Talk of repatriating the ill-gotten gains of fallen dictators is just that – talk – according to new research by MyPrivateBanking which claims that historically only a tiny proportion of assets stolen by former dictators is finally restituted to the countries formerly in thrall to them.

Having analysed what became of the assets of 25 of the most prominent dictators and corrupt politicians since 1990 after they were run out of power, the private client forum found that just 5 per cent of stolen assets are traced and frozen, and only half of that figure is finally restituted to the countries formerly in thrall to them.

MyPrivateBanking estimates (very conservatively, it says) that the assets misappropriated by these 25 tyrants amounted to close to $140 billion, however just $7 billion of this amount was traced and frozen, and only $3.3 billion was ever repatriated. Just 2.4 per cent of the illicit funds were “returned to governments and people who had been the victims of corruption and outright theft on the part of these former rulers,” the research said.

These are startling figures indeed, particularly in light of recent events in the Middle East and North Africa and promises from governments, politicians and banks that sovereign wealth will be returned to its rightful owners. That such pledges unfortunately often turn out to be empty promises, MyPrivateBanking says is down to several reasons.

Of course, the first obvious difficulty in tracing assets is that they will typically be very well hidden through labrynthine networks of interlinked trusts, companies and associates, often with no overt link to the former dictator. A second, and more sinister, reason is that Western governments often don’t have the political will to persecute former political allies, as their own collusion could be discovered in the process. Similarly, MyPrivateBanking points out that this might mean incoming governments are not interested in laying claim to stolen assets after a regime change.

However, the report’s authors are adamant that a large part of the responsibility for stolen assets never being repatriated has to be lain at the door of banks and wealth managers. MyPrivateBanking asserts that all too often KYC and AML due diligence resembles “going through the motions”; tick-box exercises are carried out, but there is a serious lack of further investigation even when suspicions have been raised, MyPrivateBanking said.

“An overwhelming proportion of assets linked to criminal activities of corrupt politicians and their entourages has been lost for ever, seemingly untraceable and unrecoverable”, said Steffen Binder, research director at MyPrivateBanking.

“Our numbers show, however, that once assets have been frozen or blocked there is a relatively high probability of final asset restitution to the country of origin.”

MyPrivateBanking naturally recommends that banks shun dubious assets in the first instance. However, in the case that illicit funds are accepted to have entered the system the report’s authors urge that it is essential that not only political will – both within governments and banks – but also sufficient resources are dedicated towards finding them.

“These illegally obtained and now hidden assets are a ticking time bomb for governments and financial services firms as they bear witness to past involvement with corrupt and criminal politicians and their associates,” said Christian Nolterieke, research director.

“Therefore, it is in the interests of the banking industry, particularly wealth managers and private banks, not to wait for further regulation, but to actively devise and implement effective strategies to identify persons with a background of corruption, to refuse to receive their assets and to trace tainted money that may have already been invested with a bank.”