Asset Recovery Handbook
A Guide for Practitioners
Jean-Pierre Brun
Larissa Gray
Clive Scott
Kevin M. Stephenson
Asset Recovery Handbook
Asset Recovery Handbook
A Guide for Practitioners
Jean-Pierre Brun
Larissa Gray
Clive Scott
Kevin M. Stephenson
© 2011 e International Bank for Reconstruction and Development / e World Bank
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ISBN: 978-0-8213-8634-7
eISBN: 978-0-8213-8635-4
DOI: 10.1596/978-0-8213-8634-7
Library of Congress Cataloging-in-Publication Data
Brun, Jean-Pierre, 1962-
Asset recovery handbook : a guide for practitioners / Jean-Pierre Brun and Larissa Gray.
p. cm.
Includes bibliographical references and index.
ISBN 978-0-8213-8634-7 — ISBN 978-0-8213-8635-4 (electronic)
1. Forfeiture—Criminal provisions. 2. Searches and seizures. I. Gray, Larissa. II. Title.
K5107.B788 2011
345’.0773—dc22
2010048779
Contents
Preface xi
Acknowledgments xiii
Acronyms and Abbreviations xv
Introduction 1
Methodology 2
How the Handbook Can Be Used 3
1. Overview of the Asset Recovery Process and
Avenues for Recovering Assets 5
1.1 General Process for Asset Recovery 5
1.2 Legal Avenues for Achieving Asset Recovery 9
1.3 Use of Asset Recovery Avenues in Practice: Three Case Examples 14
2. Strategic Considerations for Developing and Managing a Case 19
2.1 Gathering Facts: Initial Sources of Information 19
2.2 Assembling a Team or Unit, Task Forces, and Joint Investigations with
Foreign Authorities 22
2.3 Establishing Contact with Foreign Counterparts and Assessing
Ability to Obtain International Cooperation 25
2.4 Securing Support and Adequate Resources 27
2.5 Assessing Legislation and Considering Legal Reforms 28
2.6 Addressing Legal Issues and Obstacles 29
2.7 Identifying All Liable Parties 34
2.8 Specific Considerations in Criminal Cases 34
2.9 Implementing a Case Management System 38
3. Securing Evidence and Tracing Assets 41
3.1 Introducing a Plan and Important Considerations 41
3.2 Creating a Subject Profile 43
3.3 Obtaining Financial Data and Other Evidence 43
3.4 Identifying Relevant Data: Examples from Commonly
Sourced Documents 61
3.5 Organizing Data: Creating a Financial Profile 71
3.6 Analyzing Data: Comparing the Flows with the Financial Profile 72
3.7 Garnering International Cooperation 74
vi I Contents
4. Securing the Assets 75
4.1 Terminology: Seizure and Restraint 75
4.2 Provisional Order Requirements 76
4.3 Pre-restraint or Pre-seizure Planning 79
4.4 Timing of Provisional Measures 85
4.5 Exceptions to Restraint Orders for Payment of Expenses 86
4.6 Ancillary Orders 87
4.7 Third-Party Interests 87
4.8 Alternatives to Provisional Measures 89
5. Managing Assets Subject to Confiscation 91
5.1 Key Players in Asset Management 92
5.2 Powers of the Asset Manager 93
5.3 Recording Inventory and Reporting 94
5.4 Common Types of Assets and Associated Problems 95
5.5 Ongoing Management Issues 99
5.6 Consultations 101
5.7 Liquidation (Sale) of Assets 101
5.8 Fees Payable to Asset Managers 101
5.9 Funding Asset Management 102
6. Mechanisms for Confiscation 103
6.1 Confiscation Systems 105
6.2 How Confiscation Works 107
6.3 Confiscation Enhancements 114
6.4 Third-Party Interests 118
6.5 Confiscation of Assets Located in Foreign Jurisdictions 119
6.6 Recovery through Confiscation for the Victims of Crime 119
6.7 Disposal of Confiscated Assets 120
7. International Cooperation in Asset Recovery 121
7.1 Key Principles 122
7.2 Comparative Overview of Informal Assistance
and MLA Requests 127
7.3 Informal Assistance 131
7.4 MLA Requests 138
7.5 Cooperation in Cases of Confiscation without a Conviction 156
7.6 Cooperation in Civil Recovery (Private Law) Cases 157
7.7 Asset Return 158
8. Civil Proceedings 159
8.1 Potential Claims and Remedies 160
8.2 Bringing a Civil Action to Recover Assets 169
8.3 Final Dispositions 173
8.4 Formal Insolvency Processes 174
Contents I vii
9. Domestic Confiscation Proceedings Undertaken
in Foreign Jurisdictions 177
9.1 Jurisdiction 177
9.2 Procedure for Beginning an Action 178
9.3 Role of the Jurisdiction Harmed by Corruption Offenses in
Foreign Investigation and Prosecution 179
9.4 Ensuring Recovery of Assets from the Foreign Jurisdiction 183
Appendix A. Offenses to Consider in Criminal Prosecution 187
Appendix B. Explanation of Selected Corporate Vehicles
and Business Terms 193
Appendix C. Sample Financial Intelligence Unit Report 199
Appendix D. Planning the Execution of a Search and
Seizure Warrant 201
Appendix E. Sample Document Production Order for
Financial Institutions 203
Appendix F. Serial and Cover Payment Methods in Electronic
Funds Transfers 209
Appendix G. Sample Financial Profile Form 213
Appendix H. Possible Discussion Points with
Contacts—Informal Assistance Stage 235
Appendix I. Mutual Legal Assistance Template and
Drafting Tips 237
Appendix J. Web Site Resources 241
Glossary 249
Index 253
Boxes
1.1 Legal Framework for Asset Recovery 10
1.2 Alternative Means of Recovering Assets 15
2.1 Role and Contribution of FIUs in Asset Recovery Cases 21
2.2 Obstacles to International Cooperation 26
2.3 Strategic Decisions in Peru—Legislation Allowing
Plea Agreements 28
2.4 Prosecution of Accounting, Records, and Internal Control
Provisions in the United Kingdom and the United States 36
2.5 Examples of Challenges in Establishing the Elements of the Offense 37
3.1 Checklist for Collection of Basic Information 44
3.2 Tracing and Recovering Assets—Efforts in the United Kingdom 46
3.3 Elaborating Sufficient Grounds for a Search Warrant 55
3.4 Important Items to Seize 56
3.5 Documentation to Be Requested from Financial Institutions 58
viii I Contents
3.6 Retention Orders 59
3.7 Forms and Documents Related to the Wire Transfer Process 65
3.8 Red Flags in Contracts, Payment Documentation, Payment Records,
and Payment Mechanisms 69
4.1 Drafting Affidavits 78
4.2 An Example of Pre-restraint Planning Decisions in Practice 83
6.1 Historical Background and Recent Developments in Confiscation 104
6.2 Issues Encountered in Determining the Proceeds of
Crime—A Case Example 110
6.3 Using “Related Activities” to Capture the Full Benefit 118
7.1 Connecting With People—A Case Example from Peru 124
7.2 Contact Points for International Cooperation 125
7.3 Disclosure Obligations—A Barrier to MLA Requests 127
7.4 Investigative Jurisdiction in France, Switzerland, the
United Kingdom, and the United States 133
7.5 Facilitating Informal Assistance 134
7.6 Spontaneous Disclosures from Switzerland 137
7.7 Selecting a Legal Basis to Include in an MLA Request 139
7.8 Overcoming Dual Criminality—Illicit Enrichment and Corruption
of Foreign Public Officials 142
7.9 Bank Secrecy and Fiscal Offenses—A Ground for Refusing MLA? 146
7.10 Avoiding Rejections of MLA Requests That Are Overly Broad 149
7.11 Worldwide Orders in the United Kingdom 153
7.12 Requirements for Direct Enforcement of MLA Requests for
Confiscation in the United Kingdom and the United States 154
7.13 Asset Recovery Pursuant to an MLA Request in France 158
8.1 Case Examples of Proprietary (Ownership) Claims 160
8.2 The U.S. Racketeer Influenced and Corrupt Organizations
(RICO) Statute 163
8.3 Compensation for Damages Where Assets Are Misappropriated 164
8.4 Fyffes v. Templeman and Others (2000) 166
8.5 World Duty Free Company Limited v. The Republic of Kenya (2006) 167
8.6 Disgorgement of Profits—Practice in the United States 168
8.7 Circumstantial Evidence Considered in Federal Republic
of Nigeria v. Santolina Investment Corp., Solomon & Peters,
and Diepreye Alamieyeseigha (2007)
170
8.8 Requirements for Restraint Orders in France, Panama, and the
United Kingdom 171
8.9 The Ao Man Long Case 173
8.10 Enforcement of Judgments When the Defendant Is
Absent from the Proceeding 174
9.1 Establishing Jurisdiction Where Limited Acts Have Occurred
in the Territory 179
9.2 Establishing Jurisdiction over Nationals in the United Kingdom
and the United States 180
Contents I ix
9.3 Jurisdiction to Prosecute Money Laundering Offenses in France,
the United Kingdom, and the United States 181
9.4 Confiscation Proceedings Initiated by Foreign Authorities 182
9.5 Important Role of the Jurisdiction Harmed by Corruption—
A Case Example from Haiti 183
9.6 Direct Recovery in Practice 185
9.7 Asset Return Options Available in Switzerland 186
A.1 Illicit Enrichment Provisions in France 190
F.1 Hiding Originating Customer Information 211
F.2 Monitoring Records from Financial Institutions 211
I.1 MLA Drafting and Execution Tips 240
Figures
1.1 Process for Recovery of Stolen Assets 6
2.1 Standards of Proof 33
2.2 Criminal Charges to Consider 35
3.1 Five Effective Questions to Use in an Investigation 48
3.2 Preliminary Information Available from Other Government Agencies 49
3.3 Basic Cross-Border Wire Transfer Process 63
3.4 Sample SWIFT Message Format and Code Interpretation 68
3.5 Sample Flow Chart 72
3.6 Sample Chart of Relationships and Assets 73
5.1 Seized Motor Vehicles Left Outdoors 97
6.1 Confiscation of an Asset in a Foreign Jurisdiction 120
7.1 Phases of Asset Recovery and Integrating International Cooperation 122
7.2 Flow Chart of International Cooperation 130
7.3 Informal Assistance and Formal MLA Requests—
What Can Be Requested? 131
7.4 Flow of an MLA Request in the Presence of a Treaty or
Domestic Legislation 155
A.1 Criminal Charges to Consider 187
F.1 Serial/Sequential and Cover Payment Methods 210
Tables
4.1 Considerations in Partial Control or Limited Restraint 84
7.1 Differences between Informal Assistance and MLA Requests 129
Preface
Developing countries lose between US$20 to US$40 billion each year through bribery,
misappropriation of funds, and other corrupt practices. Much of the proceeds of cor-
ruption nd “safe haven” in the world’s nancial centers. ese criminal ows are a
drain on social services and economic development programs, contributing to the fur-
ther impoverishment of the world’s poorest countries. e victims include children in
need of education, patients in need of treatment, and all members of society who con-
tribute their fair share and deserve assurance that public funds are being used to improve
their lives. But corruption a ects us all by undermining con dence in governments,
banks, and companies in both developed and developing economies.
e international community has responded to the challenge and, in principles and
through international agreements, is now moving forward. e G20 has put the ght
against corruption at the forefront of its e orts to improve global integrity and account-
ability. e Stolen Asset Recovery (StAR) Initiative was launched in September 2007 by
the World Bank and the United Nations O ce on Drugs and Crime (UNODC) to pro-
mote the rati cation and implementation of the United Nations Convention against
Corruption (UNCAC), and speci cally its chapter 5, which provides the rst compre-
hensive and innovative framework for asset recovery.
Many developing countries have already sought to recover stolen assets. A number of
successful high-pro le cases with creative international cooperation have demonstrated
that asset recovery is possible. However, to date, only US$5 billion in stolen assets have
been recovered. What we need now is more visible, tangible progress in forcefully pros-
ecuting bribery cases, and systematic recovery of proceeds of corruption.
However, recovering proceeds of corruption is complex. e process can be over-
whelming for even the most experienced of practitioners. It is exceptionally di cult
for those working in the context of failed states, widespread corruption, or with lim-
ited resources. We must support their e orts as they grapple with the strategic, orga-
nizational, investigative, and legal challenges of recovering stolen assets, whether
through criminal con scation, nonconviction based con scation, civil actions, or
other alternatives.
We hope that the guide will prove useful for law enforcement o cers, prosecutors,
investigating judges, lawyers, and other experts. We also expect that it will be helpful to
xii I Preface
those making policy decisions regarding legislation and management of resources
devoted to ghting corruption, and we look forward to using the handbook to provide
technical assistance and promote capacity building in countries interested in the StAR
Initiative.
Ngozi N. Okonjo-Iweala Yury Fedotov
Managing Director, e World Bank Executive Director, UNODC
Acknowledgments
is handbook is the result of special collaborative e orts from colleagues around the
world. eir time and expertise were invaluable in developing a practical tool to assist
practitioners in recovering the proceeds and instrumentalities of corruption.
is publication was written by Jean-Pierre Brun (team leader, Financial Market Integ-
rity Unit, World Bank), Larissa Gray (Financial Market Integrity Unit), Kevin
Stephenson (Financial Market Integrity Unit), and Clive Scott (United Nations O ce
on Drugs and Crime [UNODC]), with the participation of Nina Gidwaney (Financial
Market Integrity Unit).
e authors are especially grateful to Jean Pesme (manager, Financial Market Integrity
Unit, Financial and Private Sector Development Network) and Adrian Fozzard (Stolen
Asset Recovery [StAR] Initiative coordinator) for their ongoing support and guidance
on this project.
e team bene ted from many insightful comments during the peer review process,
which was co-chaired by Jean Pesme and Tim Steele (senior governance specialist, StAR
Secretariat). e peer reviewers were Raymond Baker (director, Global Financial Integ-
rity), Yara Esquivel (Integrity Vice Presidency, World Bank), Frank Fariello (Legal
Department, World Bank), Agustin Flah (Legal Department, World Bank), Jeanne
Hauch (Integrity Vice Presidency, World Bank), Lindy Muzila (UNODC), and Mutembo
Nchito (prosecutor, Zambia).
As part of the dra ing and consultation process, practitioners’ workshops were held in
Vienna, Austria (May 2009) and Marseille, France (May 2010). Practitioners brought
experience conducting criminal con scation, non-conviction based con scation, civil
actions, investigations, asset tracing, international cooperation and asset management—
from both civil and common law jurisdictions, and from both developed and develop-
ing countries. e people participating (from both public and private sectors) were Yves
Aeschlimann (Financial Market Integrity Unit), Jean-Marc Cathelin (France), France
Chain (Organisation for Economic Co-operation and Development [OECD]), Hamza
Chraiti (Switzerland), Anne Conestabile (OECD), Margaret Cotter (International Mon-
etary Fund), William Cowden (United States), Maxence Delorme (France), Nick deVil-
liers (South Africa), Adrian Fajardo (Mexico), Frank Filippeli (United States), Clara
Garrido (Colombia), John Gilkes (United States), Dorothee A. Gottwald (UNODC),
xiv I Acknowledgments
Guillermo Jorge (Argentina), Vitaliy Kasko (Ukraine), William Loo (OECD), Marko
Magdic (Chile), Olaf Meyer (Germany), Holly Morton (United Kingdom), Elnur
Musayev (Azerbaijan), Shane Nainappan (United Kingdom), Nchima Nchito (Zambia),
Jean Fils Kleber Ntamack (Cameroon), Pedro Pereira (International Centre for Asset
Recovery), Stephen Platt (Jersey), Frederic Ra ray (Guernsey), Linda Samuel (United
States), Jean-Bernard Schmid (Switzerland), Salim Succar (Haiti), Jose Ugaz (Peru),
Gary Walters (United Kingdom), Jean Weld (United States), Simon Williams (Canada),
and Annika Wythes (UNODC).
e handbook also bene ted from the contributions of eodore S. Greenberg
(Financial Market Integrity Unit), David M. Mizrachi (Panama), and Felicity Toube
(United Kingdom).
A special thanks also to elma Ayamel for arranging the logistics of the workshops in
Vienna and Marseille; and to Maria Orellano and Miguel Nicolas de la Riva for their
administrative support.
Jean-Pierre Brun
Task Team Leader
Financial Market Integrity Unit
World Bank
Acronyms and Abbreviations
BIC Bank identi er code
CARIN Camden Assets Recovery Inter-Agency Network
CHAPS Clearing House Automated Payments System
CHIPS Clearing House Interbank Payments System
CTR Currency transaction report
ECHR European Court of Human Rights
EWHC (Ch.) England and Wales High Court (Chancery Division)
FATF Financial Action Task Force
FCPA Foreign Corrupt Practices Act
Fedwire Fedwire Funds Service
FIU Financial intelligence unit
GDP Gross domestic product
IBC International business corporation
ICSID International Centre for Settlement of Investment Disputes
LLC Limited Liability Company
MLA Mutual legal assistance
NCB Non-conviction based
OECD Organisation for Economic Co-operation and Development
PEP Politically exposed person
PTC Private trust company
RICO Racketeer In uenced and Corrupt Organizations
StAR Stolen Asset Recovery Initiative
STR Suspicious transaction report; Suspicious activity report
SWIFT Society for Worldwide Interbank Financial Telecommunications
UAE United Arab Emirates
UNCAC United Nations Convention against Corruption
UNODC United Nations O ce on Drugs and Crime
UNTOC United Nations Convention against Transnational Organized Crime
WDF World Duty Free Company Limited
Introduction
e the of public assets from developing countries is an immense development problem.
e amount of money stolen from developing and transition jurisdictions and hidden in
foreign jurisdictions each year is approximately $20–$40 billion—a gure equivalent to
20–40 percent of ows of o cial development assistance.
1
e societal costs of corruption
far exceed the value of assets stolen by public leaders. Corruption weakens con dence in
public institutions, damages the private investment climate, and ruins delivery mechan-
isms for such poverty alleviation programs as public health and education.
2
Recognizing the serious problem of corruption and the need for improved mechanisms
to combat its devastating impact and facilitate the recovery of corruption proceeds, the
international community introduced a new framework in the United Nations Conven-
tion against Corruption (UNCAC). Chapter V of the convention provides this framework
for the return of stolen assets, requiring states parties to take measures to restrain, seize,
con scate, and return the proceeds of corruption. To do so, they may use various mecha-
nisms, such as:
direct enforcement of freezing or con scation orders made by the court of another •
state party;
3
non-conviction based asset con scation, particularly in cases of death, ight, or •
absence of the o ender or in other cases;
4
civil actions initiated by another state party, allowing that party to recover the •
proceeds as plainti ;
5
con scation of property of a foreign origin by adjudication of an o ense of money •
laundering or other o enses;
6
court orders of compensation or damages to another state party and recognition •
by courts of another state party’s claim as a legitimate owner of assets acquired
through corruption;
7
spontaneous disclosure of information to another state party without prior •
request;
8
and
international cooperation and asset return.•
9
1. World Bank, Stolen Asset Recovery (StAR) Initiative: Challenges, Opportunities, and Action Plan (Washington,
DC, 2007), 9.
2. Ibid.
3. United Nations Convention against Corruption (UNCAC), art. 54(1)(a) and 54(2)(a).
4. UNCAC, art. 54(1)(c).
5. UNCAC, art. 53.
6. UNCAC, art. 54(1)(b) and 54(2)(b).
7. UNCAC, art. 53(b) and (c).
8. UNCAC, art. 56.
9. UNCAC, art. 55 and 57.
2 I Asset Recovery Handbook
Even with this framework, the practice of recovering stolen assets remains complex. It
involves coordination and collaboration with domestic agencies and ministries in mul-
tiple jurisdictions with di erent legal systems and procedures. It requires special inves-
tigative techniques and skills to “follow the money” beyond national borders and the
ability to act quickly to avoid dissipation of the assets. To ensure e ectiveness, the com-
petent authority (“the authority”) must have the capacity to launch and conduct legal
proceedings in domestic and foreign courts or to provide the authorities in another
jurisdiction with evidence or intelligence for investigations (or both). All legal options—
whether criminal con scation, non-conviction based con scation, civil actions, or
other alternatives—must be considered. is process may be overwhelming for even
the most experienced practitioners. It is exceptionally di cult for those working in the
context of failed states, widespread corruption, or limited resources.
e complexity of the process highlights the need for a practical tool to help practitio-
ners navigate the process. With this in mind, the Stolen Asset Recovery Initiative, a joint
initiative of the United Nations O ce of Drugs and Crime and the World Bank focused
on encouraging and facilitating more systematic and timely return of stolen assets, has
developed this Asset Recovery Handbook: A Guide for Practitioners. Designed as a how-
to manual, the handbook guides practitioners as they grapple with the strategic, organi-
zational, investigative, and legal challenges of recovering assets that have been stolen by
corrupt leaders and hidden abroad. It provides common approaches to recovering stolen
assets located in foreign jurisdictions, identi es the challenges that practitioners are
likely to encounter, and introduces good practices. By consolidating into a single frame-
work the information dispersed across various professional backgrounds, the handbook
will enhance the e ectiveness of practitioners working in a team environment.
Methodology
To develop the Asset Recovery Handbook as a practical tool to help practitioners navi-
gating the issues, laws, and theory, the Stolen Asset Recovery Initiative drew on those
people who have practical day-to-day experience in one or more of the core areas of
asset recovery. Participants included law enforcement, nancial investigators, investi-
gating magistrates, prosecutors, lawyers in private practice, and asset managers. ey
brought experience—from developed and developing jurisdictions and from civil and
common law systems—in conducting criminal con scation, non-conviction based
asset con scation, civil actions, investigations, asset tracing, international cooperation,
and asset management. ey have worked with other national agencies as well as with
foreign counterparts. Being familiar with some of the challenges in this regard, they
have developed their own methods and ideas for overcoming those challenges.
e overall format of the handbook and key topics for consideration were agreed on by
a group of practitioners at a workshop held in Vienna, Austria, in May 2009.
10
ese
10. Participating practitioners in the May 2009 Vienna workshop brought experience from practice in
Argentina, Azerbaijan, Canada, Colombia, Costa Rica, France, Guernsey, Jersey, Peru, South Africa,
Switzerland, Ukraine, United Kingdom, United States, and Zambia.
Introduction I 3
were developed by the authors into a dra version, and then presented and discussed at
a second practitioners’ workshop held one year later in Marseille, France.
11
e second
workshop was followed by additional contributions and consultations, and the nal
version was agreed to by the expanded group.
How the Handbook Can Be Used
e Asset Recovery Handbook is designed as a quick-reference, how-to manual for
practitioners—law enforcement o cials, investigating magistrates, and prosecutors—
as well as for asset managers and those involved in making policy decisions in both civil
and common law jurisdictions. Given diverse audiences and legal systems, it is impor-
tant that readers keep in mind that a practice or strategy that has worked in one jurisdic-
tion may not work in another. Likewise, an investigative technique that is permitted in
one jurisdiction may not be permitted—or may have di erent procedural requirements—
in another. In addition, jurisdictions may use di erent terminology to describe the same
legal concept (for example, some jurisdictions use “con scation” and others use “forfei-
ture”) or procedure (some jurisdictions’ assets may be “seized,” whereas others’ may be
“restrained,” “blocked,” or “frozen”).
12
Or di erent jurisdictions may assign di erent
roles and responsibilities to those people who are involved in asset recovery: in some
jurisdictions, investigations are conducted by an investigating magistrate; in others, by
law enforcement authorities or prosecutors.
e handbook attempts to point out these di erences where they exist, and it high-
lights how di erent concepts or practices may o er similar solutions to the same chal-
lenges. However, the handbook is not designed to be a detailed compendium of law and
practices. Each practitioner therefore should read the handbook in the context of his or
her speci c jurisdiction’s legal system, law enforcement structures, resources, legisla-
tion, and procedures—without being restrained by the terminology or the concepts
used to illustrate the challenges and tools for successful recovery of assets. e practi-
tioner should also consider the context of the legal system, law enforcement structures,
resources, legislation, and procedures of the speci c jurisdiction where the asset recov-
ery procedures will be sought.
e primary purpose of this handbook is to facilitate asset recovery in the context of grand
corruption, particularly as outlined in chapter V of UNCAC. Nonetheless, asset con sca-
tion and recovery can and should be applied to a wider range of o enses—particularly,
11. Practitioners participating in the May 2010 Marseille workshop brought experience from Argentina,
Azerbaijan, Brazil, Cameroon, Chile, Colombia, France, Germany, Guernsey, Haiti, Peru, South Africa,
Switzerland, Ukraine, United Kingdom, United States, and Zambia.
12. For example, in South Africa’s Prevention of Organised Crime Act, 1998, “con scation” is de ned as
value-based orders made pursuant to chapter V of the act. In other jurisdictions, these orders are described
as “pecuniary penalty orders” (for example, in federal and many state con scation laws in Australia). In
Mexico, the term “forfeiture” is preferred because this refers to the proceeds and instrumentalities of crime;
“con scation,” on the other hand, refers to the assets of an individual. In Jersey, “forfeiture” is used with the
instrumentalities of crime, and “con scation” relates to the proceeds of crime.
4 I Asset Recovery Handbook
the asset con scation provisions set out in the United Nations Convention against
Narcotic Drugs and Psychotropic Substances (Vienna) and the United Nations Con-
vention against Transnational Organized Crime.
e handbook is organized into nine chapters, a glossary, and 10 appendixes of addi-
tional resources. Chapter 1 provides a general overview of the asset recovery process
and legal avenues for recovery, along with practical case examples. Chapter 2 presents a
host of strategic considerations for developing and managing an asset recovery case,
including gathering initial sources of facts and information, assembling a team, and
establishing a relationship with foreign counterparts for international cooperation.
Chapter 3 introduces the techniques that practitioners may use to trace assets and ana-
lyze nancial data, as well as to secure reliable and admissible evidence for asset con s-
cation cases. e provisional measures and planning necessary to secure the assets prior
to con scation are discussed in chapter 4; and chapter 5 introduces some of the man-
agement issues that practitioners will need to consider during this phase. Con scation
systems are the focus of chapter 6, including a review of the di erent systems and how
they operate and the procedural enhancements that are available in some jurisdictions.
On the issue of international cooperation, chapter 7 reviews the various methods avail-
able, including informal assistance and mutual legal assistance requests; and guides
practitioners through the entire process. Finally, chapters 8 and 9 discuss two addi-
tional avenues for asset recovery—respectively, civil proceedings and domestic con s-
cation proceedings undertaken in foreign jurisdictions.
e glossary de nes many of the specialized terms used within the handbook. Because
jurisdictions o en use di erent terminology to describe the same legal concept or pro-
cedure, the glossary provides examples of alternative terms that may be used.
e appendixes contain additional reference tools and practical resources to assist prac-
titioners. Appendix A provides an outline of o enses where criminal prosecution is
concerned. Appendix B presents a detailed list and descriptions of commonly used
corporate vehicle terms. For those reviewing suspicious transaction reports, appendix
C provides a sample nancial intelligence unit report. Appendix D o ers a checklist of
some additional considerations for planning the execution of a search and seizure war-
rant. Appendixes E and G, respectively, provide a sample production order for nancial
institutions and a sample nancial pro le form. Appendix F outlines the serial and
cover payment methods used by correspondent banks in relation to electronic fund
transfers, and it discusses the new cover payment standards that became e ective in
November 2009. Appendix H o ers discussion points that practitioners may use to
begin communications with their foreign counterparts. With respect to mutual legal
assistance requests, Appendix I provides an outline for a letter of request, with key
dra ing and execution tips. Finally, Appendix J provides a broad range of international
and country-speci c Web site resources.
One of the rst considerations in an asset recovery case is the development of an e ec-
tive strategy for both obtaining a criminal conviction (if possible) and recovering the
proceeds and instrumentalities of corruption. Practitioners must be aware of the vari-
ous legal avenues available for recovering assets, as well as some of the factors or obsta-
cles that may lead to the selection of one avenue over another. is chapter introduces
the general process for asset recovery and the various recovery avenues (most of which
are discussed in greater detail in subsequent chapters).
1.1 General Process for Asset Recovery
Whether pursuing assets through criminal or non-conviction based (NCB) con sca-
tion or through proceedings in a foreign jurisdiction or through a private civil action,
the objectives and fundamental process for recovery of assets are generally the same.
Figure 1.1 illustrates this process.
1.1.1 Collection of Intelligence and Evidence and Tracing Assets
Evidence is gathered and assets are traced by law enforcement o cers under the super-
vision of or in close cooperation with prosecutors or investigating magistrates, or by
private investigators or other interested parties in private civil actions. In addition to
gathering publicly available information and intelligence from law enforcement or
other government agency databases, law enforcement can employ special investigative
techniques. Some techniques may require authorization by a prosecutor or judge (for
example, electronic surveillance, search and seizure orders, production orders, or
account monitoring orders), but others may not (for example, physical surveillance,
information from public sources, and witness interviews). Private investigators do not
have the powers granted to law enforcement; however; they will be able to use publicly
available sources and apply to the court for some civil orders (such as production orders,
on-site review of records, pre ling testimony, or expert reports). Criminal investigative
techniques and tracing are discussed in detail in chapter 3, and investigative techniques
in civil actions are discussed in chapter 8.
1. Overview of the Asset Recovery
Process and Avenues for
Recovering Assets
6 I Asset Recovery Handbook
1.1.2 Securing the Assets
During the investigation process, proceeds and instrumentalities subject to con sca-
tion must be secured to avoid dissipation, movement, or destruction. In certain civil
law jurisdictions, the power to order the restraint or seizure of assets subject to con s-
cation may be granted to prosecutors, investigating magistrates, or law enforcement
agencies. In other civil law jurisdictions, judicial authorization is required. In common
law jurisdictions, an order to restrain or seize assets generally requires judicial authori-
zation, with some exceptions in seizure cases. Asset restraint and seizure is discussed in
detail in chapter 4; restraint in private civil actions is discussed in chapter 8. Systems to
manage assets will also need to be in place (see chapter 5).
1.1.3 International Cooperation
International cooperation is essential for the successful recovery of assets that have been
transferred to or hidden in foreign jurisdictions. It will be required for the gathering of
evidence, the implementation of provisional measures, and the eventual con scation of
the proceeds and instrumentalities of corruption. And when the assets are con scated,
cooperation is critical for their return. International cooperation includes “informal
assistance,” mutual legal assistance (MLA) requests, and extradition.
13
Informal assistance
13. For the purposes of this handbook, “informal assistance” is used to include any type of assistance that
does not require a formal MLA request. Legislation permitting this informal, practitioner-to-practitioner
FIGURE 1.1
Process for Recovery of Stolen Assets
Collecting Intelligence and Evidence and
Asset Tracing
(Domestically and in foreign jurisdictions using MLA)
Securing the Assets
(Domestically and in foreign jurisdictions using MLA)
Court Process
(To obtain conviction [if possible], confiscation, fines,
damages, and/or compensation)
Enforcing Orders
(Domestically and in foreign jurisdictions using MLA)
Return of Assets
Source: Authors’ illustration.
Note: MLA = mutual legal assistance.
Overview of the Asset Recovery Process and Avenues I 7
is o en used among counterpart agencies to gather information and intelligence to assist
in the investigation and to align strategies and forthcoming procedures for recovery of
assets. An MLA request is normally a written request used to gather evidence (involving
coercive measures that include investigative techniques), obtain provisional measures,
and seek enforcement of domestic orders in a foreign jurisdiction. International coopera-
tion is addressed in chapter 7.
1.1.4 Court Proceedings
Court proceedings may involve criminal or NCB con scation or private civil actions
(each described below and in subsequent chapters); and will achieve the recovery of
assets through orders of con scation, compensation, damages, or nes. Con scation
may be property based or value based. Property-based systems (also referred to as
“tainted property” systems) allow the con scation of assets found to be the proceeds or
instrumentalities of crime—requiring a link between the asset and the o ense (a require-
ment that is frequently di cult to prove when assets have been laundered, converted, or
transferred to conceal or disguise their illegal origin). Value-based systems (also referred
to as “bene t” systems) allow the determination of the value of the bene ts derived from
crime and the con scation of an equivalent value of assets that may be untainted. Some
jurisdictions use enhanced con scation techniques, such as substitute asset provisions
or legislative presumptions to assist in meeting the standard of proof. Chapter 6 describes
these and other con scation issues; chapter 8 describes private civil actions.
1.1.5 Enforcement of Orders
When a court has ordered the restraint, seizure, or con scation of assets, steps must be
taken to enforce the order. If assets are located in a foreign jurisdiction, an MLA request
must be submitted. e order may then be enforced by authorities in the foreign jurisdic-
tion through either (1) directly registering and enforcing the order of the requesting juris-
diction in a domestic court (direct enforcement) or (2) obtaining a domestic order based
on the facts (or order) provided by the requesting jurisdiction (indirect enforcement).
14
is will be accomplished through the mutual legal assistance process (described above
and in chapter 7). Similarly, private civil judgments for damages or compensation will
need to be enforced using the same procedures as for other civil judgments.
1.1.6 Asset Return
e enforcement of the con scation order in the requested jurisdiction o en results in
the con scated assets being transferred to the general treasury or con scation fund of
assistance may be outlined in MLA legislation and may involve “formal” authorities, agencies, or adminis-
trations. For a description of this type of assistance and comparison with the MLA request process, see
section 7.2 of chapter 7.
14. See United Nations Convention against Corruption (UNCAC), art. 54 and 55; United Nations Conven-
tion against Transnational Organized Crime (UNTOC), art. 13; United Nations Convention against Nar-
cotic Drugs and Psychotropic Substances, art. 5; and the Terrorist Financing Convention, art. 8. For
restraint or seizure, see UNCAC, art. 54(2).
8 I Asset Recovery Handbook
the requested jurisdiction (not directly returned to the requesting jurisdiction).
15
As a
result, another mechanism will be needed to arrange for the return of the assets. If
UNCAC is applicable, the requested party will be obliged under article 57 to return the
con scated assets to the requesting party in cases of embezzlement of public funds or
laundering of such funds, or when the requesting party reasonably establishes prior
ownership. If UNCAC is not applicable, the return or sharing of con scated assets will
depend on domestic legislation, other international conventions, MLA treaties, or spe-
cial agreements (for example, asset sharing agreements). In all cases, total recovery may
be reduced to compensate the requested jurisdiction for its expenses in restraining,
maintaining, and disposing of the con scated assets and the legal and living expenses
of the claimant.
Assets may also be returned directly to victims, including a foreign jurisdiction,
through the order of a court (referred to as “direct recovery”).
16
A court may order
compensation or damages directly to a foreign jurisdiction in a private civil action.
A court may also order compensation or restitution directly to a foreign jurisdiction
in a criminal or NCB case. Finally, when deciding on con scation, some courts have
the authority to recognize a foreign jurisdiction’s claim as the legitimate owner of
the assets.
If the perpetrator of the criminal action is bankrupt (or companies used by the perpe-
trator are insolvent), formal insolvency procedures may assist in the recovery process.
All of these mechanisms are explained further in chapters 7, 8, and 9.
A number of policy issues are likely to arise during any e orts to recover assets in
corruption cases. Requested jurisdictions may be concerned that the funds will be
siphoned o again through continued or renewed corruption in the requesting
jurisdictions, especially if the corrupt o cial is still in power or holds signi cant
in uence. Moreover, requesting jurisdictions may object to a requested country’s
attempts to impose conditions and other views on how the con scated assets should
be used. In some cases, international organizations such as the World Bank and civil
society organizations have been used to facilitate the return and monitoring of
recovered funds.
17
15. Stolen Asset Recovery (StAR) Initiative Secretariat, “Management of Con scated Assets” (Washington,
DC, 2009), http://www.worldbank.org/star.
16. UNCAC, art. 53 requires that states parties take measures to permit direct recovery of property.
17. In 2007, the U.S. Department of Justice led a civil con scation action against a U.S. citizen indicted in
2003 for allegedly paying bribes to Kazakh o cials for oil and gas deals. e action was for approximately
$84 million in proceeds. e American citizen agreed to transfer those proceeds to a World Bank trust fund
for use on projects in Kazakhstan. See “U.S. Attorney for S.D.N.Y, Government Files Civil Forfeiture Action
Against $84 Million Allegedly Traceable to Illegal Payments and Agrees to Conditional Release of Funds to
Foundation to Bene t Poor Children in Kazakhstan,” news release no. 07-108, May 30, 2007, http://www.
usdoj.gov/usao/nys/pressreleases/May07/pictetforfeiturecomplaintpr.pdf; World Bank, “Kazakhstan BOTA
Foundation Established,” news release no. 2008/07/KZ, June 4, 2008, http://siteresources.worldbank.org/
INTKAZAKHSTAN/News%20and%20Events/21790077/Bota_Establishment_June08_eng.pdf.
Overview of the Asset Recovery Process and Avenues I 9
1.2 Legal Avenues for Achieving Asset Recovery
e legal actions for pursuing asset recovery are diverse. ey include the following
mechanisms:
domestic criminal prosecution and con scation, followed by an MLA request to •
enforce orders in foreign jurisdictions;
NCB con scation, followed by an MLA request or other forms of international •
cooperation to enforce orders in foreign jurisdictions;
private civil actions, including formal insolvency process;•
criminal prosecution and con scation or NCB con scation initiated by a foreign •
jurisdiction (requires jurisdiction over an o ense and cooperation from the juris-
diction harmed by the corruption o enses); and
administrative con scation.•
e availability of these avenues, either domestically or in a foreign jurisdiction, will
depend on the laws and regulations in the jurisdictions involved in the investigation,
as well as international or bilateral conventions and treaties. Box 1.1 outlines the vari-
ous laws relevant to practitioners pursuing these avenues. In addition, there are other
legal, practical, or operational realities that will in uence the avenue selected. Some of
these strategic considerations, obstacles, and case management issues are discussed in
chapter 2.
1.2.1 Criminal Prosecution and Confi scation
When authorities seeking to recover stolen assets decide to pursue a criminal case,
criminal con scation is a possible means of redress. Practitioners must gather evidence,
trace and secure assets, conduct a prosecution against an individual or legal entity, and
obtain a conviction. A er obtaining a conviction, con scation can be ordered by the
court. In some jurisdictions, particularly common law jurisdictions, the standard of
proof for con scation will be lower than the standard required for obtaining the con-
viction. For example, “balance of probabilities” will be needed for con scation, whereas
“beyond a reasonable doubt” will be required for a conviction. Other jurisdictions apply
the same standard to both conviction and con scation. See gure 2.1 in section 2.6.5
for an explanation of the standards of proof. Generally, unless enhanced con scation
provisions apply, con scation legislation will provide for con scation of proceeds and
instrumentalities that are directly or indirectly traceable to the crime.
18
18. e form and operation of “enhanced con scation provisions” are discussed in more detail in chap-
ter 6. Enhancements include substitute asset provisions that permit con scation of assets not con-
nected with a crime if the original proceeds have been lost or dissipated, presumptions about the
unlawful use or derivation of assets in certain circumstances, presumptions about the extent of unlaw-
ful bene ts owing from certain o enses, and the reversal of the onus and burden of proof in certain
circumstances.
10 I Asset Recovery Handbook
BOX 1.1 Legal Framework for Asset Recovery
Legislation and procedures (domestic and foreign jurisdictions):
Confi scation provisions (criminal, NCB, administrative);•
MLA;•
Criminal law provisions and codes of procedures (corruption, money laun-•
dering);
Private (civil) law provisions and codes of procedure; and•
Asset sharing laws.•
International conventions and treaties
a
UNCAC;•
United Nations Convention against the Illicit Traffi c in Narcotic Drugs and •
Psychotropic Substances;
UNTOC;•
Organisation for Economic Co-operation and Development Convention on •
Combating Bribery of Foreign Public Offi cials in International Business
Transactions;
Southeast Asian Mutual Legal Assistance in Criminal Matters Treaty;•
Inter-American Convention against Corruption;•
Council of Europe Convention on Laundering, Search, Seizure and Confi s-•
cation of the Proceeds of Crime (1990) and the revised Council of Europe
Convention on Laundering, Search, Seizure and Confi scation of the Pro-
ceeds of Crime and on the Financing of Terrorism (2005);
Council of the European Union Framework Decision 2003/577/JHA on the •
Execution in the European Union of Orders Freezing Property or Evidence;
Council of the European Union Framework Decision 2006/783/JHA on the •
Application of the Principle of Mutual Recognition to Confi scation Orders;
Southern African Development Community Protocol against Corruption •
(2001);
African Union Convention on Preventing and Combating Corruption and •
Related Offenses (2003);
Commonwealth of Independent States Conventions on Legal Assistance •
and Legal Relationship in Civil, Family and Criminal Matters;
Scheme Relating to Mutual Assistance in Criminal Matters within the •
Commonwealth (the Harare Scheme);
Mercosur Mutual Legal Assistance in Criminal Matters Treaty (Dec. No. •
12/01); and
Bilateral MLA treaties.•
a. See appendix J for available Web site resources.
Overview of the Asset Recovery Process and Avenues I 11
International cooperation, including informal assistance and requests for MLA, will be
used throughout the process to trace and secure assets in foreign jurisdictions, as well
as to enforce the nal order of con scation.
19
A bene t of criminal prosecution and con scation is the societal recognition of the
criminal nature of corruption and the accountability of the perpetrator. Further,
penalties of imprisonment, nes, and con scation serve to deter future o enders. In
addition, criminal investigators generally have the most aggressive means of gather-
ing information and intelligence, including access to data from law enforcement
agencies and nancial intelligence units (FIUs), use of provisional measures and
coercive investigative techniques (such as searches, electronic surveillance, exami-
nation of nancial records or access to documents held by third parties), as well as
grand juries or other means of compelling testimony or evidence. And, in most
jurisdictions, MLA is provided only in the context of criminal investigations. How-
ever, signi cant barriers may exist to obtaining a criminal conviction and con sca-
tion: insu cient evidence; lack of capacity or political will; or the death, ight, or
immunity of the perpetrator. Furthermore, the conduct giving rise to the request
may not be a crime in the jurisdiction where the relief is being sought. ese and
other barriers are discussed in chapter 2.
1.2.2 Non-Conviction Based Confi scation
Another type of con scation gaining traction throughout the world is con scation with-
out a conviction, referred to as “NCB con scation.”
20
NCB con scation shares at least
one common objective with criminal con scation—namely, the recovery and return of
the proceeds and instrumentalities of crime. Likewise, deterrence and depriving corrupt
o cials of their ill-gotten gains are other societal equities realized by NCB con scation.
NCB con scation di ers from criminal con scation in the procedure used to con scate
the assets. A criminal con scation requires a criminal trial and conviction, followed by
the con scation proceedings; NCB con scation does not require a trial or conviction,
but only the con scation proceedings. In many jurisdictions, NCB con scation can be
established on a lower standard of proof (for example, the “balance of probabilities” or
“preponderance of the evidence” standard), and this helps ease the burden on the
authorities. Other (mainly civil law) jurisdictions require a higher standard of proof—
speci cally, the same standard required to obtain a criminal conviction.
19. UNCAC, art. 54(1)(a); UNTOC, art. 13(1)(a); and United Nations Convention against Narcotic Drugs
and Psychotropic Substances, art. 5(4)(a) require states parties to take measures to give e ect to foreign
orders.
20. Jurisdictions include Anguilla, Antigua and Barbuda, Australia, some of the provinces of Canada
(Alberta, British Columbia, Manitoba, Ontario, Quebec, Saskatchewan), Colombia, Costa Rica, Fiji, Guernsey,
Honduras, Ireland, Isle of Man, Israel, Jersey, Liechtenstein, New Zealand, the Philippines, Slovenia, South
Africa, Switzerland, ailand, the United Kingdom, the United States, and Zambia. International conven-
tions and multilateral agreements also have introduced NCB con scation. See UNCAC, art. 53(1)(c) and
recommendation 3 of the Financial Action Task Force 40+9 Recommendations.
12 I Asset Recovery Handbook
However, because NCB con scation is not available in all jurisdictions, practitioners
may have di culty obtaining MLA to assist with investigations and to enforce NCB
con scation orders. NCB con scation is discussed in greater detail in chapter 6.
1.2.3 Private Civil Action
Authorities seeking to recover stolen assets have the option of initiating proceedings in
domestic or foreign civil courts to secure and recover the assets and to seek damages
based on torts, breach of contract, or illicit enrichment.
21
e courts of the foreign
jurisdiction may be competent if a defendant is a person (individual or business entity)
living or incorporated in the jurisdiction (personal jurisdiction), if the assets are within
or have transited the jurisdiction (subject matter jurisdiction), or if an act of corruption
or money laundering was committed within the jurisdiction. As a private litigant, the
authorities seeking redress can hire lawyers to explore the potential claims and reme-
dies (ownership of misappropriated assets, tort, disgorgement of illicit pro ts, contrac-
tual breaches). e civil action will entail collecting evidence of misappropriation or of
liabilities based on contractual or tort damages. Frequently, it is possible to use evi-
dence gathered in the course of a criminal proceeding in a civil litigation. It is also pos-
sible to seek evidence with the assistance of a court prior to ling an action.
e plainti usually has the option to petition the court for a variety of orders, includ-
ing the following:
Freezing, embargo, sequestration, or restraining orders (potentially with world-•
wide e ect) secure assets suspected to be the proceeds of crime, pending the
resolution of a lawsuit laying claim to those assets. In some jurisdictions, interim
restraining orders may be issued pending the outcome of a lawsuit even before
the lawsuit has been led, without notice and with extraterritorial e ect. ese
orders usually require the posting of a bond, guarantee, or other undertaking by
the petitioner.
Orders against defendants oblige them to provide information about the source •
of their assets and transactions involving them.
Orders against third parties for disclosure of relevant documents are useful in •
obtaining evidence from banks, nancial advisers, or solicitors, among others.
“No-say” (gag) orders prevent banks and other parties from informing the defen-•
dants of a restraint injunction or disclosure order.
Generic protective or conservation orders preserve the status quo and prevent •
the deterioration of the petitioner’s assets, legal interests, or both. Such orders
usually require showing the likelihood of success on the merits and an imminent
risk in delaying a decision.
e principal disadvantages of litigating in a foreign jurisdiction are the cost of tracing
assets and the legal fees entailed in obtaining relevant court orders. However, the litigant
21. UNCAC art. 53(a) calls on states parties to permit another state party to initiate a civil action in domes-
tic courts.
Overview of the Asset Recovery Process and Avenues I 13
has more control in pursuing civil proceedings and assets in the hands of third parties
and may have the advantage of a lower standard of proof. For example, civil cases in
common law jurisdictions usually are decided on a “balance of probabilities” or “pre-
ponderance of the evidence” standard.
Similarly, arbitration proceedings related to international contracts obtained through
bribes or illicit advantages awarded to corrupt o cials may open promising avenues,
including the cancellation of contracts, and potential claims for torts or damages. ese
avenues are discussed in greater detail in chapter 8.
1.2.4 Actions Initiated by Foreign Jurisdictions
Authorities seeking to recover stolen assets may choose to support a criminal or NCB
con scation proceeding that has been initiated in another jurisdiction against the cor-
rupt o cial, associates, or identi ed assets. At the conclusion of the proceedings, the
state or government may be able to obtain a portion of the recovered assets through
orders of the foreign courts or pursuant to legislation or agreements.
22
is will require
that the foreign authority has jurisdiction; the capacity to prosecute and con scate;
and, most important, the willingness to share the proceeds. e initiation of an action
by a foreign authority may take place in one of two ways:
Authorities in the jurisdiction harmed by corruption may ask the foreign author-1.
ities to open their own case. is may be accomplished by ling a complaint or,
even more simply, by sharing incriminating evidence and a case le with author-
ities of the foreign jurisdiction. In all cases, the foreign authorities ultimately have
the discretion to pursue or ignore the case. If authorities pursue it, the jurisdic-
tion harmed by the o enses will need to cooperate with the foreign authorities to
ensure they have the necessary evidence.
Foreign authorities may open a case independent of request from the jurisdiction 2.
harmed by corruption. Foreign authorities may receive information linking a
corrupt o cial to their jurisdiction—whether through a newspaper article, a sus-
picious transaction report (STR), or a request for informal assistance or MLA—
and decide to investigate money laundering or foreign bribery activities under-
taken within their national territory.
e involvement of the victim—including a state or government that has been harmed
by corruption o enses—in the proceedings is generally encouraged in most jurisdic-
tions; however, it generally is limited to discussions with practitioners and does not
extend to actual standing in the proceedings. In some civil law jurisdictions, however, it
may also be possible for the victim to participate in foreign proceedings as a private
prosecutor or as a civil party to the proceedings. In both civil and common law jurisdic-
tions, it may be possible to recover assets from these proceedings through court-ordered
compensation, restitution, or damages as a party harmed by corruption o enses or as a
legitimate owner in con scation proceedings.
22. UNCAC art. 53(b) and 53(c) require states parties to take measures to permit direct recovery.
14 I Asset Recovery Handbook
is avenue is an interesting option if the jurisdiction seeking redress does not have
the legal basis, capacity, or evidence to pursue an international investigation on its
own. Moreover, if the limitation period rules out the prosecution of the initial corrup-
tion charges, it may be possible to investigate o enses of money laundering or posses-
sion of stolen assets in other jurisdictions. On the other hand, the jurisdiction that has
been harmed by corruption o enses has no control over the proceedings, and success
largely depends on the foreign authorities’ priorities. In addition, unless the return of
the assets is ordered by the court, it will be dependent on asset sharing agreements or
the authorities’ ability to return the assets on a discretionary basis (see section 9.4 in
chapter 9).
1.2.5 Administrative Confi scation
Unlike criminal or NCB con scation, which requires court action, administrative con-
scation generally involves a non-judicial mechanism for con scating assets used or
involved in the commission of the o ense. It may occur by operation of statute, pursu-
ant to procedures set out in regulations, and is typically used to address uncontested
con scation cases. e con scation is carried out by an authorized agency (such as a
police unit or a designated law enforcement agency), and o en follows a process similar
to that traditionally used in customs smuggling cases. e procedures usually require
notice to persons with a legal interest in the asset and publication to the public at large.
Generally, administrative con scation is restricted to low-value assets or certain classes
of assets. For example, legislation may permit the con scation of any amount of
cash, but prohibit the con scation of real property. Another variation on this type of
con scation, called “abandonment” by some jurisdictions, employs a similar proce-
dure. Another non-judicial means to recover assets is through taxation of the illicit
pro ts (see box 1.2).
1.3 Use of Asset Recovery Avenues in Practice: Three Case Examples
Outlined below are three short case examples that demonstrate how the various avenues
discussed throughout this chapter have been used to recover assets in practice. Each
case involved several jurisdictions and incorporated a number of di erent strategic
approaches, depending on the circumstances of the case, the avenues available in the
domestic and foreign jurisdictions, or repatriation arrangements.
