finanzmärkten ohne Restriktionen handelbar. Gleichzeitig ist der internationale Goldhandel enorm anfällig für Geldwäschereioperationen von Drogenkartellen, kriminellen und terroristischen Organisationen und Potentaten . Als Weltzentrum der Goldraffination ist die Schweiz diesen Geldwäschereirisiken in erhöhtem Masse ausgesetzt.
Im vorliegenden Text werden zunächst die Geldwäschereirisiken im Goldhandel anhand von Beispielen analysiert. Im Anschluss folgt ein Überblick über die Sorgfaltspflichten der Goldraffinerien gemäss der bestehenden Selbstregulierung und dem Geldwäschereigesetz (GwG). Es wird aufgezeigt, dass die Selbstregulierungsmodelle bestenfalls gemischt erfolgreich sind und das Kerngeschäft der Raffinerien nicht dem GwG untersteht. Der Text endet mit einer Gegenüberstellung von Pro- und Kontraargumenten hinsichtlich der umfassenden Unterstellung von Goldraffinerien unter das GwG.
Cryptolaundering: anti-money laundering regulation of virtual currency exchanges
This paper discusses anti- money laundering regulation for virtual currency intermediaries, by showcasing and comparing regulatory models at the national and international levels.
It is found that anti-money laundering regulation for virtual currencies — more than being merely “nice to have” — contains considerable potential in the fight against economic crime. Where financial intermediaries engaged in virtual currencies are required to gather the full spectrum of information needed to identify their customers and the source of funds, virtual currencies become much less attractive to money launderers than traditional fiat money systems. Furthermore, anti-money laundering regulation means that supervisory and investigatory authorities can identify and act against money launderers and other delinquents.
The author presented this paper at a conference at the University of the Western Cape, South Africa, in October 2018. It was published in the Journal of Anti-Corruption Law (Volume 3, Number 2: 2019, pp1-15).
The author would like to emphasise that the world of cryptocurrencies and money laundering regulation moves fast and many things may have changed since the paper was written.
News and blog
Recovering assets hidden in international financial centres – Stefan Mbiyavanga presents to Latin American study group on Facebook Live
Stefan Mbiyavanga, Legal Specialist for Latin America, recently gave an in-depth presentation on challenges and best practices for recovering assets hiding in international financial centres as part of an online conference by the Grupo de Estudios del Sistema Penal. The week-long conference, in Spanish, sought to disseminate perspectives on asset recovery, non-conviction-based confiscation and mutual legal assistance MLA to practitioners and law students in Latin America. Speakers from Peru, Spain, Andorra and Switzerland, including Oscar Solórzano, the Basel Institute’s Head of Latin America and Senior Asset Recovery Specialist, shared their experiences and international best practices. Key points on recovering assets in financial centres Stefan Mbiyavanga spoke about recent experiences related to the identification and seizure of bribery funds in the context of the Odebrecht/Lava Jato probes in Peru, Switzerland and Brazil. Key points are: Among the main challenges for asset recovery by victim countries are the systematic use of networks of offshore corporations and overseas bank accounts by bribe recipients. The detection of stolen assets is complicated further by the fact that bribe payments are often made via slush funds, shadow bankers also referred to as doleiros , as well as cash transactions. Spontaneous transmissions of information by jurisdictions harbouring financial centres are frequently at the origin of asset recovery investigations by victim countries. Deficiencies in MLA procedures continue to be a major stumbling block for asset recovery efforts. For instance, authorities in important financial centres are not able to share banking information without a prior notification to the holder of the bank account in question. Latin American countries increasingly rely on amnesty agreements and plea bargaining in their corruption probes. However, these tools do not make traditional asset recovery techniques less important. View the recorded presentation. About the conference organisers The Grupo de Estudios del Sistema Penal is an initiative started by Peruvian law students. Its mission is to provide a platform to disseminate academic lectures online while universities are closed due to the covid-19 pandemic. Since its launch on Facebook in February 2020, the group has since gained almost 17,000 followers.
New Working Paper on Swiss gold refineries and money laundering regulations
The Basel Institute's latest Working Paper explores whether, why and how gold refiners can be further integrated in efforts to prevent and combat money laundering in Switzerland. The author, Stefan Mbiyavanga, explains the background and what motivated him to write it, including pending reforms in the Swiss Anti-Money Laundering Act. Faced with increasingly regulated financial markets, international money launderers have long fallen for the glitz of gold. Billions of dollars' worth of gold are bought and sold by these criminals. Gold is an extremely attractive vehicle to turn illicit profits into a stable, anonymous and easily exchangeable asset. Not only that, but a lot of gold is mined in conflict zones or regions in the grips of organised crime. This gives you an idea of the money laundering risks faced by the gold industry. As the world’s leading gold refining hub, Switzerland is clearly exposed to these risks. Four of the world's largest gold refiners are situated in Switzerland. Together, they refine up to 70 percent of the global gold mining output. Similar to banks in relation to money, these refiners face the task of choosing which gold can enter international markets. Once gold has been refined in Switzerland, it is internationally accredited and able to be traded freely. Unlike banks, however, the refiners’ core business is only marginally affected by Switzerland’s anti-money laundering regulation. And so it comes at no surprise that cases of Swiss gold refiners accepting gold from highly suspect suppliers keep coming up. Many experts worry about the risks a number of gold refiners seem to have accepted – not least industry representatives themselves. There is undoubtedly a public interest in having a comprehensive national strategy to identify and fight the forms of organised crime that have infiltrated the international gold trade. There is also a public interest in upholding the reputation of Switzerland as a business hub with a high degree of integrity. Download Working Paper 31 in: English: Applying the Swiss Anti-Money Laundering Act to gold refineries German: Die Unterstellung von Goldraffinerien unter das Geldwäschereigesetz