The Missing Link

12 November 2013, by Akere T. Muna.

As the global discourse about stolen assets rages on, the code words are the same: the discussions are about dictators and kleptocrats from the South and about facilitating the repatriation of stolen assets, profiling of politically exposed persons (PEPs) and the beneficial ownership of offshore companies and trusts.

But the banks seem to remain under the radar. The entities they partner with that take money out of many desperately poor countries are named and, at times, shamed. In some cases, they are even the subject of lawsuits. But the banks? Nothing happens to them!

The banks that handle looted assets and proceeds or corruption get off with a bonus: The right to hang on to the frozen funds. They can do so until ownership is determined or a decision is made by courts ordering the return of the frozen assets. There is no explanation as to why a handler, who is as culpable as the thief, should be allowed to hold on to stolen funds.

A recent report by British authorities says that 70 percent of the banks in the United Kingdom should have known that the funds they were dealing with were tainted. Swiss authorities have come up with similar reports. The dubious practices of banks over the past several years have been continually denounced and fines have been imposed in the billions. From manipulating Libor (London Interbank Offered Rate) and facilitating movement of tainted funds to helping to hide earnings in tax havens and other offshore corporate accounts, banks are in a win-win situation. They win when they rake in the tainted funds and win again when the funds are frozen.

What is the solution? If the funds that are frozen are removed from the reach of the suspected individual or corporate entity, then the bank that is an accomplice in that should be prevented from benefitting from holding the funds. When funds are frozen and it can be that the bank should have known that the money came from a dubious source, the funds should be transferred to an escrow account opened at a multilateral development bank, depending on the region from which the funds originate.

Until we stop banks from benefitting from a crime they facilitated, they remain the missing link in any credible push against stolen assets.

About Akere T. Muna

Akere T. Muna is vice-chair of Transparency International, a presiding officer of the Social and Cultural Council of the African Union, chairperson of the Eminent Persons Panel of the African Peer Review Mechanism, president of the Pan-African Lawyers Union, Sanctions Commissioner of the African Development Bank, member of the High-Level Panel on Illicit Financial Flows from Africa and member of the governing board of the African Governance Institute.