1.3.1 Case of Vladimiro Montesinos and His Associates
Following televised videos that showed Vladimiro Montesinos (personal adviser to
Peru’s president Alberto Fujimori and de facto chief of Peru’s intelligence service) brib-
ing an elected opposition congressman in September 2000, funds were traced to several
jurisdictions, including the Cayman Islands, Luxembourg, Switzerland, and the United
States. Ultimately, more than $250 million was recovered from Switzerland and the
United States and from local banks in Peru.
Overview of the Asset Recovery Process and Avenues I 15
For the $48 million of assets in Switzerland, two options were discussed with the Swiss
investigating magistrate: e Peruvian authorities could prosecute the o enders domes-
tically for corruption and then seek recovery of the assets through MLA requests and
signed waivers. Or Switzerland could pursue drug tra cking and related money laun-
dering o enses that were involved in the case. With the second option, recovery would
be reduced because Peru would have to share a percentage of the assets with Switzerland.
Peru decided to pursue the rst option. To lay the groundwork, Peruvian authorities
introduced legislation permitting guilty pleas (plea agreements) and other forms of
cooperation.
23
In return for a reduced criminal sentence or dismissal of proceedings,
defendants provided useful information regarding known or unidenti ed crimes and
unknown evidence, access to the proceeds of crime, or testimony against key gures. In
addition, defendants signed waivers authorizing the foreign banks that held their money
to transfer it to the Peruvian government accounts. Several million dollars were recov-
ered through the use of these waivers.
23. Referred to as the “E cient Collaboration Act” (Law 27.378).
BOX 1.2 Alternative Means of Recovering Assets
Taxation of Illicit Profi ts
A public offi cial or an executive from a state-owned company who receives
bribes, misappropriated funds, or stolen assets may be liable for income taxes on
this illicit income. In such a case, authorities do not have to prove the illicit origin
of assets. It is suffi cient to prove that they represent undisclosed revenue. The
authorities simply prove that the taxpayer has made a taxable gain or received
taxable income and that he or she is liable for the appropriate amount of taxes,
including interest and penalties if the tax was not paid on time. Therefore, the
evidentiary burden is less than in a civil recovery case. Given the fact that this
approach generally does not involve court proceedings, this mechanism is poten-
tially cheaper and faster than civil recovery or criminal proceedings.
Fines and Compensation Orders in Criminal Trials
In criminal cases, the court may order the defendant to pay fi nes, compensation
to the victim, or both. Such orders may accompany confi scation orders, or may
be ordered in lieu of confi scation orders. Although fi nes or compensation orders
may be easier to achieve than a separate proceeding for confi scation, the enforce-
ment of such orders is likely to be more diffi cult. Enforcement of fi nes and com-
pensation orders may proceed through civil courts, whereas confi scation orders
will be enforced against assets that have been previously restrained. In addition,
the amount of the fi ne may be limited by statute and therefore insuffi cient on its
own to meet the recovery being sought.
16 I Asset Recovery Handbook
For the assets allegedly in the Cayman Islands, Peru hired local lawyers to assist with
pursuit of $33 million transferred through a Peruvian bank. Peruvian authorities also
met with the FIU to seek its assistance. A er several months of nancial analysis, Peru
discovered that the money had never been sent to the Cayman Islands, but had remained
in the Peruvian bank. A back-to-back loan scheme had been used to simulate the
“transfer” to the Cayman bank and the “return” to the Peruvian bank. When this was
discovered, the funds in the Peruvian bank were seized.
In the United States, Victor Venero Garrido, an associate of Montesinos, was arrested in
coordination with the Peruvian authorities; his apartment was seized; and $20 million
was frozen. Another $30 million of Montesinos’ funds held in the name of a front man
were also frozen. NCB con scation proceedings in California and Florida were used to
recover the funds, and the entire amount was repatriated to Peru. e repatriation agree-
ment with the United States was conditioned on the investment of the money in human
rights and anticorruption e orts.
In Peru, more than $60 million was recovered by Peruvian authorities seizing and con-
scating properties, vehicles, boats, and other assets through approximately 180 crimi-
nal proceedings involving more than 1,200 defendants.
1.3.2 Case of Frederick Chiluba and His Associates
In 2002, a task force was established in Zambia to investigate corruption allegations
against the former president Frederick Chiluba and his associates during the period
1991–2001, to assess whether criminal proceedings could be brought, and to determine
the best options for recovering assets. In 2004, the attorney general of Zambia initiated
a civil suit in the United Kingdom to recover funds transferred to London and across
Europe between 1995 and 2001 to fund the former president’s expensive lifestyle—
including a residence valued at more than 40 times his annual salary.
24
ese proceed-
ings were launched in addition to ongoing criminal proceedings in Zambia.
ree factors informed the decision to launch the civil action in addition to the criminal
proceedings: First, most of the defendants were located in Europe, making domestic
criminal prosecution and con scation impossible in a number of cases.
25
Second, most
of the evidence and assets were located in Europe, which made a European venue a more
favorable option. And, third, speci cally with respect to the cases whereas domestic
criminal prosecution and con scation was possible, successful international coopera-
tion through an MLA request was unlikely. Zambia lacked the bilateral or multilateral
agreements, procedural safeguards, capacity, and experience necessary to collect evi-
dence and enforce con scation orders across Europe. Instead, court orders obtained in
a European jurisdiction would be easier to enforce in jurisdictions that were parties to
the Brussels Convention on recognition of foreign court decisions in Europe.
24. Attorney General of Zambia v. Meer Care & Desai & Others, [2007] EWHC 952 (Ch.) (U.K.).
25. Zambia did not have NCB con scation legislation at that time; however, it was adopted subsequently.
Overview of the Asset Recovery Process and Avenues I 17
London was chosen as the European venue because most of the funds diverted from
Zambia had passed through two law rms and bank accounts in the United Kingdom,
and the attorney general of Zambia was able to establish jurisdiction over defendants in
jurisdictions that were parties to the Brussels Convention. Finally, it was anticipated
that decisions obtained from courts in the United Kingdom would also be enforceable
in Zambia when they were registered before the courts.
e High Court of London found su cient evidence of a conspiracy to transfer approx-
imately $52 million from Zambia to a bank account operated outside ordinary govern-
ment business—the “Zamtrop account”—and held at the Zambia National Commercial
Bank in London. Forensic experts traced the monies received in the Zamtrop account
back to the ministry of nance. ey also substantially traced the funds leaving the
Zamtrop account, and they revealed that $25 million was misappropriated or misused.
In addition, the High Court found no legitimate basis for payments of about $21 million
made by Zambia pursuant to an alleged arms deal with Bulgaria and paid into accounts
in Belgium and Switzerland.
e Court held that the defendants conspired to misappropriate $25 million from the
Zamtrop account and $21 million from the arms deal payments. e Court also held
that the defendants had broken the duciary duties they owed to the Zambian Republic
or dishonestly assisted in such breaches. As a result, the defendants were held liable for
the amounts and assets corresponding to misappropriated funds.
1.3.3 Case of Diepreye Alamieyeseigha
In the case involving Diepreye Peter Solomon Alamieyeseigha, former governor of
Bayelsa State, Nigeria, this jurisdiction was able to recover $17.7 million through domes-
tic proceedings and through cooperation with authorities in South Africa and the
United Kingdom.
In September 2005, Alamieyeseigha was rst arrested at Heathrow Airport by the
London Metropolitan Police on suspicion of money laundering. An investigation
revealed that Alamieyeseigha had $2.7 million stashed in bank accounts and in his
home in London, as well as London real estate worth an estimated $15 million.
Alamieyeseigha was released on bail and subsequently le the jurisdiction in November
2005, returning to Nigeria.
In Nigeria, he claimed immunity from prosecution. He was subsequently removed
from o ce by Bayelsa State’s lawmakers, and thereby lost his immunity. Later in
November 2005, Nigeria’s Economic and Financial Crimes Commission charged him
with 40 counts of money laundering and corruption, and it secured a court order
restraining assets held in Nigeria.
For assets in the United Kingdom, close cooperation between the Commission and the
London Metropolitan Police’s Proceeds of Corruption Unit was crucial. e $1.5 million
in cash seized from Alamieyeseigha’s London home was con scated under the Proceeds
18 I Asset Recovery Handbook
of Crime Act on the basis of a court order that the assets represented proceeds of crime.
In May 2006, the court ordered the funds repaid to Nigeria, and the transfer was made a
few weeks later. For the bank accounts, the process was more challenging because assets
and evidence were located in the Bahamas, the British Virgin Islands, the Seychelles,
South Africa, and the United Kingdom. Nigerian authorities recognized that requesting
assistance from these jurisdictions could take considerable time and that orders from
Nigerian courts would not necessarily be executed. In addition, the pursuit of legal pro-
ceedings in each of these jurisdictions was a daunting prospect because the Nigerian
authorities had little evidence linking Alamieyeseigha to these assets and linking the
assets to acts of corruption.
As a result, Nigerian authorities decided to bring civil proceedings in the United Kingdom
and simultaneously pursue criminal proceedings in Nigeria. To secure evidence, the Nige-
rian authorities obtained a disclosure order for the evidence compiled by the Metropoli-
tan Police in the course of its investigation.
26
Nigeria was able to use this evidence together
with Alamieyeseigha’s income and asset declaration
27
to obtain a worldwide restraint
order covering all assets owned directly or indirectly by Alamieyeseigha and a disclosure
order for documents held at banks and by Alamieyeseigha’s associates.
In parallel with those proceedings, the South African Asset Forfeiture Unit initiated
NCB con scation proceedings against Alamieyeseigha’s luxury penthouse. Funds were
returned to Nigeria following the sale of the property in January 2007.
Before a Nigerian high court in July 2007, Alamieyeseigha pleaded guilty to six charges
of making false declaration of assets and caused his companies to plead guilty to 23
charges of money laundering. He was sentenced to two years in prison, and the court
ordered the con scation of assets in Nigeria. Alamieyeseigha’s guilty pleas e ectively
voided his defense in the civil proceedings in the London High Court; and, in December
2007, the Court issued a summary judgment con scating property and a bank account
in the United Kingdom. A judgment in July 2008 led to the con scation of the remain-
ing assets in Cyprus, Denmark, and the United Kingdom.
26. e Nigerian application for disclosure was not contested by the Metropolitan Police. is departed
from the usual practice: the police usually do not concede to providing evidence gathered through criminal
investigations to assist private parties pursuing civil claims.
27. e declaration was led in 1999 when Alamieyeseigha was rst elected state governor. It indicated that
he had assets amounting to just over half a million dollars and an annual income of $12,000.
2. Strategic Considerations for
Developing and Managing a Case
Successful asset recovery requires a comprehensive plan of action that incorporates a
number of important steps and considerations. Practitioners will need to gather and
assess the facts to understand the case; assemble a team; identify key allies; communicate
with foreign practitioners; grapple with the legal, practical, and operational challenges
28
;
and ensure e ective case management. Each facet will help practitioners select the most
appropriate legal avenue for recovering assets—whether criminal or non-conviction
based (NCB) con scation followed by a mutual legal assistance (MLA) request for
enforcement, private civil action, or a request that authorities in another jurisdiction pur-
sue criminal or NCB con scation. Experience has demonstrated that whereas a criminal
conviction is always important to combat and deter corruption, criminal con scation may
not be the best option for asset recovery. Some authorities will use a combination of the
avenues to pursue con scation.
29
Alternatively, the presence of obstacles may warrant
consideration of another legal avenue. In cases involving multiple jurisdictions, a number
of di erent avenues may be pursued—for example, domestic con scation followed by an
MLA request for enforcement in one jurisdiction and private civil recovery in another.
is chapter reviews some of the initial actions and some of the issues that practitioners
will have to consider in selecting an avenue for asset recovery. It is important for practi-
tioners to persevere and to think creatively in developing and implementing a strategy:
perhaps there is an innovative way to resolve an issue, such as introducing new legislation
or a di erent approach. Practitioners should also be conscious that decision making is an
ongoing and iterative process: because pragmatism is essential, the rst choices should be
reviewed regularly to check that they are still appropriate in light of case developments.
2.1 Gathering Facts: Initial Sources of Information
To launch an asset recovery investigation, authorities analyze leads from diverse sources
of information discussed below. ey may also choose to undertake some preliminary
28. e Stolen Asset Recovery (StAR) Initiative is currently undertaking a study of the barriers to asset
recovery. e expected publication date is early-2011. e study will be available at www.worldbank.org/
star. See also “Best Practices: Con scation (Recommendations 3 and 38),” adopted by the plenary of the
Financial Action Task Force (FATF) in February 2010. e document is available at http://www.fatf-ga
.org/dataoecd/39/57/44655136.pdf.
29. In the United States, for example, prosecutors o en use NCB con scation procedures to freeze or seize
property and have the NCB case “stayed” during criminal proceedings. If the defendant is convicted, crim-
inal con scation will be used to con scate the defendant’s interest in the property.
20 I Asset Recovery Handbook
investigations, as outlined in chapter 3. Potential sources of information include the
following:
Criminal complaints (communications) and proceedings. • Reports of fraud,
corruption, the , or other o enses led by victims (including individuals, com-
panies, and jurisdictions harmed by corruption o enses) or government agencies
(such as regulatory authorities, anticorruption agencies, tax authorities, and
nancial intelligence units [FIUs]) are vital sources of information. In addition,
investigations into other criminal activities may reveal corruption. For example,
a search or communication intercept in a drug case could yield evidence of
bribery activities.
FIU• reports. Money laundering legislation obliges nancial institutions, regula-
tory authorities, and some non nancial businesses and professions (such as law-
yers, accountants, dealers in precious metals and stones, and trust and company
service providers) to le suspicious transaction or activity reports (STRs) with
FIUs and to be particularly vigilant concerning politically exposed persons—
namely, senior government o cials, their family members, and close associates.
30
Some jurisdictions also require the lling of currency transactions reports (CTRs)
for certain transactions. On receipt of an STR or a CTR from a reporting entity,
an FIU may launch an investigation and relay the completed report to local law
enforcement or prosecutors. e FIU may also transmit the information to a for-
eign FIU through the Egmont Group, a network of FIUs. For more information
on using FIUs in initiating and investigating asset recovery cases, see box 2.1, and
section 3.3.2 of chapter 3.
Civil or administrative proceedings.• Civil or administrative proceedings, such
as a brokerage report, regulator sanctions against a nancial institution, or sanc-
tions against a company by an international or regional development bank, may
reveal corrupt activities. Many complaints, although not speci cally citing cor-
ruption, lead to the discovery of such misconduct on investigation. A complaint
about missing or defective materials, for instance, could indicate that defective
goods were accepted by a procurement o cial in exchange for bribes. Similarly,
complaints led by contractors alleging unfair treatment in a bidding process also
merit attention.
MLA requests. • Requesting jurisdictions may include in their requests a lot of
detailed information on individuals and bank accounts that may lead the requested
jurisdiction to open a domestic case for money laundering. Information shared
through tax exchange agreements also may be useful.
Spontaneous disclosures. • Foreign competent authorities and FIUs may sponta-
neously provide the authorities in another jurisdiction with information on cor-
ruption activities that have taken place in the other jurisdiction or have involved
one of its nationals. Such information may also be passed through formal or
informal practitioner networks (see section 7.3.5 of chapter 7).
30. See United Nations Convention against Corruption (UNCAC), art. 52(1) and (2); and recommenda-
tions 6, 13, and 16 of the FATF 40+9 Recommendations.
Strategic Considerations for Developing and Managing a Case I 21
BOX 2.1 Role and Contribution of FIUs in Asset Recovery Cases
FIUs are agencies responsible for collecting STRs from fi nancial institutions and
other reporting entities, conducting analysis, and disseminating the resulting
intelligence to local competent authorities (typically, law enforcement agencies
and prosecutors and foreign FIUs) to combat money laundering and terrorist
fi nancing. They may be helpful partners for asset recovery practitioners in initiat-
ing a case and conduct an investigation in a number of ways:
Proactive sharing of intelligence with law enforcement and prosecu-•
tors. Where an FIU analysis reveals money laundering or other criminal
activity, FIUs will proactively provide intelligence reports to local law
enforcement or prosecutors. Where appropriate, FIUs will also provide
intelligence reports to foreign FIUs bilaterally, often through the Egmont
Group’s secure Web site. That information is analyzed further and may be
passed to foreign law enforcement and prosecutors.
Provision of ancillary intelligence.• Most FIUs maintain a central database of
all STRs, CTRs, cross-border currency reports, intelligence reports, and any
queries received from law enforcement agencies or foreign FIUs. The intelli-
gence received and stored may not have been suffi cient on its own to warrant
a report to law enforcement; however, it may be useful to law enforcement
offi cials in understanding the activity of an investigation’s targets, identifying
associates, and forming links with the investigations of other agencies.
Expertise in fi nancial matters.• Financial intelligence analysts are familiar
with fi nancial services and products and with money laundering typologies,
and they are experienced in analyzing fi nancial records and fl ows. Such
expertise is critical throughout an investigation and prosecution, and FIUs
may be a helpful resource in this regard.
Personal contacts and networks.• FIUs will have contacts in fi nancial insti-
tutions, other domestic agencies, and foreign FIUs (through the Egmont
Group) that may be helpful resources for practitioners.
Ability to institute an administrative freeze.• Some FIUs are able to restrain
funds for a brief period of time (see section 7.3.4), thereby helping practitio-
ners quickly preserve assets prior to the obtaining of a formal court order.
Practitioners have found FIUs to be most effective as partners. Such a relation-
ship requires a two-way sharing of relevant intelligence between the FIU and the
practitioner: both upstream and downstream rather than a one-way fl ow of intel-
ligence from the FIU to the practitioner. Practitioners have found that such a
practice increases the intelligence available to FIUs and ultimately improves the
fi nancial analysis that the FIUs produce.
Auditors. • Companies are commonly subject to annual audits of their nancial
statements, and individuals are audited by tax agencies. Similarly, governments
usually establish auditing or regulatory agencies (for example, o ces of inspectors
general, courts, inspection agencies, and specialized accounting o ces) to oversee
government departments or state-owned companies. ese audits frequently
22 I Asset Recovery Handbook
uncover discrepancies between movements of funds and actual business transac-
tions, thereby signaling possible corrupt activities. In particular, examination of
nancial documents relating to revenues or expenses may reveal patterns of cti-
tious billing typical of corruption and bribery cases.
Whistle-blowers.• Initial referrals for investigation may come from employees or
individuals who suspect malfeasance within their institutions or who are hoping
for lenient treatment for their own crimes.
31
Media and civil society reports.• Suspicious activity or arrests of foreign o -
cials on corruption charges are o en relayed by the news media or through
reports of civil society and nongovernmental organizations. Such reports may
trigger an investigation directly or may prompt the ling of an STR that leads to
an investigation.
Asset and income declarations by public o cials.• Many jurisdictions oblige
public o cials to disclose information regarding their assets and income.
32
ese
declarations may highlight signi cant increases in assets that are inconsistent
with an individual’s declared income or even falsi cation of declared income.
Comparing declared assets against those assets used by public o cials may point
toward illicit enrichment.
Intelligence services. • Information may be received from an intelligence agency
or through intelligence services located in another government agency (for exam-
ple, law enforcement or a regulatory authority).
Proactive investigations. • Practitioners may also actively seek information from
potential sources. ey may monitor the activities of sensitive industries or those
susceptible to money laundering and corruption, such as natural resource extrac-
tion or arms dealing.
2.2 Assembling a Team or Unit, Task Forces, and Joint Investigations
with Foreign Authorities
Particularly in large, complex cases, it will be important to assemble a multidisciplinary
team or unit to ensure the e ective handling of the case and eventual con scation. is
team likely will comprise a range of individuals, including nancial investigators and
experts in nancial analysis, forensic accountants, law enforcement o cers, prosecu-
tors, and asset managers. Experts may be appointed from the private sector or seconded
31. Many jurisdictions have incorporated whistle-blower protections and procedures into legislation. Haiti,
for example, enshrined the concept—referred to as “public outcry”—in its 1987 constitution. See also
UNCAC, art. 33.
32. UNCAC art. 8(5), 52(5), and 52(6) require states parties to consider establishing such systems; and
there are approximately 114 jurisdictions with systems in place for disclosure to an ethics o ce, anticor-
ruption body, or other government department. See eodore S. Greenberg, Larissa Gray, Delphine
Schantz, Carolin Gardner, and Michael Lathem, Politically Exposed Persons: Preventive Measures for the
Banking Sector (Washington, DC: World Bank, 2010), 42; Ruxandra Burdescu, Gary J. Reid, Stuart Gilman,
and Stephanie Trapnell, Stolen Asset Recovery—Income and Asset Declarations: Tools and Trade-o s
(Washington, DC: StAR Initiative, conference edition released November 2009). Documents are available
at www.worldbank.org/star.
Strategic Considerations for Developing and Managing a Case I 23
from other agencies, such as a regulatory authority, the FIU, a tax authority, an audit-
ing agency, or the o ce of an inspector general. Depending on its jurisdiction and
circumstances, the case will likely involve investigative and prosecutorial teams and
may expand to a joint task force of the relevant agencies or a joint investigation with
another jurisdiction.
33
2.2.1 Investigative and Prosecutorial Teams
Investigative teams should include individuals with the expertise necessary to analyze
signi cant volumes of nancial, banking, and accounting documents, including wire
transfers, nancial statements, and tax or customs records. ey should also include
investigators with experience in gathering business and nancial intelligence; identifying
complex illegal schemes; following the money trail; and using such investigative tech-
niques as electronic surveillance, wiretapping, search warrants, and witness interviews.
In some cases, it may be useful or necessary to appoint experts or consultants who bring
technical expertise in nancial analysis, forensic accounting, and computer forensics.
Prosecutors also require similar expertise and experience to e ectively present the case
in court. Special prosecutors may be appointed in cases involving high-ranking o cials
to prevent con icts of interest, to guarantee independent investigations, and to ensure
that the process is credible.
Normally, a high-ranking prosecutor should lead the investigation or follow investi-
gations conducted by the investigating magistrate or law enforcement because the
prosecutor ultimately is responsible for presenting the case to the court. He or she
must ensure that law enforcement agencies collect the necessary evidence to estab-
lish the o enses, provisional measures, and con scation.
34
In addition, the prosecu-
tor acts as an interface with judges when law enforcement o cers need judicial
authorization to use special investigative tools, such as wiretapping, searches, arrests,
and plea agreements.
e law enforcement or prosecution agencies having primary responsibility for the
speci c o enses involved in a case o en have the capacity to gather and present the
evidence required for the purpose of con scation. Where possible, there is also merit
in creating specialized con scation investigation and prosecution units to support pri-
mary criminal investigation teams. Experience suggests that it can be di cult when
law enforcement o cers and prosecutors are responsible for both the speci c o ense
and the con scation. In some jurisdictions, for example, criminal prosecutors are not
assigned until the investigation is largely complete—a point too late for the purposes
of asset con scation. In addition, criminal investigators and prosecutors have large
33. e term “investigative teams” includes investigations or intelligence gathering that takes place before
and a er the initiation of charges against the defendant. In some jurisdictions, the term “investigation” is
used exclusively for investigations that follow the initiation of formal charges.
34. In some civil law jurisdictions, investigating magistrates may lead the investigations from the beginning
of the case until its nal adjudication; however, prosecutors can appeal their decisions.
24 I Asset Recovery Handbook
caseloads and tend to give priority to obtaining the criminal conviction, not necessar-
ily the con scation.
With the establishment of specialized con scation units, con scation investigators and
prosecutors develop the specialized skills needed to present evidence e ectively for the
purpose of enforcing con scation laws. Con scation investigators will generally go far-
ther than will criminal investigators in identifying and tracing assets for the purpose of
con scation, and they are well placed to undertake international inquiries to follow
assets that have le the jurisdiction. If such an approach is taken, con scation practitio-
ners must work closely with their counterparts pursuing the criminal prosecution. Fail-
ure to do so can have negative consequences for the criminal case—and that, in turn, is
likely to a ect con scation e orts.
e team may be based in anticorruption agencies that have the authority to investi-
gate, prosecute, or both; or in regular law enforcement and prosecutorial agencies.
Wherever the team is situated, it will be critical that investigators and prosecutors are
granted, in law, the authority to investigate or prosecute (or both) the o enses and to
con scate the proceeds and instrumentalities of those o enses.
35
2.2.2 Joint Task Forces
Authorities may consider forming joint task forces that comprise the various agencies,
law enforcement authorities, and private sector actors who have an interest in the pros-
ecution or recovery of assets (or both). A joint task force may include representatives
from departments of tax, customs, justice, foreign a airs, treasury, and immigration; as
well as participants from the FIU, the regulatory authority, the central authority, and
the asset management authority. Such task forces facilitate exchange of information and
skills and assist in discussions and reviews of the latest developments in the case. It will
be important to clarify the respective roles of the team members and other law enforce-
ment authorities to avoid confusion or rivalries among the agencies.
2.2.3 Joint Investigations with Foreign Authorities
In demanding and di cult investigations requiring coordinated action with other juris-
dictions, a joint investigation or agency task force involving authorities in other jurisdic-
tions should be considered.
36
Where permitted, a joint investigation avoids duplicating
e orts and can facilitate cooperation, the exchange of information, and the development
of a common strategy (that is, a case may be pursued in one jurisdiction or multiple
jurisdictions). It can avoid some of the pitfalls of making an MLA request (such as alert-
ing the targets to the investigation and losing time with subsequent appeals) because the
35. Generally, foreign jurisdictions will refuse to grant MLA to investigations or prosecutions led by non-
judicial agencies or agencies not authorized at law.
36. UNCAC, art. 49, and United Nations Convention against Transnational Organized Crime (UNTOC),
art. 19, call on states parties to consider establishing joint investigations on a case-by-case basis.
Strategic Considerations for Developing and Managing a Case I 25
practitioners are all working with a common purpose. Where there are multiple venues
with ongoing litigation, a joint investigation (and case conferences) may help ensure that
the various litigants are informed of what is happening in the other jurisdictions. Where
capacity and the domestic legal framework for provisional measures and con scation
are weak in one jurisdiction, a joint investigation can facilitate skills transfer among
members or permit the pursuit of the matter in the jurisdiction with the more e cient
and e ective legal framework.
Nevertheless, joint investigations can be di cult to coordinate, and practitioners will
need to consider whether the conditions for a successful joint investigation are pres-
ent. ey should verify the existence of appropriate legal frameworks that enable com-
petent authorities to conduct joint investigations in the absence of an MLA request,
the gathering of evidence by foreign practitioners in the host jurisdiction, and the
direct sharing of information. Because each participating authority must have juris-
diction over an o ense, laws that provide extraterritorial jurisdiction are helpful. In
addition, practitioners should con rm the presence of su cient resources, proper
training, security measures for operational information, and an environment of trust
and commitment. Finally, the parties will need to agree on a common purpose, dura-
tion, and procedures; and on how information collected will be used. Such agreements
may be set out in a memorandum of understanding.
2.3 Establishing Contact with Foreign Counterparts and
Assessing Ability to Obtain International Cooperation
Establishing a liaison with foreign practitioners early in the case can help assess poten-
tial di culties, build a strategy, obtain preliminary information and informal assis-
tance, con rm requirements for MLA requests, and create goodwill in the international
cooperation process. Making connections with law enforcement attachés or liaison
magistrates posted to embassies is a good way to ensure contact with the authorities in
foreign jurisdictions. In larger cases, face-to-face meetings with counterparts have
proved essential to successful international cooperation. Direct contact helps demon-
strate political will and facilitate discussions of obstacles, strategies, and needed assis-
tance. Some authorities have opted to convene a case conference or workshop that
involves representatives from each of the foreign authorities having a potential interest
in the case. is tactic is particularly e ective in cases that involve a number of jurisdic-
tions or where resource constraints may limit foreign travel. An alternative is to travel
to the foreign jurisdiction. Section 7.1 describes this process and possible points of
contact in greater detail.
Di erences in legal traditions (common law versus civil law) and among con scation
systems (value-based versus property-based systems) create challenges and frustrations
in cooperating with foreign jurisdictions. Terminology tends to be di erent as do the
procedures used, evidentiary burdens, and time required to obtain assistance. For
example, some civil law jurisdictions can restrain or seize assets more easily because
prosecutors or investigating magistrates have this power and can take swi action (in
26 I Asset Recovery Handbook
contrast to common law jurisdictions that require an application before a court). A
value-based con scation system will need only evidence that the assets are linked to a
person who has been accused or convicted of a crime, whereas a property-based con-
scation system demands proof of the connection between the asset and the o ense.
Use of incorrect terminology or failure to meet the necessary evidentiary requirements
can lead to confusion, delay, and even the refusal of assistance. is handbook attempts
to highlight some of these di erences; however, it will be important to use personal
contacts on a continuing basis to learn about the other systems and con rm the proper
course of action.
Authorities pursuing an international asset recovery e ort should verify as soon as pos-
sible whether they can meet the conditions for obtaining informal assistance and MLA
from foreign jurisdictions, or whether there may be obstacles in obtaining such assis-
tance. A potential obstacle to MLA is meeting dual criminality requirements—namely,
that the conduct underlying the request for assistance is criminalized in both jurisdic-
tions. Because dual criminality should be reviewed on the basis of conduct, not termi-
nology, it may be overcome by providing facts or evidence that support o enses accept-
able to the requested jurisdiction. For example, if the requested jurisdiction does not
have laws against illicit enrichment, practitioners will have to supply facts supporting
another crime that is an o ense in the requested jurisdiction. Box 2.2 outlines more
BOX 2.2 Obstacles to International Cooperation
The following obstacles may compromise efforts toward international cooperation:
Legal obstacles, including insuffi cient laws and procedures on international •
cooperation, enforcement of foreign orders, return of assets, lack of legal
authority to cooperate informally, limited ability to provide assistance before
the fi ling of criminal charges, statutory time limits for investigations and
prosecutions in the requesting jurisdiction that may not allow suffi cient time
for the MLA process, and laws that require disclosure to the asset holder;
Need to meet the dual criminality requirement and provide the necessary •
undertakings (for example, reciprocity, limits on use of information, or pay-
ment of costs or damages);
Reasons for refusal, including essential interests, nature of penalty, ongo-•
ing proceedings in the requested jurisdiction, lack of due process in the
requesting jurisdiction, and specifi c crimes (such as tax evasion)
a
;
Length of process (delay) due to formalities, processing times, and appeals;•
Evidentiary requirements that are too diffi cult to meet (for example, a •
request may be considered a “fi shing expedition” because it is overbroad
and lacks suffi cient details to identify the bank account concerned); and
Differences in confi scation systems that may lead to problems in enforce-•
ment.
a. It is uncertain whether tax evasion is covered under the United Nations Convention against Corruption.
Strategic Considerations for Developing and Managing a Case I 27
speci c examples of problems that may be encountered, and chapter 7 discusses these
issues in greater detail.
If MLA requests for enforcement of domestic provisional measures and con scation
orders will not be granted, then the other avenues must be considered. It may be pos-
sible to use NCB con scation or civil law actions (including formal insolvency pro-
cesses) to recover the stolen assets or provide the case materials and evidence to sup-
port a prosecution in a foreign jurisdiction.
2.4 Securing Support and Adequate Resources
e demonstrated and credible intent of political actors, civil servants, and mecha-
nisms of the state to combat corruption and recover assets—referred to as “political
will”—is a necessary precondition for asset recovery. Without political will and the sup-
port of government leaders, lack of resources and political interference may become
major obstacles in developing a case.
37
Practitioners will need to identify allies and
build support for the case, both at the political level and among the various agencies.
Strong public support developed with the help of the media (particularly investigative
journalists) and nongovernmental organizations can help generate or maintain high-
level political will. Regular progress reports to senior political o cials in which needs
and resources are discussed may help enhance and maintain commitments. Likewise,
practitioners will need to take e orts to minimize possible interferences, particularly if
potential targets are political allies or personal friends of government o cials. ese
alliances may extend into other jurisdictions and lead to problems with international
cooperation or to tipping o the targets.
In addition to securing political and public support, adequate funding for each stage of
the asset recovery e ort should be ensured—preferably through legislation. Asset
recovery investigations may be overwhelming for a developing jurisdiction because
they require a team of practitioners with the ability to analyze bank records, trace and
secure funds in foreign jurisdictions, dra proper MLA requests, and eventually obtain
a nal con scation order.
If the authorities are seeking to conduct a domestic investigation and prosecution, there
may be foreign jurisdictions that are willing to contribute personnel (for example, a
mentor), funding, or training for practitioners. Even civil actions may not be out of
reach: some jurisdictions have helped fund private civil actions against corrupt o cials
who have misappropriated assets from a low-capacity jurisdiction, and private law rms
have accepted cases on a pro bono or contingency-fee basis.
In the absence of political support and adequate resources for a domestically led inves-
tigation and recovery through con scation or a civil action, authorities may decide to
37. For a discussion of how the lack of political will can impede asset recovery, see the forthcoming study
described in footnote 28.
28 I Asset Recovery Handbook
provide the case materials and evidence to foreign authorities (assuming jurisdiction)
to assist in foreign proceedings.
2.5 Assessing Legislation and Considering Legal Reforms
It will be important for the authorities to determine whether adequate and e ective
laws are in place, both domestically and in the foreign jurisdiction.
38
is will include
legislation on the various legal avenues, as well as asset management and international
cooperation (see chapter 5 on asset management and chapter 7 on international coop-
eration). Con scation, for example, might result from general legislation providing for
con scation of proceeds or instrumentalities of crime, or from provisions applying to a
speci c o ense. In both cases, authorities should make sure that con scation related to
the crimes they investigate is legally possible.
When legislation on a particular legal avenue is insu cient, an alternative avenue may
have to be considered. Or it may be possible in some jurisdictions to apply new proce-
dures to crimes committed before the laws were enacted. As an example, introducing
plea agreements allowing peripheral defendants to plead guilty to a lesser charge or with
a recommendation of a sentence lighter than the maximum may encourage cooperation
in locating evidence relating to more important targets. at is what happened in Peru
in the context of the Montesinos case (see box 2.3). Because ex post facto legislation or
38. e Internet and contact with foreign practitioners can be helpful resources for foreign legislation. Some
jurisdictions will publish laws and guidance on government Web sites. See appendix J for some examples.
Other resources for legislation include the International Money Laundering Information Network (http://
www.imolin.org) and the UNCAC Knowledge Management Consortium and the Legal Library (to be
released in late-2010 at http://www.unodc.org).
BOX 2.3 Strategic Decisions in Peru—Legislation Allowing
Plea Agreements
One of the important strategic steps taken by the government of Peru in the early
phases of its investigation into Vladimiro Montesinos, chief of Peru’s intelligence
service under President Alberto Fujimori, was the adoption of Law 27.738. The
law essentially established a plea agreement mechanism for investigations into
organized crime. It was unique because the concept of “guilty pleas” and plea
agreements did not exist in Peru or in many other civil law jurisdictions, as it does
in many common law jurisdictions. The law allowed members of the criminal
organization subject to prosecution (with the exception of leaders and some pub-
lic offi cials) to engage with prosecutors in plea agreements, often providing infor-
mation in exchange for a reduced sentence.
The law secured convictions and avoided years of litigation. Most important, it
enabled the Peruvian authorities to quickly obtain information on the fl ow of
funds and—through a waiver process—to recover assets amounting to more
than $175 million located in foreign jurisdictions.
Strategic Considerations for Developing and Managing a Case I 29
procedures are likely to face constitutional scrutiny, it is important at the outset that
practitioners consider the adequacy and constitutionality of the laws.
39
2.6 Addressing Legal Issues and Obstacles
In the early phases of an asset recovery case, practitioners will need to assess potential
legal issues and obstacles and consider options for addressing them. is will include
issues with jurisdiction, immunities enjoyed by suspect o cials, statute of limitations,
return provisions, and applicable standards of proof.
2.6.1 Jurisdiction
Jurisdiction is the practical authority granted to legal authorities to investigate, prose-
cute, adjudicate, and enforce legal matters.
40
Before an action is launched, authorities
must verify that courts can claim jurisdiction.
In criminal proceedings, territorial jurisdiction over o enses committed by domestic or
foreign o enders within the national territory will be critical. Jurisdiction over the per-
son may also allow the authorities to claim jurisdiction for crimes committed by their
nationals or incorporated entities in a foreign jurisdiction. In some jurisdictions, the
commission of a single element of the crime on national territory will be su cient, even
if other elements were committed in a foreign jurisdiction. Consider, for example, a
situation in which the corruption o ense was committed in a foreign jurisdiction, but
money was laundered using domestic banks and intermediaries. Some authorities will
claim jurisdiction even if some peripheral acts related to the o ense have “touched”
their territory. In the absence of both territorial and personal jurisdiction, the o enses
can only be prosecuted by the authorities in the foreign jurisdiction (see section 9.1 in
chapter 9 for a more detailed discussion of jurisdictional issues).
41
A challenge with cases that are multijurisdictional is that a foreign authority with juris-
diction may decide (or be obligated) to start its own case. And it may do so based on
the information provided by the requesting jurisdiction during informal assistance and
the submission of an MLA request. Because such action could derail a domestic case by
alerting the targets or suspending an MLA request, it will be important for practitio-
ners to be aware of the issue, identify when it is applicable, and undertake necessary
39. For example, the retroactivity of NCB con scation laws has been raised in cases in Liechtenstein, ai-
land, and the United States. See eodore S. Greenberg, Linda M. Samuel, Wingate Grant, and Larissa Gray,
Stolen Asset Recovery—A Good Practices Guide to Non-Conviction Based Asset Forfeiture (Washington, DC:
World Bank, 2009), 45–46.
40. UNCAC, art. 42; UNTOC, art. 15; and the United Nations Convention against Narcotic Drugs and
Psychotropic Substances, art. 5 oblige states parties to adopt the measures necessary to establish jurisdic-
tion over the o enses, in accordance with the convention.
41. is is true, for example, if a foreign national misappropriates assets from a foreign subsidiary of a state-
owned company and if the money laundering activities were conducted in foreign jurisdictions.
30 I Asset Recovery Handbook
coordination to ensure that both cases eventually proceed without di culty. Chapter 9
provides additional detail on proceedings initiated by foreign authorities.
2.6.2 Immunities Enjoyed by Offi cials
Immunity from prosecution enables some public o cials to avoid prosecution for
criminal o enses. In most jurisdictions, immunities incorporated into domestic laws
or constitutional provisions are referred to as “national immunities.” In addition, there
are “international immunities” that apply in all jurisdictions under customary interna-
tional law and treaties, including functional and personal immunity. Functional immu-
nity is granted to foreign o cials performing acts of state (for example, a head of state
or head of government, a senior cabinet member, a foreign minister, and a minister of
defense); personal immunity shields some foreign o cials (particularly heads of state
and diplomatic and consular agents) from arrest and criminal, civil, or administrative
proceedings (typically, while in o ce). Functional immunity may protect foreign o -
cials a er they leave o ce, whereas personal immunities normally cease at that time.
If the asset recovery action concerns a head of state, a member of parliament, a judge,
or other high-ranking authority, practitioners must consider the immunities enjoyed by
these o cials.
42
In particular, practitioners should con rm the extent of the immunity
(for example, whether it is national or international, functional or personal; and whether
it shields the o cial from criminal, civil, or administrative liability); the possibility that
the immunity can be waived; and, if necessary, the opportunity to lodge charges against
other individuals implicated in the crimes, including family members, accomplices,
and those people involved in the laundering of funds. Some jurisdictions have changed
immunity laws to allow prosecution but not actual incarceration of an o cial.
43
In some
cases, a jurisdiction may not recognize the national immunities of another jurisdiction,
and it may proceed with a prosecution for money laundering or foreign bribery.
44
Even
international immunities have been set aside in cases involving the restraint and seizure
of assets held in foreign nancial institutions.
45
If the success of criminal proceedings
appears to be doubtful, but civil liability can be established, avenues including NCB
con scation and civil proceedings should be explored.
42. UNCAC, art. 30 requires states parties to maintain an appropriate balance between immunities and the
possibility of e ectively investigating, prosecuting, and adjudicating o enses.
43. Law 25.320 of 2000 (Argentina), http://www1.hcdn.gov.ar/dependencias/dip/textos%20actualizados/
25320%20Ley%20de%20fueros.pdf.
44. e United Kingdom has prosecuted Nigerian governors for corruption-related money laundering
o enses in circumstances where national immunities were in force. See David Chaikin and J. C. Sharman,
Corruption and Money Laundering: A Symbiotic Relationship (New York: Palgrave Macmillan, 2009),
89–90.
45. In a case involving the bribery of Kazakh o cials by an American businessman, the Swiss Federal Tri-
bunal refused to unfreeze $84 million held in Swiss bank accounts, despite Kazakh claims that the money
was protected by the doctrine of sovereign immunity. David Chaikin, “International Anti-Money Launder-
ing Laws: Improving External Accountability of Political Leaders,” U4 Brief 4 (August 2010): 2–3. e
funds were eventually con scated by the United States using NCB con scation (see footnote 17).
Strategic Considerations for Developing and Managing a Case I 31
2.6.3 Period of Prescription or Statute of Limitations
In most jurisdictions, it is impossible to initiate criminal or civil proceedings once a
certain period of time has passed since the commission of the o ense—the “period
of prescription” or the “statute of limitations.” e time period varies among jurisdic-
tions and with the severity of the o ense—that is, the more severe o enses generally
allow for lengthier limitation periods.
46
Because the period begins a er the commis-
sion of the o ense, the start of the time period may be delayed or suspended (tolled)
in the event of o enses that continue to occur over a period of time.
47
In addition, the
clock may be suspended or even restarted by certain events, including investigations
by law enforcement, the commencement of formal proceedings, or the ight of the
o ender. Moreover, in some jurisdictions, the start of the limitation period may be
delayed until the o ense is discovered or until a er the public o cial has le o ce.
48
For example, if ctitious invoices and false accounting conceal bribes paid to an
intermediary, the statute would not start to run until a er the discovery of the fraud.
e concept of “discovery” will be mandated under statute or by courts; determin-
ing the actual date at which discovery occurred will frequently be adjudicated before
the court.
e expiry of the limitation period presents a challenge for practitioners, and it is even
more acute in cases of corruption: the misappropriation of assets or evidence of brib-
ery is o en not discovered until long a er the corrupt o cial has le o ce. In addition
to obstacles arising from the short duration of the limitation periods and from some
jurisdictions’ lack of discovery provisions, some jurisdictions require that the predi-
cate o ense for money laundering be within the limitation period. In addition to
remaining mindful of the applicable limitation periods, o cials seeking to recover
stolen assets should:
identify o enses that apply a more favorable limitation period (for example, •
embezzlement, money laundering, and possession of stolen assets);
research laws or court decisions that delay the start of a limitation period until •
discovery of the crime or until the public o cial has le o ce, or that suspend
the limitation period if assets or the corrupt o cial are located outside the
jurisdiction;
verify whether speci c actions by prosecutors or law enforcement agencies have •
suspended or restarted the time limitation;
46. For example, a prosecution for homicide may have no limitation period, whereas a prosecution for the
may be limited to a ve-year period following the o ense.
47. Under the “continuing o ense doctrine” in the United States, if the o ense is continuous, then the
practical e ect of its ongoing nature is to extend the statute “beyond its stated term.” Toussie v. United
States, 397 U.S. 112, 114, 90 S.Ct. 858, 25 L.Ed.2d 156 (1970). “Conspiracy . . . is the prototypical continuing
o ense.” United States v. Jaynes, 75 F.3d 1493, 1505 (10th Cir., 1996).
48. In Argentina, for example, the period starts for all defendants a er the public o cial has le o ce
(Criminal Code [Argentina], art. 67). France and the United Kingdom also apply the principle of discov-
ery, as does the United States in NCB cases (Title 19, United States Code, sec. 1621).
32 I Asset Recovery Handbook
explore all legal avenues—including criminal and NCB con scation, civil actions, •
a request that a foreign authority initiate proceedings—to determine the most
favorable time limitation
49
; and
consider continuing the investigation because criminal investigations of an •
o ense for which the statute of limitations has expired may lead to the discovery
of another o ense that is not statute barred.
2.6.4 Legislative Provisions on Asset Return
In choosing between foreign and domestic criminal proceedings or other avenues, it is
important to consider how this decision will in uence the amount of assets to be recov-
ered. Embezzled or laundered public funds recovered pursuant to the United Nations
Convention against Corruption must be returned to the requesting jurisdiction.
50
In
addition, some jurisdictions will return assets where con scation was the result of the
direct enforcement of a foreign order and there is a treaty in place. Assets may also be
returned directly to the legitimate owner or jurisdiction harmed by corruption o enses
through a court order for damages or compensation. However, if the assets were con s-
cated outside these parameters—perhaps through a domestic money laundering case
conducted by foreign authorities—the amount of return will depend on the sharing
agreement in place or the prerogative of the requested jurisdiction.
51
Furthermore, for-
eign proceedings may be limited to money laundering o enses, and that may be a bar-
rier to con scating the proceeds from predicate or related o enses, particularly in
jurisdictions that only con scate assets linked to the o enses that form the basis of the
con scation (see section 6.2.2 of chapter 6).
2.6.5 Standards of Proof
Practitioners must also consider whether the evidence is su cient to meet the stan-
dards of proof required for tracing, provisional measures, con scation, civil actions, or
conviction—both domestically and, where applicable, in foreign jurisdictions.
Although the applicable standard will vary among jurisdictions, it is generally true
that the more intrusive the investigative technique or measure, the higher the eviden-
tiary standard of proof.
49. In the United States, the statute of limitations for NCB con scation—unlike the statute of limitations for
criminal prosecutions—begins to run from the discovery of the o ense giving rise to the con scation action;
it can be suspended if the property is located beyond U.S. borders (Title 19, United States Code, sec. 1621).
50. UNCAC art. 57(3) requires return of assets to the requesting state party in case of embezzlement or
laundering of public funds when executed in accordance with the convention.
51. is was one of the factors that in uenced Peru’s decision in the Montesinos case to conduct a domestic
case to pursue assets in Switzerland. Although it was possible to have Switzerland prosecute parts of the case
in Switzerland under drug legislation, asset sharing laws at that time would have allowed only a portion of
the funds to be returned to Peru. Following strategy discussions with Switzerland, Peru decided to conduct
domestic cases and use MLA and legislative waivers to recover a larger portion of the funds. For additional
details, see section 1.3.1 of chapter 1.
Strategic Considerations for Developing and Managing a Case I 33
For practitioners involved in cases that require international cooperation, it will be
important to understand that common and civil law jurisdictions di er in the termi-
nology used and the way that the standard of proof is understood. In most common
law jurisdictions, a conviction requires proof “beyond a reasonable doubt,” and the
con scation (whether NCB or criminal) requires the lower “balance of probabilities”
or “preponderance of the evidence” standard that is normally applied in civil (private
law) proceedings. In most civil law jurisdictions, the standard of proof is the same for
a conviction, a criminal or NCB con scation, or a nding for the plainti in a civil
proceeding—namely, an “intimate conviction” of the truth of the evidence. Common
law jurisdictions apply a probabilistic approach to assessing the evidence; that is, the
quanti able likelihood of the occurrence of the event expressed as an odds or percent-
age. Civil law jurisdictions focus more on the judge’s subjective impression. Figure 2.1
illustrates the di erent standards of proof that apply, from investigative techniques to
conviction or con scation.
Practitioners should be aware of these distinctions to ensure that evidence su cient to
meet the applicable standard is provided. Where evidence is insu cient to meet the
standard of proof required under one approach, practitioners may have the option to
consider another avenue. For example, the inability to establish a criminal conviction
“beyond a reasonable doubt” will prevent criminal con scation. Nevertheless, it may be
possible to recover the proceeds and instrumentalities of corruption through a private
civil action or through NCB proceedings, domestically or in a foreign jurisdiction, if
di erent standards of proof are applied.
FIGURE 2.1
Standards of Proof
Reasonable grounds to
believe or probable
cause
Balance of probabilities
or preponderance
of the evidence
Proof beyond a
reasonable doubt
Reasonable
grounds to
suspect
Tracing
measures
Provisional measures,some
investigative techniques
(such as a search and
seizure order)
Intimate conviction
Conviction
Intimate conviction
Civil
law
Common
law
Evidence needed
to establish the
truth
Evidence needed
to establish the
truth
Civil
action
Confiscation
order;
Source: Authors’ illustration.
34 I Asset Recovery Handbook
2.7 Identifying All Liable Parties
In most jurisdictions, parties who knowingly facilitated the transfer of proceeds of cor-
ruption or who received illicit assets may be held liable under various civil or criminal
statutes, including complicity, conspiracy, willful blindness, negligence, and fraudulent
abstentions or omissions. is is particularly true for legal entities and their directors,
as well as bankers, nancial managers, real estate agents, notaries, and lawyers who
deliberately fail to make reasonable inquiries. In some jurisdictions, courts may not
accept claims of lack of knowledge when consultancy fees are not proportionate to ser-
vices rendered or are paid to agents with no relevant technical expertise. Other jurisdic-
tions will hold the parent company liable for acts committed by a subsidiary if there is
direct involvement by the parent’s employees and o cers.
52
Targeting receiving or facilitating parties may have two major advantages: First, it may
increase chances of claiming restitution or compensation from entities or individuals
other than the corrupt o cial. Second, it is sometimes possible to obtain information
and cooperation from third parties or co-conspirators. However, practitioners must
consider the potential disadvantages of complicating the management of the case and
diluting resources.
2.8 Specifi c Considerations in Criminal Cases
Outlined below are a number of additional considerations for practitioners in pursuing
criminal cases.
2.8.1 Identifying Applicable Criminal Offenses
Bribery is not the only possible charge to consider in plotting strategy for stolen asset
recovery proceedings. Figure 2.2 outlines some of the charges that practitioners should
consider lodging.
Corruption frequently involves the commission of several criminal o enses. In select-
ing the o enses to pursue, practitioners will have to consider the following aspects: the
facts of the case; whether the direct or circumstantial evidence ful lls elements of the
o enses; the use of procedural aids, such as rebuttable presumptions
53
; the likelihood of
conviction; sentencing interests; the public interest; and, where applicable, the ability to
obtain foreign assistance and enforcement.
52. Working Group on Bribery in International Business Transactions, “Typologies on the Role of Interme-
diaries in International Business Transactions” (Organisation for Economic Co-operation and Develop-
ment, 2009).
53. A number of jurisdictions employ rebuttable presumptions that e ectively assist the prosecution or
plainti in meeting the burden of proof. For example, if the prosecution establishes the defendant’s involve-
ment in organized crime, the defendant’s assets are presumed to be the proceeds of criminal activity (unless
the defendant can overcome the presumption). For additional examples, see section 6.3.1 of chapter 6.
Strategic Considerations for Developing and Managing a Case I 35
FIGURE 2.2
Criminal Charges to Consider
Source: Authors’ illustration.
Note: Descriptions of the terms used in this fi gure may be found in appendix A of this volume.
