Some 225 bn Dollars of Illegal Money from the Middle East and Africa Stashed in Offshore Accounts

Zurich, 14.2.2011. According to a recent report by the Swiss research company MyPrivateBanking wealthy individuals from the Middle East and Africa hold about USD 1.5 trillion in foreign bank accounts (offshore). The research firm estimates that at least 15% of these assets have been obtained through illegal means or through taking advantage of government positions and transferred out of the home countries. The major part of this wealth is in accounts with European banks, which as a consequence of the ongoing pressure for corrupt regimes to be overthrown, face serious financial, legal and reputational challenges.
“Of course, the by far biggest share of the wealth of individuals from Middle East and Africa has been generated by legal means but a substantial proportion equaling a stunning USD 225 billion is estimated to be obtained through corruption and other illegitimate activities and diverted offshore.” explains Steffen Binder, Research Director of MyPrivateBanking. “Over the decades these regimes have grown an entire ruling class consisting of family, friends, businesses, security forces and secret service that have transferred significant wealth out of their home countries.”
MyPrivateBanking research estimates that 41% of Middle Eastern and African offshore wealth lies in EU countries such as the UK/Channel Islands and Luxembourg, 33% in Switzerland, 8% in the Far East (notably Singapore) with the remainder in North America and other destinations like the Caribbean.
As has happened many times after the overthrow of a dictatorial, corrupt leadership, the new governments in Tunisia, potentially Egypt and a number of other countries will in all likelihood start criminal proceedings against the former ruling families and their adherents. In the assessment of MyPrivateBanking Research this could become a critical situation for a number of private banks and wealth managers who have been personally and financially heavily involved with the Middle Eastern and African political elites around the world. The reputation of affected banks could be damaged if such legal proceedings become public. There is also a risk that the rightful owners (the new governments) demand compensation for losses arising from the negligence of financial institutions.
Therefore, MyPrivateBanking Research emphasizes the utmost importance that private banks and wealth managers take an active stance now to develop a tough and resilient strategy to deal with this challenge. They need to pro-actively check the background of firms and persons who could be involved with corruption. “If in doubt about the origin of the assets or the credibility of the account holder – don`t accept them.”, Steffen Binder summarizes the imperative for banks in dealing with assets of dubious origin. ”And if the control systems failed in the past, banks now have every incentive, as well as a moral obligation, to co-operate with the new, legitimate governments in countries such as Tunisia and Egypt to start swift proceedings to return funds in accordance with law.”

The MyPrivateBanking Research Brief “What the Arab Revolution Means for Private Banks and Wealth Managers” can be downloaded on our homepage.

MyPrivateBanking.com is an independent platform for information and networking among wealthy private clients and with wealth managers across the world. Established in 2009 in Switzerland, MyPrivateBanking.com offers a variety of information to assist investors and providers in making their decisions. This includes in-house research by MyPrivateBanking Research, articles and updates related to wealth management, detailed bank directories and client evaluations of wealth managers across the world. The interactive “MyWealth” online network allows the clients looking for wealth managers to get in touch with one another and exchange experiences. MyPrivateBanking.com aims at making wealth management more transparent, more cost effective and giving it a greater client focus. For further information please check www.myprivatebanking.com.

Steffen Binder, Research Director MyPrivateBanking GmbH

MyPrivateBanking GmbH
Weinbergstrasse 9
CH-8280 Kreuzlingen
Tel.: +41 (0) 76 578 1904
Fax: +41 (0) 8671 670 0483
pr@myprivatebanking.com

This release was published on openPR.