Breach of public procurement
regulations
•
•
Collusion
•
Forgery / falsification of documents
•
Accounting crimes
•
Tax violations
•
Customs fraud / smuggling
•
Mail and wire fraud
•
Conspiracy
•
Assistance by aiding or
abetting
•
Obstructio
n of justice
Misappropriation
or diversion of
funds and
property
Theft or larceny
Embezzlement
Fraud, false pretenses,
misrepresentation
Conversion or transfer of property
Concealment and disguise
Acquisition, possession, or use of
proceeds of crime
Possible
corruption case
charges
Bribery and
related
offenses
Laundering,
concealment,
acquisition,
possession, or
use of proceeds
of crime
Facilitating
crimes
Bribery (national and foreign
public officials)
Trading in influence
Abuse of functions
Illicit enrichment
Conflict of interest
Illegal financing of political
parties or campaigns
Extorting
In addition to the more obvious o enses of corruption, practitioners should consider
other o enses that could increase the opportunity for securing a conviction. ese
o enses include conspiracy, aiding and abetting, receipt or possession of proceeds of
crime, or money laundering.
54
Money laundering may be the most e ective o ense to
pursue, particularly in jurisdictions that allow self-laundering and do not require proof
54. In France, tax or false accounting o enses, embezzlement, or breach of trust—o enses frequently asso-
ciated with corrupt activities—may be easier to prove than bribery.
36 I Asset Recovery Handbook
of all elements of the predicate o ense to obtain a conviction.
55
Box 2.4 o ers examples
from the United Kingdom and the United States. Practitioners should be aware that
such decisions may a ect proceedings in foreign jurisdictions, and they should try to
coordinate with foreign counterparts.
e o ense of illicit enrichment has been a particularly useful tool for prosecuting cor-
rupt o cials in a number of jurisdictions, such as Argentina, Brazil, and Colombia.
56
It
penalizes public o cials for any signi cant increase in their declared assets that is not
reasonably corroborated by their lawful income. E ectively, it eases the burden on the
prosecution, which otherwise would be required to establish the various elements of a
corruption o ense (that is, the occurrence of a corrupt act, derivation of a bene t, and
so forth). Some jurisdictions will not recognize illicit enrichment as a criminal o ense,
but will have incorporated it into civil or administrative legislation.
57
Where illicit
55. In Belgium, defendants involved in nancial transactions may be convicted of money laundering if
there is su cient evidence that they knew that assets were of illicit origin. Prosecutors do not have to estab-
lish the elements of the predicate o ense.
56. UNCAC art. 20 and Inter-American Convention against Corruption art. 9 require states parties to
consider adopting provisions.
57. Some jurisdictions that have illicit enrichment as a criminal o ense will use civil avenues to pursue
recovery of the assets.
BOX 2.4 Prosecution of Accounting, Records, and Internal Control
Provisions in the United Kingdom and the United States
In United States v. Siemens,
a
authorities discovered that bribes were paid to
public offi cials to secure government contracts. Bribes were accounted for as
payments to consultants, who subsequently channeled them to the public offi -
cials. Siemens and its subsidiaries in Argentina, Bangladesh, and República Boli-
variana de Venezuela pleaded guilty to charges of conspiracy and violations of
books and records and internal controls provisions in a plea agreement that
resulted in a $450 million fi ne.
In a case involving BAE Systems, the company bribed several public offi cials to
secure arms sales in different jurisdictions. Eventually, BAE Systems reached a
settlement with the United Kingdom and the United States.
b
In the United States,
the company pleaded guilty to charges of conspiring to make false statements in
connection with regulatory fi lings, and it agreed to pay a $400 million fi ne and
make additional commitments concerning ongoing compliance. In the United
Kingdom, the company pleaded guilty to failure to keep reasonably accurate
accounting records, and agreed to pay a £30 million (approximately $47 million)
fi nancial order.
a. U.S. Department of Justice. v. Siemens Aktiengesellshaft, Siemens S.A. (Argentina), Siemens Bangladesh Ltd., Siemens S.A.
(Venezuela), sentencing memorandum Dec. 12, 2008, http://www.siemens.com/press/pool/de/events/2008-12-PK/DOJ2.pdf.
See also Title 18, United States Code, sec. 371; and Title 15, United States Code, sec. 78(b)(2)(B), 78m(b)(5), and 78ff (a).
b. “BAE Systems plc,” news release, February 5, 2010, http://www.sfo.gov.uk/press-room/latest-press-releases/press-releases-
2010/bae-systems-plc.aspx. See also U.S. v. BAE Systems, sentencing memorandum February 22, 2010, No. 1:10-cr-00035 (D.D.C.
2010) (U.S.), http://www.justice.gov/criminal/pr/documents/03-01-10%20bae-sentencing-memo.pdf.
Strategic Considerations for Developing and Managing a Case I 37
BOX 2.5 Examples of Challenges in Establishing the Elements
of the Offense
Bribery and traffi cking in infl uence. May require proof that the bribe was
offered, promised, or paid as part of a “corruption pact” (agreement on terms of
the bribe and quid pro quo in advance) between the briber and the public offi cial.
Securing this proof will be diffi cult if the investigation is conducted well after the
fact. In addition, when bribes are paid overseas by subsidiaries or intermediaries,
prosecutors may need to prove that managers or directors at headquarters knew
or intended that the subsidiary or the intermediary would commit this crime.
Defendants may claim that employees who paid bribes to foreign public offi cials
acted in their personal capacity, fl outing corporate guidelines.
Illicit enrichment. Will necessitate an assessment of an individual’s concealed
assets or income.
Theft or embezzlement. May not apply to real property, services, or intangible
assets.
Money laundering. Usually requires proof of the commission of a predicate
offense, and proof of transactions or schemes organized to conceal or disguise
the illegal origin, ownership, or control of assets.
Forgery or falsifi cation. May require evidence that the falsifi ed documents have
legal signifi cance or consequences. Other documents are frequently not consid-
ered to be subject to forgery. In certain jurisdictions, accounting offenses only
apply to published accounting statements.
Criminal liability of legal entities. May not apply, depending on the jurisdiction
or the specifi c offense.
Fraud. When committed over a long period, the activity may involve hundreds or
even thousands of individual offenses. Prosecution of such offenses can be cum-
bersome or diffi cult. Use of sample or representative charges may have adverse
consequences on related confi scation proceedings. For additional information on
use of representative charges, see section 6.2.2 of chapter 6.
For additional explanation of these offenses, see appendix A of this handbook.
enrichment is criminalized, practitioners must be aware that its use may introduce
obstacles to international cooperation in jurisdictions that do not have the o ense
because of a lack of dual criminality (see section 7.4.2 of chapter 7).
2.8.2 Anticipating Evidentiary Challenges
Practitioners will need to consider the challenges in establishing the speci c elements
of the o ense to the required standard of proof (see examples of these challenges in
box 2.5). In some jurisdictions, there may be rebuttable presumptions that will assist
38 I Asset Recovery Handbook
prosecutors in establishing these elements, whether for the o ense or during the con-
scation stage (see section 6.3 of chapter 6).
A review of the challenges relating to di erent o enses should be conducted on a case-
by-case basis. As an example, illicit enrichment may be easier to prove than bribery in
the absence of written documentation of bribes and quid pro quo during the course of
the preliminary investigation.
58
On the other hand, if practitioners uncover such evi-
dence, bribery will become the easier o ense to prove—especially given that illicit
enrichment still requires the prosecution to gather information on the lifestyle and
assets of the defendant.
2.8.3 Inability to Obtain a Conviction
In most jurisdictions, it is impossible to adjudicate a criminal case in the absence of the
defendant, such as in cases of ight or death. In a few civil law jurisdictions, it may be
possible to proceed with a criminal trial in absentia if the person is a fugitive. However,
convictions in these cases may not be nal because due process requires that court deci-
sions be subject to appeal by the fugitive if he or she is apprehended. In addition, some
con scation laws contain absconding provisions that permit the law to continue to
operate, even in the event of the ight or death of the defendant.
If the defendant is a fugitive, authorities should consider obtaining extradition of the
fugitive in the context of multilateral and bilateral conventions or the legislation of the
jurisdiction to which the fugitive has ed (or both). Extradition can be a very long and
frustrating process involving numerous court decisions and appeals to higher courts. In
addition, if some of the criminal o enses that are the basis of the request are denied by
the extraditing country, the specialty principle forces the requesting country to cease
the investigation or prosecution of these o enses. Alternative options include ling a
complaint with the foreign authorities (leading to criminal or NCB con scation in the
foreign jurisdiction) or initiating domestic NCB con scation proceedings. If the defen-
dant is deceased, authorities may consider a private civil action against the estate of the
decedent (in domestic or foreign courts) or domestic or foreign NCB con scation.
e authorities may not have su cient evidence to meet the standard of proof required
to establish a conviction. In these circumstances, practitioners should explore whether
there may be su cient evidence to proceed through a private civil action or NCB con-
scation (see section 2.6.5 above concerning standards of proof).
2.9 Implementing a Case Management System
To increase e ciency, accountability, and transparency, it will be important that proper
policies and procedures are in place to ensure that o enders are appropriately charged,
58. Note that prosecution for illicit enrichment may cause di culties in meeting the dual criminality
requirement for MLA in some jurisdictions. See section 7.4.2 of chapter 7 for additional information.
Strategic Considerations for Developing and Managing a Case I 39
that evidence is properly gathered and passed from law enforcement to prosecutors to
courts, and that the due process rights of the o ender are respected. Noncompliance
with con dentiality or due process requirements may lead to nulli cation of the domes-
tic case, loss of credibility, and failure to obtain international cooperation from foreign
jurisdictions. Some examples of important policies and procedures are discussed
below.
2.9.1 Strategic Planning and Leadership
Whereas strategies must be set at the beginning of the case, authorities should ensure that
decision making is an ongoing and uid process. Unanticipated di culties or challenges
may arise at any moment in the asset recovery e ort and may call for new investigative
methods or the exploration of other avenues. To ensure maximum exibility, frequent
reviews of the case should bring together policy makers, law enforcement o cers, pros-
ecutors, investigating magistrates, asset managers, and representatives of other partici-
pating agencies. ese meetings should be based on precise, updated, and accurate reports
or records detailing recent decisions and their rationale; and time should be devoted to
anticipating potential challenges or opportunities. Many jurisdictions have found it use-
ful to have one case manager appointed—a person who is responsible for coordinating
meetings, making nal decisions, ensuring resources, and so forth.
2.9.2 Timing and Coordination
e case should be planned to ensure that investigative measures and MLA requests
are coordinated with provisional measures and arrests to prevent the dissipation or
movement of assets or the ight of a target. Where assets will be seized, asset manage-
ment issues must be assessed as part of the planning process. Mechanisms should also
be in place to provide for the safety of key witnesses, law enforcement o cials, attor-
neys, or judges concerned with high-pro le cases. is coordination is particularly
important in the initial phase of the investigation when gathering basic information,
requesting documents, interviewing witnesses, and submitting MLA requests may
alert potential targets and give them a chance to destroy or conceal documentary evi-
dence, in uence key witnesses, move or hide assets, gain political support, and ee to
foreign jurisdictions.
at risk should be assessed constantly and minimized by careful choices of covert
investigative techniques in the early phases of the investigation—for example, physical
and electronic surveillance, monitoring of mail and trash, or use of informants. When
more overt techniques are needed (such as searches of houses or businesses, orders for
seizure or production of documents, or interviews of targets and witnesses), it will be
important to consider coordinating those activities with the timing of arrests and
restraint or seizure of assets. For additional information on these issues, see sections 3.3
(investigative measures), 3.1 and 4.3 (timing provisional measures), 4.2.2 and chapter 5
(asset management).
40 I Asset Recovery Handbook
2.9.3 File Organization and Report Writing
Files should be organized to ensure that deadlines relevant to the case are met: for
example, charges are laid within the prescription period and extensions of provisional
measures, preventive detention of targets, or other temporary remedies are in place.
e case le should include assets targeted for recovery, graphics demonstrating the
ow of nancial transactions, explanations for calculations of criminal proceeds (made
in accordance with domestic legislation), criminal records of targets, and summaries of
testimonial and documentary evidence.
Evidence should be numbered, logged, and stored in a secured location, along with
records of the chain of custody between seizure and storage. Although these prepara-
tions are very time consuming and may appear to impede the development of the case,
they are necessary to ensure the integrity of the evidence or chain of custody.
Report writing is an important aspect of criminal investigation work that is o en
ignored or given lower priority. In asset recovery investigations, however, report writ-
ing takes on an even greater importance because the investigations can be lengthy,
complex, and multijurisdictional. Accurate, timely, and concise reports will assist, for
example, in dra ing the necessary background information to meet evidentiary require-
ments in MLA requests for evidence. It is imperative that practitioners document their
ndings periodically throughout the entire investigation, as well as a er signi cant
events. Reports should be written in a clear and concise manner, preferably on the same
day as the event being described; and should include all relevant information and
events. ey should be reviewed and approved by a supervisor as soon as possible.
2.9.4 Addressing Media Inquiries
Corruption cases, particularly those involving high-pro le o cials, are likely to attract
substantial media attention. Practitioners must be prepared to deal with these inquiries;
otherwise, the inadvertent release of con dential information is likely to have disas-
trous consequences on a case.
In most jurisdictions, responsibility for addressing the media will lie with the attorney
general or director of a relevant government agency (for example, public a airs person-
nel or the department of justice). Typically, a senior o cial in the local o ce or, in large
cases, a senior member of the team is designated as the media contact point. ese
individuals should be properly trained and familiar with applicable guidance and pro-
cedures (if available), such as ways of addressing the media through press releases or
conferences, the types of information that may be disclosed in an ongoing investiga-
tion, and coordination with national counterparts on issues of national or regional
importance. In some cases, practitioners have found it helpful to designate a contact
point for procedural (not substantive) information—an individual who can explain
how the system of justice operates. Ultimately, care must be taken to avoid any state-
ment that would prejudice a legal proceeding against a target.
3. Securing Evidence and
Tracing Assets
One of the biggest challenges in an asset con scation case is producing the evidence
that links the assets to the criminal activities (property-based con scation) or proving
that assets are a bene t derived from an o ense committed by the target (value-based
con scation).
59
To establish this link (also referred to as the “nexus” or a “paper trail”),
practitioners must identify and trace assets or “follow the money” until the link with
the o ense or location of the assets can be determined.
However, it is o en the case that the assets have been moved around the world, using
schemes that involve o shore centers, corporate vehicles, and a variety of nancial
transactions in an e ort to launder the funds and obscure this paper trail. In addition,
cases are o en document-intensive “paper cases” that are time-consuming and compli-
cated and that require multiple skills. ese skills include the abilities to understand
what information can be obtained from nancial institutions; obtain relevant informa-
tion through traditional investigative techniques; analyze bank statements, business
records, nancial documents, and contracts; pierce the corporate veil to determine the
ultimate bene cial owners; assemble corroborative evidence through interviews of wit-
nesses or targets; coordinate with foreign authorities; and organize the information in a
comprehensive and coherent manner.
60
e purpose of this chapter is to introduce some of the techniques that practitioners
can use to trace assets and analyze nancial data, and to secure reliable and admissible
evidence for asset con scation cases. e techniques discussed may also be helpful in
gathering evidence to prove the elements of the o enses that are under investigation.
3.1 Introducing a Plan and Important Considerations
Experience has demonstrated that it is important to trace assets at the early stages of an
investigation, simultaneously with the investigation into the o enses of corruption,
money laundering, and so forth. Establishing a framework or investigative plan is an
important rst step in navigating tracing e orts.
59. For a discussion of property-based and value-based con scation systems, see chapter 6.
60. Some jurisdictions have created specialized units of investigators that trace assets while other investiga-
tors focus on gathering evidence of the criminal o enses or unlawful conduct. ese groups typically work
in close cooperation, and the unit tracing assets only performs actions that will not compromise the crim-
inal investigation.
42 I Asset Recovery Handbook
e overall plan or approach o en depends on whether the preliminary evidence points
to corrupt activities, money laundering, or both. For corruption, law enforcement o -
cials investigate the corrupt activities and then follow the money trail to identify and
recover the proceeds and instrumentalities of crime. In the case of money laundering,
practitioners begin by analyzing nancial transactions to link them to corruption or
other o enses. Speci c steps are likely to include the identi cation of persons, compa-
nies, and assets involved in the case and the connections between them; and an analysis
of the assets and nancial ows.
Particularly in large cases involving signi cant activity and volumes of documentation,
practitioners will nd it helpful to set priorities and focus on speci c types of documents
or accounts or on a particular time frame. For example, securing, obtaining, and analyz-
ing bank account documentation that can be interpreted and mapped out easily is most
useful in money laundering cases where practitioners need to show links between indi-
viduals and companies and to understand the money ow. However, in the case of an
individual living o cash bribes, the more important evidence may be witness statements
of business associates, employees, and neighbors; title information; and tax records.
ere are also a few important considerations to keep in mind when planning and con-
ducting an asset recovery investigation. First, when tracing assets through the nancial
sector, it is important to remember that proceeds of corruption may be commingled
with other assets not linked to the o ense, may change form, and may ow through
various channels. Even if such proceeds change form (for example, $1 million is depos-
ited into one account and portions are subsequently wired to di erent bank accounts or
used to purchase property), the proceeds may be con scated.
61
Second, experience has demonstrated that a corrupt o cial does not hold assets or
bank accounts in his or her own name. Instead, assets are held by other individuals or
companies to disguise the o cial’s role as the bene cial owner—the natural person
who ultimately owns or controls the assets or the bank accounts. It will be important for
practitioners to look into the assets and bank accounts of those potentially involved,
including
relatives, business associates, or close associates;•
intermediaries or “straw men”—individuals who are duped or willingly partici-•
pate in shielding the corrupt o cial by holding an asset or opening and managing
an account, o en for a small fee; and
corporate vehicles, including corporations, trusts, limited liability partnerships, •
and foundations. For a list and description of some corporate vehicles, see
appendix B.
62
61. In this regard, it is important that jurisdictions have broad de nitions of “assets” or “property” and of
the “proceeds of crime” included in their legislation. See United Nations Convention against Corruption
(UNCAC), art. 2(d); and see section 6.2.1 of chapter 6 for a discussion of commingled assets.
62. e Stolen Asset Recovery (StAR) Initiative is conducting a study into the misuse of corporate vehicles
in grand corruption cases (both in the perpetration of the corruption and the laundering of the proceeds)
Securing Evidence and Tracing Assets I 43
In the case of assets held by nancial institutions, some nancial institutions will be
able to provide the name of the natural person who bene cially owns the account.
63
However, not all banks will obtain this information, especially when a chain of legal
persons is used to disguise the ultimate bene cial owner. ey may identify shareholders
or other parties involved; but these may not be the ultimate bene cial owner. Even when
a bene cial owner is identi ed by the person opening the account, this may have been a
false statement intended to hide the corrupt o cial. Given these limits—and the fact
that many other assets do not list bene cial ownership information—practitioners will
need to ensure that the investigation takes steps to determine the actual assets and com-
panies that are bene cially owned by the targets.
Finally, practitioners should continually assess whether it is possible and practical to
institute provisional measures to seize or restrain assets discovered in the course of their
tracing e orts. In some cases, they may decide to keep the account open and monitor the
activity to discover new leads. However, where there is a risk that the target will be tipped
o and subsequently dissipate or move assets, the implementation of provisional mea-
sures should be considered. For a discussion of provisional measures, see chapter 4.
3.2 Creating a Subject Profi le
In all investigations it is essential that practitioners collect and record all basic informa-
tion related to the investigation targets. Practitioners should collect and record infor-
mation that fully identi es the targets and notes any aliases used by those targets. For
easy reference, all of the information should be maintained in an orderly fashion within
the case folder. Box 3.1 provides a checklist of pertinent information that the practitio-
ner should try to gather in the early stages of the investigation.
3.3 Obtaining Financial Data and Other Evidence
As targets are identi ed, practitioners will need to obtain information and nancial data,
and to ensure that reliable and admissible evidence is secured for trial. Depending on the
investigation plan, the nancial data may include all assets and liabilities and all income
and expenses of the targets and their businesses. Documents and other leads will need to
be gathered from a range of sources, including the Internet and other publicly available
sources; government agencies; nancial institutions, including e-banking facilities;
to assist policy makers in designing relevant national policies. e expected publication date is early 2011.
e study will be available at http://www.worldbank.org/star.
63. e international community has adopted standards requiring nancial institutions to conduct cus-
tomer due diligence to identify their customers and bene cial owners, obtain information on the nature of
the business relationships, and use enhanced due diligence in relationships with politically exposed per-
sons (PEPs)—senior public o cials, their families, and their close associates. See UNCAC, art. 52; and
recommendations 5 and 6 of the Financial Action Task Force (FATF) 40+9 Recommendations. Unfortu-
nately, these standards are not always in place. See eodore S. Greenberg, Larissa Gray, Delphine Schantz,
Carolin Gardner, and Michael Lathem, Politically Exposed Persons: Preventive Measures for the Banking
Sector (Washington, DC: World Bank, 2010), 7, 13.
44 I Asset Recovery Handbook
money service providers; law and accounting rms; trust and company service providers;
real estate agents; art dealers; business competitors; travel and other reward programs;
businesses, relatives, employees, and associates of the targets; and the targets themselves.
Various investigative techniques (described below) are used to assist practitioners in
these e orts.
64
e techniques provided are examples of those used around the world,
64. is section is not meant to be an exhaustive how-to manual for each technique. More detailed how-to
guides may be available online and through such public sources as libraries and bookstores. In addition,
many agencies—both domestic and foreign—have customized guides that they are willing to share.
BOX 3.1 Checklist for Collection of Basic Information
Practitioners should collect and maintain the following information during the
early stages of an investigation:
Date and place of birth (include aliases); copies of birth certifi cates, pass-•
ports, and national identity cards.
Names and birth dates of spouses, children, both parents (and new part-•
ners, if divorced, separated, or widowed), siblings, spouses of siblings,
immediate relatives (uncles, aunts, cousins, grandparents, grandchildren).
Relevant telephone numbers (business, home, mobile), e-mail address, •
and contact details of any other Internet or social network communication.
In some jurisdictions, it may be possible to obtain subscriber information
from the service provider.
Recent photographs of all targets and associates (preferably government-•
issued identifi cation).
A fi ngerprint card.•
Results of a criminal record search.•
Results of public-source searches on targets and associates, using Internet •
search engines, social networking sites, local media reports, and libraries.
Information from other government agencies (see section 3.3.2 of this •
chapter), especially
°
land, vehicle, and utility information;
°
business records;
°
court records;
°
tax records;
°
border crossings and customs declarations;
°
immigration records;
°
salary statements (from a relevant government employer, if applicable);
and
°
asset and income declarations.
Real estate records, including purchase agreements, mortgages, loan appli-•
cations, and appraisals.
Information identifying banks or bank accounts and other entities that may •
hold business records. Consider retention orders (see also box 3.6).
Securing Evidence and Tracing Assets I 45
but not all techniques are available or permitted in every jurisdiction. Furthermore,
jurisdictions will di er in which techniques require judicial authorization or the appli-
cation of a special procedure (typically for coercive measures, such as search warrants,
bank account information, and electronic surveillance) and which do not (typically
noncoercive measures, such as obtaining publicly available information and intelligence
from other government agencies).
It is imperative that practitioners determine which techniques are authorized by
law and that all legal requirements, policies, and procedures are followed. Respect
for the rule of law and the due process rights of the accused will also be essential,
particularly if international cooperation is being sought. Deviating from legal
requirements, policies and procedures or infringing on the rights of the accused
can be catastrophic to a case: it may lead to the invalidation and inadmissibility
of evidence discovered through the use of that technique—and possibly the entire
investigation. In cases requiring international cooperation, many jurisdictions
will refuse to provide mutual legal assistance (MLA), if they perceive that the
rights of the accused have not been respected (see section 7.4.4 in chapter 7). For
information on these basic rights, see the United Nations International Covenant
on Civil and Political Rights and the Universal Declaration of Human Rights.
With regard to the selection of a particular technique, this should be assessed as part
of the overall investigative plan or framework. Typically, the practitioner should use
the most basic investigative and non-intrusive techniques (for example, simple data
checks) before implementing more complex techniques (such as wiretaps). In addi-
tion, practitioners should use covert techniques (surveillance, public information
searches, information from other government agencies, and trash runs) before moving
to overt techniques (search warrants) to avoid tipping o the targets. Practitioners
must also keep in mind that the use of one technique may provide leads or information
that will become grounds to take additional measures. A trash run or a search of a
business or residence may reveal documents that link the targets to bank accounts; and
these facts can be used to support a subsequent order to obtain bank account docu-
mentation because they demonstrate a nexus between the targets and the bank
accounts. Physical surveillance may reveal a potential gatekeeper to be investigated;
and documents obtained through a production order on a bank may reveal the names
of bank o cials or individuals involved in a transaction who may be able to provide
additional leads if interviewed. For an example of how investigative techniques can be
used in practice, see box 3.2.
3.3.1 A Return to the Basics
A technique to use at the outset will be the traditional ve-question maxim: who,
what, where, when, and how (see gure 3.1.). Even though asset recovery cases may be
complicated paper cases that di er from traditional law enforcement investigations,
the techniques used to resolve a fraud case can help unravel a complex stolen asset
recovery case.
46 I Asset Recovery Handbook
BOX 3.2 Tracing and Recovering Assets—Efforts in the United Kingdom
Law enforcement offi cers in the United Kingdom became aware of allegations of
corruption and misappropriation of assets by former Plateau State (Nigeria) Gov-
ernor Joshua Dariye, and they suspected that assets could be located in the
United Kingdom. Through the following investigative techniques, they were able
to trace and link the assets to the offense:
1. Technique. Investigators conducted public record searches for information
on Dariye in the United Kingdom (through property, vehicle, and corporate
registries); and sought intelligence on Dariye from other governmental
agencies, including the FIU.
Result. No link to Dariye was found.
2. Technique. Investigators identifi ed Dariye’s family and associates and
checked for a nexus to the United Kingdom.
Result. Investigators discovered that Dariye’s children were attending pri-
vate school in the United Kingdom.
3. Technique. Investigators made inquiries to the relevant bank (a permitted
authority of fi nancial investigators).
Result. Investigations revealed that Dariye operated a Barclaycard account,
and that the account was being paid off each month through the bank
account of Joyce Oyebanjo. Oyebanjo was effectively Dariye’s banker in the
United Kingdom who paid off fees and utilities on behalf of Dariye, includ-
ing the fees paid to a private school for his two children.
4. Technique. Investigators obtained a production order to access the school
fi les.
Result. Investigators confi rmed that school fees were paid by Joyce
Oyebanjo.
5. Technique. Investigators searched publicly available information and other
governmental agencies for information on Oyebanjo. They also obtained a
production order for her bank accounts.
Result. Oyebanjo, employed as a housing offi cer in the United Kingdom,
was found to have 15 bank accounts with funds totaling roughly £1.5 million
(approximately $2.3 million), and £2 million (approximately $3.1 million)
worth of real property. Furthermore, she was managing one of Dariye’s
properties in Regents Park Plaza, a property purchased in the name of
“Joseph Dagwan” and paid for by the Plateau State Ecological Fund through
various companies.
(continued next page)
Securing Evidence and Tracing Assets I 47
BOX 3.2 (continued)
6. Technique. Investigators made credit reference checks, and those revealed
bank accounts operated by the targets. Assets were traced from the bank
account to other bank accounts, property, and vehicles. Production and
search orders were used to obtain additional information and to trace
assets.
Result. Investigators discovered that Dariye had one bank account regis-
tered to a particular address in London. Examination of Dariye’s and Oye-
banjo’s bank accounts revealed large electronic credits from various banks
in Nigeria.
7. Technique. Investigators used a production order to obtain the conveyanc-
ing solicitor’s fi le for the London address.
Result. The fi le revealed that property had been purchased using a false
name, and had been paid for from a Nigerian company’s London-based
bank account.
8. Technique. An MLA letter of request was sent to Nigeria to determine the
origins of the funds received.
Result. It was established that an ecological grant obtained by Dariye had
been diverted and concealed in his own company bank account, with the
assistance of bank staff. The funds were diverted to a company and associ-
ated bank account set up by Dariye in Nigeria and subsequently transferred
to London for his use. The Nigerian company that purchased the London
property was also linked to the ecological grant theft because the company
had received £100 million (approximately $157 million) of the stolen funds.
The company had paid £400,000 (approximately $626,800) for the London
property after Dariye had authorized a Plateau State government contract
for the installation of £37 million (approximately $58 million) worth of televi-
sion equipment in the Plateau State.
This example illustrates that it is imperative for practitioners to “know their sub-
jects” and to identify all close relatives, business associates, and other persons
who could assist a target in stealing funds and moving them into foreign jurisdic-
tions. Practitioners must use all techniques available (for example, other govern-
ment agencies, public sources, and coercive measures), for they never know the
origins of the next lead.
48 I Asset Recovery Handbook
3.3.2 Information from Public Sources
and Other Government Agencies
Information from public sources and other government agencies can provide useful
background information on targets, their family members, associates, and companies;
and can assist in identifying assets and potential witnesses, and in compiling the subject
pro le (see section 3.2) and nancial pro le (see section 3.5).
Public information can be accessed on the Internet, using search engines and social
networking sites (including archived information), and from subscription Web sites or
databases, media sources, libraries, and some government agencies. See appendix J for
a list of some Web sites. Practitioners may consider subscribing to commercial database
providers who hold relevant information.
Data from other government agencies ( gure 3.2) also should be explored, including
the following agencies:
Financial intelligence unit (FIU).• e FIU is an important source of nancial
intelligence because of its role as the national center for the collection, analysis,
and dissemination of information regarding money laundering and the nancing
of terrorism. See box 2.1 in chapter 2 for a description of how FIUs can be impor-
tant sources for initiating and investigating an asset recovery case.
65
FIUs typi-
cally collect suspicious transaction or activity reports (STRs) from reporting
nancial institutions, and it is o en useful to review these reports. Some FIUs
also collect and maintain currency transaction reports (CTRs), sometimes
65. For more information on FIUs, see International Monetary Fund/World Bank Group, Financial Intel-
ligence Units: An Overview (Washington, DC, 2004).
WHO?
WHAT?
WHEN?
HOW?
When did the event
occur?
How much was stolen?
How were the assets stolen?
How were the assets moved?
How do we get them back?
WHERE?
Where was it stolen?
Where did it go?
What was stolen?
Who stole the money?
Who was involved
(co-conspirators)?
FIGURE 3.1
Five Effective Questions to Use in an Investigation
Source: Authors’ illustration.
Securing Evidence and Tracing Assets I 49
referred to as “reports on transactions above a speci ed amount.” Most FIUs will
conduct an analysis of all STRs that are submitted (referred to as an “intelligence
report”), a process that can include a thorough assessment of the individuals and/
or businesses linked to the STR. See the sample FIU report in appendix C. Intel-
ligence is also shared among FIUs through the Egmont Group. ese are all
sources of data that may yield intelligence that is helpful in reconstructing the
money trail. Where permitted,
66
practitioners submitting a request to the FIU
should include the following:
– any STR or CTR led in relation to targets of the investigation;
– any STR or CTR led in relation to businesses linked to the targets;
– any STR or CTR led in relation to associates/relatives of the targets;
– any related intelligence reports of possible criminal conduct (some FIUs are
not permitted to provide information in the absence of an STR).
66. In some jurisdictions, the FIU is not permitted to provide a copy of the STR or CTR to law enforcement.
In these circumstances, the intelligence report (if dra ed) is usually available on request and contains
much of the same information.
FIGURE 3.2
Preliminary Information Available from Other Government Agencies
Source: Authors’ illustration.
Utility
information
Immigration
and border-
crossing
information
Customs
declaration
forms(s)
Financial
intelligence
unit
reports
Tax records
Business
information
and
records
Civil
records
Court
records
Land and
vehicle
ownership
Asset and
income
declarations
Government
audit
results
Information from
government
agencies
50 I Asset Recovery Handbook
Immigration and border-crossing authorities.• Obtain copies of forms or any
other relevant documents that indicate targets’ border crossings.
Customs. • Obtain copies of any customs declarations forms that indicate the
cross-border movements of the targets. If there is a cash declaration requirement,
check to see if the targets have declared currency.
Tax authorities. • Obtain copies of all tax records related to the targets of the
investigation, including individual income tax, property tax, and business tax
records. e tax assessor’s o ce or the cadastral o ce may also provide owner-
ship information, a legal description of the property, a statement of the property
value, and the purchase history of the property.
Auditing agencies. • State or government auditing agencies (referred to in some
jurisdictions as the “O ce of the Inspector General”) are typically mandated
with providing an independent and objective review of the operations of the gov-
ernment department to which they are assigned. ey conduct investigations,
audits, and special projects to detect fraud and misconduct; and to promote
integrity, e ciency, economy, and e ectiveness in the department operations. If
the corruption has involved a government department, these agencies may have
information or resources to assist the investigation.
Ethics or integrity o ce.• e o ce that is responsible for collecting and analyz-
ing asset and income declarations may be able to provide copies of declarations
led by the targets and their close relatives.
67
Real property (land) and vehicle registries. • Depending on the jurisdiction, the
city, county, or provincial records o ce may be able to provide data con rming
ownership (deeds) for real property (indicating buyer and seller), liens on the
property, mortgage(s), property tax, tax assessments, recent sales, and building
permits. Vehicle records o ces may provide title information and summary data
on the vehicle at transfer or sale dates.
Corporate or business registries and licensing boards. • Business registries and
regulatory boards can provide information that helps identify the assets of targets
and their associates. Records may also identify possible co-conspirators. Some
registries will provide the practitioner with ownership information; names of
agent of record (typically a lawyer or accountant), shareholders, directors, and
bene cial owners; and company nancial statements. is search should be con-
ducted for all types of businesses—sole proprietorships, partnerships, limited
liability partnerships, and corporations.
Civil records repositories. • Civil registries can provide information about cur-
rent and previous spouses (marriage and divorce records), siblings, parents,
grandparents, and other relatives.
Court records repositories. • A check of court records can reveal if any of the
targets have been involved in prior court matters. If so, review any plea agree-
ments and the transcripts of any testimony, decision, or sentencing hearing for
information on assets or for other relevant information. Also, check courts that
67. For more information on asset and income declarations, see Ruxandra Burdescu, Gary J. Reid, Stuart
Gilman, and Stephanie Trapnell, Stolen Asset Recovery—Income and Asset Declarations: Tools and Trade-
o s (Washington, DC: StAR Initiative, conference edition released November 2009).
Securing Evidence and Tracing Assets I 51
may not be linked to law enforcement databases, including bankruptcy, civil, or
family courts.
Utilities. • Examine the utility bills for all residences and businesses identi ed
(including electric, water, telephone, cable or satellite, sewerage, and garbage) to
determine the recipient of the utility bill, method of payment, the person or entity
that executes the payments, and subscriber information. Request a general search
of targets and associates to identify links to other addresses.
3.3.3 Physical Surveillance
Physical surveillance is the covert observation of investigation targets to gather infor-
mation about them. Recording the movements of targets of an investigation can be
useful for identifying the following: possible witnesses; co-conspirators; real property
or other assets; lawyers, bankers, or accountants possibly involved in facilitating the
laundering of corrupt proceeds; businesses; patterns of conduct; and other forms of
intelligence that could be vital to the investigation. However, physical surveillance is
not without risk. A target might realize that he or she is under surveillance, regardless
of the quality and expertise of the surveillance team. e lead practitioner, in consulta-
tion with the team, must determine if the rewards outweigh the risks.
A successful surveillance operation requires adequate human resources and equipment.
For example, radios or mobile phones are important for notifying other team members
of the location and actions of a target; and recording devices can be used to record
events or keep notes of movements or of other individuals contacted. In addition, an
experienced lead practitioner should be assigned to assemble, coordinate, and super-
vise the surveillance. Team leaders will determine the size of the team and the format
and locations of the surveillance; and they will prepare presurveillance brie ngs to
explain the assignment to the team members, provide continuity at shi changes, and
advise of any personal security issues. ey will be responsible for making strategic
decisions, such as choosing the type of surveillance (for example, stationary, mobile
vehicle, or mobile foot), deciding whether to follow other targets encountered during
the surveillance, and dra ing a report of the signi cant events that occurred during the
operation. Although surveillance is a useful technique, cost considerations may favor
an intermittent approach because the cost of a 24-hours/7-days-a-week surveillance is
usually prohibitive.
3.3.4 Trash Runs
Conducting trash runs involves looking through a target’s garbage for relevant infor-
mation, such as discarded bank statements, names of business associates, correspon-
dence, bills, travel receipts, and so forth. In turn, this evidence can be used to support
applications for search warrants by showing a nexus between a target and other indi-
viduals or assets.
As with other investigative techniques, practitioners will rst need to determine
whether this is permissible at law and identify any limitations because jurisdictions
52 I Asset Recovery Handbook
have di erent standards of “rights to privacy” as they relate to trash.
68
Where permit-
ted, the trash run should be conducted at all the residences and businesses of the tar-
gets. Practitioners may focus on banking information; bills; any documents related to
nancial assets; or any documents related to businesses, other persons, companies,
lawyers, accountants, or credit cards; and they should be sure to document the evi-
dence collected (for example, date, time, o cers involved, document number). Trash
inspections should be conducted routinely on all other family, spouses, former spouses,
associates, lawyers, accountants, and other businesspeople linked to the targets.
3.3.5 Mail Cover
Mail cover is the process by which a record is made of any data appearing on the outside
cover of sealed or unsealed mail (for example, the return address and the cancellation
date and country of the postage stamp) or of the contents of any unsealed mail. Mail
covers can be excellent sources of leads to the location of assets. Mail received from a
bank, law rm, company, or accounting rm, for example, alerts practitioners to poten-
tial sources of information on the assets owned by a target.
Where permitted, jurisdictions o en allow mail covers without a warrant because the
recipient of the letter has little to no reasonable expectation of privacy for the contents
on the outside of the letter or parcel. Most jurisdictions require a search warrant or
some other form of legal authority to open and read sealed letters and parcels. Opera-
tionally, it will be important for practitioners to consider the nexus between the target
and the sender of each letter, record accurately all data on the outside of an envelope or
package, log the date and time when the mail cover was conducted, and maintain a
copy of the record in the case le.
3.3.6 Interviews
Interviews are an essential element of any investigation and tremendously important in
an asset recovery case.
69
Statements can corroborate or clarify the information derived
from documentary evidence, reveal new leads, or identify new nancial documents.
Important sources may include any complainants; the business associates, relatives,
neighbors, employees, or other associates of the targets; business competitors; nancial
institution employees and other sources that have been in contact with the targets; and
the targets themselves. It will be important to identify and interview any straw men
involved in the case. ese individuals have taken substantial risk with little reward,
68. In the United States, for example, there is no expectation of privacy over trash that has been set on the
curb outside a house for pickup by sanitation engineers, so practitioners may collect and inspect it. How-
ever, there is an expectation of privacy if the trash is in a bin adjacent to the house, and a search warrant
will be required. On the other hand, trash runs are not permitted in Ukraine.
69. Some jurisdictions make distinctions between interviews and interrogations, de ning an interview as
questioning of non-targets of the investigation and an interrogation as the questioning of investigation
targets. In this section, we will use the term “interview” to include both forms of questioning. Practitioners
must ensure that proper protections are a orded witnesses, experts, victims, whistle-blowers, and cooper-
ating targets. See, for example, UNCAC art. 32, 33, and 37.
Securing Evidence and Tracing Assets I 53
and they may prefer to inform authorities about the people they are hiding rather than
be implicated in a scheme. Practitioners will need to be familiar with the laws related to
conducting interviews with targets and non-targets, especially when working with
authorities in foreign jurisdictions.
70
Some jurisdictions, for example, require that all
statements be taken through a formal hearing. Others permit a range of interview
options, such as routine questioning of witnesses by law enforcement (no formal or
verbatim record), written statements, video or audio recordings of statements with
warning to the interviewee, or recorded statements under oath.
orough preparation is essential to conduct a successful interview, including having
a complete understanding of all the evidence, the targets, associates, timeline of events,
and information already gathered in the investigation. A practitioner may prepare
questions to cover the information desired; during the interview, however, the practi-
tioner must be exible and focus on the responses of the targets, not on the preplanned
questions.
71
Because targets may attempt to communicate with one another and agree
on a common version of events or in uence the testimony of a witness, practitioners
may take (or request from competent judicial authorities) appropriate measures to
ensure that the targets are discouraged, prohibited, or prevented from communicating
with one another or with witnesses prior to the interviews. In addition, the interview
location selected should be one that o ers the fewest distractions, provides discretion,
and is most likely to solicit open responses (for example, a residence, police station, or
place of business). e number of interviewers present should be limited to two, if
possible.
3.3.7 Account Monitoring Orders
An account monitoring order is an ex parte order by the court (or the investigating
magistrate in some jurisdictions) specifying that a particular nancial institution must
provide account information covering a speci ed period of time for the account identi-
ed in the order. e information must be given to an appropriate o cer in the manner
and at or by speci ed times stated in the order.
72
e order allows for real-time nancial
surveillance of the ongoing transactions in an account that practitioners can use to
establish typologies of activity and identify new accounts. It can also be a means to
establish su cient grounds to ask for an order to disclose, restrain, or search and seize
assets.
73
In cases of large cash withdrawals, it may also present opportunities for cash
seizure because the withdrawal locations will be revealed.
70. Practitioners must ensure that interview requirements (for example, required warning to interviewee)
are conveyed to foreign counterparts, and should inquire whether it is possible to participate in those
interviews. For a discussion of cooperating with foreign practitioners or participating in the execution of
the request, see section 7.4.6 of chapter 7.
71. In this regard, practitioners may nd it more helpful to prepare themes rather than speci c questions
to guide the interview.
72. In the United Kingdom, the order can be in place for up to 90 days at a time.
73. Typically, the standard of proof or other requirements for account monitoring orders are less stringent
than for disclosure, freezing, or seizure orders.
54 I Asset Recovery Handbook
3.3.8 Search and Seizure Warrant
e execution of a search warrant on a house and business is a tremendous opportunity
to gather evidence of criminal activity, discover information about assets, identify
co-conspirators, and develop other leads that support the investigation.
74
In some cases
or jurisdictions, this will be the primary technique used to obtain bank documents. See
section 3.3.9 on orders for disclosure or production of documents.
Given the coercive nature of a search, laws typically require that searches be requested
by an authorized individual—o en a law enforcement o cer or prosecutor—and be
judicially authorized by a judge or investigating magistrate (barring exigent circum-
stances). Practitioners must be aware that civil and common law jurisdictions di er
in their requirements for authorization, speci cally in the standards of proof needed
to obtain the warrant, the speci city required for the evidence to be seized, and the
location of the evidence. In general, greater speci city is required in common law
jurisdictions.
Preparing and Obtaining the Search Warrant
Common law jurisdictions will require a written application (except in exigent circum-
stances, where it can be made orally or by telephone). e application will comprise
two documents: the warrant and the supporting a davit (for information on dra ing
a davits, see box 4.1 in chapter 4). e warrant itself sets out the details of the search,
including who is authorized to conduct the search, its location, the hours or days when
the search may be carried out (for example, day or night), its duration, what is to be
searched, the inventory of items taken; and the subsequent report to the court. e
supporting a davit must articulate reasonable grounds to believe or “probable cause”
that (1) a crime has been committed, (2) items sought are connected to the crime, and
(3) items sought are likely to be on the premises to be searched (see box 3.3 for tips on
elaborating these grounds).
Civil law jurisdictions will require similar information, but without the formality
and with a standard of proof that may di er from “reasonable grounds to believe.”
An a davit is not required, and law enforcement o cers may be authorized by a
prosecutor or investigating magistrate to conduct “all necessary searches to establish
the truth.”
75
e applicant will also need to specify the items to be seized and locations to be searched.
In civil law jurisdictions, it may be possible simply to refer to “all articles that may have
connection to the crime committed.” In common law jurisdictions, the applicant must
be more speci c. He or she must articulate why an article should be seized, and be suf-
ciently precise so that all important articles are covered (see box 3.4).
74. In addition to houses and businesses, items to be searched may include banks, people, cars, planes,
ships, computers and other electronic media (such as compact discs and encryption keys), and packages or
boxes.
75. In France and other civil law jurisdictions, this authorization is o en called “commission rogatoire.”
Securing Evidence and Tracing Assets I 55
Planning and Executing the Search and Seizure
Except under exigent circumstances, practitioners will have the opportunity to plan the
execution of the search warrant. ey should consider the possibility of searching sev-
eral businesses or houses at the same time, even in di erent jurisdictions, to avoid the
destruction or disappearance of evidence. Although the degree of planning and coordi-
nation is very demanding, the results can be impressive. Practitioners will also need to
consider the type of expertise required for the search. For example, a search may demand
a computer forensic specialist who can gather electronic and computer data in a manner
that avoids its loss, destruction, or damage; can present it in a manageable form; and can
ensure that the necessary steps are taken to preserve its admissibility at trial (perhaps by
taking a “mirror image” of the data to avoid claims of postsearch manipulation).
76
Because the search will likely tip o the target, it will be important to take measures to
secure assets that may not be at the search locations, such as bank accounts, whether in
advance or simultaneous with the search. For the seizure of assets that will be subject to
con scation, it is critical to coordinate preseizure planning with prosecutors and asset
managers (see section 4.2 in chapter 4, on pre-restraint planning). Appendix D provides
a checklist of some additional considerations for planning the execution of the search.
76. Note that computer users will implement various mechanisms to protect or hide data or deem the sys-
tem inaccessible if access is attempted by an unauthorized user. Computer forensic specialists will have
tools for preserving systems, recovering lost information, monitoring cloud computing use, and so forth.
Proper gathering of information will also ensure that information is managed.
BOX 3.3 Elaborating Suffi cient Grounds for a Search Warrant
Suffi cient grounds to obtain a search warrant are likely to be established from a
variety of sources, and it will be important for practitioners to elaborate this
clearly. These grounds (or reasons) will include:
Direct observations and the expertise of investigating offi cers, •
Cooperating witnesses,•
Informants,•
Physical or electronic surveillance,•
Publicly available information, and•
Historical case information. •
Other important points to include are the following:
Reason to believe the target may destroy the evidence (in such a circum-•
stance, ensure that the issue is also addressed operationally);
Objective evidence of the target’s attempts to obstruct the investigation; and•
Facts that establish that other means to obtain the evidence are unavail-•
able, were unsuccessful, or may compromise the investigation, divulge the
identity of an informant, jeopardize an undercover offi cer, and so forth.
56 I Asset Recovery Handbook
Preserving the Evidence and Adhering to Postexecution Requirements
Once the warrant has been executed and evidence has been seized, the evidence should
be taken to a secure location to be properly logged and examined, and the event should
be documented in the case le.
77
If an interview of the target or associates occurred dur-
ing the execution of the warrant, a report of the interview should be made as soon as
possible and incorporated into the case le. e lead investigator will be responsible
for preserving the chain of custody and the integrity of the evidence throughout the review
period, and he or she must ensure that all evidence is detailed in the inventory. e lead
investigator may also be responsible for reporting the results to a judge or prosecutor.
Practitioners should review all the documentary evidence seized; identify potential
leads for tracing assets or possible co-conspirators; and, where necessary, take immedi-
ate action to restrain assets to avoid their dissipation or movement. If the practitioner
has engaged the assistance of foreign authorities during the course of the investigation,
77. Some jurisdictions may require details on the location of each item at all times to ful ll chain of custody
requirements.
BOX 3.4 Important Items to Seize
The list below highlights some of the main items that practitioners will want to
seize to assist with the investigation. Because common law jurisdictions require
greater specifi city in the warrants, examples of various forms of these items are
also described.
Financial documentation.• Books, records, receipts, notes, ledgers, and
other papers relating to assets, business interests, business transactions,
real estate, letters of credit, money orders, checks, traveler’s checks, bank
drafts, banking correspondence, cashier’s checks, wire transfers, bank
checks, mortgage information, credit card information, safe deposit box
information and keys, and other related items supporting the existence,
concealment, or transfer of assets or the expenditure of funds. For docu-
mentation to be requested from fi nancial institutions, see box 3.5 concern-
ing orders for disclosure or production of documents.
Computers and computer storage devices.• Computers, electronic equip-
ment, cell phones, answering machines, personal organizers, CD-ROMs,
and other data storage devices. Seizure of computers should include the
actual computer hardware, not simply a mirror or copy of the contents of
the hard drive.
Items to identify associates or other leads.• Photographs, videos, address
books, calendars, and trash.
Proceeds or instrumentalities of crime.• Currency, precious metals, jew-
elry, fi nancial instruments such as stocks and bonds, and other valuable
items such as artwork and other collectibles.
Shredded paper.• Shredded materials must be reconstructed.
Securing Evidence and Tracing Assets I 57
it is o en bene cial to apprise these authorities of the results of the search warrant in a
timely manner so that they may respond favorably to the results.
3.3.9 Orders for Disclosure or Production of Documents
Obtaining business documents will be essential to an asset recovery case. Documents
that are likely to require judicial authorization will include those held by banks, account-
ing and law rms, insurance companies, Web-based e-mail services, Internet service
providers, and sometimes utility companies. e process for obtaining a disclosure or
production order is similar to that for obtaining a search warrant (see section 3.3.8 for
additional information on search and seizure warrants).
Similar to search warrants, jurisdictions will vary on the speci city required for disclo-
sure orders. Common law jurisdictions will require a more speci c list; civil law juris-
dictions may be satis ed with a general phrase, such as “all documents that may have
connection to the crime committed.” In practice, many practitioners nd it most help-
ful to combine these two approaches—providing a precise list of documents requested
and concluding the list with the general phrase because many disclosing entities will
want to limit the documents they o er for disclosure. If practitioners submit a request
that is too narrow in scope, they risk being denied relevant information. Box 3.5 lists
items to be included in requests to nancial institutions.
Although the request should be broad enough to ensure that relevant documentation is
captured, it will be important to avoid being inundated by boxes and boxes of irrelevant
information—particularly if the tracing or investigative team does not have the capac-
ity to review vast amounts of nancial information in a timely manner. Requesting an
excessive amount of documentation may also delay its delivery because it may take
longer for the disclosing entity to produce the documentation. Or the disclosing entity
may challenge the order on the basis of relevance and undue burden.
78
Where data
retention laws, retention orders, or do-not-destroy orders are in place such that the
records that might be relevant in later stages of the investigation will be maintained by
the disclosing entity (see box 3.6), practitioners should develop their cases (particularly
the large cases) in stages, using the documentary evidence as building blocks. ey
should rst request what is considered imperative, and then submit subsequent requests
to follow relevant leads or when capacity is increased. As a precaution against routine
inadvertent destruction, it is a good idea to request that the nancial institution pre-
serve other relevant records. Adopting this building-blocks approach enables practitio-
ners to focus e orts on smaller amounts of information and then follow the relevant
leads, thus avoiding loss of time in reviewing boxes of documents and large electronic
data sets that may not be relevant.
Where permitted by law, the requesting authority should consider asking that the appli-
cation be heard ex parte (that is, without notice) to avoid tipping o the targets. Even
78. Another common ground for challenge by the disclosing entity is privilege (such as solicitor-client
privilege).
58 I Asset Recovery Handbook
BOX 3.5 Documentation to Be Requested from Financial Institutions
Practitioners often need or opt to provide a specifi c list of items requested from
fi nancial institutions for accounts or targets, related persons, close associates,
or related companies. In such cases, offi cials from FIUs or the central bank may
be helpful resources in determining the types of documents that might be rele-
vant. Examples of specifi c records to request include (but are not limited to) the
following:
All account-opening documentation, including forms that identify the ben-•
efi cial owner (for example, “Form A” is used in Switzerland), powers of
attorney signature cards, articles of incorporation or partnership agree-
ments, and copies of identity documents provided when an account is
opened. Include not only accounts under the names of the targets, but also
those accounts that list any of the targets as a power of attorney or a signa-
tory, or indicate some other pertinent relationship.
Client profi le, know-your-customer notes, account manager notes, teller or •
banker journal, cashier check log, any due diligence conducted by the fi nan-
cial institution, and any other data probing the economic background of the
client, commercial activities, and transactions on the account (for example,
copies of contracts, bills, letters of credit, list of partners, and affi liated
companies).
Loan documentation, to include mortgage information, copy of loan appli-•
cation, listing and/or description of any collateral (including liens against
deposits), income, assets, and personal and/or business references.
All bank account statements for the period under investigation.•
Any reports of suspicious activity that were submitted by an employee of •
the fi nancial institution, to include those that might not have been for-
warded to the FIU.
Documents related to account transactions, including client orders, deposit •
and withdrawal slips, credit and debit memos, and checks (front and back).
Wire transfer documentation, including the request form, advice statement, •
confi rmation, and other relevant documents (see box 3.7).
Correspondence fi les maintained by the fi nancial institution, possibly includ-•
ing internal bank memos, records of client visits, phone order notes,
e-mails, faxes, notes authored by account managers, and records or notes
related to either or both instructions or transactions.
Credit card information, including application, statements, payment history, •
transaction logs covering any interaction with credit card staff, and other
cards under the umbrella of a target’s account but in another person’s name.
Safe deposit information, including contracts, visiting records, and video •
surveillance of relevant areas (not usually box-contents viewing areas).
All documents that may have connection to the crime committed.•
Also see appendix E for an example of a draft production order to a fi nancial
institution.
Securing Evidence and Tracing Assets I 59
where the order is made ex parte and there are provisions that prohibit those served
with the production order from disclosing the request to the targets, practitioners must
assess the risk that the targets will be informed, and they must take necessary action to
restrain or seize the assets.
79
3.3.10 Electronic Surveillance
e surreptitious interception of any wire, oral, telephone, computer, or other elec-
tronic communication used by the targets—referred to in this handbook as “electronic
surveillance”—can be very useful to law enforcement o cers in providing investigatory
leads similar to those addressed in the discussion of physical surveillance (section
3.3.3). At the same time, electronic surveillance is labor intensive, can be cost prohibi-
tive, and is a highly intrusive technique; therefore, many jurisdictions require judicial
oversight and perhaps special authorization to ensure protection of privacy and due
process rights of the accused. Some jurisdictions will permit consensual monitoring of
communications with prior consent of one of the parties (for example, a cooperating
witness, informant, or undercover agent), and this does not require a warrant.
80
In all
79. In cases requiring mutual legal assistance (MLA), practitioners should be aware of potential disclosure
obligations of the requested jurisdiction, and they should address this issue prior to sending of the request.
See section 7.1 of chapter 7 for additional information.
80. Consensual monitoring is permitted in some states in the United States. See Department of Justice,
O ce of the Inspector General, “Federal Bureau of Investigation’s Compliance with the Attorney General’s
Investigative Guidelines (Redacted),” special report, (Washington, DC, September 2005), ch. 6, http://
BOX 3.6 Retention Orders
Most jurisdictions have laws that require businesses (such as banks, accoun-
tants, lawyers, Internet service providers, and telephone companies) to retain
customer data and records for a prescribed period of time. The period of time will
vary, depending on the type of business: it may be as short as a period of months
(telephone companies and Internet service providers) or as long as several years
(banks, lawyers, accountants). On the investigation side, practitioners are unlikely
to have suffi cient evidence for a disclosure or production order at the outset—an
issue that becomes particularly problematic the shorter the retention period.
Fortunately, many jurisdictions address this issue by permitting retention orders
or do-not-destroy orders. Such orders require that the document holder retain
documents related to the targets past the period of time prescribed by statute,
thus avoiding the loss of potentially relevant data or evidence. The requirements
for obtaining such an order are typically less onerous than for a production or
disclosure order and therefore should be considered in the early stages of an
investigation. Practitioners should assess where documents may be held; deter-
mine the corresponding periods of retention; and, where permitted and neces-
sary, obtain retention orders. Such actions will help preserve potentially relevant
data for a future disclosure or production order.
60 I Asset Recovery Handbook
cases, electronic surveillance must be done in a manner that adheres to domestic laws
and internal policies and procedures.
Practitioners involved in electronic surveillance should be diligent in recording the
subject(s), time, date, length of conversation, and other pertinent information for every
communication intercepted. ey should ensure that original recordings are secured
as evidence—properly sealed and maintained in a secure and safe environment—
and that working copies are made for practitioners. Translation services may be nec-
essary for conversations in foreign languages. Intercepts should be monitored 24
hours a day, 7 days a week to ensure that time-sensitive information is quickly
addressed and any follow-up actions are properly coordinated. Practitioners should
also consider introducing a physical surveillance team that will closely coordinate
with the electronic surveillance team because this will generate both visual and voice
evidence.
3.3.11 Undercover Operations
Undercover operations are another investigative technique that can be used to in ltrate
targets and uncover evidence and information about assets. In asset recovery cases, this
might include the controlled delivery of funds through an undercover agent. However,
such operations are legally and procedurally complicated, risky, and resource intensive.
As with other techniques, legal requirements and procedures must be strictly followed
to ensure admissibility of the evidence obtained. O cers must be skilled, trained, and
suited to the investigation. Proper equipment to record and monitor meetings between
undercover o cers or informants and the targets or associates of targets must be
secured and constantly monitored to protect the safety of the informants and under-
cover agents involved.
81
Use of informants can be di cult, so undercover o cers are usually preferred. When
use of an informant is the only option, it is advisable to register the informant, provide
the informant with clear and concise written instructions, and have the informant
sign a written acknowledgment that instructions are understood. In addition, infor-
mants, vehicles, and other relevant belongings may need to be searched for contra-
band immediately before the undercover meeting to avoid accusations of evidence
planting. Finally, because o cer or informant safety is a priority, it will be important
to control where meetings occur and to choose environments that are most conducive
to the success and safety of the operation.
www.justice.gov/oig/special/0509/chapter6.htm. Section 3.3.11, “Undercover Operations,” provides tips
that can be applied in consensual monitoring. Where such monitoring is not permitted, a court order
would be required (for example, in Ukraine).
81. For example, informants, o cers, or consenting parties should wear a body wire or other concealed
transmitting device (perhaps a device concealed in a pen, cell phone, cigarette package, briefcase, or laptop
computer) as well as a separate recording device to ensure a clear recording (because transmitter signals
can be disrupted and voice quality is o en poor). In practice, it is helpful to record a preamble to the tape
recording, stating practitioner’s name, the date and time, and a brief description of events.
Securing Evidence and Tracing Assets I 61
3.4 Identifying Relevant Data: Examples from
Commonly Sourced Documents
Various documents will surface throughout an investigation, including bank account
records, nancial statements, contracts, invoices, deeds, shareholder agreements, arti-
cles of incorporation, receipts, and the like. ey will reveal information on assets,
movement of funds, individuals and companies linked to a target, and other relevant
data. To assist practitioners, some examples of relevant data from commonly sourced
documents are outlined here.
3.4.1 Suspicious Transaction Reports
Where disclosure to law enforcement is permitted, STRs and related documents may be
excellent sources of data for practitioners because they typically include data on the
transaction, a narrative on the reasons for the suspicion, and an analysis by nancial
analysts.
82
e amount of information provided and the quality of the narrative may vary,
depending on the requirements of the jurisdiction or the person ling the STR. In gen-
eral, however, there are many important points of information on the STR, including
source and destination of funds;•
narrative explanation by the bank employee about the nature of the suspicion and •
know-your-customer (KYC) information;
frequency of the use of wire transfers, checks, and so forth; and•
information on other assets or products held by the target at the bank.•
From this information, practitioners can obtain information on the nancial ow that
will enable them to trace the money backward to con rm its illegal source or forward
to follow where it has gone. e information will provide additional leads, such as bank
accounts to subpoena and individuals or companies to interview. With regard to inter-
views, it may be helpful to speak directly with the compliance o cer to discuss the STR
and other background information on the target. For an example of the information
that can be drawn from an FIU report, see appendix C.
3.4.2 Account-Opening Documents and Know-Your-Customer
or Customer Due Diligence Records
Practitioners should carefully review all account-opening information and any KYC or
customer due diligence e orts conducted by the nancial institution. In the case of
politically exposed persons (PEPs), nancial institutions should have additional due
diligence on the economic background and transactions in the le. is documentation
will likely provide the practitioners with a lot of useful information and potential leads.
For example,
82. In some jurisdictions, the FIU is not permitted to provide a copy of the STR or the CTR to law enforce-
ment o cers. In these circumstances, the intelligence report (if dra ed) usually may be requested, and it
contains much of the same information.
62 I Asset Recovery Handbook
the account manager and any persons named as power of attorney may be worth •
interviewing;
the documents provided by the bank account holder to justify the source of funds •
(for example, contracts, letters, and real estate sales) may help
a. identify the bene cial owner (look at addresses, companies, and individuals
involved),
b. provide a better understanding of the alleged economic background of the
funds,
c. reveal contradictions with the gures or with other evidence already gathered,
d. identify potential witnesses, and
e. prepare for interviews with targets;
in the case of bank accounts in the name of a corporate vehicle, the documents •
incorporating the company, the names of the board members, and the names of
the persons entitled to conduct business on behalf of the company may reveal
persons worth interviewing.
83
3.4.3 Bank Account Statements
As a rst step, practitioners should focus on determining the origin of the funds entering
the account and where the funds have been transferred. is includes debit and credit
ows in the accounts through cash deposits and withdrawals, wire transfers, bonds,
checks, loans, and so forth. In reviewing these ows, di erent techniques need to be
used for assessing the origin and destination of the funds. Here are a few suggestions:
Cash. • Cash movements can be di cult to trace because of the lack of origin or
destination information. Practitioners should obtain the cash deposit or with-
drawal receipt from the bank, and this document should indicate the identity of
the person initiating the transactions. In addition, practitioners will need to use
traditional investigative techniques to follow the link to the cash deposits through
e-mails, letters, and wire transfers; and by looking at activity in other accounts
and safe deposit visiting records.
Bonds. • Bond deposits can be arranged from bank to bank, so practitioners will
have to ask the banks for all information regarding the bonds and the method by
which they were deposited into the account.
Checks. • If it is a deposit by check, practitioners may have to go to the bank account
on which the check was drawn to identify the originator. If the check is endorsed—
that is, signed on the back so as to cash, deposit, or sign it over to someone else—
it should be treated similar to a cash deposit, requiring that the practitioner identify
the person who endorsed the check. Practitioners should also review the “memo”
line of the check because this may indicate suspicious activities. For example, checks
to related companies for “management” or “consulting services” may reveal that
the company is laundering proceeds through a series of companies that it owns.
83. In some cases, board members and employees of a gatekeeper or service provider responsible for creat-
ing shell companies may have little information to assist the investigation.
Securing Evidence and Tracing Assets I 63
3.4.4 Wire Transfers
Previous corruption cases have shown that large amounts of corruption proceeds are
placed in nancial institutions and then moved around the world through wire trans-
fers (also referred to as “electronic funds transfers”) in an e ort to break the audit trail
and secure funds in bank secrecy havens. A wire transfer is initiated with a request by a
customer ( nancial institution, legal entity, or individual) to direct funds elsewhere,
either domestically or across borders.
84
e request gives instructions through a system
of messages by telephone, e-mail, fax, and/or cell phone (see gure 3.3).
85
Before the
proceeds reach their nal hiding place, such wire transfers are used to launder the
funds through several nancial institutions and transit jurisdictions using corre-
spondent bank accounts, serial wires, cover payments, shell companies, and o shore
jurisdictions. Some nancial institutions have even been complicit in helping cor-
rupt politicians, their relatives, and close associates launder funds through complex
transactions using corporate vehicles and establishing special private wealth account
privileges.
86
A wire transfer comprises two components: (1) the instruction, which includes informa-
tion on both the originator and the bene ciary institutions, and (2) the actual movement
84. is can include a chain of wire transfers that has at least one cross-border element (for example, a
correspondent bank in another jurisdiction). See also FATF, Interpretative Note to Special Recommen-
dation VII.
85. According to the FATF Special Recommendation VII on Wire Transfers, promulgated in 2001, the
terms “wire transfer” and “funds transfer” refer to “…any transaction carried out on behalf of an originator
person (both natural and legal) through a nancial institution by electronic means with a view to making
an amount of money available to a bene ciary person at another nancial institution.”
86. See United States Senate, Minority Sta of the Permanent Subcommittee on Investigations, “Money
Laundering and Foreign Corruption: Enforcement and E ectiveness of the Patriot Act. Case Study Involv-
ing Riggs Bank” (Washington, DC, July 15, 2004), http://hsgac.senate.gov/public/_ les/ACF5F8.pdf. Fur-
thermore, a large international bank had a training manual for its employees so they would know how to
“strip” (remove) information from a wire transfer to hide the fact that the transfer was for or on behalf of a
sanctioned jurisdiction. See information at http://www.justice.gov/opa/pr/2009/December/09-ag-1358.
html.
FIGURE 3.3
Basic Cross-Border Wire Transfer Process
Beneficiary bank
(jurisdiction B)
Beneficiary
customer
(jurisdiction B)
Originating
customer
(jurisdiction A)
Originating bank
(jurisdiction A)
Wire
Instruction
Credit
Source: Authors’ illustration.
64 I Asset Recovery Handbook
or funds transfer. ere are many ways for nancial institutions to send instructions,
including electronic networks available through various interbank payment systems,
e-mail, fax, telephone, and telex. By far the most common way for banks to communicate
transfer instructions to each other is by accessing a special nancial telecommunications
system known as the Society for Worldwide Interbank Financial Telecommunications
(SWIFT). Where the actual movement of money is concerned, the two major wholesale
interbank payment systems available are the Clearing House Interbank Payments System
(CHIPS) and Fedwire Funds Service (Fedwire). In addition, direct bank-to-bank and
other intermediary payment systems are frequently used by banks to move customer
funds between institutions.
CHIPS and Fedwire may be used for U.S. dollar transfers or as part of a U.S. dollar com-
ponent of an international transaction. However, CHIPS has been used primarily to
facilitate dollar-denominated international transfers. Unlike these payment systems,
SWIFT is a messaging system only, and it does not hold or transfer funds or manage
accounts on behalf of its members.
An actual funds transfer takes place through a “book transfer,” and it may involve a cor-
respondent bank. A book transfer is essentially an accounting process that physically
moves funds from one account to another. If both the originating customer and the
bene ciary customer have an account at the same nancial institution, then an internal
book transfer can take place between the two customer accounts. When funds are trans-
ferred between two unrelated nancial institutions, a book transfer occurs through a
correspondent or intermediary bank employed to bridge the relationship.
87
Many banks
maintain correspondent accounts primarily for the purpose of processing and clearing
wire transfer transactions with institutions that are members of and have access to
CHIPS or Fedwire; doing so enables them to carry out wire transfers on behalf of their
customers, even though they are not member institutions themselves. Correspondent
banking relationships are also common between domestic and foreign banks because
they can facilitate business and provide services to clients in foreign jurisdictions with-
out the expense and burden of a bank having to establish a foreign presence.
88
Gathering Relevant Documents and Information for Analyzing Wire Transfers
Practitioners will need to ensure that wire transfer documentation is requested from
nancial institutions because this will be critical to asset tracing e orts. is will
include a copy of the wire transfer message itself, as well as other documents that
nancial institutions generate in the process of originating or receiving the transfer of
funds. Box 3.7 outlines some of the forms and documents that may be produced in
87. In this case, if the originating bank maintains a correspondent account with a bene ciary bank, it may
instruct the bene ciary bank to transfer funds out of the originating bank’s correspondent account to the
account of the bene ciary customer. U.S. Department of Treasury, Financial Crimes Enforcement Net-
work, Key Electronic Funds Transfer Systems: Fedwire, CHIPS, SWIFT, Report OSA92/CB0012 (Vienna,
VA, September 1992).
88. Additional information on correspondent banking communications and the use of serial and cover pay-
ment methods, including new cover payment practices developed by SWIFT, is discussed in appendix F.
Securing Evidence and Tracing Assets I 65
connection with a wire transfer. A review of these documents and forms will reveal
key information, such as the originator and bene ciary nancial institution, cus-
tomer parties, amount, date, and customer-to-customer or nancial institution-to-
institution information.
A practitioner seeking information should request wire transfer information in both
spreadsheet format and advice statement form, if available. Because banks use di erent
formats that are not standardized, a spreadsheet may contain information that makes it
easier to understand the transaction, whereas the advice statement format could con-
tain more comprehensive data.
Depending on the circumstances of the investigation, it will be important to obtain
additional documents or apply scrutiny in di erent areas, such as those addressed here:
Underlying payment documents. • Invoices, shipping documents, receipts, con-
sultant contracts, and other documents associated with a transfer will reveal key
information about funds in question.
KYC information. • At the transaction level, the bank may not have identi ed the
ultimate bene ciary when funds exited the account. KYC information may also
be helpful in this regard.
BOX 3.7 Forms and Documents Related to the Wire Transfer Process
Originating institution:
Funds transfer request form•
Wire transfer copy•
Advice statement or confi rmation of wire transfer•
Debit memo to originating customer •
Customer monthly account statement•
Internal log of outgoing wires (correspondent bank logs, payment and •
processing logs)
Journal entry•
Benefi ciary (or correspondent) institution:
Funds transfer request form•
Wire transfer copy•
Credit memo to benefi ciary customer (if deposited)•
Customer monthly account statement•
Journal entry•
Cashier’s check•
Interbank book transfer information that banks keep for the purpose of •
clearing transactions
66 I Asset Recovery Handbook
PEP customers. • In cases involving PEPs, wire transfers may be found in the pri-
vate banking business operations of a nancial institution. PEPs-related inquiries
should include a review of all accounts that have a power of attorney attached to
them and those accounts maintained by law rms because these are common
methods used by PEPs to move money.
Book transfers between personal and corporate accounts. • Such transfers may
be useful in detecting a layering scheme.
SWIFT private gateways and name variants used by the nancial institution. •
A review of the separate SWIFT gateways used only for private banking clients
within the bank and its various branches may uncover a separate and potentially
special permission transaction originating through these gateways. SWIFT name
variants used by the nancial institution may reveal transfers through di erent
avenues. A bank may have di erent wire transfer departments, addresses, or
internal ways of identifying itself.
89
To ensure that the gateways and name vari-
ants are listed in the order to produce bank records, practitioners should consider
gathering this information through interviews with bank o cials (for example,
compliance o cials).
Suspicious transaction reports. • Where available, STRs or intelligence reports
may reveal valuable wire transfer information and originator details.
Federal Reserve Bank inquiries. • For wire transfers submitted through Fedwire,
the U.S. Federal Reserve Bank may be a useful source because it retains wire
transfer records for 180 days. When requesting information, it is important to be
very speci c about the transaction by referencing as many details as possible (for
example, date, transaction amount, originating party, bene ciary customer,
receiving institution, account numbers, purpose of the transaction (if known),
and so forth).
Transaction patterns at speci c institutions. • When reviewing information
obtained from smaller banks, practitioners may look for patterns of very large
transfers relative to the bank’s size (for example, a book transfer that amounts to
80 percent of the total money transferred for a particular bank over the course of
a month).
Repaired, returned, and resent wires. • Monitoring systems will create a “repair
item” for messages containing errors (such as incomplete originator informa-
tion). ose messages are then set aside and alerted for manual review. Such doc-
uments will o en be maintained by the originating and bene ciary banks, and
may reveal patterns of activity by a target or bank.
90
Interpreting Wire Transfer Documentation
In most cases, advice statements con rming a wire transfer and the debit and credit
memos sent by banks to their originating or bene ciary customers will be easy-to-read
89. One bank was found to have 43 separate identi ers based on variations of its name and address.
90. ese records may also be helpful when looking for a pattern of behavior by a nancial institution that
may demonstrate it has knowingly laundered the proceeds of crime. In addition, practitioners should ask
for all rejected wires from a bank in question within, for example, the last 30 days; and they should be
particularly alert to information that was supplemented or changed when the wire was resent.
Securing Evidence and Tracing Assets I 67
documents containing information needed to trace the movements of funds, including
account numbers and the identity of the originating and bene ciary customers. Where
such documents are unavailable, the process of identifying and tracing funds will neces-
sitate an understanding of how to read and interpret the various messaging systems
used to e ect wire transfers.
Payment systems such as CHIPS and Fedwire use a separate messaging format for
wire transfer communication between member institutions; however, SWIFT o ers a
standardized messaging platform for the largest number of nancial institutions globally.
With regard to SWIFT messages, there are industrywide protocols for messaging for-
mats, special codes for di erentiating between information and direction, and encryption
to prevent security breaches during data transmission. To identify the di erent types of
SWIFT messages, there are numbers assigned to each of them. For a message identi ed as
“MT 103,” as an example, the “MT” pre x stands for “message type,” and the three-digit
number that follows represents a speci c SWIFT message type (in this case, “103” means
a single customer/credit transfer). Within a message type, speci c eld codes are used to
demarcate important information. For example, eld 50 (ordering customer) is a key eld
to focus on for tracing laundered funds because it may include more than just the cus-
tomer name and address.
91
Figure 3.4 provides a sample of some of the relevant SWIFT
messaging elds that practitioners will want to review.
SWIFT bank identi er codes (BICs) are another source for practitioners because these
provide the name of the nancial institution, jurisdiction, location, and/or branch. BICs
are generally eight characters in length and consist of a bank code (unique to the nan-
cial institution), a country code (to identify the jurisdiction where the nancial institu-
tion is located), and a location code (that provides a geographic distinction within a
jurisdiction). Sometimes, an additional three characters are used for a branch code (to
identify the physical branch of a nancial institution).
92
3.4.5 Accounting Records
In business accounting, nancial transactions are supported by documentation and are
recorded through journal entries that identify account names and amounts. ese are
summarized in the business’s nancial statements, which include income statements
and balance sheets.
93
Corrupt o cials and those involved in fraudulent schemes will
o en manipulate these records to conceal their illegal activities. Practitioners may nd
91. ere are three options for displaying information in eld 50 (ordering customer) that may be useful to
a practitioner: (1) account plus identi er, (2) identi er plus name and address, and (3) account plus name
and address.
92. For more information on BICs, see http://www.swi .com. e Web site allows searches by institution
name or by BIC, and search parameters may be narrowed by country, city, or both.
93. A journal is a record that keeps accounting transactions in chronological order. Most commonly used
are cash receipts, disbursements, sales, purchases, and general journals. A ledger records transactions by
type of account. An income statement lists revenue and expenses, and a balance sheet lists assets and liabil-
ities.
68 I Asset Recovery Handbook
illicit transactions by analyzing and comparing accounting entries, actual payments,
and the documents used to justify them.
In cases where bribery and/or other inappropriate payments to third parties are sus-
pected, it is common that ctitious invoices are submitted by the bribe recipient
(agent, intermediary, or third party) to the paying party (usually the company seek-
ing to win a contract). Inappropriate payments masked by ctitious invoices are a
pervasive problem, and they facilitate paying business consultants, agents, interme-
diaries, and other third parties for questionable purposes. One reason for using cti-
tious invoices is to provide a false “audit trail” in the records of the bribe-paying
company, thereby concealing the true purpose of the underlying payment. In addi-
tion, they are di cult to identify because they appear to be plausible, legitimate
documents.
If the use of ctitious invoices is suspected, practitioners should focus primarily on
identifying discrepancies between invoiced amounts and the actual value (or the non-
existence) of purchased goods or services. e various documents recording the
transaction—the contract, the documentation to the paying agent (for example,
invoices or e-mails), payment records, bills of lading, and the process for the payment
itself—may reveal red- ag indicators (see box 3.8). When such discrepancies are
FIGURE 3.4
Sample SWIFT Message Format and Code Interpretation
:20: PAYREF-XT78305
:32A: 091010EUR#1010000#
:50: [CUSTOMER NAME AND ADDRESS]
:59: [BENEFICIARY NAME AND ADDRESS]
Code Interpretation
20 Transaction reference number (coded number assigned by the originating institution to
identify the transaction)
32A Value date, currency code, and amount of the transaction
50 Ordering customer (party ordering the SWIFT transaction)
59 Beneficiary (party designated as the ultimate recipient of the funds)
In addition to the above codes, other codes may include
52D Ordering bank (financial institution initiating the SWIFT)
53D Sender’s correspondent bank
54D Receiver’s correspondent bank
57D The financial institution at which the ordering customer requests the beneficiary be paid
70 Details of payment
71A Details of charges for the transaction
72 Instructions from the sending bank to the receiving bank
Source: Authors’ illustration.
Securing Evidence and Tracing Assets I 69
BOX 3.8 Red Flags in Contracts, Payment Documentation, Payment
Records, and Payment Mechanisms
Contracts:
Invoices for signifi cant payments to third parties in the absence of a formal •
contract
Lack of specifi city in the contract or agreement on the services to be •
performed
Absence of written evidence confi rming that due diligence was performed •
to confi rm the identity and legitimacy of the contracting party
Back-dated contracts or contracts in which services have been supplied •
and billed prior to the date the contract came into existence
Multiple contracts with different parties for performance of the same ser-•
vices in the same location (that is, paying multiple contractors for the same
service)
Existence of annexes or side agreements (including oral agreements) that •
unreasonably expand or alter the scope of the original contract
Success-fee commissions to be paid to the “agent” if the paying party •
wins a key contract, particularly where the activities of the agent are not
specifi ed
A commission rate that exceeds the expected market rate for the juris-•
diction
Payment documentation (invoices, receipts, e-mails to justify payment, minutes,
and other documentation provided by third parties to justify payments as a ven-
dor of goods or services):
Failure to provide supporting information to confi rm that services were •
provided
Deliverables or reports provided by third parties that are the same as, simi-•
lar to, or not commensurate with the commission payable (for example, a
search of report phrases on the Internet may reveal that the contract has
been plagiarized)
Invoices that contain generic add-on fees or surcharges•
Invoices missing expected information, such as tax identifi cation or corpo-•
rate registration numbers
Value of services rendered that is not commensurate with the amount paid•
Recipient bank details that differ from the jurisdiction or location where •
services were performed
A third-party name that appears to be a shell company or to be managed by •
shell companies
A recipient name that differs from the name of the contractual third party•
Multiple third parties who share the same business address•
Multiple consultants who have the same generic invoice format or addresses•
(continued next page)
70 I Asset Recovery Handbook
BOX 3.8 (continued)
Payment records and entries in accounting records:
Signifi cant invoices or invoice amounts recorded in generic general ledger •
accounts, such as miscellaneous expenses or consulting
Use of suspense or transitory accounts that eventually are written off as •
bad debt
Payments processed outside of the normal accounts payable process (for •
example, one-off manual payments, cash payments)
Failure to follow payment procedures (for example, obtaining one signature •
when two are required)
Reluctance of company personnel to approve invoices for payment through •
normal channels, such as online or directly on the invoice
Pressure from a third party or company personnel to process payment •
urgently
Unusual interest by company personnel in the processing of payments to •
specifi c third parties
Unusual responses or hostility from company personnel or third parties in •
response to a search for additional supporting documentation
Payments to third parties for which risk management processes were not •
followed
Payment mechanisms by which funds are remitted from the company:
Request for payments to be remitted through tax-haven jurisdictions•
Requests by employees to hand-deliver payment•
Requests to split payment across multiple company bank accounts and/or •
country offi ces
Requests by employees that payments be made in cash or cash equivalents•
Requests by employees for purchase of high-value “gifts” (such as watches •
or jewelry)
found, it will be possible to lter the population of suspicious transactions and focus
the investigation on the issuer of the ctitious invoice (the suspected bribe recipient).
In the absence of more speci c leads, attention should be paid to large, unusual, or one-
o items recorded under expenditure accounts—consultancy, commissions, entertain-
ment, travel, and miscellaneous expenses. In addition, practitioners should consider
account receivables that are not repaid and are written o as bad debts.
3.4.6 Insurance Policies
Some life insurance policies may be of great value and may be purchased with a single
downpayment, making them attractive to would-be money launderers. Practitioners
should determine if the targets have cash-value insurance policies. In addition,
Securing Evidence and Tracing Assets I 71
insurance policies may reveal other assets owned by the targets (perhaps jewelry or cars).
Typically, such information can be gathered through the various investigative techniques.
3.4.7 Purchase and Sale Documents
Documents related to the purchase and sale of assets—whether real property, shares,
vehicles, jewelry, or artwork—will include land registry documents, purchase and sale
agreements, loans, mortgages, nancial statements, tax returns, and credit card state-
ments. Practitioners should focus on documenting the values at and dates of purchase
and sale, the name of the buyer or seller, the method of payment (cash, check, cur-
rency), and the source of funds. With assets purchased with cash, it may be di cult to
trace the date of purchase or the value, particularly when there are numerous potential
sellers or dealers (as is true for artwork, jewelry, and vehicles). Travel data (gathered
from border-crossing information, credit card information, or travel reward programs),
insurance policies, jewelry repair bills, vehicle identi cation numbers, dealer stickers or
decals on the vehicles, and art dealers may provide assistance in determining the seller
of these items and the dates of purchase.
Practitioners also need to consider assets ostensibly owned by family members or close
associates but e ectively controlled, held, or gi ed by a target (see section 4.3.1 in chap-
ter 4 for a discussion of this issue in the context of provisional measures).
3.5 Organizing Data: Creating a Financial Profi le
It will be important to organize the information gathered into an account pro le for
each bank account; and this information, in turn, can be combined with other nancial
data collected (such as other asset holdings, liabilities, income, and expenses) to build
the nancial pro le of a target. A standard computer spreadsheet program could be
used for this purpose (see appendix G for a sample nancial pro le form).
As an example, the account pro le should include the following information:
name of the bank and branch location;•
bank account number and type;•
names of bank account holder, bene cial owner, and those granted powers of •
attorney;
dates of account opening and, if applicable, closing;•
currency;•
account balance at the time of the disclosure;•
annual credit turnover;•
annual debit turnover; and•
whether the assets have been restrained.•
Practitioners may then consider entering into a spreadsheet program additional rele-
vant data, such as the credit and debit activity that occurs within the bank account
72 I Asset Recovery Handbook
during the relevant period under investigation, with the date, amount, and (when
available) the source of funds or where the funds were sent (bank and bank account
holder’s name).
To assist with organizing and eventually presenting and explaining the data, practitio-
ners should map out the ow of funds in a ow chart (see examples in gures 3.5 and
3.6). ese ow charts provide a visual snapshot of the targets, associates, gatekeepers,
and corporations involved; and of the assets, bank accounts, and corporate vehicles. Not
only is this snapshot or “big picture” view helpful for practitioners as they try to under-
stand and interpret the ows, but it also becomes essential when explaining the ow and
associations developed during the course of the investigation to a prosecutor or judge.
In addition, practitioners should consider using a document management system, par-
ticularly in complicated cases and with large amounts of data.
3.6 Analyzing Data: Comparing the Flows with the Financial Profi le
In this critical phase, analysts will compare and contrast dates, origins, destinations,
bank account holders, banks, and sources of information so they may group and
FIGURE 3.5
Sample Flow Chart
Company Y
(location:
country A)
Target
(ultimate beneficiary)
(location: country E)
funds received:
$1.3 million
Company X
(location:
country B)
Company Z
(location:
country E)
Intermediary B
bank acct #2345
(location:
country C)
Intermediary C
bank acct #3456
(location:
country D)
Intermediary A
bank acct #1234
(location:
country B)
2/1/10:
$25,000
AT
1/13/10:
$500,000
WT
1/13/10:
$1.0 million
WT
2/1/10:
$25,000
WT
1/17/10:
$650,000
WT
2/9/10:
$500,000
WT
2/21/10:
$125,000
WT
1/23/10:
$450,000
AT
2/22/10:
$125,000
AT
1/12/10:
$375,000
AT
2/1/10:
$25,000
PYMT
2/21/10:
$125,000
PYMT
2/11/10:
$150,000
AT
2/10/10:
$350,000
AT
2/11/10:
$150,000
WT
1/2/10:
$2.1 million
AT
Source: Authors’ illustration.
Note: AT = account transfer; PYMT = payment; WT = wire transfer.
Securing Evidence and Tracing Assets I 73
FIGURE 3.6
Sample Chart of Relationships and Assets
LINK
LINK
Son-in-law
LINK
LINK
Company
ABC Ltd.
LINK
Business associate
ABC trust
LINK
Director
DirectorCo-owner
LINK
Trustee
Owner
LINK
Owner
Spouses
Spouse
Ex-spouse
Children
Son-in-law’s
business interests
Property ownership
Siblings
Brother Brother
Other property interests
Rental
properties
Corporation
Manufacturing
Target PEP
Co-trustee
Source: Authors’ illustration.
reconcile transactions and identify gaps in data. For example, one account may show
the withdrawal of a large sum of cash, leaving the analyst without destination informa-
tion; another may show a subsequent deposit. Or perhaps physical surveillance records
reveal that a target traveled to a foreign jurisdiction in the days following the with-
drawal. Payments to contractors may be linked to subsequent deposits. In one case, for
example, several deposits by a corrupt o cial were found to be the same percentage as
the payments to the contractor. is analysis will help in better understanding the
asset ow and in developing new leads.
Another technique used by practitioners is a net worth analysis—a comparison of the
value of the assets held by a target with his or her reported income. Any unreported
income is likely to have illicit origins, and practitioners will subsequently need to direct
e orts to show a link between the asset and the o ense. In jurisdictions that prosecute
illicit enrichment, the net worth analysis is a necessary step in the investigation.
To assist in identifying corruption and money laundering schemes, it may be helpful to
review information or research on the various typologies and red ags for identifying
criminal activity. Many agencies and international organizations publish such reports,
and they are available online. ey include
74 I Asset Recovery Handbook
Financial Action Task Force (FATF) typology reports (for example, FATF typolo-•
gies on money laundering and terrorist nancing in the real estate sector);
FIU annual reports on STRs; and•
reports by the FIU, nancial sector supervisor, or banking association on typolo-•
gies and red ags for identifying criminal activity and money laundering.
3.7 Garnering International Cooperation
Asset recovery in corruption cases frequently crosses borders and involves many di er-
ent jurisdictions; therefore, information on assets and bank accounts located abroad
will have to be requested. Some information (such as land, vehicle, and corporate infor-
mation; and nancial intelligence) may be obtained through informal channels (per-
haps counterpart practitioners, liaison magistrates or regional attachés, or practitioner
networks such as the Egmont Group), rather than through an MLA request. However,
if a requesting jurisdiction is seeking documentation to be used as evidence in domestic
court proceedings, an MLA request will be required. In all cases, it may be possible for
practitioners to participate in the activities undertaken in the foreign jurisdiction.
Chapter 7, on international cooperation, provides further guidance on this process and
discusses some of the challenges encountered in asset tracing.
E orts toward asset con scation are of little value if, at the end of the day, no asset is
available for con scation. Given that assets can be hidden or moved out of reach in a
short period of time and that an investigation and con scation can take years (o ering
a target ample time to move or dissipate assets), it is critical that measures be taken
early on to secure the assets that may become subject to a con scation judgment. ese
measures are referred to as provisional measures, and they include the seizure and
restraint of assets. e measures should be taken as close to the beginning of the case as
possible; and, where feasible, should secure the assets until the conclusion of the con s-
cation proceedings.
94
e laws governing provisional measures in most jurisdictions involve the balancing of
two opposing principles. e rst principle is the public interest in ensuring that the
proceeds and instrumentalities of crime are preserved and maintained until the end of
the con scation case; and the second principle is the right of the individual to enjoy the
ownership and use of his or her property. A similar balancing occurs when a person is
charged with a serious o ense, and a determination must be made whether that person
should be allowed to remain in the community on bail pending trial or be held on
remand.
4.1 Terminology: Seizure and Restraint
In both common and civil law jurisdictions, two distinct mechanisms have been devel-
oped to control and preserve assets that may be subject to con scation: seizure and
restraint. Seizure involves taking physical possession of the targeted asset. Although
court orders are generally required, some jurisdictions grant law enforcement agencies
the right to seize assets. For example, bulk cash or other assets “reasonably suspected or
believed” to be the proceeds or an instrumentality of crime may be seized in exigent
circumstances. Such powers, o en emanating from customs laws, are particularly use-
ful for seizing suspicious cash that is transported across international boundaries in
contravention of cash import or export reporting laws.
Restraint orders are a form of mandatory injunction issued by a judge or a court that
restrains any person from dealing with or disposing of the assets named in the order,
94. Although some jurisdictions limit the duration of the provisional orders, generally the limitations may
be extended. In Liechtenstein, for example, the court must limit the duration for which the order is issued,
but the deadline may be extended upon application (Code of Criminal Procedure, sec. 97a[4]).
4. Securing the Assets
76 I Asset Recovery Handbook
pending the determination of con scation proceedings.
95
Unlike seizure orders,
restraint orders do not result in the physical possession of the asset. Judicial authoriza-
tion is usually required; however, some jurisdictions permit restraint to be ordered by
prosecutors or other authorities.
96
At the same time, not all jurisdictions use the same
terminology for seizure and restraint of assets. For example, one jurisdiction will “seize”
bank accounts, whereas another will “restrain” them. Other jurisdictions have intro-
duced such terms as “freezing” or “blocking.”
97
Practitioners should be aware of the
distinction between the terms when sending or receiving an order involving another
jurisdiction, and they must ensure that requests use terminology that can be under-
stood. O en it is a good idea to describe the purpose of the order rather than the
name of the order to be requested because the terminology may confuse the recipient
(see section 7.4 of chapter 7 for additional information on dra ing mutual legal assis-
tance [MLA] requests).
4.2 Provisional Order Requirements
Similar to search and seizure warrants and disclosure orders, laws typically require that
provisional measures be judicially authorized by a judge or investigating magistrate.
Many jurisdictions will also permit emergency or short-term provisional measures to
be implemented administratively, through either the nancial intelligence unit (FIU),
law enforcement agency, or other authority under law (see section 7.3.4 of chapter 7 for
a discussion of these avenues).
4.2.1 Evidentiary Requirements
e requirements for obtaining a seizure order (also see chapter 3) or a restraint order
usually involve the following:
either (1) a target has committed an o ense from which a bene t has been derived •
(value-based con scation), or (2) the assets being sought are linked to criminal
activities (property-based con scation) (see chapter 6 for a discussion of property-
based and value-based con scation);
98
and
95. Restraint orders are similar (not identical) to the common law Mareva injunctions. See chapter 8 for a
discussion of restraint orders.
96. A prosecutor has the authority to restrain assets in Colombia and Mexico. For example, see Law 793.02,
Colombia).
97. Some con scation laws contain both restraint and freezing orders. Restraint orders, made by a judge,
are high-level orders that can restrain any type of property; freezing orders, made administratively by law
enforcement o cers or public servants, are lower-level orders that can restrain limited classes of lesser-
value property.
98. e exact formulation of the test will vary from jurisdiction to jurisdiction. For example, the High
Court of Australia has de ned reasonable belief as “an inclination of the mind towards assenting to, rather
than rejecting, a proposition and the grounds which can reasonably induce that inclination of the mind
may, depending on the circumstances, leave something to surmise or conjecture” (George v. Rockett, 170
CLR 104, High Court of Australia, 1990).
Securing the Assets I 77
proceedings have been instituted or are about to be instituted.•
99
In common law jurisdictions, these requirements are generally established on a “rea-
sonable grounds to believe” or “probable cause” standard of proof. Similarly in civil law
jurisdictions, the decision will rest with the prosecutor’s or judge’s belief in or knowl-
edge of these requirements. Additional requirements may include grounds to believe
that there is risk of dissipation or that the assets are subject to con scation and an
undertaking as to damages.
100
4.2.2 Procedural Requirements
Applicable rules of procedure may be outlined in con scation laws or may incorporate
criminal or civil procedural laws by reference. Common law jurisdictions, for example,
will require the application to be in writing; and the application or motion usually
consists of two documents: (1) the seizure warrant or restraint order, and (2) the sup-
porting a davit (see box 4.1 for a description of a davits and important evidence to
include). Civil law jurisdictions, on the other hand, may simply require a recitation of
the facts demonstrated by relevant documents or evidence contained in the case le
before the judicial authority. In some other civil law jurisdictions, the prosecutor or
investigating magistrate may restrain or seize assets based on the need to preserve evi-
dence or avoid dissipation of assets subject to con scation.
Provisional measures can be strongly contested or appealed by targets and their families
or associates, particularly when substantial property interests are subject to restraint or
seizure. e result is that the application process for provisional measures may be con-
verted into a mini-trial in which allegations supporting the application are challenged.
Mindful that provisional measures simply require a reasonable belief of certain facts,
prosecutors should urge the court to avoid deliberating on the ultimate merits of the
case, which will be determined at trial. is determination is most appropriately le to
the court dealing with the related prosecution and con scation.
Many jurisdictions permit the prosecutor to make applications for provisional mea-
sures ex parte, or without notice to the asset holder, on the notion that notice would tip
him or her o and create an opportunity to move or hide assets. Under some laws, pros-
ecutors or investigating magistrates will have an absolute right to proceed ex parte if
they choose to; other legal systems permit such applications only if certain conditions
are satis ed, such as showing a risk of dissipation.
99. Some restraining order provisions permit application to be made at any time, as long as an investigation
(criminal or non-conviction based) is under way. is gives much more exibility to apply for restraining
orders at the earliest possible time, and is a development that should be encouraged.
100. In those jurisdictions where undertakings must be given, there is a limited scope of circumstances in
which the prosecution is required to pay damages, particularly to criminal defendants. e ultimate dis-
charge of the order does not result in the automatic imposition of a damages order, unless it can be shown
that the prosecutor either acted in bad faith or was negligent in the discharge of his or her duties.
78 I Asset Recovery Handbook
If there is any risk that notice of an application for a restraint order will result in dissipa-
tion or if the assets subject to the restraint are inherently movable—such as funds in a
bank account, jewelry, cash, vehicles—good practice dictates that the application pro-
ceed on an ex parte basis.
An ex parte order may be e ective for a limited time, during which the applicant must
either (1) provide notice to the asset holder and an opportunity for a hearing; or (2) apply
to the court for an extension of time in which to do so. Some jurisdictions will require
that the asset holder be provided with details of the proceedings, such as a transcript.
BOX 4.1 Drafting Affi davits
An affi davit is a sworn statement of fact based on the personal knowledge or
belief of the affi ant. Used mainly in common law jurisdictions, it is an important
procedural aid that permits the admission of evidence through a written state-
ment that is not subject to cross-examination. Without an affi davit, the applicant
or prosecutor must call witnesses (vive voce evidence) who will then be subject
to cross-examination—evidence cannot simply be recited or submitted by the
prosecutor as is permitted in some civil law jurisdictions.
a
Affi davits are useful in
asset recovery cases for all applications to the court, including search and seizure
warrants, restraint orders, and disclosure or production orders; and may be per-
mitted for certain types of evidence at trial.
In applications for seizure, restraint, or other investigative techniques, an affi davit
is typically sworn to by law enforcement offi cers; they can introduce all relevant
material, including hearsay evidence, even though it may have been derived from
numerous sources. Practitioners will need to ensure affi davits are drafted in a
manner prescribed by the rules of the court.
b
In addition,
because an affi davit is essentially the evidence for the application, it must •
outline how the case meets the evidentiary requirements for granting a
restraining order.
hearsay evidence is permitted in affi davits and applications for court orders. •
Where the deponent relies on information obtained from another person,
the affi davit should state the source of the information and that the depo-
nent believes it to be true.
any supporting documents relied on should be annexed to the affi davit.•
care should be taken to ensure that the facts in the affi davit are correct.•
if the requesting jurisdiction invokes a confi dentiality provision in the mutual •
legal assistance (MLA) request, the requested jurisdiction must gain con-
sent before any information obtained from the assistance request may be
submitted to a court in the form of an affi davit.
a. In the United States, affi davits are not required when a complaint is fi led in a non-conviction based confi scation case. A short
recitation of the facts giving rise to the confi scation in the complaint is suffi cient. b. Many jurisdictions have forms available to
guide practitioners.
Securing the Assets I 79
4.2.3 Provisional Restraint or Seizure of Assets in Foreign Jurisdictions
ere are various avenues to achieve seizure or restraint of assets located in foreign
jurisdictions.
101
On receipt of a request from the requesting jurisdiction, the authorities
in the foreign requested jurisdiction may enforce the restraint or seizure order that is in
place in the requesting jurisdiction.
102
Alternatively, the authorities in the requested
jurisdiction may apply for a domestic restraint or seizure order, based on the facts pro-
vided by the requesting jurisdiction. ere may also be informal or administrative ave-
nues to achieve seizure or restraint of assets (see chapter 7 for additional details on
these avenues).
4.3 Pre-restraint or Pre-seizure Planning
Proper planning is essential for e ective restraint or seizure. Outlined below are a num-
ber of important considerations for practitioners to take into account.
4.3.1 Identifi cation of Assets Subject to Provisional Measures
e assets subject to provisional measures will be those needed to satisfy the eventual
con scation order. Applications for provisional measures should be carefully cra ed to
correspond to the con scation sanction or sanctions (because more than one can be
pursued) that might operate against restrained or seized assets.
Ensuring that the appropriate assets are subject to provisional measures will depend on
the con scation system in place (that is, whether it is a property-based or value-based
system). For example, if the only available sanction against a target is a property-based
con scation order, no purpose would be served in seizing a house that cannot be char-
acterized as the proceeds or an instrumentality of corruption. However, if an available
sanction is a value-based con scation order or if substitute asset provisions exist, there
may be very good reason to seize such an asset, provided that there is some evidence that
the target has derived a bene t from the alleged o ense.
In cases where rebuttable presumptions or reverse onus provisions apply, the scope of
the order can be expanded to include the assets that would be con scated by operation
of the presumption. For example, if the o ense invokes a presumption that some or all
assets are proceeds of corruption, these assets can be subject to provisional measures
(see section 6.3.1 of chapter 6 for a discussion on rebuttable presumptions).
101. See United Nations Convention against Corruption, art. 54(2)(a) and 54(2)(b), for lists of these
mechanisms.
102. is avenue requires that the requesting jurisdiction have extraterritorial jurisdiction over the assets
located in the foreign jurisdiction and that these assets must be listed in the restraint order. Laws permitting
direct enforcement in the requested jurisdiction o en have provisions that prohibit the requested jurisdiction
courts from considering issues and challenges that are available to the target and his family or associates in
the con scation proceeding pending in the requesting jurisdiction. Such provisions prevent the adjudica-
tion of similar challenges in two di erent jurisdictions.
80 I Asset Recovery Handbook
Assets Controlled, Held, or Gi ed by a Target
Although some jurisdictions will permit the seizure of assets without consideration of
the identity of their owner or holder, other jurisdictions—particularly value-based
systems—will limit con scation to assets “owned” by the target. A strict interpretation
of ownership can be problematic, especially given that corrupt o cials are likely to
hold assets in ways that disguise ownership. For example, assets might be:
owned by a family member or associate of the target, but held by them for the •
bene t of the target;
owned by a corporate entity or trust, either owned or indirectly controlled by the •
target; or
gi ed by the target to the family member, associate or company.•
e capacity to “pierce the corporate veil”—to reach corporate assets that are essentially
controlled by the target—and to include assets in the hands of third parties is particu-
larly important if an order for provisional measures is to work e ectively. Fortunately,
most jurisdictions broadly de ne “ownership” to include assets that are e ectively con-
trolled, held, or gi ed by the target. Such laws go beyond what the person might own to
include assets owned by a trust, corporation, or individual that is controlled by the tar-
get. Some jurisdictions use other procedural aids, such as presumptions, that e ectively
shi the burden of proving ownership to the third party.
103
Such provisions assist with
the restraint or seizure of assets that a target has sold to a third party for less than mar-
ket value or under simulated legal transactions (for example, payment of professional
fees or debts that do not exist).
Other jurisdictions permit only the restraint or seizure of assets that are held by a tar-
get; and they de ne “held” broadly to include ownership and assets owned by others,
but in which the target holds a bene cial interest.
With regard to assets that are gi ed, some jurisdictions permit the restraint or seizure of
assets that have been gi ed within a reasonable time, such as a ve- or six-year period.
104
ese provisions are similar to the “claw back” provisions used to recover assets disposed
of by a bankrupt person or entity in the period leading up to the bankruptcy.
In linking a target to an asset or account held in the name of an associate, close relative,
or company, it is helpful to look into the transactional activity surrounding the asset
and to consider a number of factors, including:
the amount paid for the asset (market value), including whether the mortgage •
responsibility was transferred with the title;
the source of funds used to purchase the asset;•
103. In Colombia, if assets have been transferred or sold to a third party, those assets can be restrained; the
third party then has the burden of proving that it is not involved with the criminal enterprise.
104. Colombia permits con scation of gi ed items at any time (Law 793.02). In the United Kingdom, leg-
islation permits going beyond the six-year period if the asset can be linked to the o ense.
Securing the Assets I 81
the person paying the expenses and outgoings associated with the asset;•
the capacity or resources of the owner of the asset to purchase or maintain the •
asset; and
the person occupying, possessing, or controlling the asset.•
ese questions can lead to the accumulation of evidence, circumstantial or otherwise,
that will permit a court to draw the inference that assets owned by a third party are
actually bene cially owned or controlled by the target and therefore (if the law permits)
subject to restraint or seizure and eventual con scation.
Partial Interests in Assets
A target will o en hold a partial interest in or a share of an asset, business entity, or
investment. Unless it is alleged that the remaining interests are bene cially owned or
controlled by the target, it is important to ensure that restraint is limited to the target’s
interest in the asset (for additional information and guidance, see section 4.7 of chapter
4 on third-party interests).
4.3.2 Asset Management Considerations
In addition to determining which assets are subject to provisional measures, it is
essential that consideration be given to what, if any, asset management requirements
will be generated by the proposed restraint or seizure (see chapter 5 for a discussion of
asset management issues). is will involve the investigation team (including any
investigators tasked speci cally with tracing the assets) and the prosecution team
(including the prosecutor tasked with obtaining the order). When it is determined
that a restraint or seizure will take place, the team should consider involving the
agency responsible for asset management (if one exists). e manager can provide
valuable advice about whether assets should be restrained or seized and the particular
powers and conditions that should be included in the order to facilitate management
of the asset. In addition, early involvement will allow the manager the opportunity to
consider whether logistical arrangements will be needed to achieve physical control of
the assets.
Although all bank accounts, share certi cates, cash, and other intangible assets that
hold value will be included in the restraint or seizure order, some form of cost-bene t
analysis should be undertaken for assets that will require management because it is an
expensive activity that has the potential to cost more than the value of the assets being
managed. Just because assets can be restrained or seized does not necessarily mean that
they should be. As a general rule, assets should not be seized or restrained if the likely
costs of maintaining, storing, or managing them will exceed or substantially diminish
the return on con scation. Some jurisdictions have set thresholds to avoid restraint or
seizure of low-value assets or they refuse to restrain or seize certain types of assets (such
as livestock). Others will appoint a depository holder, escrow agent, or custodian for
assets that are too risky or expensive to administer or they will permit the seizure and
sale of certain items.
82 I Asset Recovery Handbook
is general rule should not be applied in exibly. ere may be reasons in an individual
case where restraint or seizure is in the public interest, such as an abandoned house
used for illegal activity. Likewise, even if there is value in an asset, there may be reasons
for restraining but permitting continued use of it—for example, the family home and
contents or cars.
105
Clear policies in relation to these matters should be developed and
communicated to practitioners and asset managers.
106
Another consideration in the planning stage is whether the asset can be preserved with-
out requiring management services, such as by registering a lien on the real property in
the public records. Box 4.2 is an example of how planning can result in small changes
to a proposed order that eliminate the need for the appointment of an asset manager,
with consequential savings in expenditure, complexity, and administrative work; and
without much loss in the value of the asset.
4.3.3 Partial Control or Limited Restraint
Some assets may be controlled at di erent levels, and advance consideration should be
given to the degree of control that is required to preserve the assets for con scation. For
example, a target may be the proprietor of a business that is operated on land owned by
the target; and it may be possible to restrain the land and buildings, as well as the busi-
ness itself. Making and acting on such a determination will involve a number of consid-
erations. Although land can be restrained without requiring the appointment of an
asset manager, maintaining buildings and a business is likely to be costly and will require
management. Businesses, in particular, may require specialized management skills
involving marketing and sales, customer service, logistics and supply, asset manage-
ment, and human resource management; failure in any of these areas can turn a pro t-
able business into an unpro table one. On the other hand, the pro ts generated from
the buildings or business may not be subject to con scation unless they are included in
the restraint order. Table 4.1 de nes some of the advantages and disadvantages of the
di erent options.
4.3.4 Preparation for Taking Physical Possession
e only practical way to preserve assets is o en to take physical possession of them.
Before an asset manager can take physical possession, arrangements must be put in
place to ensure safe seizure of the asset, safe storage facilities, and safe transfer to the
storage facilities. In some cases, storage can be accomplished relatively easily: for exam-
ple, jewelry or bullion may be stored safely in safe deposit boxes at a bank. Other types
of assets—such as valuable artwork, motor vehicles, or yachts—require specialized stor-
age facilities that may take time and substantial cost to arrange.
105. See, for example, section 4.5 of chapter 4 or sections 5.4.2 and 5.4.3 of chapter 5.
106. In the United States, the government is prohibited from seizing real property during the course of
con scation proceedings, unless the government demonstrates that the property is abandoned or is dete-
riorating in value. However, prosecutors will place a lis pendens (lien) on the public land records to give
notice of the pending proceeding. e lien prevents any future purchaser from obtaining bona de pur-
chase for value status.
Securing the Assets I 83
BOX 4.2 An Example of Pre-restraint Planning Decisions in Practice
In the course of an investigation into the corrupt activities of a government offi cial, it
was determined that asset confi scation proceedings would be brought against the
offi cial at, or shortly before, his arrest. The following is a list of the offi cial’s assets and
the considerations and decisions made with respect to restraint and management:
Large residential dwelling occupied by offi cial and family.• The property
was included in the restraint order, and the existence of the order was noted
on the title to warn prospective purchasers or secured lenders. An asset
manager was not appointed; and the offi cial and his family were permitted
to remain in the dwelling on condition, as noted in the order, that the offi cial
maintain the property and pay rates, taxes, and mortgage payments.
Investment seaside house (rented out by agent). • Although initially thought
to be an asset that would need to be managed, it was discovered that the
ongoing management and profi ts generated were being managed by a prop-
erty agent. It was decided that the asset could be adequately restrained
without an asset manager by means of an appropriately drafted order requir-
ing the property agent to pay accumulated rent into a restrained bank
account. The property agent was authorized by the order to pay property
outgoings and fees from rental receipts. The existence of the order was
noted on the title.
Small plastic fabrication factory (located in an industrial unit owned •
by the offi cial) operated by a company owned by the offi cial. It was
determined that the factory was of little value: the current account balance
was low and investigators suspected it was simply used as a vehicle to
launder the proceeds of corruption. As a result, restraint was not sought
and the business was left in the hands of the offi cial. Within six months of
the arrest, the plastic factory business folded.
Industrial unit. • It was discovered that the only “tenant” of the unit was the
factory, and the factory had not been paying rent to the offi cial. This prop-
erty was included in the restraint order, which was noted on the title. It was
determined that the factory could continue to occupy the unit without pay-
ing rent providing that it continued to maintain the buildings and pay rates
and taxes. After the plastic factory business folded, the restraint order was
varied by providing for the appointment of an asset manager to manage
this property. He arranged to lease the property, paid the outgoings on the
land and buildings from the rent, and invested the profi ts.
Personal bank accounts and share portfolio. • These were restrained,
with the exception of one low-value account into which the offi cial’s salary
was paid (used by the offi cial to pay living expenses for himself and his fam-
ily). Because the share portfolio was not very large and was held in blue-
chip companies with a stable value, an asset manager was not appointed
at the outset. After the asset manager was appointed to control the indus-
trial unit, the share portfolio was also placed under his control.
Three high-value cars. • The cars were restrained and placed in the custody of
law enforcement (provided for in legislation) with vehicle management proce-
dures and facilities that enabled them to look after high-value cars properly.
84 I Asset Recovery Handbook
With regard to how an asset will be seized, the asset manager (or asset management
authorities) should coordinate with practitioners investigating the criminal matter. If
search warrants are to be executed on premises that have assets to be seized, the best
time to take possession is during the execution of the warrants. When the o cers have
secured the premises and completed their preliminary searches for evidence, the prem-
ises can be checked easily by the asset manager for the presence of assets he or she has
TABLE 4.1
Considerations in Partial Control or Limited Restraint
Option Advantages Disadvantages
Restrain the land only.
(Leave hotel business and
buildings in possession of target
to manage and pay related fees.)
May not necessitate the
appointment of an asset
manager because the
business is responsible for
outgoings and taxes.
In the event that confi sca-
tion is unsuccessful, there is
a low risk that the authority
will be liable for post-
restraint losses of the
business.
The profi ts from the land and the
business will not be subject to
confi scation.
If the business is being used to
launder money, this option will allow
such activities to continue; therefore,
it would be better to consider the
third option.
Restrain the land and buildings
only.
(Lease or rent land to hotel
business.)
Profi ts from the land in the
form of rent (less outgoings)
will be subject to confi sca-
tion.
Management tasks involving
only the land and buildings
may not be particularly
diffi cult or onerous.
Asset manager may need to be
appointed.
Profi ts from the business will not be
subject to confi scation.
Restrain everything (land,
buildings, hotel business).
The full value of the
property, including the hotel
business, will be restrained
and subject to confi scation.
This is a major intervention and
involves placing expert managers to
oversee the operation of the
business and to ensure that the
profi ts of the business are properly
restrained.
In the event that confi scation is
unsuccessful, the authority may be
liable for post-restraint losses of the
business.
Source: Authors’ compilation.
Note: Assets = hotel business of target operated on land owned by target.
Securing the Assets I 85
been authorized to seize.
107
e applicant for the seizure order will need to ensure that
the asset manager has the necessary authority to enter the premises because he or she
may not be covered under the authorities granted to law enforcement.
When assets must be seized independently of a criminal investigation (for example, to
enforce a seizure order in a non-conviction based [NCB] con scation proceeding), it
may be necessary to obtain orders authorizing the asset manager to enter the premises
to take possession of certain assets. Asset managers should liaise with law enforcement
on security issues, and law enforcement o cials should be prepared to provide agents
for this purpose.
4.4 Timing of Provisional Measures
Proper timing of provisional measures is one of the most challenging parts of asset
con scation work. If they are imposed too early, a target may be tipped o and cease
activities (thereby making it di cult to gather evidence and identify other accounts,
targets, or the typologies used). However, if the measures are imposed a er a target is
aware of the investigation, the likely result is that assets will be dissipated or hidden.
As a result, practitioners investigating o enses must coordinate with practitioners
seeking recovery of the assets. ey must be attentive to the risk that a target may
become aware of the investigation, and they should remain su ciently agile to obtain
provisional measures when needed. A target may be tipped o at any of the following
stages:
When certain investigative techniques are used in the course of an investigation—•
techniques such as search of residences or businesses, interviewing witnesses, pro-
duction orders, or issuance of a MLA request. It will be important to ensure that
assets are secured before (or simultaneously with) the use of these techniques.
At the time a target is charged with a criminal o ense. •
At the time an application for con scation is made. •
e consequence of bad timing is the loss of assets and additional evidence. Practitio-
ners should begin consultations in the early stages of an investigation and before any
overt action is taken against a target. ey should develop a strategy that will permit
criminal investigation objectives to be achieved together with the restraint or seizure of
a target’s assets at the optimal time.
Provisional measures are less e ective in jurisdictions that permit the implementation
of measures only a er a target has been charged. Most investigations and tracing e orts
107. Sometimes practitioners are empowered by con scation legislation to seize assets that are covered in
the restraining order or that they believe are the proceeds or instrumentalities of crime. is may remove
the need for the asset manager to be present during the search; however, procedures for dealing with the
assets should be worked out in advance between the asset manager and the practitioners.
86 I Asset Recovery Handbook
can take months, if not years—thereby increasing the opportunity for a target to hide or
dissipate assets or to ee the jurisdiction. It is fortunate that some jurisdictions have
addressed this issue by permitting provisional measures at any time during an investi-
gation into an o ense. e existence of NCB con scation laws can also provide an
opportunity to restrain or seize assets much earlier because the power to do so is not
dependent on criminal charges.
4.5 Exceptions to Restraint Orders for Payment of Expenses
Some jurisdictions will permit exceptions to be made to a restraint order to pay for
certain categories of expenses, including the living expenses of a target and his or her
dependents, legal expenses arising from the con scation proceedings and any related
criminal prosecution, and the bona de debts and business expenses of a target.
Such exceptions are a controversial topic.
108
Applications for exceptions to the restraint
order have the potential to entirely strip out the value of a restraint order. ose people
with assets under restraint orders have an obvious incentive to try to use restrained
assets under threat of con scation rather than unrestrained assets—the existence of
which may not be known. On the other hand, there are issues of due process and the
right to counsel that must be considered.
109
In jurisdictions that permit the drawing down of restrained assets, practitioners
should ensure that there are no other unrestrained assets with which to pay the
expenses.
110
Using investigative techniques (such as production or disclosure orders,
interviews, search orders, and previous statements made under oath), practitioners
may be able to locate evidence of unrestrained assets in or outside the jurisdiction and
then use that information to argue before the court that the exception should not be
made while other assets are available. In this regard, statements made in disclosure or
examinations under oath that reveal lies or contradictions are useful to prosecutors
because they damage the credibility of the applicant (see section 4.6 of chapter 4 on
ancillary orders).
When it is established that no unrestrained assets are available, the applicant will likely
have to submit a bill of costs for consideration by the court. Some jurisdictions will
place a statutory cap on the fee that lawyers may charge, o en an amount comparable
with legal aid rates.
111
108. eodore S. Greenberg, Linda M. Samuel, Wingate Grant, and Larissa Gray, Stolen Asset Recovery—A
Good Practices Guide to Non-Conviction Based Asset Forfeiture (Washington, DC: World Bank, 2009), 74.
109. Jurisdictions that do not allow such exceptions typically rely on the legal aid system or appoint a cura-
tor ad litem.
110. In some jurisdictions, it will be the responsibility of the applicant (target) of the restraint order to
demonstrate to the court through sworn testimony that he or she has no untainted assets with which to pay
expenses.
111. In Ontario, Canada, legislation permits the claimant to apply to the court for the release of reasonable
legal expenses in NCB con scation cases. e payments are subject to limits in the Civil Remedies Act. e
Securing the Assets I 87
4.6 Ancillary Orders
Ancillary orders are subsidiary orders to a restraint or seizure order. eir purpose is to
increase the e ectiveness of the primary order. Examples are orders
requiring a target or persons associated with a target to disclose details of the •
nature and location of the target’s assets;
placing restrained or seized assets under the control of an asset manager (see •
chapter 5);
requiring a target to be examined under oath before an o cial of a court or other •
appropriate authority regarding his or her assets; and
requiring third parties to produce documents relating to the assets of a target.•
Disclosure and examination powers can be useful ways to probe complex asset holdings
and obtain evidence useful in defending against applications to fund expenses from
restrained funds. A prosecutor should not conduct examinations unless he or she is
familiar with all available information on the assets and is in a position to test and chal-
lenge evidence given by the examinee. Information from a nancial institution, for
example, may be used to show that a target is failing to disclose assets, and it may lead
to charges of contempt or failure to comply.
To protect a target’s privilege or right against self-incrimination, evidence obtained
under an ancillary order may not be used in related criminal proceedings.
112
e exam-
iner should identify potential targets of criminal proceedings and be aware of the
rami cations of eliciting incriminating evidence. Close consultation with the criminal
prosecutors is necessary.
4.7 Third-Party Interests
ird-party claims will inevitably arise in cases of asset restraint or seizure. Targets
o en will have complicated holdings that involve third parties with legitimate interests—
for example, business partners and investors. A third party may have an interest in or
own an instrumentality that was used in the commission of an o ense but be unaware
of the illegal uses to which it was put. Or the legitimacy of the third party’s interest
may be at issue: On paper, the third party may own an asset that is alleged to be con-
trolled by a target or it may be alleged that the third-party owner was not a bona de
purchaser.
Where a third party holds an interest or share in a business or investment venture with
a target, practitioners will want to ensure that the interest is held bona de and that the
maximum amount of funds available for legal expenses is calculated as a percentage of the total funds, and
there are limits on the legal rates.
112. ese protections are usually set out in legislation or enshrined as constitutional rights. Some jurisdic-
tions also require an undertaking by the prosecution.
88 I Asset Recovery Handbook
interest concerned is not bene cially owned or controlled by a target. If con rmed, it is
important to dra the order in such a way that the third-party interests are not restrained
or seized. In such cases, a restraint order can require that the business continue under
normal processes, but with strict reporting requirements to the court and oversight by
the asset manager—thus permitting uninvolved third parties to participate in and ben-
e t from the business, but escrowing any bene ts due to the target and preventing any
involvement by the target in the running of the business.
If assets are jointly owned by a target and an innocent third-party investor who has
used legitimate funds to invest in the assets and was not complicit in any way with the
illegal activity, it may not be appropriate to obtain a restraint order over the entire
asset. Instead, it may be su cient to restrain “the interest of [target] in asset x.” In
practice, such an order will block dealings in the entire asset because it will be di -
cult for the third party to deal independently with his or her interest. However, this
way of constructing the order will make it clear to the third party that it is not intended
to con scate his or her interest—thereby avoiding unnecessary disputes with the
third party.
e asset subject to con scation is o en encumbered by a lien or other security held by
a person or entity that had no involvement in or knowledge of the illegal use of the asset
(for example, a bank that has issued a loan). Where satis ed that the creditor was not
complicit in the illegal activity, a number of jurisdictions have streamlined the process
for recognizing such creditors as innocent owners. Some jurisdictions require that a
lienholder, like any other party in interest, le a timely claim in the con scation pro-
ceeding; and if such a claim is not led, the lien will be extinguished in the con scation
proceeding. When the con scation proceedings are complete and the asset is con s-
cated and sold, the creditor is paid from the proceeds.
In all cases, practitioners should be open to submissions from third parties and, where
permitted, should consent to vary the restraint order or release assets or instrumentali-
ties held legitimately.
113
However, where no satisfactory or veri able explanations can be
given or there is a compelling public interest to seize the asset (for example, a drug
house), third-party claims should be le to the court to determine in accordance with
the criteria set out in the legislation for the protection or exclusion of third-party inter-
ests from restraint and con scation (see section 6.4 of chapter 6 for a discussion of
third-party interests in the con scation phase).
114
113. When making such releases of property, practitioners should ensure that the third parties execute
release documents, holding harmless and waiving any future claims against any government o cials and
their contractors who were involved in the seizure or restraint.
114. Depending on the laws of the jurisdiction and the circumstances of the case, there may be a risk that
the government will have to pay damages if the con scation order is unsuccessful, if it is determined that a
loss was incurred (in the property value or income) and the property manager should have released the
assets to the third party.
Securing the Assets I 89
4.8 Alternatives to Provisional Measures
Although provisional measures are the preferred mechanism for securing assets, there
may be cases where evidence is insu cient to obtain the relevant order. In such cases,
practitioners should consider alternative means of achieving the same result. In many
jurisdictions, anti-money laundering legislation—in particular, requirements to report
suspicious activity or transactions—can provide these alternative tools to secure assets:
FIUs may have administrative authority to restrain or refuse consent to release funds on
receipt of a suspicious transaction or activity report (STR); and nancial institutions
may decide independently to restrain accounts to avoid being implicated in a money
laundering scheme. As a result, if the practitioner advises a nancial institution that a
corrupt o cial has been indicted or that other suspicious activity has taken place, this
may raise su cient suspicion for the bank to issue an STR, and may prompt the FIU or
bank to implement one of these alternative means to secure the funds.
Once assets have been secured through provisional measures, authorities will need
to ensure the safety and value of the assets until they are eventually con scated (or
released)—potentially, a period of years. ese control mechanisms are sometimes
capable of working e ectively over assets without any need for ongoing supervision
and management. For example, once an order to restrain or seize a bank account has
been served on the bank, the bank can usually be relied on to ensure that the account
is blocked e ectively. Other assets may require more-targeted approaches to ongoing
maintenance, control, and management—assets such as unique investment vehicles,
exotic or valuable livestock, or luxury real estate. It is essential for any asset con sca-
tion system to have both the exibility to control and manage such assets pending
con scation and the ability to realize them and pay the proceeds to the state, the
government, or other authorized recipients a er con scation.
115
e starting point for establishing a functional asset management system is appro-
priate legislation and accompanying regulations that enable the preservation of the
economic value of assets in an e cient, transparent, and exible manner. Su cient
and appropriate resources must be allocated, including the identi cation of a cen-
tralized competent authority to manage and control the assets and the appointment
of senior personnel with management and administrative skills to oversee the pro-
gram. It cannot be assumed that existing law enforcement structures already have
the skills and resources required to manage assets. Although there may be some basic
capacity in this area—for example, a law enforcement agency seizes and stores prop-
erty that is evidence of criminal o enses—the systems are insu cient to deal with
the seizure or restraint and con scation of a wide range of assets. Without carefully
dra ed legislation, regulations, and funding for asset management, even the most
successful con scation system may be rendered ine ective by the inability to manage
the assets seized.
115. e importance of the management of seized assets has been recognized by the international com-
munity. See United Nations Convention against Corruption, art. 31(3). Guidance also has been issued on
the topic in G8 Lyon/Roma Group, Criminal Legal A airs Subgroup, “G8 Best Practices for the Administra-
tion of Seized Assets” (April 27, 2005), http://www.coe.int/t/dghl/monitoring/moneyval/web_resources/
G8_BPAssetManagement.pdf; and the General Secretariat, Organization of American States, “Model Regu-
lations Concerning Laundering O ences Connected to Illicit Drug Tra cking and Related O ences,” art. 7
(Washington, DC, 1992).
5. Managing Assets Subject
to Confi scation
92 I Asset Recovery Handbook
5.1 Key Players in Asset Management
As demonstrated in this handbook, asset con scation requires the coordinated e orts
of individuals and agencies with di erent skill sets working together, including law
enforcement o cers, nancial analysts, prosecutors, investigating magistrates, and the
asset manager or asset management agency. Although one group might have more
involvement than another at any given time, it is important that all groups are aware of
what is happening in the case, from the beginning to the end.
Asset managers must have the skills, resources, and legal authority to (1) preserve the
security and value of assets pending con scation (including the sale of rapidly depreciat-
ing assets); (2) if necessary, hire contractors with specialized skills to accomplish man-
agement tasks; (3) liquidate assets for a fair price a er con scation; and (4) distribute the
proceeds in accordance with applicable legislation following payment of all necessary
expenses. Such skills are unlikely to be found among law enforcement o cers, prosecu-
tors, or the courts; instead, authorities should seek to obtain the needed expertise in
other ways, including
Creating a separate specialized asset management o ce.• Set up an agency
with responsibility to manage seized or restrained assets, hire quali ed asset
managers, conduct pre-restraint planning and analysis, and coordinate post-
con scation realization or liquidation.
116
Creating an asset management unit within an existing agency.• In some cases, a
new unit dedicated solely to the duties of managing assets subject to con scation
is established within an existing government agency.
117
Logically, this is o en an
agency with ready expertise in asset management.
118
Outsourcing asset management.• In those jurisdictions where establishing an
asset management o ce or co-opting an existing agency is not an option, engage
private, locally available property trustees.
119
116. Examples of specialized asset management o ces include the Canadian Seized Property Management
Directorate and the Haitian Bureau d’Administration du Fond Special de lutte contre la drogue. e Finan-
cial Action Task Force (FATF) has recommended asset management o ces in “Best Practices: Con scation
(Recommendations 3 and 38),” adopted by the plenary of the FATF in February 2010. e Camden Asset
Recovery Inter-Agency Network also recommended the creation of asset management o ces at its 2008
annual general meeting.
117. In Colombia, the antinarcotics agency has a specialized asset management unit responsible for man-
aging seized or restrained assets pursuant to Colombia’s anti-drug tra cking laws. In the United States, the
U.S. Marshal’s Service, a generalist law enforcement agency, has been performing asset management func-
tions in the U.S. Asset Forfeiture Program since 1984.
118. An example is the Insolvency and Trustee Service Australia, the government o ce responsible for
administering bankruptcy and insolvency laws. In addition to performing its primary role as the adminis-
trator of the bankrupt estates and to managing the assets of bankrupt individuals or insolvent companies,
the o ce also provides specialized asset management services in support of Australian federal con scation
laws.
119. South Africa is an example of a jurisdiction that makes use of private trustees, or curators bonis, to
provide asset management services in support of the enforcement of the Prevention of Organised Crime
Act, 1998. is legislation permits the court appointment of people to manage assets seized or restrained
Managing Assets Subject to Confi scation I 93
5.2 Powers of the Asset Manager
Asset managers derive their authority through existing laws or rules of court, which
o en include important information-gathering powers to assist managers with their
duties.
5.2.1 Legal Powers
When an asset management o ce is placed in control of assets by a court, pursuant to
a restraint or seizure order, the o ce (or manager) must be given legal powers to carry
out the various requisite functions. Typically, these powers will be granted through
con scation laws, asset management laws, anti-money laundering laws, and rules of the
court. e powers should include the following:
authority to pay all necessary costs, expenses, and disbursements connected with •
the restraint or seizure and the management of the assets;
authority to buy and sell seized or restrained assets that are in the form of shares, •
securities, or other investments;
authority to insure assets under control;•
in the case of a business, authority to operate the business, including to employ •
or terminate the employment of people in the business, hire a business manager
if required, and make decisions necessary to manage the business prudently;
in the case of assets that represent shares in a company, authority to exercise •
rights in respect of those shares as if the asset manager were the registered holder
of those shares; and
authority to pay salaries of the asset manager and people involved in asset man-•
agement, in accordance with a de ned scale or regulation, or in accordance with
an order of the court that is subject to full disclosure and mandatory audit (see
section 5.8 of chapter 5 for a discussion of fees payable to asset managers).
120
Asset managers are sometimes given powers to deal with depreciating or perishable
assets—particularly, the power of an interlocutory sale prior to entry of a nal con sca-
tion order (see section 5.4.7 of chapter 5 for further information). If not given authority
to deal with perishable assets, or if confronted by any other management issue for which
no speci c guidance or powers are given in the legislation, the asset manager may have
to apply to the court that made the restraint order to seek guidance and authority. e
drawback with this process is that it is time-consuming and costly.
under the act and to realize property in satisfaction of con scation orders. e Asset Forfeiture Unit of the
South African National Prosecution Authority has created a manual to guide people appointed as curator
bonis under the act.
120. In some jurisdictions, salaries of asset managers are paid from con scated assets. It is not recom-
mended that the salaries of practitioners responsible for the investigatory or litigation decisions leading to
con scation be paid directly from such funds because doing so creates the appearance that assets are being
seized for monetary reward.
94 I Asset Recovery Handbook
5.2.2 Information-Gathering Powers
Asset con scation laws o en contain information-gathering powers. In many cases,
these powers may be used only by law enforcement o cers, prosecutors, or investigat-
ing magistrates. However, sometimes they are available to asset managers who have
been directed to take control of assets of which the exact nature and location are
unknown, or to enforce value-based money judgments or bene ts orders. ese powers
may include production orders, search warrants for documents relevant to tracing
assets, compulsory statements by targets disclosing assets, and examinations.
Exercising the power to order a target to disclose to the asset manager in a sworn state-
ment the nature and location of his or her assets is a useful tactic that can be employed
in both civil and common law jurisdictions.
121
Even if a target does not disclose the
existence or location of a previously unknown asset, the existence of such a statement—
or even the refusal to make a statement—can be helpful in defending against a target’s
subsequent applications to have access to restrained assets to pay for legal fees or living
expenses.
122
Also, discovery of false information or refusal to make such disclosures
may o en be prosecuted as contempt or failure to comply with the disclosure order. In
addition, the power to examine under oath a target, people associated with the target,
or a target’s professional advisers (for example, accountants, real estate agents, and law-
yers) can be useful in tracing assets.
5.3 Recording Inventory and Reporting
When an asset manager takes control of restrained assets, it is essential to maintain
detailed records of the assets and any transactions involving them. e manager makes
a detailed inventory and description of the assets and their condition, and provides
subsequent updates.
123
ese records should be supplemented with photographs or
video recordings that show the condition of the asset at the time of seizure or restraint.
Appraisals should be obtained and included in the records. ese records can protect
the asset manager and the applicant for the restraint order from subsequent claims that
assets were damaged by sta or agents of the asset manager.
Managers should also be careful to record any management issues or defects identi ed
at the time of seizure or restraint—for example, a leaky roof in a warehouse containing
goods. Managers should give this information to the court, the prosecutor, or both so
that appropriate measures may be taken and so that the asset manager is not blamed for
pre-existing conditions.
121. Authorities in Brazil and the United Kingdom are able to request such disclosure orders.
122. ese examination powers sometimes infringe the target’s right or privilege against self-incrimination.
Where this happens, authorities are usually prevented from using any evidence derived from the examina-
tion in related criminal proceedings.
123. Technological support can be essential to maintaining an updated inventory list. Some jurisdictions
have introduced computerized tracking systems speci cally designed for these purposes.
Managing Assets Subject to Confi scation I 95
A reporting component is also important to an e ective asset management system. It
increases the transparency of asset management activities and may raise awareness
among the public about the purpose and achievements of the o ce. Reports on speci c
cases should be delivered to the applicant for the restraining order and, if mandated by
legislation, to the court. e inventory and valuation should be annexed to this report.
In addition, annual reports on the general activities of the unit and overall statistics may
be required.
5.4 Common Types of Assets and Associated Problems
5.4.1 Seized Cash, Bank Accounts, and Financial Instruments
Money o en is di cult to trace, but it is usually easier to manage. Seized cash, except
cash to be used as evidence, is most o en preserved in an interest-bearing account.
124
Similar policies will be in place in jurisdictions that restrain or seize bank accounts.
125
Financial instruments (such as cashier’s checks, money orders, certi cates of deposit,
stocks, bonds, and brokerage accounts) will also need to be seized, with procedures
taken to preserve or redeem their value. With stocks, bonds, and brokerage accounts, a
professional (such as a stock broker) will have to be contacted for a valuation of the
assets and a determination of how best to preserve their value. In some cases, the pro-
fessional may require the authority to liquidate accounts or hold them in a di erent
manner to preserve the value of the assets.
5.4.2 Real Property (Land)
As a general rule, real property and improvements are good assets to seize for con sca-
tion purposes, particularly in jurisdictions with an e cient landownership system that
records ownership and encumbrance details at a central land registry or land titles
o ce.
126
Under such systems, recording a lien or other notice of encumbrance in the
public land records is quite simple and will give notice that the land is subject to con s-
cation proceedings to any potential arm’s-length purchaser to whom a target wants to
sell his or her land (in contravention of the restraint order). Failure to record notice on
a title may impede or defeat the e orts of the authorities to con scate: even with a
restraint order in place, a target could transfer land to a bona de purchaser for value,
and that purchaser could subsequently claim bona de ownership.
In the absence of complications, land o en can be restrained e ectively without appoint-
ing an asset manager. However, there are several problems:
124. In Colombia, U.S. dollar deposits are transferred to the U.S. Federal Reserve Bank for veri cation of
authenticity and then invested in securities issued by the Colombian government.
125. In Switzerland, the Swiss Bankers Association and law enforcement agencies have worked together on
a system for managing bank accounts subject to con scation.
126. Older systems are generally indexed in books accessible to the public, and newer systems may be
found electronically indexed and o en available through online databases.
96 I Asset Recovery Handbook
Rates, taxes, and secured loans. • Land is usually the subject of government rates
and taxes, and it may be encumbered to banks as security for mortgages or loans.
Where land is restrained, the order should provide that the target or other occu-
pant of the land is required by court order to maintain current payment of taxes
and other debts that have the potential to encumber the land with a lien. In the
event the owner stops paying rates, taxes, and loan payments, the court should be
alerted. Alternatively, the manager may reach an agreement with the target or other
occupant that grants the right to continued occupancy, conditional on the payment
of these expenses; and that grants the manager the immediate right to take posses-
sion and evict the occupants if the conditions are not met. If required to evict the
occupants, the asset manager may seek to lease the asset at a rate that is su cient
to meet expenses or to sell the asset and use the proceeds to pay outstanding debts.
Ultimately, taxes and liens will usually take priority over the con scation order.
Expenses, outgoings, and capital improvements. • e restraint of land may be
complicated by heavy, property-related expenses and utility bills, some of which
may be urgent. Some types of land require signi cant and expensive maintenance
to retain their value—for example, a golf course or farm. If funds are available
from the target’s assets, a designated con scation fund, or some other contin-
gency fund, they should be used to maintain the overall value. If funds are not
available or the value cannot be maintained, leasing or selling the land (where
permitted, with or without consent of the owner) may be the better option.
5.4.3 Motor Vehicles, Boats, and Airplanes
Vehicles indisputably pose signi cant management challenges. ey are di cult and
costly to store and maintain between seizure and con scation—potentially, a period of
years. e market value of seized vehicles may be debatable, and they typically depreci-
ate at a rapid rate.
Frequently, vehicles seized by practitioners are simply le outside in a yard (see gure
5.1). is is not an appropriate asset management strategy because it exposes the seiz-
ing agency to claims for compensation and substantially reduces the recovery of any
sales proceeds if the vehicles are eventually con scated.
Proper maintenance of motor vehicles, boats, and airplanes requires a secure, appropri-
ate storage facility where proper maintenance may be provided and people with exper-
tise in maintaining and meeting any regulatory requirements for the type of vehicle
seized. is storage and expertise can be expensive, and nancing will need to be pro-
vided by the agency responsible for the seizure (for example, a law enforcement agency
or asset manager if pursuant to seizure order) or other source (including the target or a
con scation fund).
Given these expenses and the depreciating nature of vehicles, it may not be worth seiz-
ing vehicles that are old or in poor condition because their realizable value may not
cover the cost of maintaining them. Where authorized by law, consideration should be
given to selling such vehicles while they are relatively new and in good condition (with
Managing Assets Subject to Confi scation I 97
or without the consent of the owner). Because it is o en in the interests of all parties to
convert a depreciating vehicle into an asset that holds its value or appreciates, it may be
possible to make such an agreement by the consent of all parties—including the target.
One nal option would be to permit a target to retain use of the vehicle or other convey-
ance during the course of the con scation proceeding and to post a bond guaranteeing
the payment of an amount equivalent to its value at the time the case was initiated.
5.4.4 Businesses
Generally, it is not possible to restrain or seize a business e ectively without placing it
under the control of an asset manager; and the risks and expense of this course of action
may be considerable. Given that a business may hold little value (for example, it may
not own its inventory or the premises on which it operates), an equity valuation of the
business should be undertaken before any restraint or seizure is requested to accurately
determine its debt load and equity. If such a valuation cannot be made before request-
ing a restraint or seizure order, it should be done shortly a er the provisional action.
For a business with little value, it may be best to include it for con scation but not
undertake the nancial risks associated with its continued operation; instead, close
operations or sell the business. ere is also the possibility that identifying the business
as a target for con scation will damage its goodwill value. One way to prevent this is to
permit the current manager to continue its operation, but under the control of a busi-
ness manager contracted by the asset manager or appointed by the court.
Pre-restraint planning will be critical to any restraint or seizure of a business. Restraint
orders should be made ex parte to avoid the removal of business assets and cash. Indi-
viduals with the necessary skills to manage the business should be sourced and avail-
able to assume control immediately at the time of restraint.
FIGURE 5.1
Seized Motor Vehicles Left Outdoors
Source: Courtesy of Clive Scott.
98 I Asset Recovery Handbook
e asset manager or appointed manager or contractor should take immediate control
of bank accounts, accounting systems and records, important business data (such as
customer records), valuable stock, and valuable plant and equipment. If the business
will continue in operation, all books and accounting records must be made available
and should be assessed by the manager. In addition, managers will need to engage with
sta and key personnel to prepare themselves for eventual decisions about the reliabil-
ity of those employees. Removal of sta may prove costly and can result in loss of cor-
porate knowledge, customer dissatisfaction, and loss of business; however, retaining
sta whose loyalty lies with a target may be hazardous to the business as well.
Regular reports on the performance of the business should be sent to the prosecution
agency responsible for the restraint order. Any problems with the business should be
raised immediately.
5.4.5 Livestock and Farms
is category of assets is o en a subset of a business because cattle, sheep, or game ani-
mals are usually part of an agricultural business; or horses are kept for breeding or rac-
ing purposes. ey may also be hobby farms. Whatever the form, managing animals
can be quite problematic for asset managers.
When these assets are of very high value to certain markets (for example, race horses
can be worth hundreds of thousands or even millions of dollars), practitioners are more
inclined to include them in restraint orders. However, maintaining animals can be very
expensive, with costs for stock-feed, veterinary procedures, yard and pasture mainte-
nance, and sta ng costs. Given these expenses and the fact that su cient revenue
streams to fund them are unlikely, some jurisdictions refuse to seize livestock and farms.
Others may be authorized to restrain the farm, then seize and sell the livestock (with or
without consent of the owner). Again, a bond could be posted if a target or associates
desire to continue the operation during con scation proceedings.
5.4.6 Precious Metals, Jewels, and Artwork
In addition to ensuring compliance with procedures and safeguards for the inventory of
such items, asset managers will need to retain expertise for inspection, veri cation, and
valuation. A secure and appropriate storage facility must be arranged or set out in leg-
islation or regulations.
127
5.4.7 Perishable and Depreciating Assets
is category of assets generally includes
highly perishable assets, such as a boatload of fresh sh or a consignment of cut •
owers that will lose all value if not sold within a few days;
127. In Azerbaijan, seized diamonds must be secured at a nancial institution.
Managing Assets Subject to Confi scation I 99
moderately perishable assets, such as a eld crop or farm animals that will lose •
value if they are not harvested or sold at an appropriate time (possibly within
weeks or months);
depreciating assets, such as cars, boats, and electronic equipment that lose 15–30 •
percent of their value each year.
In an ideal situation, con scation laws have provisions that empower an asset manager
to sell perishable or rapidly depreciating assets and place the proceeds in an interest-
bearing account supervised by either the asset manager or the court. Where such pow-
ers are not available or do not apply, it may be possible to request that a court exercise
general discretionary powers to make appropriate orders relating to restrained assets.
Consent of all parties is preferable, but the court should have authority to enter such
orders even if contested.
5.4.8 Assets Located in Foreign Jurisdictions
Assets may be restrained and seized by foreign jurisdictions through informal assis-
tance (for example, through administrative avenues) and pursuant to a mutual legal
assistance request (see section 4.2.3 of chapter 4 and chapter 7). When a restraint order
is registered, enforcing it will be the responsibility of the authorities in the foreign juris-
diction. An asset manager may be appointed by the court in the foreign jurisdiction to
achieve this.
Generally, the asset managers in both jurisdictions will work together to maintain the
assets. At the same time, it is wise to ensure that the asset manager in the requesting
jurisdiction has additional powers to help enforce the foreign restraint order and man-
age the assets. Such powers would not grant the asset manager physical control over the
assets in the requested jurisdiction; but they would permit the asset manager to hire
contractors, lawyers, and other agents in the requested jurisdiction for the purpose of
obtaining orders from the courts of the requested jurisdiction.
ere may be additional problems when dealing with foreign jurisdictions. e requested
jurisdiction may not have the domestic authority or the operational ability to restrain or
seize certain types of assets. For example, some jurisdictions refuse to seize or restrain
live animals. Or the requested jurisdiction may not have an asset manager or funds
dedicated to asset management. ese issues can be resolved through discussions with
the requested jurisdiction, although ultimately the requesting jurisdiction may have to
provide funds to hire a manager to manage the assets in the requested jurisdiction.
5.5 Ongoing Management Issues
5.5.1 Expenses
In optimal circumstances, an asset manager will have a reasonable mix of assets—
income-generating, cash, capital, and depreciating assets—so that expenses can be paid
100 I Asset Recovery Handbook
from income, thereby maintaining the overall value of the portfolio and preserving it
pending the outcome of con scation proceedings. However, sometimes no cash or
income will be available to fund the preservation or maintenance of assets. In these
cases, the asset manager will need to either sell the assets or generate su cient funds to
pay for maintenance—perhaps from the target or from a con scation or con scation
fund (see section 5.9).
5.5.2 Heavy Debts
In some cases, an asset manager is placed in control of the assets of a target who also has
massive debts. e asset manager may apply to the court for the release or sale of other
restrained assets to pay those debts. Creditors o en compete with the con scating
authority’s case by attempting to collect judgment liens or force the target into bank-
ruptcy proceedings.
In these circumstances, the asset manager should have a good understanding of how
the provisions of the con scation legislation relate to bankruptcy or company liquida-
tion legislation. In some jurisdictions, the bankruptcy or liquidation legislation takes
priority when the individual or company is declared bankrupt. e con scating author-
ity simply joins the queue with other unsecured creditors. In other jurisdictions, con s-
cation laws are immune from the operation of bankruptcy and company liquidation
law, which e ectively gives the con scating authority and its application priority over
all other creditors.
5.5.3 Living, Legal, and Business Expenses
An asset manager will o en be given responsibility by a court for the disbursement of
funds from restrained assets for the living, legal, and business expenses of a target and
his or her dependants (see chapter 6 for additional background on this issue). In most
cases, the expenses will be determined by law or xed by the court, although the asset
manager may occasionally be involved in determining what is “reasonable” for certain
purposes—an assessment that the target can dispute on application to the court.
As the payment of these expenses is frequently disputed before the court, it is important
for the asset manager to make decisions carefully and to record and document these
decisions and any transactions connected with them.
5.5.4 Use of Assets Subject to Confi scation
e use of assets that have been seized, but not ordered con scated, presents major
ethical and nancial implications that militate against the practice. e primary ethi-
cal issue is this: if prosecutors, magistrates, law enforcement o cials, or military per-
sonnel are permitted immediately to use any vehicle or conveyance seized in the
preliminary stages of a case, they may have little incentive to pursue the con scation
proceeding to its conclusion, thus e ectively perpetually depriving the owner of his or
her assets without a court judgment. Also, such provisional-use practices create an
Managing Assets Subject to Confi scation I 101
unwanted incentive for law enforcement to seize assets without necessarily developing
the requisite evidentiary showing. Financially, there are cost issues—particularly in the
event of a court order requiring the return of the asset: because the use of the asset
diminishes its value, restitution from the general treasury funds of the jurisdiction will
be necessary.
5.6 Consultations
As discussed above, the asset manager must be involved in consulting with other practi-
tioners in relation to proposed restraint and asset management decisions. Consultation
can also be bene cial when a management proposal or decision may a ect the value of
the restrained assets. Such consultations may militate against claims for losses due to
mismanagement, particularly if these consultations include the target, the practitioner
who obtained the restraint order, and any third party with interest. Advice by all parties
consulted should be recorded in writing and considered seriously. Ultimately, however,
the asset manager has the nal decision, subject to the direction of the court.
5.7 Liquidation (Sale) of Assets
When appointed to take control of assets pursuant to a restraint order, the asset man-
ager’s role is usually expressed in terms of preservation, maintenance, and management.
In most cases, sale of restrained assets is contemplated only in relation to perishable and
depreciating assets or a er a con scation order has been made. In addition, the author-
ity to sell the assets varies: in some jurisdictions, the asset manager is given the authority
under statute; in other jurisdictions, the court must make an order conferring realiza-
tion powers on the asset manager.
When selling assets pursuant to realization powers, an asset manager usually has consid-
erable discretion in how to go about the process. e most transparent procedures should
be used because they will prevent or minimize allegations of mismanagement. For this
reason, it is generally best to arrange to sell assets at well-advertised and professionally
run public auctions. Occasionally, specialized or exotic types of assets will be restrained.
ey can be sold using methods (such as sales to specialized markets) to attract the
maximum price. Decisions to sell assets in this way should be the subject of expert
advice and well documented. Many jurisdictions are accomplishing these objectives
with online auctions or other Web listings of assets for sale with preset minimum bids.
5.8 Fees Payable to Asset Managers
In some jurisdictions, fee structures for the payment of the asset manager are clearly
de ned in the con scation laws or by reference in some other law (for example, prop-
erty trustee or company liquidation laws). Sometimes these fees are le to the discre-
tion of the court and are subject to full disclosure and mandatory audit.
102 I Asset Recovery Handbook
Asset con scation legislation usually envisages that the asset manager’s fees will be
deducted from the proceeds of con scation, either as a xed percentage or on a fee-for-
service basis, perhaps calculated on an hourly rate or in accordance with a scale of fees.
Because the manager may be required to manage assets over a lengthy period of time,
it is good practice for the manager to prepare regular updates of the fees incurred under
his or her appointment and to provide them to the prosecutor. e accumulation of fees
may alert the prosecutor to the fact that the order is becoming uneconomical, and may
suggest that other methods or con gurations of order should be considered.
ere will be circumstances where the asset manager performs extensive work but fees
cannot be deducted (for example, where con scation proceedings are discontinued or
unsuccessful). Under such circumstances, the manager’s fees must be paid by the con-
scating authority. An existing con scation fund can be a useful tool to pay asset man-
agement costs. Good practice suggests that these issues be considered and made the
subject of agreement by prosecutors, asset managers, and the courts at the earliest pos-
sible time to avoid misunderstandings and potentially costly disputes at a later stage.
5.9 Funding Asset Management
Resources are required for all phases of asset con scation, including tracing, restrain-
ing, managing, and liquidating. As discussed above, asset management can be expen-
sive; and it requires mechanisms that ensure predictable, continued, and adequate
nancing. In some cases, management may be nanced from the general budget; in
other cases, it is nanced through a con scation fund. e issue has been addressed in
other Stolen Asset Recovery Initiative publications.
128
128. eodore S. Greenberg, Linda M. Samuel, Wingate Grant, and Larissa Gray, Stolen Asset Recovery—A
Good Practices Guide to Non-Conviction Based Asset Forfeiture (Washington, DC: World Bank, 2009), 90;
and Stolen Asset Recovery Secretariat, “Management of Con scated Assets” (Washington, DC, 2009).
An asset con scation regime is a prerequisite for any jurisdiction that wishes to provide
the full panoply of methods for recovering the proceeds of corruption and money laun-
dering. Con scation involves the permanent deprivation of assets by order of a court or
other competent authority.
129
Title is acquired by the state or government without com-
pensation to the asset holder. International instruments and standards emphasize the
importance of con scation systems by requiring, at a minimum, that parties have crim-
inal con scation systems in place as a means to combat and deter corruption, money
laundering, and other serious o enses.
130
Non-conviction based (NCB) con scation is
encouraged in the United Nations Convention against Corruption (UNCAC) and the
Financial Action Task Force 40+9 Recommendations, and is being adopted more widely
as jurisdictions continue to expand their con scation programs.
131
e rationale for con scation is clear: First, in crimes involving corruption and other
nancial predatory crime, there are victims (either a state, a government, or private
individuals) who should be compensated with any recoverable funds. Second, because
greed is a primary motive behind corruption and nancial crime, con scation provides
deterrence by removing the possibility of enjoying the illegal gains. In other words,
con scation sends a message that “crime does not pay.”
Like all legislation, con scation laws have not been without legal challenge in many
jurisdictions and before international courts. e challenges have included debates over
property rights and whether targets of con scation are a orded the constitutional rights
of those involved in criminal matters, including the presumption of innocence; the
right to be heard before a criminal court; and rights against self-incrimination, double
punishment, and retrospective punishment. Many of these debates have centered on
the issue of whether con scation should be considered a punishment or a remedial
measure: if it is a punishment, the proceedings would attract the safeguards of the crim-
inal process; if a remedial measure, the scope of application expands and may include
hearings before administrative agencies or civil courts, use of a di erent standard of
proof, use of rebuttable presumptions (although many jurisdictions permit rebuttable
129. United Nations Convention against Corruption (UNCAC), art. 2; United Nations Convention against
Transnational Organized Crime (UNTOC), art. 2; United Nations Convention against Narcotic Drugs and
Psychotropic Substances, art. 1.
130. UNCAC, art. 2, 31, 54, 55; UNTOC, art. 2, 6, 12, 13; United Nations Convention against Narcotic
Drugs and Psychotropic Substances, art. 1, 5; and recommendations 3 and 38 of the Financial Action Task
Force (FATF) 40+9 Recommendations.
131. UNCAC, art. 54(1)(c); recommendation 3, FATF 40+9 Recommendations.
6. Mechanisms for Confi scation
104 I Asset Recovery Handbook
presumptions with certain criminal o enses), and retrospective application. Ultimately,
many courts have adopted an approach that permits a broader scope of application.
132
A con scation regime must provide for the identi cation, seizure or restraint, manage-
ment, con scation, liquidation, and sharing or return of the proceeds and instrumen-
talities. And because most large-scale corruption and money laundering cases cross
international borders, the con scation regime must be capable of having domestic orders
enforced in foreign jurisdictions. is chapter addresses speci c steps for obtaining a
con scation order and the procedural aids or enhancements that some jurisdictions
apply. For information on the other aspects of con scation, see chapters 3, 4, 5, and 7.
Some of the historical background and recent developments related to con scation are
provided in box 6.1.
Prosecutors may have a number of con scation methods available under their domes-
tic regime; and they should try to keep all options available, particularly in cases where
challenges to the con scation are extremely likely and where evolving events may
132. e European Court of Human Rights (ECHR) has held that where the amount is limited to the ben-
e t obtained, and could not be substituted by imprisonment but rather by other measures of economic
value, con scation of the proceeds of crime will have a remedial character. Welch v. United Kingdom,
No. 17440/90 (ECHR, February 9, 1995); Philips v. United Kingdom, No. 41087/98 (ECHR, July 5, 2001);
Butler v. United Kingdom, No. 41661/98 (ECHR, June 27, 2002). For examples from speci c jurisdictions,
see eodore S. Greenberg, Linda M. Samuel, Wingate Grant, and Larissa Gray, Stolen Asset Recovery—A
Good Practices Guide to Non-Conviction Based Asset Forfeiture (Washington, DC: World Bank, 2009),
19–21.
BOX 6.1 Historical Background and Recent Developments in Confi scation
The concept of asset confi scation has been around for a very long time. Exam-
ples of ancient confi scation laws have been found in texts that are thousands of
years old. Confi scation laws, descended from these ancient precedents, devel-
oped as part of both English common law and early civil law. Beginning with
strengthened efforts in the 1980s to combat drug traffi cking and organized crime,
some jurisdictions implemented both a criminal confi scation regime and an NCB
system. More recently, jurisdictions have redoubled their efforts to obtain con-
fi scation, often motivated by the relatively low levels of recovery of criminal
profi ts, compared with the enormous fi gures estimated to compose the criminal
economy. This reevaluation has led to the following broad trends in confi scation
legislation:
introduction of (NCB) confi scation provisions;•
reduced standards of proof;•
reversal of the burden of proof in some circumstances;•
an increased use of rebuttable presumptions; and•
greater use of administrative confi scation authority and abandonment pro-•
cedures in relation to cash and instrumentalities of crime.
Mechanisms for Confi scation I 105
eliminate one method. For example, if a prosecution collapses because of inadmissible
evidence or death of the defendant, the existence of a parallel NCB application pre-
serves the opportunity to con scate. e availability of multiple options may also
enable the authorities to use one method to seize or restrain assets and then switch to
another method to con scate.
133
Strategically, it may o en be prudent to obtain multiple con scation orders over the
same asset, such as a property-based con scation order and a value-based order. In
such a case, if any charge is dismissed, an acquittal is obtained, or a conviction is reversed
on appeal, then the other con scation order may still stand. In some jurisdictions with
NCB con scation, the NCB con scation proceeding may be stayed until the criminal
case has been concluded and appeals exhausted. If con scation legislation does not
require an election to be made one way or another, practitioners should not abandon a
potentially available sanction.
6.1 Confi scation Systems
Generally, there are three types of con scation used to recover the proceeds and instru-
mentalities of corruption: criminal con scation; NCB con scation; and, in some juris-
dictions, administrative con scation.
6.1.1 Criminal Confi scation
Criminal con scation requires a criminal conviction by trial or following a guilty plea
by the defendant. Once a conviction is obtained, the court can make a nal order of
con scation—o en as part of the sentence. In some jurisdictions, con scation is a
mandatory order; in others, the court (or jury) has discretion in imposing it.
134
Crimi-
nal con scation systems may be property-based or value-based systems (described fur-
ther in section 6.2).
In some jurisdictions, di erent standards of proof may be applied in the two phases of
the case (that is, during the adjudication of the conviction and during the con scation
proceedings). During the adjudication of the conviction, the prosecutor’s primary
133. e United States o en seizes or restrains assets using NCB con scation before an indictment is
obtained, but switches to criminal con scation to con scate these same assets a er a conviction is entered:
United States v. Candelaria-Silva, 166 F.3d 19, 43 (1st Cir., 1999). A reason for doing this is that the prac-
titioner will o en want to seize or restrain before the evidence will support the obtaining of a formal
charge. Generally, however, if a conviction is eventually obtained, it is easier at that point to have the
con scation ordered as part of the sentence in the criminal case. Similarly, under Colombia’s extinción de
dominio system, the NCB con scation proceeding may go forward independently and parallel to the
criminal case. But if the defendant is convicted, the de comiso (criminal) con scation is o en easier to
obtain than is completing the NCB con scation process.
134. In Cameroon, for example, con scation is mandatory in some corruption cases. Section 184(4) of the
Cameroon Criminal Code on misappropriation of public funds states that con scation “shall be ordered in
every case.”
106 I Asset Recovery Handbook
burden is to convict the defendant for the o ense at the required criminal standard of
proof, whether “beyond a reasonable doubt” or by “intimate conviction.” is stan-
dard of proof must be met to prove the crime before con scation can be ordered.
Subsequent or secondary burdens may be imposed during the court’s consideration of
con scation. In some jurisdictions, this secondary burden may be established on the
lower “balance of probabilities” standard of proof; other jurisdictions apply the same
standard used in criminal cases.
Because of the need for a conviction, there may be di culty in using this procedure to
con scate assets when the o ender has died, ed the jurisdiction, or is absent. Some juris-
dictions have incorporated absconding provisions that declare the o ender “convicted”
for con scation purposes once it is established that he or she has ed the jurisdiction.
6.1.2 NCB Confi scation
NCB con scation—sometimes referred to as “objective con scation” or “extinción de
dominio”—authorizes the con scation of assets without the requirement of a convic-
tion.
135
Because it is o en a property-based action against the asset itself, not against
the person with possession or ownership, NCB con scation generally requires proof
that the asset is the proceeds or an instrumentality of crime.
136
In addition, NCB con-
scation is not linked to the obtaining of a conviction.
is type of con scation most o en takes place in one of two ways: e rst is con s-
cation within the context of criminal proceedings, but without the need for a nal
conviction or nding of guilt.
137
In such situations, NCB con scation laws are incor-
porated into existing criminal codes, anti-money laundering acts, or other criminal
legislation; and are regarded as “criminal” proceedings to which the criminal proce-
dural laws apply. e second way is con scation through an independent statute that
introduces a separate proceeding that can occur independently of or parallel to related
criminal proceedings, and is o en governed by the rules of civil procedure (rather
than criminal procedure laws).
138
In jurisdictions applying civil procedure, a lower
balance of probabilities or “preponderance of the evidence” standard of proof is
required for con scation—thus easing the burden for the prosecution.
Some jurisdictions pursue NCB con scation only a er criminal proceedings have been
exhausted or unsuccessful. In other jurisdictions, a stay of the NCB con scation pro-
ceedings is ordered until the criminal investigation is completed.
139
135. For a list of jurisdictions that have NCB con scation, see footnote 20.
136. In Brazil and the Philippines, the system is not purely property-based because the authorities may
obtain a personal judgment against an individual, not against the asset. Antigua and Barbuda and Australia
apply value-based NCB provisions in addition to property-based NCB con scation.
137. Examples of jurisdictions include Liechtenstein, Slovenia, Switzerland, and ailand.
138. Examples of jurisdictions include Colombia, South Africa, the United Kingdom, and the United States.
“Civil con scation” or “civil forfeiture” systems would t into this category.
139. Civil rules permitting pretrial discovery (such as depositions of witnesses, interrogatories, and docu-
ment production or disclosure orders) may adversely impact an ongoing criminal investigation.
Mechanisms for Confi scation I 107
NCB con scation is useful in a variety of contexts, particularly when criminal con s-
cation is impossible or unavailable, such as when (1) the o ender has died, ed the
jurisdiction, or is immune from prosecution; (2) an asset is found and the owner is
unknown; or (3) there is insu cient evidence to seek a criminal conviction, or crimi-
nal proceedings have resulted in an acquittal (applies in jurisdictions that apply a lower
standard of proof). is type of con scation may also be useful in large and complex
cases where a criminal investigation is in progress and there is a need to restrain and
con scate the assets before a formal criminal charge is brought.
140
NCB con scation systems are not intended to replace criminal con scation. In cases
where it is possible to prosecute and obtain a conviction, the conviction should be
obtained and powerful and relatively economical criminal con scation should be avail-
able to prosecutors.
6.1.3 Administrative Confi scation
Administrative con scation occurs without the need for a judicial determination. It is
o en used to con scate assets when a seizure is not contested and certain requirements are
met (for example, notice to parties and by publication; no objection is led). In addition,
there may be statutory limits to administrative con scation, such as a maximum value of
the asset or certain types of assets that can be con scated.
141
Laws establishing an admin-
istrative con scation o en require that decisions be subject to subsequent court approval.
Administrative con scation is commonly associated with—and o en evolves from—
the enforcement of customs laws, laws combating drug tra cking, and laws requiring
the reporting of cross-border transportation of currency. For example, it may be
employed to con scate a vehicle used to transport prohibited goods or cash found in
the hands of a courier. In such cases, the statutory authority is typically granted to
police and customs o cers. is process can result in a speedy and economical con s-
cation of such assets.
6.2 How Confi scation Works
As indicated above, a con scation judgment may be either (1) a property-based judg-
ment (naming a speci c asset) or (2) a value-based judgment (naming an amount of
money owed by a speci c person). Some jurisdictions will employ both systems, per-
mitting con scation of identi ed assets and a judgment that can be satis ed from the
legitimate assets of a person. In these situations, a property-based system may be the
140. Many civil law jurisdictions permit a restraint order in such instances; but many common law juris-
dictions either do not permit a restraint order or do require that a formal charge be brought within a
speci ed time frame a er the restraint order.
141. In the United States, currency of any amount and personal property valued at less than $500,000
may be con scated administratively; but real estate, regardless of value, must always be con scated
judicially.
108 I Asset Recovery Handbook
rst choice; but a value-based con scation would be available when the proceeds have
been dissipated or hidden.
Both approaches target proceeds of crime, and there is a large overlap between the
operational reach of the laws. However, they di er in the procedures used and the evi-
dentiary requirements for obtaining these proceeds. is section attempts to highlight
some of these di erences.
6.2.1 Property-Based Confi scation
e property-based system (also referred to as “in rem” con scation or a tainted prop-
erty system) is aimed at assets connected to or found to be the proceeds or instrumen-
talities of crime. is requires that a link be established between the identi ed assets
and an o ense.
Property-based con scation is most useful when identi ed assets can be linked with
evidence of an o ense—for example, money seized from a person who has taken a
bribe (proceeds) or the vehicle used to transport a substantial cash bribe to the recip-
ient of the bribe (instrumentality). However, when assets cannot be linked to an
o ense because the target has not directly participated in criminal activity or the ben-
e ts are distanced from the crime through money laundering, this type of con sca-
tion becomes more di cult. Some jurisdictions have adopted legal enhancements to
overcome these barriers, such as substitute asset provisions and extended con scation
(see section 6.3).
e legislative de nition of proceeds and instrumentalities subject to con scation—
and interpretation by courts—will be an important consideration for practitioners
when determining the assets to be included in the con scation request. Below are some
issues that have been raised and some examples of how de nitions have been inter-
preted to capture (or not capture) proceeds or instrumentalities.
Proceeds Obtained Directly or Indirectly
Generally, proceeds are de ned as anything of value obtained directly or indirectly as
the result of the o ense.
142
“Direct proceeds” would include funds paid for a bribe or
amounts stolen by an o cial from a national treasury or government program. “Indi-
rect proceeds” would include an appreciation in the value of the bribe payments or a
stock portfolio purchased with the stolen treasury fund.
Indirect proceeds do not accrue directly from the commission of the o ense; rather,
they are ancillary bene ts that would not have accrued were it not for the commission
of an o ense.
142. Many jurisdictions have adopted the “proceeds of crime” de nition used in United Nations Conven-
tions, including UNCAC, art. 2; UNTOC, art. 2; and United Nations Convention against Narcotic Drugs
and Psychotropic Substances, art. 1. ese conventions de ne “proceeds of crime” to mean “any property
derived from or obtained, directly or indirectly, through the commission of an o ense.”
Mechanisms for Confi scation I 109
e task of valuing the proceeds (or, in the case of value-based con scation, valuing the
“bene ts”) derived from an o ense can be di cult. For example, if a corporation pays
a bribe to ensure that its bid for a military contract is accepted, there are a number of
possible options for quantifying the proceeds or bene t, such as the following
143
:
Gross value of the defense contract. • If the contract was to supply two patrol boats
for $50 million each, the value of the bene t would be $100 million. is method
assumes that the contract would not have been received by the o ender were it not
for the payment of the bribe—an assumption that may or may not be correct.
Net pro ts derived from the contract. • In the example above, if the company had
$60 million of expenses in supplying the boats, the net pro ts would be $40 million.
Value of increased pro ts derived by eliminating competition from the •
contract. is may be extraordinarily di cult to measure.
It is important to note that including appreciation in the value of the asset does not
mean that losses in the value can be deducted. e value of the proceeds or bene t is
usually assessed or “crystallized” at the moment the bene t was derived, and subse-
quent losses are ignored.
Commingled Proceeds
As proceeds are laundered, they may be mixed with other assets that may not be proceeds
of crime, and they may be converted into other forms of assets (see the example in box
6.2). As a result, these assets are technically not the direct proceeds of crime, but rather
the assets obtained from the original proceeds.
144
Some examples of statutory wording
that de ne what can be con scated in commingled situations include the following:
“Any asset or part of an asset” • allows the court to separate out the relevant pro-
ceeds that have been mingled with non-proceeds.
Assets “derived, obtained, or realized from an o ense” or assets “substantially •
derived or realized from an o ense” can ensure that proceeds of crime mingled
with non-proceeds will not lose their status as proceeds. “Substantially derived”
may limit recovery to a portion of the proceeds derived from the o ense. For
example, the court may not be prepared to nd that the investment bank account
was “substantially derived” from the corruption o ense if only 10 percent of the
account represents proceeds.
“Any asset with which proceeds have been mingled,” • the most far-reaching
approach, subjects all commingled assets to con scation.
145
Under such language,
143. e Stolen Asset Recovery Initiative is currently working on a paper with the Organisation for Eco-
nomic Co-operation and Development that will grapple with the quanti cation of the proceeds of crime
(expected to be released in spring 2011).
144. International agreements oblige states parties to allow for con scation of transformed and intermin-
gled assets. UNCAC, art. 31(4) and (5); UNTOC, art. 12(3) and (4); United Nations Convention against
Narcotic Drugs and Psychotropic Substances, art. 5(6)(a) and (b).
145. An example of this type of provision is the de nition of “proceeds of unlawful activities” in the Preven-
tion of Organised Crime Act, 1998 (South Africa), which includes property “that is mingled with property
that is proceeds of unlawful activity.”
110 I Asset Recovery Handbook
theoretically, one dollar in proceeds deposited in an account with a balance of
$999 will taint the whole account and result in its con scation.
Any instrumentality with which proceeds have been mingled. • Some jurisdic-
tions permit the con scation of the entire bank account that was used to launder
funds as an instrumentality of an o ense.
Proceeds Derived from Foreign O enses
Because corruption cases o en involve situations in which the criminal conduct
occurs in one jurisdiction and the proceeds are invested in another, con scation laws
o en provide jurisdiction to permit recovery of assets that have been obtained
through o enses committed abroad. A number of jurisdictions have legislation
authorizing the con scation of proceeds of crime if the conduct is unlawful in both
BOX 6.2 Issues Encountered in Determining the Proceeds of Crime—A
Case Example
Mr. X is a corrupt offi cial who accepted a cash bribe of $100,000 to manipulate
the process in awarding a government contract. A series of transactions subse-
quently took place to move and launder the funds:
Mr. X deposited the bribe into a bank account in his wife’s name.•
Mr. X caused his wife to transfer the money into the trust account of a law-•
yer in another jurisdiction. This lawyer was already holding $900,000 (the
origins of which were unknown) on behalf of Mr. X.
Mr. X instructed his lawyer to use all Mr. X’s money to purchase a prop-•
erty worth $1 million in the name of an investment company controlled by
Mr. X.
Three years later, Mr. X sold that purchased property for $2 million and had •
the proceeds returned to an account he controlled in his home jurisdiction.
When these corrupt activities came to light, prosecutors applied for a property-
based confi scation order of $200,000 from the bank account containing the
$2 million, on the basis that it constituted the proceeds of crime. This amount
was calculated through the following analysis:
$100,000—• the amount directly derived from the bribe. The fact that the
property was converted to a different form of property and commingled
with other assets did not affect its character as direct proceeds of the
offense.
+ $100,000—• the capital gain on the sale of the house (doubled in value).
The gain amounted to an indirect benefi t of the corruption offense.
= $200,000—• total proceeds of crime.
Had the law included “any property which is mingled with property that is proceeds of crime,” it would have permitted an
application for the entire amount ($2 million). Another method could have been to confi scate the bank account as an
instrumentality of money laundering.
Mechanisms for Confi scation I 111
jurisdictions.
146
Others list speci c serious crimes, such as foreign corruption, drug
tra cking, and crimes of violence as providing a basis for con scation.
Instrumentalities of an O ense
Instrumentalities are generally assets used or intended for use in any manner or part to
commit or facilitate the commission of an o ense—for example, a vehicle used to trans-
port a substantial cash bribe to the recipient of the bribe. Assets may become instru-
mentalities, notwithstanding the fact that they have been acquired legitimately with
lawfully obtained funds. It is the illegal use to which the object has been put that makes
it an instrumentality.
An issue that practitioners will need to consider is the de nition of “use”—whether
de ned by statute or in case law. For example, if a corrupt o cial uses a telephone in a
house to accept a bribe and arrange for delivery of funds, it may be debatable whether
the house was su ciently or substantially “used” to commit the o ense. Another exam-
ple could be a yacht on which a corrupt o cial has been lavishly entertained. Courts in
some jurisdictions require that there be more than an accidental or incidental connec-
tion between the asset and the o ense: the o ense must be related to, dependent on,
could not have been committed without, or resulted directly from the use of the asset.
147
Courts in other jurisdictions have found that any use of asset, no matter how periph-
eral, is a “use” for the purposes of con scation. In such cases, an asset that has been
indirectly used as an instrumentality of an o ense is subject to con scation where leg-
islation provides that “use” means “in connection with” an o ense.
6.2.2 Value-Based Confi scation
Unlike property-based con scation orders that are directed at speci c assets, value-
based con scation is focused on the value of bene ts derived from criminal conduct
and o en imposes a monetary penalty equal to that value. In this system, there is a
quanti cation of bene ts which owed to the defendant from the o ense (direct bene-
ts) and most o en any increase in value due to appreciation of the assets (indirect
bene ts). At sentencing, the court will impose a liability equal to that bene t on the
defendant. is judgment may be enforceable as a judgment debt or ne against any
asset of the defendant, whether or not it has any link to the o ense.
e absence of a requirement to link the speci c assets to an o ense o en facilitates the
practitioner’s ability to obtain a con scation judgment. However, the bene ts must be
linked to the o enses that form the basis of the defendant’s conviction, and that may be
problematic in cases where the prosecutor proceeds or succeeds on only some of the
o enses. In addition, the assets are limited to those owned by the defendant, although
this issue is o en resolved through presumptions and broad de nitions of “ownership”
to include assets that are held, controlled, or gi ed by the defendant (see section 4.2.1
146. See, for example, the Proceeds of Crime Act, 2002 (United Kingdom), sec. 241; and Criminal Code
(Liechtenstein), sec. 20b(2).
147. See Re an Application Pursuant to Drugs Misuse Act, 1986 [1988] 2 Qd. R. 506 (Australia).
112 I Asset Recovery Handbook
of chapter 4). Value-based con scation laws may also be paired with property-based
con scation laws to achieve maximum coverage.
Similar to property-based con scation, the legislative de nition and interpretation of
key terms will be important. Some of the issues raised in litigation are set out below.
Assessing Bene ts
e term “bene ts” is usually de ned broadly to include the full value of cash or non-
cash bene ts received directly or indirectly by a defendant (or a third party, at the
defendant’s direction) as a result of the o ense (see section 6.2.1 for a description of
direct and indirect). Bene ts will usually cover more than the rewards of a nancial
nature.
148
Some examples include:
the value of money or assets (including “illegal” assets)•
149
actually received as the
result of committing an o ense;
the value of assets derived or realized (by either the defendant or a third party at •
the direction of the defendant) directly or indirectly from the o ense;
the value of bene ts, services, or advantages accrued (to the defendant or a third •
party at the direction of the defendant) directly or indirectly as a result of the
o ense (for example, the value of the lavish entertainment in a bribery case
150
; or
of forced manual, household, or other labor in a human tra cking or smuggling
case); and
the value of bene ts derived directly or indirectly from related or prior criminal •
activity.
In some jurisdictions, the existence of bene ts may be inferred from increases in the
value of assets held by a person before and a er the commission of an o ense.
151
As stated above, a potential drawback to value-based con scation is that the bene ts are
linked to the o enses that form the basis of a defendant’s conviction. is is problematic
in jurisdictions where prosecutors do not always proceed on each o ense (unless they
are obliged to); instead, they may proceed on a selection of charges that are representa-
tive of the overall criminality of the defendant and that achieve an appropriate range of
148. Some jurisdictions will provide guidance in legislation. See, for example, the Proceeds of Crime Act,
2002 (Australia), sec. 122.
149. Bene ts may include legitimate assets, as well as assets that are illegitimate or illegal—for example,
proceeds generated from criminal enterprises. e value of illegitimate bene ts is di cult to assess and must
be estimated based upon the evidence available. Most helpful to practitioners are value-based con scation
systems that have exible bene t assessment procedures, such as those that permit the assessment based on
the black-market value and inferences over the period of the crime based on receipts from a nite period.
150. Recent cases have revealed bribes in the form of high-priced entertainment—for example, a $90,000
dinner for six people, travel expenses and trips to theme parks, and use of assets.
151. is inference of bene ts takes place in jurisdictions that have laws against illicit enrichment or unjust
resources, such as Argentina and Colombia.
Mechanisms for Confi scation I 113
sentencing options.
152
Several methods have evolved to address this potential issue,
such as:
Representative charges that capture a continuing course of criminal con-•
duct over a period of time. Where permitted, charges for a corruption o ense
committed between [date] and [date] will eventually permit an order of con s-
cation for all the bene ts derived from this “course of conduct” over the entire
period.
Rebuttable presumptions and extended con scation. • A rebuttable presump-
tion, raised on conviction for a single o ense, could allow the inference that
bene ts derived over an extended, speci c period of time are bene ts of that
o ense. Such a presumption would permit the con scation of assets that may
have been derived from other o enses for which the o ender was not charged or
convicted. Similarly, provisions that allow the court to con scate assets for
“related criminal activities” will permit the court to include any related or simi-
lar criminal activity in calculating bene ts (see sections 6.3.1 and 6.3.3 for addi-
tional information).
If the relevant legal system permits a value-based con scation order only for the conduct
on which the defendant is convicted, a practitioner must take care in choosing the charges
on which to prosecute the defendant (that is, choose the o ense according to the desired
con scation). In addition, any decision to drop or amend charges must be considered
carefully because such decisions can have drastic e ects on the calculation of bene ts.
Gross or Net Bene ts
In most jurisdictions, the term “bene ts” is speci cally de ned as “gross bene ts”—
not “net bene ts” or “pro t”—a er deduction of any expenses incurred in deriving the
bene t. A calculation based on “net bene ts” would enable the corrupt o cial to
deduct legal, banking, transportation, and other fees paid in the process of laundering
funds and would enable him or her to retain parts of the proceeds. e computation of
gross bene ts should not be mitigated by any loss in value or dissipation of an asset
because the value of the criminal bene t is “crystallized” at the moment the bene t is
generated.
Joint and Several Liability
In some jurisdictions, defendants can be held jointly and severally liable for value-
based con scation orders. e result is that the full value of the bene t is recoverable
from each of the convicted defendants. For example, in the case of a crime committed
by ve people that generated a total bene t of $500,000, the entire amount is recover-
able from each individual, rather than $100,000 from each of the ve o enders. is is
useful if four of the defendants are found to be impecunious, but the h has assets of
$1 million.
152. is would not be an issue if proceeding on the o ense of illicit enrichment or unjust resources because
all bene ts would be linked to the one o ense.
114 I Asset Recovery Handbook
6.2.3 Discretion to Confi scate
e court’s authority to enter a con scation order is o en discretionary.
153
Some con-
scation laws provide speci c factors that the court must consider in exercising its dis-
cretion to grant or refuse con scation. ese factors include
the hardship that will be endured by any person as a result of the entering of the •
order;
the ordinary use to which the asset subject to con scation is put; and•
the proportionality between the o ense and the amount to be con scated.•
154
6.2.4 Use of Expert and Summary Testimony to Present Confi scation
Evidence in Court
Evidence establishing the link between the asset and the o ense or the value of bene ts
can be complex and di cult for the judge (or jury) to follow. Such evidence is o en best
presented using ow charts and spreadsheets that present the nancial material in a
more easily comprehensible way (see gures 3.5 and 3.6 in chapter 3 for sample ow
charts). A forensic accountant or nancial investigator with training and experience in
presenting evidence can be helpful in this regard. If permitted, the witness could intro-
duce summary evidence in the form of spreadsheets or charts that, when prepared
properly, can clearly show how bene ts were derived and how complex schemes were
operated. Care must be taken to ensure that presentation aids are accurate and precisely
re ect the evidence in source documents: a factual or methodological error may
impeach the credibility of the evidence, leaving a big hole in the prosecution’s case.
6.3 Confi scation Enhancements
Most jurisdictions provide for procedural aids or enhancements designed to improve the
e ectiveness of the con scation law or to capture an extended range of assets.
155
With the
exception of substitute asset provisions, which are needed only in property-based con s-
cation systems, most are applicable in both property-based and value-based systems.
6.3.1 Rebuttable Presumptions
A rebuttable presumption is an inference of the truth of a proposition or fact drawn by
a process of probable reasoning in the absence of actual certainty from a de ned set of
153. Such legislation would state that the court “may” order con scation when requirements are met.
154. Hardship, ordinary use, and proportionality most o en apply to cases involving instrumentalities,
such as a lawfully acquired family residence that is also used as a base for illegal activity (both lawful and
unlawful purposes). See, for example, National Director of Public Prosecutions v. Prophet, [2006] ZACC 17
(Constitutional Court of South Africa) (factors to consider upholding the con scation of a residence as an
“instrumentality” of a drug operation).
155. Enhancements are encouraged in international conventions and agreements. UNCAC, art. 48, 59; the
European Council Framework Decision 2005/212/JHA of 24 February 2005 on Con scation of Crime-
Related Proceeds, Instrumentalities and Property, art. 3.
Mechanisms for Confi scation I 115
circumstances. us, if a practitioner establishes the de ned set of circumstances suf-
cient to raise a presumption, the party against whom the presumption exists has the
burden to overcome the presumption by presenting proof to rebut the presumption. If
the party fails, the prima facie presumption is converted into an uncontroverted fact.
In criminal law, primacy is given to the presumption of innocence—the legal or constitu-
tional right of the accused to be considered innocent until proven guilty. e burden of
proof lies with the prosecution to establish guilt to the required standard, and failure to do
so results in an acquittal. Rebuttable presumptions are used infrequently in criminal cases
because they e ectively reverse this burden
156
; however, they are more common in con s-
cation and civil proceedings or other proceedings in which the presumption of innocence
does not apply because neither criminal liability nor individual liberties are at stake.
157
Presumptions are enormously helpful in con scation cases involving corrupt public
o cials because these o cials—particularly those who have a long tenure in public
service—have had extensive opportunity to embezzle and conceal funds and are o en
able to in uence witnesses and thwart investigations into their assets. Relieving the
prosecution of the burden to establish that unexplained wealth is linked to speci c
instances of illegal conduct or a bene t from crime greatly enhances the possibility of
obtaining a con scation judgment.
Presumptions are powerful tools, and practitioners must ensure they are used appropri-
ately. Any chronic abuse of the tools available in a con scation system can bring the entire
system into disrepute.
158
For example, using presumptions to con scate all the assets of a
person who has committed a relatively minor crime could raise questions about the integ-
rity of the con scation system. Common bases for presumptions include the following:
Possession. • Under this presumption, assets found in the possession of a person
at the time of the o ense, or shortly before or a er the commission of the o ense,
are considered to be either the proceeds or an instrumentality of the o ense.
Associations. • is presumption has been applied in organized crime cases in
which assets belonging to a person who has participated in or supported a criminal
organization are presumed to be at the disposal of the organization and can be
con scated.
159
e inclusion of this enhancement helps attack the economic base
of entrenched criminal groups.
156. For example, a person in possession of more than a prescribed amount of a drug may, in the absence
of evidence to the contrary, be presumed to be a drug tra cker.
157. Note that criminal con scation is adjudicated a er the conviction has been obtained. Tax and customs
legislation also apply such presumptions in their proceedings.
158. Some jurisdictions have reserved the application of some presumptions to serious o enses: the Con s-
cation Act, 1987 (Victoria, Australia) and the Proceeds of Crime Act, 2002 (Commonwealth of Australia).
In the United Kingdom, presumptions in value-based con scation cases are permitted only in “criminal
lifestyle” cases: Proceeds of Crime Act, 2002, sec. 6 (United Kingdom).
159. In 2005, Switzerland’s Federal Supreme Court ruled that Nigeria’s former president Sani Abacha, his
family, and associates constituted a criminal organization; and it ordered the con scation and return of
$458 million of Abacha-related assets, using these provisions. See also Criminal Code (Switzerland), art. 72.
116 I Asset Recovery Handbook
Lifestyle.•
160
is presumption may be raised when the prosecutor can show that
the o ender does not have su cient legitimate sources of income to justify the
value of assets accumulated over a period of time.
161
Items that the o ender can
show were acquired lawfully may be excluded from the con scation order. is
presumption requires the o ender to justify more assets than those related to the
speci c o ense.
Transfers of assets. • e law can impose a presumption that transfers to family
and close associates or any transfers for below-market value are not legitimate.
162
e titleholder would have to prove that the asset was the subject of an arm’s-
length transaction that involved payment of fair market value.
163
If not rebutted,
the transfer will be invalidated.
Nature of the o ense. • is presumption is usually linked to conviction for a class
of particularly serious o enses, such as tra cking in substantial quantities of
drugs, major forms of corruption or fraud, racketeering, or organized crime.
When the person is convicted of such an o ense, a rebuttable presumption is
raised and the assets accumulated during the period of the crime are presumed to
be the proceeds of crime and subject to con scation.
Although the burden lies with the o ender to rebut the presumption, the prosecutor
will normally present some information to counter any rebuttal evidence an o ender
may choose to produce and to help the court draw the inference that the asset was
acquired with illicit proceeds or was an instrumentality of crime. e presence of such
material will make it much more di cult for an o ender to rebut the presumption with
a simple assertion as to the lawful source and use of the asset.
6.3.2 Substitute Asset Provisions
Substitute asset provisions help overcome obstacles o en faced in property-based con-
scation regimes—such as tracing or linking the assets to the o ense—by permitting
the con scation of assets not connected to the o ense. Such provisions may require
proof that
the original assets were derived as a bene t from an o ense or a particular asset •
was used as an instrumentality of the o ense; and
the asset cannot be located or is otherwise unavailable.•
160. A presumption based on lifestyle is separate and distinct from the o ense of illicit enrichment or
unjust resources. Although the de nition is o en the same, the procedures applied are di erent.
161. In South Africa, the presumption extends for a period of seven years prior to the initiation of proceed-
ings. Prevention of Organised Crime Act, Second Amendment, 1999, sec. 22. In the United Kingdom, the
period is six years for defendants determined to have a criminal lifestyle. Proceeds of Crime Act (United
Kingdom), sec. 10(8); also see Criminal Code (France), art. 131-21.
162. In ailand, transfers of property to family members are presumed to be dishonest: Anti-Money
Laundering Act, 1999, sec. 51 and 52.
163. In Colombia, the party attempting to rebut the presumption must also prove that the transaction actu-
ally occurred (that is, the party had su cient income to purchase and the selling party received the
funds).
Mechanisms for Confi scation I 117
When it is established that the o ender has dissipated the direct proceeds, the prosecu-
tor may apply for con scation of an equivalent value of the o ender’s untainted assets.
Value-based con scation laws do not need substitute asset provisions because they
impose a similar monetary liability on the person deriving the bene t that can be
enforced against any of that person’s assets.
164
6.3.3 Extended Confi scation
Some jurisdictions permit courts to con scate (or include in the bene t assessment)
assets derived from similar or related criminal activities.
165
e o ender need not be
charged with an o ense for these other related activities; however, the court must nd
the related activities are su ciently connected to the o ense (see example in box 6.3).
In some other jurisdictions, courts may be allowed to con scate all or part of the assets
of a convicted person, without consideration of whether they were purchased before or
a er the commission of an o ense.
166
Such provisions will o en be limited to serious
crimes—such as terrorism, organized crime, money laundering, or drug tra cking—
and will apply only to assets belonging to the o ender.
6.3.4 Mechanisms to Void Transfers of Assets
In addition to the use of presumptions to void certain transfers of assets (see section
6.3.1), some jurisdictions have enacted statutory provisions that hold that title to the
con scated assets vests in the state or government at the time of the unlawful act giving
rise to the con scation.
167
If the asset is subsequently transferred, it remains subject to
con scation—with the exception of transfers to bona de purchasers without knowl-
edge that the asset was subject to con scation.
6.3.5 Automatic Confi scation on Conviction
is type of provision results not in the operation of a rebuttable presumption, but in
actual con scation by automatic operation of the statute. Such a provision eliminates
the need for any judicial determination when certain conditions are satis ed.
168
e
164. In the United States, substitute assets may be con scated in most criminal con scation cases, but not
through NCB con scation.
165. Such extended powers of con scation are required in European Union jurisdictions. Council of the
European Union Framework Decision 2005/212/JHA of February 24, 2005, on Con scation of Crime-
Related Proceeds, Instrumentalities and Property, art. 3. In South Africa, the Prevention of Organised
Crime Act, 1998, sec. 18(1)(c), permits value-based con scation orders to be assessed on “related activities.”
166. Criminal Code (France), art. 131-21.
167. is concept is used for some con scations in the United States, and it is referred to as the “relation
back doctrine.” Title 21, United States Code, sec. 853(c) and 881(h); and Title 18, United States Code, sec.
1963(c). Such provisions may also be found in administrative con scation laws.
168. Automatic con scation is applied in Australia.
118 I Asset Recovery Handbook
person claiming an interest in an asset subject to automatic con scation—either a
defendant, innocent owner, or third party—may apply to exclude the asset from the
operation of the law by proving the lawful derivation and use of the asset. e claimant
bears the burden of proof.
6.4 Third-Party Interests
ird parties with a potential legal interest in assets subject to con scation are entitled
to notice of the proceedings and the opportunity to be heard.
169
Typically, appropriate
notice is sent to individuals the authorities believe may have a legally recognized inter-
est. is test should be applied liberally; and if a party indicates he or she has an inter-
est, formal notice should be given. Because con scation extinguishes all rights in the
asset, some additional form of notice is generally given to the population-at-large
through newspapers, legal gazettes, or the Internet. ere should also be procedures for
recognizing the legitimate interests of third parties in the restraint order (see section 4.5
in chapter 4 for a discussion of this issue).
Procedural steps for the assertion of third-party interests may vary, depending on
whether the con scation is criminal or NCB. Generally, for criminal con scation, the
169. UNCAC, art. 31(9), 35, 55(3)(c), 57; UNTOC, art. 12(8), 13(8); United Nations Convention against
Narcotic Drugs and Psychotropic Substances, art. 5(8).
BOX 6.3 Using “Related Activities” to Capture the Full Benefi t
Over a two-month period, customs offi cial Ms. X accepted three bribes from
undercover agents. The bribes totaled $20,000. Evidence obtained showed that
she was planning further dealings that would generate additional bribes, and that
her wealth increased by $500,000 in excess of what she could have been
expected to have saved from her government salary during the previous two
years. Several suspicious transaction reports concerning Ms. X conducting unex-
plained transactions involving large amounts of cash were found as well.
Ms. X was convicted on three counts of corruption, based on the bribes from the
undercover agents. The prosecutor applied for a confi scation order, based on the
benefi ts derived from the commission of the three offenses and any “criminal
activities related to the offense”—an option available under the jurisdiction’s con-
fi scation law. The prosecutor submitted evidence that Ms. X was engaged in a
business of extracting bribes from importers, and that the $500,000 unexplained
increase in her wealth was derived from her corrupt business practice that was
“related to” the offenses for which she was convicted. The court ordered a judg-
ment for $520,000—the amount of the three bribes plus the value of the wealth
derived from the related offenses.
a
a. Had the “related activities” clause not been included in the legislation, the prosecution would have only been able to seek an
order for $20,000 (the amount of the three bribes).
Mechanisms for Confi scation I 119
criminal proceedings dealing with the underlying o ense must be concluded and the
defendant’s interest ordered con scated before third-party interests are heard by the
court. Some jurisdictions permit prejudgment appearances by third parties who can
assert limited defenses, such as that provisional restraint is causing severe hardship or
that the asset is from a legitimate source and is needed for living expenses. Under NCB
systems, third-party claims are generally considered during the course of the primary
litigation. Typically, the party must prove that (1) he or she has a legally cognizable
interest in the assets; and either (2) the interest was obtained prior to the commission
of any criminal o ense and the party did not have reason to believe the assets were
involved in the underlying crime; or (3) the interest in the assets arose a er the criminal
activity was committed and the party was a bona de purchaser for value of the assets.
6.5 Confi scation of Assets Located in Foreign Jurisdictions
It is quite common for corruption and money laundering investigations to move beyond
domestic borders, thus requiring cooperation with foreign jurisdictions. e involve-
ment of a foreign jurisdiction both complicates a case and opens up a whole new range
of possibilities. For example, if a case involves domestic o enses for corruption and
money laundering and foreign o enses for money laundering, several possibilities
may arise:
Domestic con scation proceedings may be enforced in the foreign jurisdiction •
through a mutual legal assistance request and the assets returned to the requesting
jurisdiction, pursuant to international agreements, treaties, or other agreements
(see chapter 7 for a description of mutual legal assistance proceedings).
170
Foreign con scation proceedings may return the proceeds of the con scation to •
the jurisdiction harmed by corruption o enses by means of direct recovery or a
sharing agreement (see chapter 9 for a description of these proceedings).
Both domestic and foreign con scation proceedings may be pursued in tandem.•
Figure 6.1 illustrates these possibilities.
6.6 Recovery through Confi scation for the Victims of Crime
It is becoming increasingly common for jurisdictions to use con scation mechanisms
as a means to provide restitution to the victims of crime.
171
Legislation and regulations
have been designed to give priority to victims over the general treasury or con scation
fund of the state or government. If su cient assets exist to satisfy a con scation judg-
ment and restitution order, the con scated assets could be deposited to bene t the state
or government a er the victims receive restitution.
170. For example, see the return provisions outlined in UNCAC, art. 57.
171. is practice is supported in international agreements. See UNCAC, art. 57(3)(c); and UNTOC, art.
14(2).
120 I Asset Recovery Handbook
Such mechanisms ensure that con scation orders are not enforced at the expense of
victims who are owed restitution as a result of the underlying criminal conduct. Another
advantage lies in the general restraint provisions for con scation that permit a more
aggressive provisional restraint once formal charges are led than is o en available in
a civil litigation action to obtain restitution or secure compensation. Finally, using
con scation to obtain restitution for victims may save them the signi cant fees or per-
centages of recovery that are usually required in a private law (civil) case.
6.7 Disposal of Confi scated Assets
Con scation laws frequently require con scated assets to be liquidated and the pro-
ceeds paid into a consolidated government account or general treasury. A number of
jurisdictions have established asset con scation funds into which realized assets must
be paid.
172
ese funds are used for designated law enforcement and con scation pro-
gram purposes, including the purchase of equipment, training, investigative expenses,
and prosecutorial and asset management and liquidation costs
173
(for a discussion of
issues related to the management of assets subject to con scation, see chapter 5).
172. e jurisdictions include Australia, Canada, Italy, Luxembourg, Namibia, Spain, South Africa, and
the United States. For a list of jurisdictions with con scation funds, see eodore S. Greenberg, Linda M.
Samuel, Wingate Grant, and Larissa Gray, Stolen Asset Recovery—A Good Practices Guide to Non-Convic-
tion Based Asset Forfeiture (Washington, DC: World Bank, 2009), 91.
173. For more information on these options, see eodore S. Greenberg, Linda M. Samuel, Wingate Grant,
and Larissa Gray, Stolen Asset Recovery—A Good Practices Guide to Non-Conviction Based Asset Forfeiture
(Washington, DC: World Bank, 2009), 90–94; and Stolen Asset Recovery Initiative Secretariat, “Manage-
ment of Con scated Assets” (Washington, DC, 2009).
international
boundary
domestic confiscation sanctions
domestic sanction enforced
under MLA
domestic ML
offense
corruption
offense
foreign ML
offense
foreign confiscation sanctions
FIGURE 6.1
Confi scation of an Asset in a Foreign Jurisdiction
Source: Authors’ illustration.
Note: ML = money laundering; MLA = mutual legal assistance.
7. International Cooperation
in Asset Recovery
Corruption cases and most complex money laundering cases generally require asset
recovery e orts beyond domestic borders. Some parts of an o ense may be committed
in another jurisdiction: a company paying bribes for a contract may be headquartered
in a jurisdiction outside the jurisdiction in which the bribes are paid, and the o cials
receiving the bribes may launder their ill-gotten gains in another jurisdiction. In addi-
tion, the international nancial sector is a particularly attractive setting for people
seeking to launder funds and impede asset tracing e orts. Intermediaries or gatekeep-
ers, such as accountants, lawyers, or trust and company service providers, o er access
to the nancial sector and serve to disguise a corrupt o cial’s involvement in a trans-
action or ownership of assets. Corrupt o cials use complicated nancial schemes
o en involving o shore centers, shell companies, and corporate vehicles to launder
the proceeds of corruption. In addition, money can be moved quickly—o en
instantly—with the click of a keyboard key or a cell phone button, with the help of such
tools as wire transfers, letters of credit, credit and debit cards, automated teller
machines, and mobile devices.
In contrast, asset tracing and recovery by law enforcement o cials and prosecutors
may take months or years because the principle of sovereignty restricts domestic
authorities’ ability to take investigative, legal, and enforcement actions in foreign juris-
dictions. Successful tracing and recovery e orts o en depend on assistance from for-
eign jurisdictions, a process that may be slowed and complicated by di erences in legal
traditions, laws and procedures, languages, time zones, and capacities.
In this context, international cooperation is essential for the successful recovery of
assets that have been stashed abroad. e international community has concluded a
number of multilateral treaties or instruments requiring states parties to cooperate
with one another on investigations, production of evidence, provisional measures
and con scation, and asset return (see box 1.1 in chapter 1). Figure 7.1 illustrates
that international cooperation is integral to each phase of asset recovery.
Practitioners should take into account that international cooperation is “mutual”: not
only will the jurisdiction that has been plundered of its assets be requesting assistance
from the foreign jurisdiction(s) where the assets are hidden, but it may need to provide
information or evidence to these jurisdictions to obtain the most e ective recovery of
assets. In addition, practitioners must be proactive in seeking international coopera-
tion, as well as in alerting their counterparts in foreign jurisdictions to potential cor-
ruption o enses. Examples of the primary forms of cooperation include informal
122 I Asset Recovery Handbook
assistance,
174
spontaneous disclosures of information, joint investigation teams,
mutual legal assistance (MLA) requests, transfer of proceedings to another jurisdic-
tion, implementation of domestic laws that permit direct recovery, enforcement or
registration of a provisional restraint or con scation order from another jurisdiction,
and extradition.
175
e decision about the forms of cooperation and process will vary from case to case.
is chapter highlights the strategic considerations, challenges, and characteristics of
the various options that practitioners will encounter in international cooperation.
7.1 Key Principles
Practitioners in need of international cooperation should keep the following four key
principles in mind from the outset of their e orts.
174. For the purposes of this handbook, “informal assistance” is used to include any type of assistance that
does not require a formal mutual legal assistance (MLA) request. Legislation permitting this informal,
practitioner-to-practitioner assistance may be outlined in MLA legislation and may involve “formal”
authorities, agencies, or administrations. For a description of this type of assistance and comparison with
the MLA request process, see section 7.2.
175. Extradition is the process through which a jurisdiction surrenders a suspected or convicted criminal.
Whereas parts of the extradition process and requirements are similar to MLA, there are a number of
additional issues—such as the extradition of nationals, specialty, and the doctrine of non-inquiry. An
extensive review of these issues is beyond the scope of this handbook.
FIGURE 7.1
Phases of Asset Recovery and Integrating International Cooperation
2. Freezing
of Assets
1. Tracing &
Gathering of
Evidence
4. Asset
Return
3. Confiscation
of Assets
International
Cooperation
Source: Authors’ illustration.
International Cooperation in Asset Recovery I 123
7.1.1 Incorporate International Cooperation into Each Phase of the Case
When the case reaches beyond domestic borders, it is important that practitioners
immediately focus on international cooperation e orts and ensure they are maintained
for the duration of the case. Some authorities have waited until a domestic conviction
and a con scation order were achieved before beginning the process of tracing and
securing the assets abroad—o en with frustrating and adverse results: the delay gave
the corrupt o cial ample opportunity to transfer funds to bank secrecy or uncoopera-
tive jurisdictions. erefore, it is imperative to involve authorities from other jurisdic-
tions at the outset, at least through informal means. Establishing proactive contact early
may aid practitioners in understanding the foreign legal system and potential chal-
lenges, in obtaining additional leads, and in forming a strategy. It also gives the foreign
jurisdiction the opportunity to prepare for its role in providing cooperation.
7.1.2 Develop and Maintain Personal Connections
Forming personal connections with foreign counterparts is the hallmark of successful
asset recovery cases. A telephone call, an e-mail, a videoconference, or a face-to-face meet-
ing with foreign counterparts will go a long way to moving the case to completion. It is
important in all phases: obtaining information and intelligence, making strategic deci-
sions, understanding the foreign jurisdiction’s requirements for assistance, dra ing MLA
requests, or following up requests for assistance. It helps reduce delays, particularly where
di erences in terminology and legal traditions lead to misunderstandings. And it can
demonstrate that an administration is serious and committed to the case, thereby building
trust among the parties and fostering increased attention and commitment to the case.
In larger cases, an early face-to-face meeting among practitioners in the various juris-
dictions who will be involved in the investigation may facilitate the exchange of infor-
mation. It also helps counterparts build trust, assess strategies, and learn about require-
ments for submitting MLA requests (see box 7.1 for an example). In some cases,
particularly when faced with resource constraints or in cases that involve several juris-
dictions, practitioners have invited representatives of the foreign jurisdictions to attend
a case conference held domestically.
176
In other cases, practitioners have opted to visit
the foreign jurisdictions involved in the case.
Establishing personal connections can be di cult. Many practitioners do not have easy
access to the Internet to determine whom to contact, are not authorized to make long-
distance phone calls, and lack resources to attend the international or regional meetings
that help them develop personal networks. Even where a contact’s name and telephone
number are obtained, language di erences may be an additional barrier.
Personal connections are so integral to a successful recovery, however, that every
attempt must be made to ensure they happen. e time and e ort spent making con-
nections will be worth the results—whether in securing guidance on how best to
176. Practitioners from Brazil have used this case conference option.
124 I Asset Recovery Handbook
proceed, gathering leads for the case, or seeking dra ing assistance with an MLA
request. Box 7.2 provides a list of avenues for pursuing personal connections.
7.1.3 Engage in Informal Assistance Channels Before, During, and After
Transmitting an MLA Request
Many practitioners immediately resort to dra ing an MLA request when they determine
that international cooperation is required. However, some important information can be
obtained more quickly and with fewer formalities through direct contact with counterpart
law enforcement agencies and nancial intelligence units, or from liaison magistrates or
law enforcement attachés posted locally or regionally. Such assistance may lead to a more
rapid identi cation of assets; con rm the assistance needed; and, even more important,
provide the proper foundation for an MLA request. Such contacts also o er an opportu-
nity to learn about the procedures and system of the foreign jurisdiction and to assess
strategic options. Such informal contacts o en need to be cleared through the practitio-
ner’s domestic central authority to ensure that protocol with the other jurisdiction is not
violated and that laws and regulations regarding foreign assistance are observed.
177
177. Taking action without proper clearance could irreparably compromise the foreign aspect of the case.
BOX 7.1 Connecting With People—A Case Example from Peru
In September 2000, televised videos showed Vladimiro Montesinos, chief of
Peru’s intelligence service under President Alberto Fujimori, bribing an elected
congressman. Switzerland subsequently used a spontaneous disclosure to alert
Peru to the presence of frozen funds in Switzerland, and invited Peru to fi le an
MLA request. The Peruvian prosecutor personally contacted the Swiss investi-
gating magistrate conducting the case—both by phone and eventually in person
in Zurich. Making the personal connection resulted in the following important
outcomes:
Enabled key strategic decisions.• Through discussions of the options for
asset recovery, Peru ultimately decided to pursue the case domestically,
and to use MLA and legislative waivers to recover the frozen funds in Swit-
zerland.
Clarifi ed requirements for MLA requests.• Contact gave the Peruvians a
better understanding of the Swiss system and an idea of what they needed
to prove and provide to be successful in a request to Switzerland.
Developed trust.• Personal contacts demonstrated the political will and
commitment of both parties, and they helped promote trust between the
parties.
These outcomes, enabled by personal connections, were central in the repatria-
tion of $93 million in two years.
International Cooperation in Asset Recovery I 125
BOX 7.2 Contact Points for International Cooperation
Personal contacts: Connections developed through previous cases, meetings,
conferences, and so forth.
Referrals: Counterparts, personal contacts, liaison magistrates or law enforce-
ment attachés, networks, and international organizations (for example, World
Bank or the United Nations Offi ce on Drugs and Crime) may have referrals based
on their personal networks.
Counterparts in foreign jurisdictions:
Law enforcement agencies (such as police and those involved in anticorrup-•
tion, customs, drug law enforcement, and tax efforts)
Financial intelligence units •
Regulatory authorities (banking, securities)•
Prosecutors•
Investigating magistrates•
Foreign counsel (Some jurisdictions will retain counsel who are more famil-•
iar with the procedures and requirements of the foreign jurisdiction.)
Liaison magistrates and regional law enforcement attachés: Many jurisdic-
tions have resource persons based in their embassies or consulates abroad to
facilitate international cooperation with foreign jurisdictions. These individuals
have knowledge of the laws and procedures of both their own jurisdictions and
the host jurisdiction, and that knowledge can help practitioners avoid the pit-
falls of working with different legal systems. Their roles vary, but generally they
will facilitate contact with counterparts, provide informal assistance, help with
MLA request preparations (reviewing drafts), and help in following up an MLA
request. Practitioners may wish to contact the foreign jurisdiction’s local
embassy, consulate, or ministry of foreign affairs to see if such a resource per-
son exists.
Examples of jurisdictions with resource persons include Argentina, Chile, Colom-
bia, France, the United Kingdom, and the United States (the Federal Bureau of
Investigation and Immigration and Customs Enforcement).
Central authorities:
• Domestic: The domestic central authority may be able to refer practitioners
to contacts abroad and provide information on jurisdictions with which
there are multilateral or bilateral agreements.
• In requested jurisdiction: The offi ce of the central authority in the requested
jurisdiction should be able to provide guidance on how best to proceed in
light of the needs of the requesting jurisdiction and the laws of the
requested jurisdiction. Many offi ces also provide assistance with drafting
requests.
(continued next page)
126 I Asset Recovery Handbook
7.1.4 Be Aware of Potential Barriers
Practitioners may encounter many barriers in trying to obtain international coopera-
tion, so it is important that they recognize possible obstacles and take the necessary
measures to overcome them.
178
Di erences in legal traditions and con scation sys-
tems, jurisdiction issues, procedural variations, legal obstacles, and delay are among
the barriers that practitioners will need to consider and take steps to overcome (see
section 2.6 of chapter 2 for a discussion of some of these obstacles). Practitioners should
be mindful that information provided to a foreign jurisdiction—informally or through
an MLA request—may result in the foreign jurisdiction initiating its own domestic
investigation and subsequently refusing to provide assistance while there are local
“ongoing proceedings.” In addition, disclosure obligations may delay the assistance
process signi cantly. Also, despite having a con dentiality obligation under an MLA
treaty, leaks of information o en occur.
178. e Stolen Asset Recovery (StAR) Initiative currently is undertaking a study of the barriers to asset
recovery. e expected publication date is early-2011. e study will be available at http://www.worldbank
.org/star.
BOX 7.2 (continued)
Practitioner networks:
• Stolen Asset Recovery/Interpol Focal Point List: a 24/7 focal point contact
list of national offi cials who can respond to emergency requests for interna-
tional assistance, available at http://www.interpol.int/public/corruptionstar/
default.asp
• Egmont Group: an international network of fi nancial intelligence units
• Interpol, Europol, Aseanpol, Ameripol: International (and regional) police
organizations that facilitate cross-border police cooperation
• World Customs Organization and its regional intelligence liaison offi ces
• Camden Assets Recovery Inter-Agency Network (CARIN): an informal net-
work of police and judicial bodies working to confi scate the proceeds of
crime
• Asset Recovery Inter-Agency Network for Southern Africa: a CARIN-style
informal network of Southern African police and judicial bodies working to
confi scate the proceeds of crime
• Arab Anti-Corruption and Integrity Network
• Asociación Iberoamericana de Ministerios Públicos
• Red Iberoamericana de Cooperación Jurídica Internacional Hemispheric Infor-
mation Exchange Network
• Organization of American States network: vets and links practitioners
through a secure software system
• European Judicial Network: representatives of national judicial and prose-
cution authorities designated as contact points for MLA
• Eurojust: judges and prosecutors from European Union member-states
who assist national authorities in investigating and prosecuting serious
cross-border criminal cases
International Cooperation in Asset Recovery I 127
To gauge risks, practitioners should use their personal contacts to learn about the other
systems, con rm strategy, and discuss the implications of providing information prior
to discussions of substance. To facilitate moving forward without breaching con denti-
ality or secrecy laws, practitioners o en speak in hypothetical terms during the early
phases of the case and strategy planning. For example, “Person x did action y. How
would I achieve outcome z in the foreign jurisdiction?” Box 7.3 describes some ideas
for overcoming the barrier of disclosure obligations.
7.2 Comparative Overview of Informal Assistance and MLA Requests
MLA is a process by which jurisdictions seek and provide assistance in gathering infor-
mation, intelligence, and evidence for investigations; in implementing provisional mea-
sures; and in enforcing foreign orders and judgments. is handbook distinguishes
between assistance that requires an MLA request and assistance that can be provided
informally. An MLA request is typically submitted in writing and must adhere to spec-
i ed procedures, protocols, and conditions set out in multilateral or bilateral agree-
ments or domestic legislation. In the investigation stages, these requests generally ask
for evidence, provisional measures, or the use of certain investigative techniques (such
as the power to compel production of bank account documents, obtain search and sei-
zure orders, take formal witness statements, and serve documents). An MLA request is
generally required for the enforcement of con scation orders.
BOX 7.3 Disclosure Obligations—A Barrier to MLA Requests
A few jurisdictions—Liechtenstein, Luxembourg, and Switzerland—have disclo-
sure obligations that require authorities to provide notice to the targets of an MLA
request and that grant these targets the right to appeal a decision to provide the
assistance. This is particularly problematic with requests for bank account informa-
tion or provisional measures. Not only do these obligations risk dissipation of funds
following notice, but they can also lead to a lengthy delay. A target will use all avail-
able avenues to block the assistance and will exhaust all appeals—a process that
can take months or years. Here are some ideas for avoiding this barrier:
Discuss issues and strategy with foreign counterparts.•
Consider conducting a joint investigation or providing information to the •
foreign authorities so that they can conduct their own investigation and
take provisional measures. Either option may remove this potential avenue
for delay because disclosure to a target can be postponed for domestic
investigation and provisional measures.
Ensure that a request is not overly broad to prevent potential arguments •
that the request breaches privacy.
Ensure that facts and reasons for the request are outlined clearly to address •
potential arguments that the dual criminality test is not met—that is, a tar-
get may argue that the request is a tax investigation colored as a corruption
investigation and intended to go around the dual criminality principle.
128 I Asset Recovery Handbook
Informal assistance typically consists of any o cial assistance rendered outside the con-
text of an MLA request. Some jurisdictions consider informal assistance to be “formal”
because the concept is authorized in MLA legislation and involves formal authorities,
agencies, or administrations. e importance of such cooperation has been emphasized
in international agreements.
179
In contrast to an MLA request, the information gathered
through informal assistance may not be admissible in court; rather, it is more like intel-
ligence or background information that can be used to develop the investigation and may
lead to an MLA request.
180
is “informal” process may occur over the telephone between
counterparts (that is, among law enforcement agencies, investigating magistrates, or
prosecutors), through administrative cooperation (for example, nancial intelligence
units), or through face-to-face meetings between counterparts.
181
It may incorporate
noncoercive investigative measures, such as gathering publicly available information,
conducting visual surveillance, and obtaining information from nancial intelligence
units; and may extend to spontaneous disclosures of information, conducting a joint
investigation, or asking the authorities in another jurisdiction to open a case. In some
jurisdictions, emergency provisional measures can be achieved through informal assis-
tance, although they must be followed with an MLA request. Table 7.1 elaborates on the
di erences between informal assistance and an MLA request.
7.2.1 The Process for International Cooperation
As described above, the process for asset recovery will use a combination of both infor-
mal requests for assistance and formal MLA requests to obtain information, intelli-
gence, evidence, provisional measures, con scation, and eventual return of assets. It is
unfortunate that this is not a simple process in which one can request everything all at
once by submitting an MLA request for information on bank accounts held, copies of
any bank documents, and the restraint or seizure and con scation of any funds that are
found to be linked to the target or convicted criminal. Although it may seem easier
to have everything in one request, such a request o en lacks the evidentiary basis
required—particularly for the latter phases of obtaining provisional measures and con-
scation. Moreover, a request containing everything at once may become too complex
to be processed in the requested jurisdiction, requiring the mobilization of multiple
agencies and ultimately a lengthy delay in response.
179. United Nations Convention against Corruption (UNCAC), art. 48 and 50; United Nations Conven-
tion against Transnational Organized Crime (UNTOC), art. 26 and 27; United Nations Convention against
Narcotic Drugs and Psychotropic Substances, art. 9; recommendation 40 of the Financial Action Task
Force (FATF) 40+9 Recommendations.
180. In general, common law jurisdictions will not permit the results of informal assistance to be used as
evidence in court. Civil law jurisdictions, on the other hand, may permit the judge to consider information
gathered through informal assistance. Chile and Switzerland, for example, will permit the admission of
such evidence.
181. UNCAC art. 46(9) requires a state party to render noncoercive assistance without requiring dual
criminality, where consistent with the basic concepts of its legal system. Recommendation 37 of the FATF
40+9 Recommendations also requires that, to the extent possible, countries should render MLA, notwith-
standing the absence of dual criminality—particularly for less-intrusive and noncoercive measures.
International Cooperation in Asset Recovery I 129
TABLE 7.1
Differences between Informal Assistance and MLA Requests
Factor Informal assistance MLA requests
Purpose • Obtain intelligence and information
to assist investigation
• Emergency provisional measures in
some jurisdictions
• Obtain evidence for use in criminal
trial and confi scation (in some cases,
non-conviction based [NCB]
confi scation)
• Enforcement of restraint order or
confi scation judgment
Type of assistance Noncoercive investigative measures;
proactive disclosure of information;
joint investigation; opening of a
foreign case
Coercive investigative measures (such
as search orders) and other forms of
judicial assistance (such as enforce-
ment of provisional measures or
confi scation judgment)
Contact process Direct: law enforcement, prosecutor,
or investigating magistrate directly to
counterpart, among Financial
Intelligence Units, between banking
and securities regulators
Generally not direct: central authorities
in each jurisdiction to proper contact
point (law enforcement, magistrate,
prosecutor, or judge)
a
; letters rogatory
through the ministry of foreign affairs
Requirements • Usually just agency-to-agency
contact; sometimes a memorandum
of understanding
• Must be lawfully gathered in both
jurisdictions
May include dual criminality, reciproc-
ity, specialty, ongoing criminal
investigation, or link between assets
and offense
Advantages • Information is obtained quickly;
formality of an MLA request is not
required (for example, dual
criminality)
• Useful for verifying facts and
obtaining background information to
improve an MLA request
Evidence is admissible in court;
enables enforcement of orders
Limitations Information cannot always be used as
evidence; diffi cult to determine
contacts; few resources allocated to
networking; potential leaks
Time consuming; resource intensive;
many requirements that are often
diffi cult to meet; potential leaks
Source: Authors’ compilation.
a. There may be bilateral or multilateral agreements that permit direct contact among practitioners.
Instead, the better method is a step-by-step process in which information or evidence
obtained pursuant to one request is used to support the next (follow-up) request. For
example, it may be possible through informal assistance to obtain bank account details
that will help provide the necessary foundation and background information for an
130 I Asset Recovery Handbook
MLA request to seize bank documents. e activity revealed in these documents will
help practitioners trace the assets and determine additional accounts to restrain or
seize. It will assist with gathering the evidence required for provisional measures,
whether emergency provisional measures (through informal assistance where avail-
able) or an MLA request. Eventually, the accumulated information and evidence will
provide the basis for domestic con scation and enforcement.
Following a step-by-step process enables practitioners to make important strategic
decisions at each stage. In addition, it leads to greater communication among coun-
terparts, thereby building or fostering a relationship of trust between jurisdictions.
Figure 7.2 provides a simple ow chart to illustrate this step-by-step process.
FIGURE 7.2
Flow Chart of International Cooperation
Initial contact with
foreign counterparts
Discreet enquiries by
foreign agencies (mutual
assistance)
Response provided in
intelligence format
FIU, public records, banks
(where possible)
explain investigation and
material needed; seek advice
phone or email is best
MLA request: evidence
request bank account
documents, witness
statements
seek advice on draft before
sending
Return
MLA Request:
confiscation
Evidence gathered
and response
provided
Request reviewed by
central authority
ensures requirements are met
sends to executing authority
for investigation and evidence
gathering
Provisional measures
direct enforcement of foreign
order
indirect enforcement -
domestic freeze based on
evidence provided
enforcement of foreign
judgment
direct enforcement
sharing mechanisms
court-ordered compensation
[MLA] request:
provisional measures
emergency request (possibly
without MLA)
enforcement of foreign
order (MLA required)
Confiscation
direct enforcement of foreign
judgement
indirect enforcement -
domestic judgment based on
evidence provided
Source: Authors’ illustration.
Note: FIU = fi nancial intelligence unit. In some jurisdictions, evidence and provisional measures can be requested at the same time.
International Cooperation in Asset Recovery I 131
7.2.2 What Can Be Requested?
e information, evidence, or judicial measures that can be requested vary from juris-
diction to jurisdiction and ultimately depend on treaty agreements and domestic laws.
In addition, jurisdictions di er on whether requests may be addressed through infor-
mal assistance or whether an MLA request is required. For example, some jurisdictions
permit the possibility of emergency provisional measures using informal assistance
channels—through a nancial intelligence unit (FIU), ministry of justice, prosecutor,
or an investigating magistrate. For additional information, see section 7.3.4.
At the same time, there are general areas of agreement on what can be requested and the
process through which it is achieved (see gure 7.3). Noncoercive investigative tech-
niques, for example, can usually be obtained through informal assistance; coercive
investigative techniques and judicial measures typically require an MLA request. ese
measures are set out in greater detail in the following sections on informal assistance
and MLA requests.
7.3 Informal Assistance
Below is a more detailed review of the channels for this cooperation and some of
the speci c forms of informal assistance that may be helpful in asset recovery
FIGURE 7.3
Informal Assistance and Formal MLA Requests—What Can
Be Requested?
Investigative Assis-
tance (Noncoercive)
Investigative Assist-
ance (Coercive) and
Evidence for Trial
Provisional
Measures
ConfiscationOther
suspicious trans-
action and
activity reports
request opening
of foreign case
(if jurisdiction)
certified
documents
direct
enforcement of
foreign restraint
or seizure order
direct
enforcement of
foreign
confiscation
order
indirect
enforcement
through
domestic order
of confiscation
indirect
enforcement
through
domestic
restraint or
seizure order
production
order
search and
seizure warrant
account
monitoring
order
sworn testimony
and witness
interviews
a
joint
investigation
a
joint
investigation
a
spontaneous
disclosure
emergency
provisional
measures
b
public records or
registry informa-
tion (vehicle,
corporate, land)
consent search
visual
surveillance
witness
interview
a
Generally obtained through
informal assistance
Generally requires formal MLA request
Source: Authors’ illustration.
a. Either informal assistance or formal MLA request (or both), depending on the jurisdiction.
b. May not require formal MLA request for the initial order, but will require one to retain the order.
132 I Asset Recovery Handbook
cases—speci cally, asset tracing, emergency provisional measures, spontaneous dis-
closures, and asking another jurisdiction to open a case. A joint investigation, one
form of cooperation that may be initiated through informal assistance or an MLA
request, is discussed in section 2.2.3 of chapter 2. A checklist in appendix H lists
some of the talking points and issues that practitioners can use to begin discussions
with their counterparts.
7.3.1 Channels for Cooperation
e most common channels for informal assistance include the following:
Counterpart practitioners,• whether law enforcement o cials, prosecutors, or
investigating magistrates. Also helpful in this regard are law enforcement attachés
and liaison magistrates. Based in embassies or consulates abroad, these individu-
als facilitate contact with counterparts to provide informal assistance, help with
MLA request preparations, and assist in following up MLA requests (see box 7.2
for some of the jurisdictions that have these resource persons).
FIUs. • e amount and type of assistance they provide will vary, depending on the
style of the FIU (administrative or law enforcement); but generally they will be
able to share nancial intelligence with other FIUs. Some FIUs have authority to
restrain funds or operate in a consent regime (see section 7.3.4).
Regulatory authorities,• such as bank, securities, and company regulators. is
cooperation is more limited because it usually requires a memorandum of under-
standing and may have restrictions in sharing for law enforcement purposes.
How does one initiate cooperation with foreign agencies? is is o en accomplished
through personal contacts from previous cases, either directly or through networks to
which the agencies are members (for example, Interpol and the World Customs Orga-
nization for law enforcement, the Egmont Group for FIUs, and the Camden Assets
Recovery Inter-Agency Network or the Organization of American States’ network for
prosecutors and investigating magistrates (see box 7.2 for a wider list of networks). One
problem for practitioners seeking to contact their counterparts is that many jurisdic-
tions have multiple law enforcement agencies, and it may be di cult to determine
which one(s) to contact (see box 7.4 for examples from four countries). ese agencies
could include federal, state or provincial, and municipal police; anticorruption o ces;
customs agencies; drug control o ces; or tax agencies. is means that practitioners
may need to contact multiple agencies, and should seek guidance from their counter-
parts whether other agencies might be relevant.
7.3.2 General Considerations
Although there are fewer restrictions to informal assistance than to MLA requests, there
are some restrictions that practitioners will need to consider. Information requested or
shared must be gathered lawfully in both the requested and requesting jurisdictions, and
communications among counterparts must be authorized. And because cooperation is
International Cooperation in Asset Recovery I 133
BOX 7.4 Investigative Jurisdiction in France, Switzerland, the United
Kingdom, and the United States
Many jurisdictions have multiple law enforcement agencies with authority to
investigate and prosecute corruption and money laundering. Some examples are
below.
France
Customs •
Gendarmerie Nationale•
Interregional specialized courts for organized and fi nancial crime•
Investigating judges•
Judicial police, specifi cally l’Offi ce Central de Repression de la Grand Delin-•
quance Financiere
Prosecution offi ces•
Switzerland
Federal Police Offi ce•
Federal investigating magistrates (• juges d’instruction)
a
Ministère public de la Confédération (federal prosecution)•
Each of the cantons (states) has its own prosecutors, law enforcement agencies,
and investigating magistrates authorities.
United Kingdom (England and Wales)
Crown Prosecution Service and the Revenue and Customs Prosecution •
Offi ce
Her Majesty’s Revenue and Customs for England and Wales•
Serious Fraud Offi ce•
Serious Organised Crime Agency•
In addition, there are 43 regional police forces in England and Wales—some of
which have dedicated units to fi ghting corruption and money laundering. They
include the Metropolitan Police and the City of London Police.
United States
Customs and Border Protection •
Department of Homeland Security•
Department of Justice (the central authority)•
Department of the Treasury•
Drug Enforcement Agency •
Federal Bureau of Investigation •
Immigration and Customs Enforcement •
(continued next page)
134 I Asset Recovery Handbook
usually counterpart-to-counterpart, the appropriate practitioners will need to go through
the relevant domestic agency for their foreign counterparts (see box 7.5 for an example
of how some jurisdictions are moving to eliminate this requirement). For example,
instead of a law enforcement agency contacting a foreign FIU, the domestic FIU may use
the Egmont Group channels to obtain information from the foreign FIU and then give
that information to law enforcement o cials. In some cases, in addition to Egmont
membership, counterpart agencies must sign a memorandum of understanding or con-
dentiality undertakings.
Practitioners must always weigh the risks and bene ts of proceeding with informal
assistance. For example, interviewing voluntary witnesses or even breaches of con den-
tiality by the foreign counterparts may alert targets to the investigation and give them a
chance to destroy evidence, move assets, or ee the jurisdiction.
7.3.3 Asset Tracing and Other Investigations
Because the tracing of assets is so time-sensitive and crucial to asset recovery, some
jurisdictions have developed tools to allow rapid access to limited information before
an MLA request is submitted. is may include suspicious transaction report (STR)
information, data from public records (for example, land, vehicle, and legal person reg-
istries), and limited information on bank accounts. Practitioners will need to consult
BOX 7.4 (continued)
Internal Revenue Service Criminal Investigation •
U.S. Postal Service•
In addition, there are state and local police forces.
Note: a. In 2011, the system of investigating magistrates (federal and cantonal) will be removed. Prosecutors will remain.
BOX 7.5 Facilitating Informal Assistance
Informal assistance is generally conducted on a counterpart-to-counterpart basis,
a process that introduces a middleman in some exchanges because law enforce-
ment must go through its domestic fi nancial intelligence unit (FIU) to obtain
information from an FIU in a foreign jurisdiction. Some jurisdictions have moved
to facilitate informal exchanges by permitting direct cooperation, regardless of
whether the foreign agency is a counterpart. For example, the U.S. Financial
Crimes Enforcement Network cooperates directly with foreign law enforcement
agencies from the European Union in certain circumstances, and similar coop-
eration is reciprocated.
International Cooperation in Asset Recovery I 135
with their counterparts to determine what may be available without an MLA request
and what information will need to be followed up with such a request.
Asset tracing is o en stymied because there is insu cient information to narrow the
search to a particular bank, branch, or location. Such information is generally required
in jurisdictions with large numbers of nancial institutions and branches (none of
which share information); otherwise, the request is too onerous in its breadth. A tool
that has helped overcome this barrier is a central registry of bank accounts.
182
Operated
in Brazil, Chile, France, Italy, and Germany,
183
these registries hold limited information
(for example, account number, name, and branch location); and they have safeguards to
ensure that privacy is protected and that access is limited to speci c agencies and cir-
cumstances. In France, for example, the FIU may conduct searches on the databases
only when there is a reasonable suspicion of money laundering or terrorist nancing.
Foreign practitioners would have to provide su cient information to meet require-
ments, and an MLA request may be necessary.
7.3.4 Emergency Provisional Measures
Although there are situations where funds may be preserved through a domestic
restraint order submitted for enforcement through an MLA request, there are also
circumstances that require greater urgency. e target may be tipped o to the inves-
tigation through an arrest or leak. Because of the speed with which targets and their
associates can move proceeds from one jurisdiction to another, practitioners must be
prepared to act quickly. Fortunately, a number of jurisdictions have measures that
enable a swi seizure or restraint of funds in emergency situations. is rapid action
o en takes the form of a temporary measure executed on the expectation that an
MLA request will follow within a speci ed period of time.
184
If the request is not pro-
vided in time, the money may be released. Some examples of emergency provisional
measures are
Administrative orders. • An administrative o cial (typically associated with the
FIU) may issue a preservation order instructing a nancial institution to restrain
funds for a brief period of time. ese administrative orders are sometimes lim-
ited to cases involving speci ed underlying o enses.
185
Some jurisdictions oper-
ate under a “consent regime” that requires the nancial institution, on the ling
of an STR, to hold the funds until the FIU provides consent to release them or
182. e FATF recently recognized establishment of central registries as a best practice in “Best Practices:
Con scation (Recommendations 3 and 38),” adopted by the plenary in February 2010. e document is
available at http://www.fatf-ga .org/dataoecd/39/57/44655136.pdf.
183. Legislation permitting central registries is currently before the Spanish parliament.
184. A time extension may be granted on application in some jurisdictions.
185. e Anti-Money Laundering Act, 1999 ( ailand), sec. 48, empowers the Transaction Committee to
restrain or seize for a period not exceeding 90 days “if there is a probable cause to believe that there may be
a transfer, distribution, placement, layering or concealment of any asset related to predicate o ense.” In
case of emergency, the secretary-general may issue the order. Relevant regulations relating to the procedure
for taking into custody, preservation, maintenance, auction, and so forth may apply.
136 I Asset Recovery Handbook
hold them for a speci ed period of time (thereby allowing the FIU or law enforce-
ment to implement provisional measures).
Provisional orders of investigating magistrates. • In civil law jurisdictions that
have investigating magistrates, the magistrate may be able to issue orders autho-
rizing provisional measures if there is reason to believe that a con scation order
may ultimately be issued, that assets are likely to be dissipated, or both.
186
Provisional measures on instigation of charges or arrest. • Some jurisdictions
permit a temporary restraint or seizure of assets subject to con scation following
an arrest in another jurisdiction.
187
e requesting jurisdiction must provide evi-
dence of the arrest and a summary of the facts of the case. e funds will be
restrained to await further evidence, and this period of restraint can be extended
on application. Generally, assets need not be traced to a crime and no treaty
arrangement is necessary, and the proceeding is conducted without notice to the
asset holder (ex parte).
Direct referral to prosecutors. • In some jurisdictions, incoming requests for
restraint and con scation are referred to prosecutors to provide the same level of
international cooperation in obtaining provisional measures and con scating
proceeds and instrumentalities of crime as is available in domestic cases.
188
Evi-
dence of crime and bene t or evidence that assets are proceeds or an instrumen-
tality of crime may be required.
Some jurisdictions will require an MLA request to obtain any provisional measure, but
a hearing can be obtained on short notice and ex parte.
189
Other jurisdictions may have
stricter conditions, such as the requirement of an arrest or charges. If that is the case,
the practitioner may have to consider other options—perhaps initiating a joint investi-
gation or supplying the foreign jurisdiction with su cient information through infor-
mal assistance channels to enable provisional measures under domestic law. ese
options are possible only if the foreign authority has jurisdiction over some element of
the underlying crime, such as money laundering.
7.3.5 Spontaneous Disclosures
Another form of informal assistance that has aided in recovering proceeds of corruption
is spontaneous disclosures.
190
A proactive form of assistance used by competent author-
ities and FIUs, a spontaneous disclosure alerts a foreign jurisdiction to an ongoing inves-
tigation of money laundering in the disclosing jurisdiction; and indicates that existing
evidence could be of interest, such as the bank account of a corrupt politically exposed
186. is applies in Switzerland, and can be achieved by sending a fax to the Federal O ce of Justice.
187. e United States has a temporary restraint order (30 days) that can be issued upon notice of charges
being led or arrest: Title 18, United States Code, sec. 984(b)(4).
188. Proceeds of Crime Act, 2002 (External Requests and Orders), order 2005, sec. 6.
189. Hong Kong SAR, China, will provide for a hearing on short notice.
190. UNCAC art. 46(4) and 56 require that states parties try to provide such disclosures of information.
International Cooperation in Asset Recovery I 137
person. Box 7.6 describes the information that may be transmitted by Switzerland.
191
e receiving jurisdiction then may use the information to further its own investigation
and eventually submit an MLA request. Such disclosures are particularly helpful in cor-
ruption cases because the international media coverage that such cases attract may
prompt a foreign bank to le an STR (subsequently leading to a foreign investigation) or
a foreign practitioner to initiate an investigation independently.
192
Recipients of spontaneous disclosures should contact the author to clarify the disclo-
sure, nd out about the foreign case, ensure that the assets will remain frozen, and
discuss the next steps to be taken.
7.3.6 Requesting the Opening of a Foreign Case
In some circumstances, the authorities may not have the ability to pursue a domestic
case of criminal or non-conviction based (NCB) con scation or civil proceedings. Per-
haps this is because of a lack of capacity, political will, or an e ective legislative frame-
work. In these circumstances, the authorities may provide the case materials to their
foreign counterparts and request that those authorities initiate domestic proceedings.
Ultimately, the foreign authorities will determine whether to proceed and how the pro-
ceedings will be conducted (see chapter 9 for details on this option).
191. e enabling legislation for spontaneous disclosures in Switzerland is art. 67a of the Federal Act on
International Mutual Assistance in Criminal Matters. It grants the authority to spontaneously transmit to
a foreign authority any prosecuting o enses information or evidence that is gathered in the course of its
own investigation, when it determines that the transmission will (1) permit the opening of a criminal pro-
ceeding or (2) facilitate a pending criminal investigation. e transmission will not a ect the domestic
criminal proceedings in Switzerland.
192. A spontaneous disclosure was the catalyst for international cooperation between Peru and Switzerland
in the Montesinos case.
BOX 7.6 Spontaneous Disclosures from Switzerland
A spontaneous disclosure from Switzerland could include
information on the investigation, including the name of the accused and a •
summary of the facts and the offense(s);
a description of evidence that might be of interest, including the name of •
the bank and account holder, account number, amount of funds frozen, and
relevant transactions;
reasons for transmission (for example, pending or possible investigation in •
the receiving jurisdiction);
an invitation to present an MLA request; and •
a request that the information not be used for any other purpose.•
138 I Asset Recovery Handbook
7.4 MLA Requests
As previously discussed, practitioners should generally not begin their international
cooperation e orts with the submission of an MLA request. If available, informal assis-
tance channels should be explored rst so that practitioners connect with their coun-
terparts to discuss what will be needed to execute the request and to address potential
barriers. Once a practitioner determines that an MLA is required for certain needed
action—such as the production of nancial records, obtaining compulsory testimony
or a search and seizure warrant, or enforcing a provisional restraint order—numerous
requirements and procedures must be ful lled. Some of those are described below.
Requirements will vary from jurisdiction to jurisdiction, so practitioners should
con rm their applicability beforehand with the foreign central authority. Consulting
with foreign counterparts or other contacts can be helpful in this regard, although
many jurisdictions will require the practitioner to proceed on a formal basis through
their own central authority when a formal request is being prepared or has been sent.
In addition, many jurisdictions publish information on their central authority’s Web
site that may state the requirements, and some even provide sample forms for pre-
paring an MLA request that is acceptable (see appendix J for a list of helpful Web
sites in a selection of jurisdictions, and appendix I for a sample MLA request).
193
e
United Nations O ce on Drugs and Crime operates a directory of central authorities
and has developed an MLA request writer tool
194
to assist practitioners.
195
Finally,
publications by nongovernmental or multilateral organizations may also provide
assistance.
196
7.4.1 Legal Basis for International Cooperation
To proceed with an MLA request, there must be a legal basis for cooperation; and this
must be speci ed in the request. is legal basis may come through (1) multilateral
conventions, treaties, or agreements containing provisions on MLA in criminal matters;
193. For example, Hong Kong SAR, China, and the United Kingdom have booklets that are available to
assist practitioners.
194. e United Nations O ce on Drugs and Crime’s Mutual Legal Assistance Request Writer Tool (which
can be downloaded through http://www.unodc.org/mla/en/index.html) is a so ware program that gener-
ates an MLA request a er prompting the user for information. e request must be tailored for each juris-
diction, but the tool will assist with the organization of the request. is tool is currently being expanded
to include asset recovery features.
195. Other multilateral organizations provide lists of central authorities, including the Organisation for
Economic Co-operation and Development (OECD), the Organization of American States, and the Asocia-
ción Iberoamericana de Ministerios Públicos.
196. e StAR Initiative’s forthcoming publication of its study of the barriers to asset recovery will include
MLA information on 15 nancial center jurisdictions. See footnote 28 for publication details. Other perti-
nent publications include the Asian Development Bank (ADB)/OECD Anti-Corruption Initiative for Asia
and the Paci c, “Mutual Legal Assistance, Extradition and Recovery of Proceeds of Corruption in Asia and
the Paci c: Frameworks and Practices in 27 Asian and Paci c Jurisdictions” (Manila, 2007); and the ADB/
OECD Anti-Corruption Initiative for Asia and the Paci c, “Asset Recovery and Mutual Legal Assistance in
Asia and the Paci c” (Manila, 2008).
International Cooperation in Asset Recovery I 139
(2) bilateral MLA treaties and agreements; (3) domestic legislation allowing for
international cooperation in criminal cases; or (4) a promise of reciprocity through
diplomatic channels (referred to as “letters rogatory” or “comity” in some jurisdic-
tions). It should be noted that the above-mentioned legal avenues are not mutually
exclusive; and an MLA request may use one or more of these avenues, depending on
the subject matter of the case and the expected outcomes (see box 7.7). Each avenue
is discussed below.
Multilateral Conventions, Treaties, or Agreements
Multilateral conventions, treaties, or agreements contain binding provisions that oblige
signatories to provide MLA under international law. e provisions de ne areas of
cooperation and contain governing procedures, thereby bringing clarity and predict-
ability to the process. ese agreements o en permit more extensive forms of coopera-
tion than the traditional promise of reciprocity or letters rogatory, such as communica-
tion between central authorities (rather than through formal diplomatic channels).
UNCAC is the most applicable multilateral treaty for recovery of the proceeds of cor-
ruption and the MLA required for success. It has been rati ed by more than 140 juris-
dictions and obliges states parties to a ord one another the widest measure of assistance
in investigations, prosecutions, and judicial proceedings concerning corruption mat-
ters. In addition to UNCAC and other United Nations treaties, a legal basis can be
provided through some regional MLA treaties or agreements—such as the Southeast
Asian Mutual Legal Assistance in Criminal Matters Treaty and the Inter-American
Convention against Corruption.
One issue that practitioners must consider with international conventions, treaties, and
agreements is how, if at all, their relevant obligations have been incorporated into
domestic legislation in the other jurisdiction—a process referred to as “domestication.”
BOX 7.7 Selecting a Legal Basis to Include in an MLA Request
In selecting the legal basis to include in an MLA request, many practitioners have
found it most helpful to list all relevant treaties, agreements, or legislation in
order of preference. This practice increases the opportunity for applicability:
because the types of assistance and potential reasons for refusal vary from treaty
to treaty, the request may be acceptable under one legal basis and not under
another. The list should be in order of preference. A bilateral treaty is generally
the best option, followed by a multilateral treaty (both jurisdictions must be states
parties), because bilateral treaties are tailored to the legal traditions and options
of the two contracting jurisdictions (in contrast to the “one-size-fi ts-all” approach
of the multilateral treaties). The relevant treaties would then be followed by any
domestic legislation (if available) and the promise of reciprocity because treaties
and domestic legislation usually allow for faster cooperation than do a promise of
reciprocity and letters rogatory.
140 I Asset Recovery Handbook
In theory, MLA requests submitted under a multilateral treaty (such as UNCAC,
UNTOC, or the United Nations Convention against Narcotic Drugs and Psychotropic
Substances) can be applied directly, as a long as both jurisdictions have rati ed the
treaty.
197
However, the mandatory provisions of these treaties are typically formulated
in a general manner, leaving room for interpretation and uncertainty. For example, the
treaty may not specify the channels for communication, the procedures and documents
for enforcement, or the particular types of evidence or procedures requiring judicial
authorization. Some jurisdictions enact detailed domestic legislation to provide the
speci cs; others have limited or no legislation domesticating the treaty and rely on
direct application through existing criminal laws and procedures, with modi cations
based on the treaty. Because some authorities will prefer that the requested jurisdiction
have domesticated the treaty, it will be important for practitioners to consider this issue
and to look to domestic laws for details on the implementation of multilateral treaties.
In addition, there may be voluntary arrangements with other jurisdictions or regional
groups (such as the Commonwealth Secretariat’s Scheme on Mutual Assistance in
Criminal Matters [Harare Scheme], which is a commitment of the Commonwealth Law
Ministers). Although not a binding legal instrument or treaty, parties are expected to
implement the provisions in domestic legislation; and assistance is rendered through
these provisions.
Bilateral Mutual Legal Assistance Treaties and Agreements
Similar to the multilateral treaties, bilateral MLA treaties contain binding provisions
that oblige the signatories to provide assistance and that de ne the procedures for prac-
titioners to follow. In addition, they may provide forms of cooperation that are not
available under other arrangements, such as direct contact between the practitioners,
competent authorities, and members of the judiciary (with limited central authority
involvement).
Domestic Legislation
A number of jurisdictions have passed legislation that provides an MLA process for
jurisdictions without a bilateral treaty, o en on the condition of reciprocity (that is, the
requesting jurisdiction will provide MLA in similar situations). Unlike a treaty arrange-
ment, there is no international obligation to provide requested assistance; such exibil-
ity makes it uncertain that the request will be acceptable.
198
Promise of Reciprocity through Diplomatic Channels (Letters Rogatory)
is traditional form of assistance may be useful if there is neither an existing treaty
between the jurisdictions nor domestic legislation in the requested jurisdiction
(although some jurisdictions require the reciprocity undertaking even when using a
197. UNCAC, art. 46 and 55; UNTOC, art. 18; and United Nations Convention against Narcotic Drugs and
Psychotropic Substances, art. 7.
198. Some examples include the Mutual Assistance in Criminal Matters Act (Singapore); Law on Interna-
tional Mutual Legal Assistance in Criminal Matters (Liechtenstein); Mutual Legal Assistance in Criminal
Matters Ordinance, cap. 525 (Hong Kong SAR, China); and the Federal Act on International Mutual Assis-
tance in Criminal Matters (Switzerland).
International Cooperation in Asset Recovery I 141
multilateral or bilateral treaty as a basis for the request). It permits formal communi-
cation among the judiciary, a prosecutor or law enforcement o cial of one jurisdic-
tion, and his or her counterpart in another jurisdiction. It is a longer process because
it requires the inclusion of an additional party, the ministry of foreign a airs, and
diplomatic formalities.
7.4.2 General Requirements
Each jurisdiction will have a number of legal requirements that requesting jurisdictions
must meet in submitting an MLA request. Below are some of those requirements and
the considerations practitioners can make in meeting them.
Nature of the Matter
Generally, the request must be related to a criminal matter, although some jurisdictions
will provide assistance on NCB con scation requests (because they usually arise in con-
nection with a criminal investigation) and in civil and administrative cases.
199
Jurisdic-
tions di er as to the point in criminal investigations or proceedings when assistance
can be provided. Although most jurisdictions will permit requests during the investiga-
tion stages, others will have more onerous requirements for the provisional seizure or
restraint of assets (such as requiring that charges have been led or nal con scation
has been ordered). Many jurisdictions will not provide assistance if the criminal pro-
ceedings have been concluded. For the more onerous requirements, practitioners
should consider timing and coordinating the request for provisional measures and
arrest to avoid the dissipation of funds.
Dual Criminality
Many jurisdictions require some showing of dual criminality (or dual con scation if
con scation assistance is sought), meaning that the conduct underlying the request for
assistance is criminalized in both jurisdictions. Some jurisdictions will waive the
requirement in certain circumstances.
200
Some jurisdictions may apply this in a more
restrictive matter (that is, requiring a match in the names or essential elements of the
o ense). However, jurisdictions more frequently apply a conduct-based approach (that
is, they look behind the terminology to the conduct and require that the conduct is a
criminal o ense under the laws of both jurisdictions).
201
In any event, the use of infor-
mal assistance is paramount to discuss, identify, and overcome (if possible) any poten-
tial barriers that the dual criminality requirement may pose.
e conduct-based approach may help in corruption cases because some of the more
speci c o enses involved are not criminalized in all jurisdictions (for example, illicit
enrichment, bribery of foreign public o cials, tax avoidance, or extended con scation).
199. See sections 7.5 and 7.6 for a discussion of international cooperation in NCB con scation and civil
cases. In addition, UNCAC art. 43(1) and 54(1)(c) require states parties to consider assisting each other in
civil and administrative matters and to permit NCB con scation.
200. Jersey is a jurisdiction that does not require dual criminality.
201. International conventions and agreements require that states parties apply this conduct-based
approach. UNCAC, art. 43(2); recommendation 37 of FATF 40+9 Recommendations.
142 I Asset Recovery Handbook
It will be important to describe rather than merely list the o enses because the requested
jurisdiction may not have the relevant expertise of the legal system of the requesting
country and may have to assess whether the conduct is punishable under a di erent
name under its domestic laws (see box 7.8). It will also be important to put the o ense
into context, demonstrating its connection to the criminal conduct in explaining the
request’s subject matter. In addition, practitioners should avoid the use of certain words
BOX 7.8 Overcoming Dual Criminality—Illicit Enrichment and
Corruption of Foreign Public Offi cials
The offenses of illicit enrichment (a signifi cant increase in the assets of a public
offi cial that the offi cial cannot reasonably explain as being derived from lawful
earnings) and bribery of foreign public offi cials have not been criminalized in a
number of jurisdictions. If strictly interpreted on the basis of terms, there would be
no dual criminality—and thus no assistance available—from those jurisdictions.
This barrier may be overcome when dual criminality is assessed on the basis of
conduct because the facts under investigation in the requesting jurisdiction may
constitute another offense in the requested jurisdiction. For illicit enrichment, the
conduct that results in the illicit enrichment may constitute another offense under
domestic law (for example, accepting a bribe). With bribery of foreign public offi -
cials, the requested jurisdiction may consider the offense to be bribery of a
national offi cial, not a foreign offi cial.
a
Once the parallel offenses—based on the
same conduct—are determined, the dual criminality requirement is met.
Practitioners using this approach must take care in stating the facts and offenses
in their MLA requests. For example, it may not be suffi cient to submit a request
that states
Mr. X is a public offi cial who earns $3,000 per month at the Ministry of
Transportation. When he began his position fi ve years ago, he had no sav-
ings; now he has $5 million. He was unable to explain and is guilty.
Instead, it will be important to include additional facts that may support an offense
in the foreign jurisdiction:
Mr. X is responsible for procurement of construction contracts. In the past
three years, he has awarded three major contracts to new companies. His
bank account statement shows he received two deposits of $400,000 just
prior to the awards. Recently, $1 million was wired to a bank account in
jurisdiction Y.
Asking counterparts in the requested jurisdiction to review a draft of the MLA
request prior to submission may facilitate this procedure. The counterpart may be
able to offer drafting suggestions that make the request more easily enforceable.
a. This approach was confi rmed in a 2003 ruling of the Swiss Federal Supreme Court (ATF 129 II 462). The Court held that dual
criminality was met on corruption charges, despite not having an off ense for corruption of foreign public offi cials in Swiss law.
In reaching this verdict, the Court looked at the facts and conduct, and held that the requesting jurisdiction was able to fulfi ll
the requirement on the basis of another off ense: passive corruption of national public offi cials was an off ense under the Swiss
system.
International Cooperation in Asset Recovery I 143
and phrases that may prompt confusion in terminology. For example, “illicit ows” can
be problematic in some jurisdictions because the term o en refers to tax evasion and
capital ight. It would be better to use “criminal ows.”
International conventions and standards also require that assistance for noncoercive
measures be provided in the absence of dual criminality.
202
Assurances and Undertakings (Reciprocity, Con dentiality, Limits on Use [Specialty],
and Commitment to Pay Costs or Damages)
Many jurisdictions require a reciprocity assurance, a written statement that the requesting
jurisdiction will provide the requested jurisdiction with the same type of cooperation in
a similar case in the future. And many jurisdictions require the requesting jurisdiction
to specify if it wishes the request to be treated as con dential. In addition, jurisdictions
may require an assurance that the requesting jurisdiction will use the information sup-
plied only for the case described in the request for assistance—not as evidence in
another case and not disclosed to a third party. Finally, some jurisdictions may require
a commitment to pay any costs and damages incurred by the requested party during
the course of executing the request.
203
ese assurances may be waived on a case-by-case basis, but waivers must be discussed
with the other jurisdiction. Some practitioners hesitate or refuse to provide these assur-
ances because they are not used in their own jurisdiction (many civil law jurisdictions
do not use them), and the practitioner is unsure whether he or she has the authority to
provide them. However, these assurances are o en not optional, and assistance may be
refused if they are not provided or addressed prior to the submission of the request.
7.4.3 Evidentiary Requirements
Practitioners usually have to provide su cient admissible evidence to o cials in the
requested jurisdiction to enable them to meet the evidentiary threshold mandated by
their courts in executing a request. is can be challenging because admissibility
requirements vary among jurisdictions. Requested jurisdictions may require standards
for some measures that are more demanding than those in the requesting jurisdiction.
What may be an appropriate request in one jurisdiction is considered overly broad—a
shing expedition—in another.
is di culty is augmented when the exchange is between civil and common law juris-
dictions or between di erent con scation systems (value-based versus property-based
system, or criminal con scation versus NCB con scation) because standards of proof,
evidentiary tests, and requirements for admissibility may di er widely. For example, if
202. UNCAC, art. 46(9); recommendation 37 of FATF 40+9 Recommendations. UNCAC art. 46(9)(a)
also requires states parties to take into account the purposes of the Convention when applying dual
criminality.
203. One of the rationales is that the requested jurisdiction may take action and expose itself to liability,
and the requesting state could fail to follow through in providing promised proof. rough no fault of its
own, the requested state would then face an award of costs against it.
144 I Asset Recovery Handbook
facts about the case are to be admissible as evidence, common law jurisdictions gener-
ally require statements in a davit or certi cate format; civil law jurisdictions, however,
generally will not impose that requirement (for information on dra ing a davits, see
box 4.1 in chapter 4).
Failure to include su cient admissible evidence to meet the applicable threshold or to
use the least intrusive means as a rst step in gathering evidence may result in the
request being returned or refused. us, practitioners should discuss evidentiary
requirements, standards, and examples of admissible evidence with their foreign coun-
terparts prior to sending an MLA request. Once it is determined that an MLA request
is required, the following three-step process should be considered prior to submission
of the request:
Step 1. • Determine what is needed (for example, production or seizure of nancial
or business records, search of a location, seizure or restraint of assets, or con sca-
tion). It is o en best to use a step-by-step approach to requesting MLA, rather
than to request everything at once.
Step 2. • Determine the least intrusive means for obtaining the needed informa-
tion, as well as the standard of proof and evidence required by the requested
jurisdiction (for example, speci c facts, location of the assets, link between asset
and o ense, and nal court order).
Step 3. • Determine the format for admissible evidence in the requested jurisdic-
tion and any other documents required (see section 7.4.4 below for additional
details on form and content).
Generally speaking, the more intrusive the measure, the higher the evidentiary standard
of proof required to demonstrate, among other things, (1) that an o ense has been com-
mitted; (2) that the assets sought are linked to the o ense or o ender, or are otherwise
subject to con scation in the practitioner’s jurisdiction; and (3) speci cally where the
assets sought to be restrained or recovered are located. Common law jurisdictions typi-
cally permit investigative and provisional measures on a “reasonable grounds to believe”
or “probable cause” standard; a higher standard is required for con scation, namely the
“balance of probabilities” or “preponderance of the evidence” standard. With some
exceptions, most civil law jurisdictions provide investigative and provisional measures
on the reasonable grounds to believe standard; but they require a higher level of proof
(“intimate conviction”) for con scation. Figure 2.1 in chapter 2 illustrates the di erent
standards of proof that may be required. Section 7.4.6 below describes more speci cally
the evidentiary requirements for asset tracing, provisional measures, and con scation;
the standards of proof that must be reached; and other relevant information.
7.4.4 Form and Content Requirements
MLA requests must be in writing and must meet the language, content, and format
requirements of the requested jurisdiction, applicable treaty, or practitioner’s domestic
central authority. As noted previously, practitioners should determine these requirements
International Cooperation in Asset Recovery I 145
and obtain sample requests before writing and sending the request. Where permitted and
available, practitioners should maximize opportunities to send dra s of the MLA request
to the requested jurisdiction’s central authority or the authority that will be implementing
the request. is dra ing process and resulting assistance helps to ensure that require-
ments are met, the facts of the case are clear, and the terminology is correct. It also helps
the requesting practitioner avoid unnecessary delays or refusals of assistance, and gives
the requested jurisdiction the opportunity to prepare its responsive actions.
With regard to language, requests should be provided in a language that is acceptable to
the requested jurisdiction. Responsibility for arranging translation lies with the request-
ing jurisdiction, although some jurisdictions provide translation services if the request-
ing jurisdiction agrees to pay the fees. In some past cases, developed jurisdictions have
agreed to cover these costs for developing jurisdictions. If conducting the translation
services, it is important to use professional services that are familiar with the legal termi-
nology because mistakes in translation may result in ambiguities that need clari cation
by the requesting jurisdiction and will delay the process. Also, the authority responsible
for dra ing the request in the original language should bear in mind that translation will
be necessary; and should write concisely, objectively, and with simple language to facili-
tate the work of the translators and avoid problems of misinterpretation. Short, declara-
tive sentences set out in chronological order translate well.
Contact information for the lead investigator or prosecutor should also be included in
the request.
Practitioners should also determine any preferences for the format of the request and
any additional documentation that is required. Some jurisdictions provide template
headings to assist in this process (see appendix J for a sample MLA request). It may be
necessary to include additional documents such as a davits and certi ed copies or
originals of court orders for production or seizure of documents, breach of bank
secrecy, provisional measures, or con scation. ese documents may need to be certi-
ed by a court or signed by the author, witness, and taker of oaths.
204
Finally, if there are any legal requirements from the requesting jurisdiction to the
requested jurisdiction in carrying out the request (for example, a speci c warning to an
interviewee), these must be speci ed in the request. Practitioners should also specify if
the circumstances require greater urgency, and they should provide details on when
and why the information is needed (for example, upcoming trial dates).
7.4.5 Reasons for Refusal
In addition to the general and evidentiary requirements, most MLA arrangements will
allow the requested jurisdiction the discretion to refuse assistance in certain circumstances,
204. An a davit requires a sworn statement of the author, witnessed by a taker of oaths (such as a notary
public or a commissioner of oaths). Certi cation can be provided by a judge, magistrate, or o cer of the
court.
146 I Asset Recovery Handbook
on a case-by-case basis.
205
Some treaties (including United Nations conventions) elaborate
prohibited grounds for refusal, such as the involvement of scal o enses or bank secrecy
(see examples in box 7.9). Practitioners should address these potential obstacles proac-
tively and before the request is sent (if possible) because it becomes much more di cult to
overcome a refusal when it has been issued. Consulting with foreign counterparts will be
important in this regard. Elaborated below are some reasons for refusals that jurisdictions
may use, and some suggestions for addressing them.
Essential Interests. Assistance may be denied if execution of the request would preju-
dice the “essential interests” of the requested jurisdiction. Essential interests are not
speci cally de ned in any convention, but may include sovereignty, public order, secu-
rity, and excessive burden on resources. Unfortunately, a broad interpretation of essen-
tial interests can impair international cooperation. For example, a requested jurisdiction
205. For example, UNCAC permits refusals if the request involves matters of a de minimis nature or there
are other ways to obtain the assistance; the request does not conform to the procedural or substantive
requirements (for example, dual criminality); the execution of the request would prejudice the sovereignty,
security, public order, or other essential interests of the requested state; or the action requested is prohib-
ited under domestic law. UNCAC, art. 46(9)(b) and (21); see also UNCAC, art. 46(23), which requires
states parties to provide reasons for any refusal to provide MLA.
BOX 7.9 Bank Secrecy and Fiscal Offenses—A Ground for Refusing MLA?
Bank secrecy and fi scal offenses are generally prohibited by United Nations con-
ventions as reasons for refusing to provide MLA. Where applicable, practitioners
should refer to treaty provisions:
Fiscal offenses. • UNCAC article 46(22), UNTOC article 18(22), and United
Nations Convention against Narcotic Drugs and Psychotropic Substances
article 3(10) prohibit MLA refusals on the sole ground that the offense
involves fi scal matters.
Bank secrecy.•
°
OECD Bribery Convention article 9(3), UNCAC article 46(8), and UNTOC
Article 18(8) expressly prohibit MLA refusals on the ground of bank
secrecy.
°
UNCAC article 31(7) and UNTOC article 12(6) require states parties to
empower courts or other competent authorities to order seizure of
bank, fi nancial, or commercial records in domestic cases and in interna-
tional cooperation.
°
UNCAC article 40 requires states parties to ensure there are appropri-
ate mechanisms to overcome obstacles that arise from bank secrecy in
domestic criminal investigations. Although this provision applies to
domestic investigations, it demonstrates efforts toward reducing bank
secrecy, and would help in cases where the requested jurisdiction is
asked or opts to pursue a domestic case for money laundering on the
basis of the foreign predicate.
International Cooperation in Asset Recovery I 147
could refuse to cooperate in a bribery case that would result in disclosure of information
on natural resources.
Assets of De Minimis Value. As indicated earlier, the process for gaining international
cooperation is lengthy and resource intensive for both the requested and requesting
jurisdictions; and a requested jurisdiction may have monetary thresholds or other cri-
teria that must be met (such as the seriousness of the o ense).
206
Practitioners should
prioritize and lter MLA requests where the assets are of de minimis value or where
there is no reasonable prospect of conviction. e value considered to be de minimis
will vary among jurisdictions, and most jurisdictions will consider requests that are
below this threshold if there is a strong public interest in responding, such as a request
involving the corruption of a senior political gure.
Double Jeopardy and Ongoing Proceedings or Investigations in Requested Jurisdic-
tion. When the target has already been convicted or acquitted of the same crime or
there are ongoing proceedings or investigations of the same conduct in the requested
jurisdiction, that jurisdiction may refuse to provide assistance. is is particularly prob-
lematic in MLA requests because the request itself may give the requested jurisdiction
su cient information to open a domestic case and issue the following response: “ ank
you for your request. We cannot provide assistance because we have started an investi-
gation based on the information you provided.” It will be important to assess this issue
prior to sending the request (through use of either personal contacts or networks), and
to determine how this will a ect case strategy.
Nature and Severity of the Penalty. Some jurisdictions will refuse to cooperate if the
o ense carries a punishment that is deemed too severe, such as the death penalty. More
speci cally on asset con scation, the nature of the penalty may impair cooperation
when the same penalty does not exist in the requested jurisdiction (for example,
extended con scation). is issue may be resolved with an assurance or undertaking
that a speci c penalty will not be imposed or carried out.
Immunities. Jurisdictions generally refuse to provide assistance if the target has immu-
nity from prosecution. is may be resolved through a waiver of immunity by the
requesting jurisdiction. For example, in the Ferdinand Marcos case, the subsequent
government of the Philippines provided a waiver of immunity to enable action by one
of the foreign jurisdictions involved. For more information, see the discussion of immu-
nities in section 2.6.2 of chapter 2.
Lack of Due Process. Practitioners o en have to make a showing to the requested
jurisdiction that due process will be or has been given to the o ender. In requests for
provisional measures and con scation, due process must also be a orded any third
206. Refusals on such a basis are permitted under UNCAC art. 46(9)(b) and 55(7). In addition to reasons
for refusal outlined in UNCAC art. 46, art. 55(7) and 55(8) provide that cooperation may be refused or
provisional measures may be li ed if su cient and timely evidence is not received or if the property is of a
de minimis value.
148 I Asset Recovery Handbook
parties with an interest in the assets. Due process generally includes a fair hearing; suf-
cient time to prepare a case; third-party protections; protection of the right against
self-incrimination; and nondiscrimination on the bases of race, nationality, sex, or reli-
gion.
207
It is important for practitioners to note that the due process issue, like other
reasons for refusal, must be looked at on a case-by-case basis—not as an analysis of an
entire legal system. As a result, it is important that the request clearly elaborates the
domestic proceedings, the rights a orded the parties (for example, notice and the
opportunity to be heard), and any procedural decisions made.
Additional reasons for refusal will apply in cases of extradition.
208
7.4.6 Specifi c Considerations: Tracing, Provisional Measures,
and Confi scation
Investigations and Asset Tracing
As outlined in chapter 3, there are numerous investigative tools for tracing assets and
obtaining information and evidence relevant to the investigation. Many of these tools
will require an MLA request, including (1) production or seizure orders to compel
nancial institutions to produce or surrender relevant documents, (2) account moni-
toring orders to compel a nancial institution to provide account activity and transac-
tions data over a period of time, (3) search and seizure warrants for physical evidence
and documents held by private parties or businesses, and (4) interviews with witnesses.
Examples of conditions commonly necessary to give e ect to such requests are:
General requirements for MLA requests are met and there are no grounds for •
refusal.
ere are reasonable grounds to suspect (or believe) that the requested informa-•
tion is relevant to the investigation and that it can be found in the bank account
or place to be searched.
ere is as much information as possible on the location of the assets to be mon-•
itored, the bank account records to be produced, and the time periods to be
examined to avoid being accused of making an overly broad request (see box 7.10
for tips on avoiding such refusals).
In some civil law jurisdictions, certain orders can be e ected by a prosecutor or inves-
tigating magistrate; in common law jurisdictions, these orders are usually issued by a
court. Who issues the orders may a ect the request form and requirements, as well as
the length of time it takes to process the request (that is, greater formality and time will
be needed in requests that require court authorization).
207. See, for example, the United Nations International Covenant on Civil and Political Rights and the
Universal Declaration of Human Rights.
208. Extradition may be refused if the o ense was committed (even partly) in the requested jurisdiction or
if the o ense is of a political nature. In this regard, it is important to note that UNCAC art. 44(4) states that
o enses under the convention are not considered political o enses.
International Cooperation in Asset Recovery I 149
In larger or particularly complicated cases with a vast amount of nancial and bank
documentation, practitioners should consider participating in the execution of the
request.
Where permitted, participation by the investigating practitioners in executing search
and seizure orders, seizing and sorting documents, and questioning witnesses and
BOX 7.10 Avoiding Rejections of MLA Requests That Are Overly Broad
One of the common reasons cited for the refusal of an MLA request or a request
for additional information is that the request is a “fi shing expedition”—a request
that is overly broad and goes beyond the scope of the offense being investigated.
For example, the following request could uncover accounts that are outside the
investigation and therefore is overly broad: “Mr. X is suspected of corruption.
Please provide a list of all accounts he has in your jurisdiction and restrain them
immediately.” More important, in jurisdictions with thousands of fi nancial institu-
tions and tens of thousands of intermediaries, gathering this information would
be too onerous a task. Even if there are only a few large fi nancial institutions,
each with hundreds of branches, the request would be too burdensome because
banks generally do not hold information in a central database.
To avoid a refusal or delay on grounds of a fi shing expedition, the request must
be as precise as possible in its description of the assets and their location(s), and
often will require an established link between those assets and the offense being
investigated. The request should include the bank or fi nancial intermediary where
assets may be located and the names of possible proxies (spouses, children,
shell companies, trusts, close associates, lawyers, and so forth). It may be diffi -
cult to assemble this information, but it is essential to the request. Below are a
few suggestions to assist in gathering this information:
Use the domestic investigation and informal assistance channels, including •
an Egmont Group request through your domestic FIU, to gather as much
information as possible.
When the bank account number or branch location cannot be obtained, •
look to other information that could assist the requested jurisdiction in iden-
tifying the location of the accounts—for example, a phone or fax number of
the bank, an account manager’s name or business card, travel destinations,
hotel bills, credit card records, copies of checks or bank transfer informa-
tion, and the like.
A few jurisdictions may be able to help when only a minimum amount of evi-
dence is provided—namely, the smaller jurisdictions or those with national regis-
tries of bank accounts (Brazil, Chile, France, Italy, Germany, and Spain). However,
certain conditions, such as a link between the assets and the offense, will have
to be established in these jurisdictions as they are in others.
150 I Asset Recovery Handbook
experts may greatly facilitate the execution of a request.
209
e requesting jurisdic-
tion is more familiar with the case and requirements regarding admissibility of evi-
dence, so it is in a better position to identify relevant documents and ensure that
procedural safeguards are followed (for example, reading a warning to a witness).
Direct participation also avoids the need for follow-up requests because relevant
leads can be followed. Participants can include the judge in charge of the investiga-
tion, representatives of the authority conducting the proceedings (public ministry,
state prosecutor), law enforcement o cers (including analysts and technicians), the
accused person and his or her lawyer(s), and civil parties and their lawyers. Certain
safeguards are in place to ensure the MLA process is respected: although foreign
practitioners may be able to view the documents, copies of the documents will not
be sent until the MLA request is received and approved. An undertaking is o en
required to ensure that information will not be used before the o cial response is
received.
Also in large cases, practitioners should consider narrowing the scope of their request.
Many corruption investigations will span a number of years—possibly decades—and
involve multiple accounts, account holders, products, companies, and corporate vehi-
cles. If a requesting jurisdiction were to request bank and other documents for the dura-
tion of this period, it could take months or years to assemble all the information. And
when the information is received, practitioners will have to si through boxes and boxes
of documents, many of which will be irrelevant. It is important to prioritize requests
and avoid framing requests that are so broad that vast amounts of documentation will
be required (for example, 10 years of account materials on a number of individuals and
companies). It would be more appropriate rst to request only bank statements and
signi cant transactions, and then request additional documents based on a review of
the rst batch of materials. Not only does this narrowing of scope make it possible to
process the request more quickly, but it also avoids unnecessary requests for and e ort
expended on irrelevant documents. In jurisdictions that require disclosure to the asset
holder, a focused request makes it more di cult for the asset holder to contest on the
grounds that the request is overly broad.
For guidance in seeking relevant documents that may be requested to assist with asset
tracing, see section 3.4 in chapter 3.
Provisional Measures
Once the assets are identi ed, authorities must take steps to seize or restrain the assets
to prevent dissipation before the eventual con scation. Practitioners should consider
209. is is permitted in Switzerland, the United Kingdom, and other jurisdictions. In Switzerland, foreign
investigators are forbidden access to “information within the scope of secrecy” (Federal Act on Interna-
tional Mutual Assistance in Criminal Matters [Switzerland], sec. 65[3]). “Secrecy” is information protected
by law, notably bank information and commercial secrets; “access” is handing out copies of documents,
taking written notes, taping audiences, or gathering any similar material element of proof to be used in
court. erefore, to safeguard these limits, the foreign authority may participate on condition that it will
not use information before closure of the regular MLA procedure.
International Cooperation in Asset Recovery I 151
options for administrative or emergency provisional measures by the foreign authori-
ties (through either the FIU, law enforcement o cials, or other authority under that
jurisdiction’s domestic law), if available, prior to making an MLA request.
210
Ultimately,
an MLA request for the provisional measures (seizure or restraint) must be submitted
to retain the measures.
Depending on the jurisdiction, ful lling an MLA request for provisional measures typ-
ically involves either the requested jurisdiction’s “direct” enforcement of the requesting
jurisdiction’s order, or “indirect” enforcement whereby the evidence submitted by the
requesting jurisdiction is used to support an application for a domestic order to restrain
or seize assets.
211
If the requested jurisdiction is enforcing the order indirectly (that is, domesticating
the con scation by ling its own case in domestic courts), the requesting jurisdiction
will have to provide the evidence necessary for practitioners in the requested juris-
diction to prove their case. e burden of proof and type of evidence will be what is
required under the requested jurisdiction’s laws, even if a con scation order was
obtained separately in the requesting jurisdiction. If the requested jurisdiction has a
lower burden of proof on NCB con scation, this process may be useful.
Direct enforcement of foreign seizure or restraint orders allows the requested jurisdic-
tion to register the foreign order in its courts and subsequently enforce the order in the
same way as a domestic court order. e requesting jurisdiction will need to provide the
restraint or seizure order, as well as information on the proceedings and grounds to
believe that a con scation order may be made (in a davit or certi cate format in com-
mon law jurisdictions). Some jurisdictions will permit the registration of a faxed copy
of the order; however, an o cial copy of the order must be led to retain the restraint
or seizure. e requesting jurisdiction can then register the foreign order in its courts.
212
e process is simpler and quicker than indirect enforcement because it avoids dupli-
cating e orts and relitigating the order; however, it will not be possible in every case.
ere may not be a legal basis for direct enforcement in a treaty or legislation, or the
requesting jurisdiction may have concerns about the process through which the orders
were obtained.
210. UNCAC art. 54(2) outlines provisional measures for freezing or seizure on the basis of a foreign order
or request or where necessary to preserve property on the basis of a foreign arrest or criminal charge
related to the assets.
211. UNCAC art. 54(1)(a) and (b) and 55(1)(a) and (b) outline these general obligations of requested juris-
dictions. See also United Nations Convention against Narcotic Drugs and Psychotropic Substances, art. 5;
UNTOC, art. 13; and art. 8 of the Terrorist Financing Convention.
212. Laws that permit a registration and enforcement of the foreign con scation judgment usually
provide that the courts in the requested jurisdiction not be permitted to entertain challenges to the con-
scation that may be raised in the requested jurisdiction’s courts. Even if not explicitly provided for in
the law, practitioners should argue that courts in the requested jurisdiction not hear the same type of
challenge that has been raised or could be raised in the requesting jurisdiction’s courts, as long as all
potential claimants have been su ciently noti ed of the proceeding and have been given the opportu-
nity to raise a challenge.
152 I Asset Recovery Handbook
Examples of conditions commonly necessary to give e ect to such requests are:
General requirements for MLA requests are met and there are no grounds for •
refusal.
ere are reasonable grounds to believe that the assets being sought are linked to •
the criminal activities, or that the target has committed an o ense from which a
bene t has been derived.
ere are reasonable grounds to believe the assets will be con scated.•
e location of the assets to be restrained is provided. •
e relief sought could also be obtained if proceedings had been brought in the •
requested jurisdiction (or the assets subject to con scation are also subject to
con scation in the requested jurisdiction).
213
Copies (certi ed, if necessary) of relevant court orders are included, and are •
enforceable in the requested jurisdiction.
Similar to investigative orders, provisional measures can be taken by a prosecutor or
investigating magistrate in civil law jurisdictions; common law jurisdictions generally
require authorization by a court. As stated above, this may a ect the form and require-
ments for the request, as well as the time it takes to process the request.
Additional points for practitioners to consider include these:
Notice to the asset holder. • Most jurisdictions will issue provisional orders ex
parte, but laws typically require that notice be given within a certain period of
time to the asset holder and others with a legal interest in the asset. Notices in
foreign jurisdictions must be translated (if necessary) and published—another
cost consideration for practitioners. Some jurisdictions permit use of the Internet
to publish notice, a process that is more cost e ective. Some jurisdictions do not
permit foreign authorities to publish or serve legal notices (even by mail or ship-
per) within their borders, and an MLA request to serve notice must be made
through the central authority. Some jurisdictions require that the MLA request,
application, and order be disclosed to the asset holder (see box 7.3).
Additional dissipation risks. • Some jurisdictions allow for legal fees and living
expenses (schooling, leases, mortgage) to be paid out of seized or restrained
assets; and, over time, that can signi cantly reduce the assets available for con s-
cation. Courts in the requested jurisdiction may order these fees to be paid, even
if not permitted under the law of the requesting jurisdiction.
214
Di erent features of con scation models. • Where the cooperating jurisdictions
have di erent models for asset con scation, practitioners must be aware of the
213. is condition can be di cult to ful ll, especially because jurisdictions di er in the types of relief that
are permitted. is generally includes anything of value obtained directly or indirectly from an o ense and
instrumentalities used in connection with an o ense. However, relief may extend to incorporate nes,
substitute assets, extended con scation, and assets intended for use in an o ense.
214. In some jurisdictions, an argument can be made that if the requesting jurisdiction is “enforcing” the
requested state’s order, it should follow the procedural and substantive law provisions of the requesting
state.
International Cooperation in Asset Recovery I 153
di erences in evidential requirements and standards of proof. For example, one
jurisdiction may apply value-based con scation, which requires evidence that
the defendant nancially bene ted from his or her crime and that he or she owns
the assets; another jurisdiction may use property-based con scation, which requires
evidence of a link between the asset and the o ense. In addition, some jurisdictions
permit provisional measures that apply more broadly (see box 7.11 for worldwide
orders available in the United Kingdom).
Con scation
Ultimately, practitioners must submit an MLA request for con scation of the assets.
Similar to orders for provisional measures, a con scation order may be enforced directly
through registration and enforcement of the order in the requested jurisdiction, or
indirectly through an application for a domestic order in the requested jurisdiction
whereby the evidence submitted by the requesting jurisdiction is used to support an
application for a domestic con scation order (see the section on “Provisional Mea-
sures” above for descriptions of direct and indirect enforcement). For information on
what is required to obtain con scation in the United Kingdom and the United States,
see box 7.12.
Examples of conditions typically necessary to obtain a con scation judgment include:
the conditions as outlined above for provisional measures applications,•
a provisional restraint during the course of the litigation to ensure assets are not •
moved or dissipated,
a nal order of judgment of con scation that is not subject to any possible •
appeal, and
proof that notice was provided to all potential claimants and that they were given •
an opportunity to present any challenges recognized by law.
BOX 7.11 Worldwide Orders in the United Kingdom
In cases involving assets in the United Kingdom, consider requesting a world-
wide freezing or disclosure order (see section 8.2.2 of chapter 8). The order
requires that the target repatriate funds or disclose documents (such as bank
statements) held in foreign jurisdictions so that they form a single group of assets
in the one jurisdiction.
Sometimes a receiver is appointed to pursue the repatriation of assets during the
provisional restraint or seizure phase through the use of a power of attorney.
The effect of these orders may be limited because they rely on the compliance
of the target and others who are named in the order. At the same time, the pros-
pect of additional charges for contempt or failure to comply has proved suffi cient
to gain compliance in some cases.
154 I Asset Recovery Handbook
BOX 7.12 Requirements for Direct Enforcement of MLA Requests for
Confi scation in the United Kingdom and the United States
In the United States, an MLA request to register and enforce a foreign court con-
fi scation judgment must meet certain statutory requirements
a
and be certifi ed by
the U.S. attorney general. U.S. authorities will fi le an application to enforce the
order as if it had been rendered by a court in the United States. The district court
will order that the judgment be enforced on behalf of the foreign jurisdiction,
unless it fi nds that the judgment was rendered under a system incompatible with
the requirements of the due process of law, that it was obtained by fraud, or that
the foreign court lacked subject-matter jurisdiction or personal jurisdiction.
In the United Kingdom, the Secretary of State refers the processing of confi sca-
tion orders arising from a criminal conviction in a foreign jurisdiction to the Direc-
tor of the Agency, the Director of Public Prosecution, or the Director of Revenue
and Customs Prosecutions. The Crown Court decides whether to seek registra-
tion of an external order, thus giving it effect. It will register only an order made
consequent to the fi nal conviction of the person named in it, not subject to
appeal, and compatible with the Human Rights Act of 1998. Appeals to the Court
of Appeal and the House of Lords are possible.
a. MLA requests for enforcement of a foreign order in the United States require a treaty agreement and must include a case
summary, a description of the legal proceedings that resulted in the confi scation order, a certifi ed copy of the confi scation
order, and an affi davit that notice was provided and that the decision rendered is in force and not subject to appeal.
Some jurisdictions will require additional information, such as the amount that remains
unpaid from the requesting jurisdiction’s con scation order or con rmation that the
person has been convicted of an o ense. is latter requirement can be a barrier if a
conviction is not possible because the accused has died, ed the jurisdiction, or is
immune from prosecution. Many jurisdictions cannot convict in absentia or through
absconding provisions, but are able to issue a nal order of con scation using criminal
law provisions or NCB con scation.
7.4.7 Submission of an MLA Request, Follow-Up, and Addressing of
Refusals
When nalized, an MLA request must be signed by appropriate authorities in the request-
ing jurisdiction and then transmitted through the authorities listed in the applicable treaty,
legislation, or agreement—o en the central authorities, although some bilateral and mul-
tilateral treaties (such as the Council of Europe conventions) allow the request to go directly
to law enforcement practitioners, with a copy sent to the central authority. Other jurisdic-
tions may require the more traditional processing through diplomatic channels (that is,
through the ministry of foreign a airs). Figure 7.4 demonstrates the ow of a request.
Following submission, the practitioner will have to follow up on its progress. If possible,
practitioners should speak directly with the person assigned to execute the request
because this opens the opportunity to clarify any terminology or translation issues,
International Cooperation in Asset Recovery I 155
check if requirements are met, and o er additional information. e requesting juris-
diction may be asked for more information to support the request. Such a request is not
a refusal and should not be perceived as one: the number of requirements and oppor-
tunities for misunderstanding mean that requests o en need more information, even
among jurisdictions with a lot of experience in transmitting requests. Clarify the infor-
mation needed with personal contacts and provide the information as soon as possible
to avoid further delay.
If no response is received or an MLA request is refused, practitioners should contact
counterparts in the requested jurisdiction to determine the reasons for the lack of a
response or for a refusal. United Nations conventions require states parties to provide
the reason(s) for any refusal.
215
It is possible that the refusal is not warranted. Perhaps
it is based on a prohibited ground (for example, scal o enses or bank secrecy), a mis-
interpretation or misapplication of the facts, or on a general opinion of the legal system
and due process rather than the facts of the case. If there is an error, requesting practi-
tioners should respectfully bring this to the attention of the requested jurisdiction and
seek guidance on how best to proceed. e request may be resurrected and repaired,
administratively appealed, or replaced by a new request.
If there is still no response or a refusal to address possible errors in the reasons for refusal,
look for other avenues. Applying third-party pressure through other jurisdictions or inter-
national organizations has been helpful in some cases, particularly in multijurisdictional
215. UNCAC, art. 46(23); UNTOC, art. 18(23); United Nations Convention against Narcotic Drugs and
Psychotropic Substances, art. 7(16). Note that it is most helpful if requesting jurisdictions receive the
reasons for refusal prior to the o cial response so that they have the opportunity to make necessary
revisions.
FIGURE 7.4
Flow of an MLA Request in the Presence of a Treaty or Domestic
Legislation
Some treaties permit direct communication
between practitioners.
Practitioner
a
(domestic)
Practitioner
a
(foreign)
• makes request
• must respond to
requests for more
information
Central
Authority
(domestic)
Central
Authority
(foreign)
• reviews request
and either
• sends request
• requests
additional info
• refuses to submit
request
• reviews request
and either
• sends request
• requests
additional info
• refuses to submit
request
• fulfills request
• may request
additional info
• may refuse
request
Source: Authors’ illustration.
Note: If letters rogatory are required, the domestic and foreign ministries of foreign aff airs must be added to the process.
a. Practitioners could include prosecutors, investigating magistrates, or law enforcement offi cials.
156 I Asset Recovery Handbook
cases. One requested jurisdiction may have greater success than the requesting jurisdic-
tion in reaching out to another requested jurisdiction that is refusing to help, especially if
there is an existing relationship between the two requested jurisdictions. In one example,
Jurisdiction x applied to two major nancial centers for assistance, jurisdiction y and juris-
diction z (all UNCAC signatories). Jurisdiction y responded with an o er to help and
jurisdiction z refused. Jurisdiction y, which had worked with jurisdiction z on other cases,
wrote to jurisdiction z to indicate that it was assisting jurisdiction x and urged o cials
there to reconsider assistance because the reasons for their refusal were against UNCAC.
Another option for assistance with request dra ing, submission, and follow-up is to
hire an attorney from the requested jurisdiction. e bene t of such an arrangement is
that this person is on the ground, has contacts, and knows the language. e disadvan-
tage is the cost.
7.5 Cooperation in Cases of Confi scation without a Conviction
Although an increasing number of jurisdictions are adopting legislation that permits
con scation without a conviction and it is encouraged in multilateral treaties and by
international standard setters,
216
international cooperation in NCB con scation cases
remains quite challenging for a number of reasons. First, although it is a growing area
of law, it is not yet universal; therefore, not all jurisdictions have adopted legislation
permitting NCB con scation, enforcement of foreign NCB orders, or both. Second,
even where NCB con scation exists, the systems vary signi cantly. Some jurisdictions
conduct NCB con scation as a separate proceeding in civil courts (con scation known
as “civil con scation”), with a lower standard of proof than in criminal cases (speci -
cally, a “balance of probabilities” or “preponderance of the evidence”); others use NCB
con scation in criminal courts and require the higher criminal standard of proof. Some
jurisdictions will pursue NCB con scation only a er criminal proceedings have been
abandoned or unsuccessful, whereas others pursue NCB con scation in a proceeding
parallel to the related criminal proceeding.
217
ere have been some successes in overcoming these barriers. Some jurisdictions have
been able to incorporate cooperation on NCB con scation into bilateral treaties or agree-
ments. Other jurisdictions have provided the case information to the foreign jurisdiction,
and the foreign jurisdiction has been able to pursue the case under domestic legislation.
Finally, some jurisdictions have been able to enforce foreign NCB con scation orders in
216. UNCAC art. 54(1)(c) requires that states parties consider such cooperation in cases of death, ight, or
absence, or in other appropriate cases. Recommendation 3 of the FATF 40+9 Recommendations requires
that countries consider allowing con scation without a conviction. e FATF has also introduced best
practices on NCB con scation, including recognition of foreign NCB con scation orders. See “Best Prac-
tices: Con scation (Recommendations 3 and 38),” adopted by the plenary in February 2010.
217. e United Kingdom generally pursues NCB con scation only a er criminal proceedings are aban-
doned or unsuccessful. e United States o en pursues NCB con scation parallel to the related criminal
proceeding.
International Cooperation in Asset Recovery I 157
spite of di erences in pertinent systems
218
or even in the absence of a domestic NCB
con scation system.
219
Even if the requesting jurisdiction does not have NCB con scation, it may be possible
to use NCB con scation in a requested jurisdiction that does have it. Doing so will
require a request to the other jurisdiction to open a foreign case in the requested juris-
diction. is may be the only way to recover assets in some cases, particularly if the
o ender has died, ed the jurisdiction, or is immune from prosecution (see chapter 9
for information on this option).
220
7.6 Cooperation in Civil Recovery (Private Law) Cases
International cooperation in civil recovery (private law) cases may be di cult, even when
the jurisdiction is a litigant in a private case. Although information gathered through
informal assistance channels could help in developing the investigation, many MLA agree-
ments have limits on the use of information and do not permit its use in actions by private
litigators to obtain civil judgments. Civil judgments can be enforced between jurisdictions
through processes such as reciprocal enforcement of judgments and related laws.
At the same time, the international community has recognized that civil recovery is
o en the only recourse in cases of corruption and has recommended cooperation in civil
and administrative matters.
221
As a result, it has become increasingly common for juris-
dictions to consent to such use either generally in a treaty or on a case-by-case basis.
218. In a case involving a request by the United States (in an NCB con scation case) to Switzerland (in which
criminal proceeds were restrained in a criminal court), the Supreme Court of Switzerland held that there can
be circumstances in which con scation may be likened to a case of “criminal character”—even in the absence
of a criminal proceeding in the foreign state (A____ Company v. Federal O ce of Justice [U.S.A.] [1A.32612005,
ATF 132 II 178]). e jurisdiction must have the right to punish, even if the authorities do not intend to
exercise it. Although this requirement can be met in the United States (a jurisdiction which usually conducts
NCB con scation parallel with or prior to the conclusion of criminal proceedings), it would not be met in
jurisdictions that pursue NCB con scation only a er a criminal case has been dropped or unsuccessful.
219. Hong Kong SAR, China, and Jersey have legislation permitting enforcement of foreign NCB con sca-
tion orders, but do not permit NCB con scation domestically: Civil Asset Recovery (International Co-
operation) Law 2007 (Jersey). Some Latin American countries will accept an NCB con scation order and
le it in a civil court for enforcement. In France, courts recognized and executed a foreign NCB con sca-
tion order from Italy, pursuant to the 1990 Council of Europe Convention on Laundering, Search, Seizure
and Con scation of the Proceeds of Crime, despite the fact that France did not have a system for NCB
con scation: Cour de cassation, November 13, 2003, No. 3 03-80371, case Crisafulli. e court recognized
the decision because of two factors: First, the evidence establishing that the property was the product of a
criminal o ense was su ciently similar to that required for a criminal decision, thus likened to a criminal
case. Second, the consequences on the property of the person were similar to a criminal penalty.
220. is method has been used in a number of cases: $20 million was returned to Peru from the United
States in the case of Victor Venero Garrido, an associate of Montesinos; $2.7 million was returned to Nica-
ragua from the United States in the case of Bryon Jerez, former Nicaraguan director of taxation; and funds
were returned to Ukraine from Antigua and Barbuda and the United States in the case against Pavlo Laza-
renko, former prime minister of Ukraine.
221. See UNCAC, art. 43(1); also see recommendation 37 of the Commonwealth Secretariat’s August 2005
“Report of the Commonwealth Working Group on Asset Repatriation,” which states, “ e mutual legal
158 I Asset Recovery Handbook
7.7 Asset Return
In general, there are two methods for asset return if an MLA request is used for con sca-
tion or compensation. e rst method is direct recovery through the judicial process.
Such recovery can occur if the requested jurisdiction permits the court to order com-
pensation or damages directly to the foreign jurisdiction, or permits the court or com-
petent authority to recognize the foreign jurisdiction as a legitimate owner in a con sca-
tion action. Direct recovery may also occur “voluntarily” through plea agreements by
which a defendant agrees to voluntarily repatriate assets located in a foreign jurisdiction
to the court in which he or she is convicted.
222
In such a case, a practitioner must request
that the foreign jurisdiction li any provisional restraint order that it had previously
requested be imposed on the assets. Also, worldwide con scation orders may be enforced
directly by a court without the need for a treaty (see box 7.13 for an example).
e second, more common, method of asset return is pursuant to treaties, agreements,
or statutory authority to distribute assets a er a nal order of con scation. If an MLA
request has been submitted pursuant to UNCAC, states parties have an obligation to
return con scated assets in cases of public corruption or when the requesting party
reasonably establishes prior ownership or damages to the state.
223
In other cases, multi-
lateral and bilateral treaties, asset sharing agreements (either on a case-by-case basis or
by permanent agreement), and statutory authorities may be used to share or return the
recovered funds (see chapter 9 for additional information on these avenues).
assistance regimes in Commonwealth countries should permit evidence gathered for a criminal proceed-
ing to be subsequently used in civil proceedings and requests for such use should be granted in corruption
cases.”
222. In the Montesinos case in Peru, money was recovered from Switzerland through a system of waivers
(that is, those who pleaded guilty provided information and signed waivers giving Peru the rights to the
funds).
223. UNCAC, art. 57(3)(a) and 57(3)(b). In both cases, the obligation applies only to the convention’s
o enses and requires compliance with UNCAC’s provisions on international cooperation and a nal judg-
ment in the requesting jurisdiction (requirement for judgment can be waived).
BOX 7.13 Asset Recovery Pursuant to an MLA Request in France
In France, an MLA request based on a foreign court decision is sent by the Min-
istry of Justice to the competent prosecutor’s offi ce, which will ask the court to
confi scate the assets. If the court decides to do so, the confi scated assets
become the property of the French government. The competent offi cials (in par-
ticular, those within the Treasury Department) will determine whether France is
obliged to return the assets under an international agreement. Even if there is no
such obligation, the assets may be returned at the discretion of the government
or under an ad hoc agreement with the requesting jurisdiction.
In most jurisdictions, authorities seeking to recover the proceeds of corruption have
the option to initiate civil proceedings
224
in domestic or foreign civil courts in the same
way as a private citizen.
225
In some cases, the authorities may decide to pursue a crimi-
nal conviction and use civil proceedings to recover the proceeds of corruption.
226
Civil proceedings may be considered for a number of reasons, including the inability to
obtain criminal con scation, non-conviction based (NCB) con scation, or the success-
fully obtaining of mutual legal assistance (MLA) for the enforcement of con scation
orders (see chapter 1 for these and other obstacles that may lead to the selection of one
con scation approach over another). In addition, there are procedural advantages. Civil
proceedings may take place in the absence of defendants who have been properly noti-
ed; and, at least in common law jurisdictions, the case will be adjudicated on a lower
standard of proof (usually the balance of probabilities). With respect to third parties,
intermediaries, and professionals who facilitated, participated in, or assisted in the
reception, transfer, or management of suspicious assets, civil actions can be launched
more easily than criminal proceedings in some jurisdictions.
227
In cases that cross bor-
ders, a civil action a ords a jurisdiction seeking to recover assets greater control of the
process, compared with criminal proceedings in foreign jurisdictions; and may o er a
more expedient route than waiting for enforcement action by the foreign jurisdiction.
e drawbacks to civil proceedings are the cost of tracing assets and the legal fees
entailed in obtaining relevant court orders. In addition, civil cases may extend over
many years, and private investigators do not typically have the range of investigative
tools or access to intelligence that is available to law enforcement.
When the decision is made to bring a civil lawsuit in a domestic or foreign court, prac-
titioners must explore the potential claims and remedies (including ownership of mis-
appropriated assets, disgorgement of illicit pro ts, compensation for damages, and
invalidity of contracts) or other options (such as insolvency proceedings). Practitioners
224. “Civil proceedings” are separate and distinct from “civil con scation,” “civil forfeiture,” or other forms
of non-conviction based (NCB) con scation.
225. United Nations Convention against Corruption (UNCAC), art. 53 requires that states parties take
measures to permit another state party to initiate civil actions in domestic courts and to recover compensa-
tion or damages.
226. In some jurisdictions, the proceedings will go forward in parallel. In others, the civil proceeding will
be stayed until the conclusion of the criminal matter. In addition, the award of civil damages may a ect a
con scation order. In some jurisdictions, con scation is discretionary rather than mandatory when civil
damages are ordered.
227. In this situation, it may be di cult to prove criminal intent to participate in a conspiracy, and easier
to establish civil liability.
8. Civil Proceedings
160 I Asset Recovery Handbook
then have to determine how they will initiate the lawsuit, collect evidence, secure assets,
and enforce foreign judgments. ese various options and techniques are discussed in
this chapter.
8.1 Potential Claims and Remedies
A number of claims and remedies exist in the civil proceedings context, including pro-
prietary claims for assets and actions in tort, actions based on invalidity or breach of
contract, and illicit or unjust enrichment.
8.1.1 Proprietary (Ownership) Claims
Cause of Action
In most jurisdictions, misappropriated assets and bribes paid to government o cials
may be claimed by the jurisdiction seeking redress as the legitimate and true owner.
ree examples of civil actions to claim ownership of assets in corruption cases are
presented in box 8.1.
BOX 8.1 Case Examples of Proprietary (Ownership) Claims
Case 1: Federal Republic of Nigeria v. Santolina Investment Corp., Solomon &
Peters, and Diepreye Alamieyeseigha (2007)
a
In December 2007, the London High Court of Justice held that Nigeria was the
true owner of three residential properties in London and of the credit balances
of certain bank accounts. The properties and funds were offi cially held by two
companies incorporated in the Seychelles and the Virgin Islands. These compa-
nies were controlled by Diepreye Alamieyeseigha, the governor of Nigeria’s
Bayelsa State from May 1999 until his impeachment and dismissal in September
2005.
In separate proceedings in Nigeria, the two companies, represented by Alamieye-
seigha, pleaded guilty to money laundering charges related to bribes obtained
for the awarding of government contracts.
Based on this Nigerian proceeding and other circumstantial evidence, the
London High Court inferred that the bank balances and real estate investments
held by the two companies controlled by Alamieyeseigha were bribes and secret
profi ts to be returned to the government of Nigeria as the legitimate owner of
those assets.
Case 2: Kartika Ratna Thahir v. Pertamina (1992–94)
b
Pertamina—an Indonesian state-owned enterprise whose principal business was
the exploration, processing, and marketing of oil and natural gas—sought to
recover bribes paid to Pertamina executive Haji Achmad Thahir by contractors
(continued next page)
Civil Proceedings I 161
Remedies
A court will consider the return or restitution of assets to their legitimate owner through
a variety of available proprietary remedies. ese remedies have signi cant advantages
over compensation or contractual remedies in that the claimant’s rights are not in com-
petition with those of other creditors, and civil procedures frequently allow courts to
issue seizure and restraint orders even if the claimant does not demonstrate a risk of
dissipation. If the proceeds of corruption were invested, the claimant may also be enti-
tled to recover interest or pro ts earned by the defendant, as demonstrated by the Per-
tamina and Attorney General of Hong Kong SAR, China, cases discussed in box 8.1.
BOX 8.1 (continued)
hoping for better contractual terms and preferential treatment. The bribes were
deposited by the executive into a bank in Singapore. Pertamina learned about the
bank accounts (owned jointly by Thahir and his wife Kartika Ratna Thahir) in
Singapore after the death of the executive and brought an action in Singapore
claiming to be entitled to the funds.
The court of fi rst instance ruled that the bribes and all earned interest were held
by the executive as a constructive trustee. The court of appeal upheld the ruling
and confi rmed that a fi duciary who accepted a bribe in breach of his or her duty
held that bribe “in trust for the person to whom the duty was owed.” As a result,
Pertamina was entitled to a proprietary claim to the money in Singapore.
Case 3: Attorney General of Hong Kong, SAR, China v. Reid (1994)
c
In this case, the Independent Commission against Corruption of Hong Kong SAR,
China, sought to recover properties purchased in New Zealand by a former pros-
ecutor, Warwick Reid. The purchases were made with bribes received in exchange
for not prosecuting certain offenders. Two properties had been assigned to Reid
and his wife, and one had been assigned to his solicitor. The judge ruled that
these properties, as far as they represented bribes accepted by Reid, were held
in trust for the Crown. As the Court explained it,
When a bribe is accepted by a fi duciary in breach of his duty, he holds that
bribe in trust for the person to whom the duty was owed. If the property
representing the bribe decreases in value, the fi duciary must pay the differ-
ence between that value and the initial amount of the bribe because he
should not have accepted the bribe or incurred the risk of loss. If the prop-
erty increases in value, the fi duciary is not entitled to any surplus in excess
of the initial value of the bribe because he is not allowed by any means to
make a profi t out of a breach of duty.
This case is still considered one of the leading common law authorities on the use
of constructive trusts to recover bribery proceeds from an unfaithful fi duciary.
a. Federal Republic of Nigeria v. Santolina Investment Corp., Solomon & Peters and Diepreye Alamieyeseigha [2007] EWHC 437 (Ch.)
(U.K.). b. Kartika Ratna Thahir v. PT Pertambangan Minyak dan Gas Bumi Negara (Pertamina) [1994] 3 SLR 257; [1994] SGCA 105
(Singapore). c. Attorney General of Hong Kong v. Reid [1994] 1 AC 324 PC (U.K.).
162 I Asset Recovery Handbook
It should be noted, however, that these proprietary claims and remedies may not
be available if the proceeds cannot be traced to the corruption o ense because they
have been laundered around the world. In addition, some jurisdictions will not recog-
nize bribes received by government o cials or pro ts derived from fraudulent con-
tracts as property of the state or government.
8.1.2 Actions in Tort
Cause of Action
According to the United Nations Convention against Corruption, states parties should
allow requesting jurisdictions to claim compensation for damages caused by a corrupt
act.
228
Tort damages are paid to compensate a plainti for loss, injury, or harm directly
caused by a breach of duty, including criminal wrongdoing, immoral conduct, and pre-
contractual fault. Where a corrupt act has occurred, a plainti generally has to prove
that it su ered compensable damage, that the defendant breached a duty, and that there
is a causal link between corruption and the damage.
Legal persons and individuals who directly and knowingly participate in the corrupt
act are primarily liable for the damage. In addition, courts may hold liable those who
facilitated the corrupt act or failed to take appropriate steps to prevent corruption. is
may be the case for lawyers or intermediaries who assisted in corrupt acts or for parent
companies and employers who failed to exert appropriate control over their subsidiar-
ies or employees.
In some civil law jurisdictions, any person who su ers direct harm caused by an o ense
can claim damages for tort in civil or criminal court a er a defendant has been convict-
ed.
229
To recover from the defendant in other jurisdictions, general liability statutes
simply require the plainti to show that an act or omission by the defendant caused the
plainti ’s damages.
In bribery cases, courts in some jurisdictions may consider that a briber and the person
receiving the bribe have committed a joint tort for which the victim is entitled to recover
the entire loss from either party.
230
Once the bribe is established, there is an irrefutable
presumption that it was given with an intention to induce the agent to act favorably to
the payer and, therea er, unfavorably to the principal. is presumption will be su -
cient to prove that the act was a ected and in uenced by the payment.
231
In other juris-
dictions, a principal or employer also has a claim against an employee who takes a bribe
228. See UNCAC, art. 53; and the Council of Europe Civil Law Convention on Corruption, art. 5 (Stras-
bourg, 4.XI.1999).
229. In Panama, for example, the commission of a crime or any unlawful act gives rise to a claim for dam-
ages that can be sought through proceedings in criminal courts or by ling a civil claim for damages in a
civil court. France permits plainti s to claim for damage in criminal courts (see art. 2, Criminal Code of
Procedure [France]).
230. In the United Kingdom, the defendant may then seek contribution from the joint tort under the Civil
Liability (Contributions) Act of 1978.
231. Industries & General Mortgage Co. Ltd. v. Lewis [1949] 2 All ER 573 (U.K.).
Civil Proceedings I 163
on the basis of loyalty owed in application of an employment contract. In practice, how-
ever, it may be di cult to prove that an act of bribery is the direct cause of a material
loss.
232
Box 8.2 describes examples of tort actions in the United States.
Remedies
In most jurisdictions, the basic rule for determining damages is that the victim must be
placed as closely as possible in the circumstances in which he or she would have been
if the corrupt act that caused the damage had not taken place. Courts may be authorized
to compensate loss of pro ts reasonably expected but not gained as a result of corrup-
tion and nonpecuniary damages that cannot be immediately calculated. e plainti ’s
right to compensation may be reduced or even disallowed in cases of negligence. With
respect to corruption cases (as the example in box 8.3 demonstrates), some common law
jurisdictions have ordered compensation by an equivalent sum of monetary damages.
Speci c di culties in calculating damages may arise in bribery cases. In some jurisdic-
tions, the loss sustained is equivalent to the value of the bribes. However, that amount
may not be su cient if undue advantages were included in a government decision or
232. For example, in a case where the city of Cannes, France, sued the mayor a er he had been convicted
for corruption, courts held that damages were the result of a ministerial decision to revoke and refuse a
license (not an act of bribery). Damages awarded for the town’s loss of reputation were quanti ed at
€100,000 (approximately $128,300).
BOX 8.2 The U.S. Racketeer Infl uenced and Corrupt Organizations
(RICO) Statute
In the United States, foreign governments or foreign nationals acting as civil
plaintiffs may seek compensation for harm resulting from tortuous corrupt prac-
tices. They may also use the Alien Tort Claims Act (enacted in 1789) to bring a tort
claim based on violations of international conventions, including corrupt or fraud-
ulent activity. Courts have held that there is no private right of action under the
Foreign Corrupt Practices Act (FCPA), which is essentially enforced by criminal or
civil actions from government agencies. However, plaintiffs could receive civil
compensation under the RICO statute for damages caused by corruption.
The RICO statute makes it unlawful to participate, directly or indirectly, in an
enterprise through a pattern of racketeering activity or collection of unlawful debt.
Racketeering activities that could be considered “predicate acts” of RICO viola-
tions include bribery, theft, embezzlement, extortion under the color of offi cial
rights, fraud, obstruction of justice, and money laundering. Predicate acts form a
pattern if they “have the same or similar purposes, results, participants, victims,
or methods of commission.” The statute is applicable to defendants who commit-
ted two predicate acts within a 10-year period of time. In practice, courts have
ruled that violations of the FCPA may serve as predicate acts for civil liability in
RICO actions. Treble damages are available, although some foreign jurisdictions
view these as punitive and will not enforce them.
164 I Asset Recovery Handbook
contract. e bribe may have resulted in a price for goods and services that is above
market value or may have permitted the use or the sale of government resources at less
than market value. In addition, there may be social or environmental damage that has
been incurred as a result of the contract award.
To be fully compensated in these situations, government authorities or entities may
have to establish the di erence between the bene ts that would have been received if
bribery had not taken place and those received a er entering into the fraudulent con-
tract.
233
It may not be su cient to show that prices for goods and services were set
above market rates. Courts may require a more precise measure of rates that a hypo-
thetical prudent negotiator would have accepted, given the market for goods and ser-
vices of the same quality. Determining this measure will be particularly challenging in
speci c circumstances and in the absence of clear market references.
234
In these situa-
tions, establishing the nancial damage will frequently require evidence of a secret
agreement between the briber and the corrupt agent and/or of technical or accounting
assistance.
235
In some jurisdictions, when the corrupt act is uncovered years a er it has taken place,
courts may presume that the bribe was incorporated into the contractual prices. Other
losses must be proved and quanti ed by the plainti .
236
233. Kevin E. Davis, “Civil Remedies for Corruption in Government Contracting: Zero Tolerance Versus
Proportional Liability,” International Law and Justice Working Paper 2009/4 (New York: New York Univer-
sity School of Law, 2009).
234. In particular, for speci c constructions or equipment and for “intellectual” services, including con-
sulting studies.
235. For example, such evidence could be documents showing that the briber and the corrupt agent secretly
agreed to increase usual rates by a speci c amount or percentage, comparisons with bids from competitors
in the same bidding process, or transcripts of conversations or reports on meetings where the corrupt
agreement was discussed.
236. O. Meyer, ed., Civil Law Consequences of Corruption (Baden Baden: Nomos Verlag, 2009).
BOX 8.3 Compensation for Damages Where Assets Are Misappropriated
In the case Attorney General of Zambia v. Meer Care & Desai & Others (2007),
a
the London High Court found suffi cient evidence that $25 million was misappro-
priated or misused, and that there was no legitimate basis for Zambia’s payments
of approximately $21 million pursuant to an alleged arms deal with Bulgaria. The
defendants were held liable in tort for these actions. They were also found to
have broken the fi duciary duties they owed to the Zambian Republic or had dis-
honestly assisted in such breaches. As a result, they were held liable for the
value of the misappropriated assets.
b
a. Attorney General of Zambia v. Meer Care & Desai & Others [2007] EWHC 952 (Ch.) (U.K.). b. Lawyers who were involved in
transactions were also held liable by the High Court of London. However, claims against them were dismissed after they
appealed.
Civil Proceedings I 165
In other jurisdictions, the briber may be held liable for the loss sustained by the victim
in entering a contract with unfavorable terms.
237
Some courts have assumed that the
true price of any goods bought by the principal in application of a fraudulent contract
was increased by at least the amount of the bribe,
238
and any loss beyond this amount
must be proved.
239
In the context of employee/employer relations, other jurisdictions have found that both
the employee who was bribed and the briber are liable to the employer at least in the
amount of the bribe,
240
and companies are liable for any tortuous act committed by
their employees.
241
In the absence of a more precise yardstick, a reasonable measure of
damages may be the bribe itself,
242
an accounting of pro ts,
243
or the harm caused by
predicate acts constituting an illegal pattern.
244
e case Fy es v. Templeman and Others
(box 8.4) highlights how courts may identify and quantify such damages.
8.1.3 Actions Based on Invalidity or Breach of Contract
Cause of Action
Courts or arbitration tribunals may hold that contracts awarded a er corruption of a gov-
ernment o cial are illegal, thus invalid or unenforceable.
245
Invalidity may be based on the
facts that the contract was extorted by fraud and that consent was vitiated by corruption.
Breach of contract is another possible action in some jurisdictions, particularly if a con-
tract included clauses wherein the contractor promised not to provide any inducements
to public o cials in connection with the award or performance of the contract. Violation
of this particular prohibition gives the government an entitlement to terminate the con-
tract, avoid its own obligations, and claim damages.
246
Remedies
Remedies for invalidity or breach of contract will include monetary damages, such as
compensatory, incidental, and other (for example, liquidated or punitive) damages. In
237. Salford Corporation v. Lever (No. 2) (1891) 1 QB 168 (U.K.).
238. Ibid.
239. Solland International Ltd. v. Daraydan Holdings Ltd. [2002] EWHC 220 (TCC) (U.K.).
240. Williams Electronic Games, Inc. v. Garrity, 479 F.3d 904 (7th Cir., 2007) (U.S. Court of Appeals).
241. For example, Germany applies these principles.
242. Continental Management, Inc. v. United States, 527 F.2d 613, 620, 208 (Ct. Cl. 501 1975) (U.S. Court of
Claims).
243. U.S. courts have concluded that an accounting of pro ts may be a reasonable measure of damages
because it ensures compensation to the plainti , prevents unjust enrichment by a defendant, and deters
willful violations of law.
244. In County of Oakland, et al. v. Vista Disposal, Inc., et al., 900 F. Supp. 879 (E.D. Mich. 1995) (U.S. Dis-
trict Court), a district court held that the measure of civil damage in Racketeer In uenced and Corrupt
Organizations Act cases is the harm caused by predicate acts constituting an illegal pattern. In the case of
a contract to treat a county’s waste, the damage was the di erence between the price charged and the price
that would have been charged in the absence of corruption.
245. UNCAC art. 34 permits such actions by states parties.
246. Reference is made to the United Kingdom.
166 I Asset Recovery Handbook
some cases, courts have limited damages to contractual fees already paid, and they have
excluded unpaid fees.
247
Rescission of contract is also possible in some jurisdictions,
particularly in cases of bribery and collusion in bidding.
248
A claim for rescission
requires proof that the government entity would have refused the contract in the
absence of any fraudulent acts. If this is not the case, the government entity would only
be entitled to damages for entering the contract under less favorable terms than what
would have been agreed to in the absence of the act causing the breach.
247. In S.T. Grand, Inc. v. City of New York, 32 NY2d 300, 344 NYS2d 938 (1973) (U.S.), the court ruled that
a contractor who paid a bribe to obtain a contract to clean the New York City reservoir could not recover
unpaid fees; but the city could recover all of the fees it had already paid to the vendor. Other courts have
ruled that a municipality was only entitled to compensation for the harm caused by an illegally awarded
contract.
248. Ross River Ltd. v. Cambridge City Football Club Ltd. [2007] EWHC 2115 (Ch) (U.K.). In addition,
French courts have ruled that government entities that entered a contract a er bidders colluded to suppress
competition in the bidding process are entitled to rescission of contracts or damages.
BOX 8.4
Fyffes v. Templeman and Others (2000)
a
Fyffes, a company involved in the banana trade, claimed that an employee who
negotiated a service agreement with a shipping contractor took bribes amount-
ing to more than $1.4 million between 1992 and 1996. The bribes were revealed
when the U.S. Internal Revenue Service was tipped about undeclared payments
that the employee received in the United States from a company incorporated in
Cyprus.
Fyffes sought to recover damages from the employee, the shipping company,
and its agents. All defendants were found jointly liable for the value of the bribes.
The court ruled that “there can be no dispute that they were taken into account
by the contractor in agreeing the amount of the freight for each year, which would
have been correspondingly less for Fyffes if they had only had to pay the net sum
which the contractor were prepared to accept.”
The shipping company and its agents were liable to pay additional compensation
for the loss that Fyffes suffered from entering into the contract under unfavorable
terms. For each year, the court determined what Fyffes would have normally agreed
to pay if it had been represented by a prudent and honest negotiator. There was
no evidence that actual payments would have been different in 1992, 1994, and
1995. But the court ruled that payments were infl ated by $830,022 in 1993 and
by $1.1 million in 1996.
An account of all profi ts made by the contractor was rejected because it was
“highly probable that Fyffes would have entered into a service agreement with
the contractor if the employee had not been dishonest.” As a result, “ordinary”
profi t from the contract was not caused by bribery, but by “the provision of ser-
vices for which there would have been a contract in any event.”
a. Fyff es Group Ltd. v. Templeman [2000] 2 Lloyd’s Rep 643 (U.K.).
Civil Proceedings I 167
In disputes arising from international investment contracts, the principle of “state
responsibility” obliging governments to assume full responsibility for the actions of
their agents may be taken into account.
249
e results are that contracts could remain
valid in spite of illegality or defect of consent caused by corruption and that remedies
should be limited to damages, adaptation of the contract, and reduction in prices.
250
On
the other hand, “international public policy” (also referred to as “ordre public interna-
tional”) has been used to support the avoidance of contracts in a case before the Inter-
national Centre for Settlement of Investment Disputes (ICSID) arbitration panel (see
box 8.5).
251
Nongovernmental organizations, including Transparency International, have encour-
aged the use of so-called integrity pacts by which government entities and bidders to
public tenders agree on pre-announced sanctions for violations of commitments not to
bribe public o cials. Depending on the agreement, sanctions applied by courts or arbi-
tration tribunals may include denial or loss of the contract, liability for damages to the
principal and the competing bidders, and debarment of the violator for an appropriate
249. Hilmar Raeschke-Kessler and Dorothee Gottwald, “Corruption,” in e Oxford Handbook of Interna-
tional Investment Law, ed. Peter Muchlinski, Federico Ortino, and Christoph Schreuer (Oxford, U.K.:
Oxford University Press, 2008), 584–616.
250. Davis, “Civil Remedies for Corruption in Government Contracting.”
251. It is not clear whether international commercial arbitration would uphold this result in the absence of
an applicable national law containing the voidability rule.
BOX 8.5 World Duty Free Company Limited v. The Republic of Kenya
(2006)
a
In 1989, Kenya initially entered into an agreement with World Duty Free Company
(WDF) for construction, maintenance, and operation of duty-free complexes at
Nairobi and Mombasa international airports. In obtaining the contract, WDF paid
bribes to the former Kenyan president, Daniel arap Moi. Subsequently, in 1998,
WDF was placed under receivership by the High Court in Kenya; and a formal
judgment and decree was made in 2001, transferring benefi cial ownership to the
receiver.
In disputing the order before the ICSID, WDF claimed that Kenya had unlawfully
destroyed its contractual rights through the receivership order. The government
of Kenya argued that WDF’s procurement of the agreement through bribes was
a breach of the English and Kenyan laws applicable to the contract, as well as a
breach of international public policy; and that the government was lawfully enti-
tled to avoid contract obligations.
The tribunal ruled that Kenya was legally entitled to avoid, and it did legally avoid
its obligations.
a. World Duty Free Company Limited v. The Republic of Kenya, ICSID Case No. ARB/00/7, Award of September 25, 2006,
http://ita.law.uvic.ca/documents/WDFv.KenyaAward.pdf.
168 I Asset Recovery Handbook
period of time. To avoid overly complicated arguments about the level of damages,
clauses may predetermine the value of “liquidated damages” that could be based on a
percentage of the contract revenues or pro ts (or a multiplication of the bribe, such as
200 percent or 300 percent of the bribe). Integrity pacts have been used in Argentina,
China, Colombia, Ecuador, Germany, India, Mexico, Pakistan, and other jurisdictions.
When applicable, they may help governments recover undue payments or advantages
awarded in application of corrupt payments to public o cials.
252
8.1.4 Actions Based on Illicit or Unjust Enrichment
Claims for disgorgement or restitution of pro ts obtained by illegal or unethical acts are
based on the legal and moral principle that no one should bene t from his or her wrong-
doing or from illicit or unjust enrichment (see the example in box 8.6). Courts may
order defendants to pay back illegal pro ts, even if the victim did not su er loss or any
other disadvantage.
253
In certain jurisdictions, courts have ruled that the receipt of bribes gives rise to liability
based on dishonesty or claims for restitution of pro ts, independent of any harm.
254
As
a result, a briber is liable to account for the amount of the bribe. Any loss in excess of
the bribe must be recovered as damages.
252. Transparency International, “ e Integrity Pact, a Powerful Tool for Clean Bidding,” http://www.
transparency.org.
253. In principle, German civil law upholds the view that an agent or wrongdoer must not be allowed to
retain the proceeds from a bribe.
254. Dubai Aluminum Company Ltd. v. Salaam and Others [2002] All ER (D) 60 (Dec) (U.K.).
BOX 8.6 Disgorgement of Profi ts—Practice in the United States
In the United States, disgorgement of profi ts is frequently sought by the Secu-
rities and Exchange Commission and the Department of Justice in civil or crim-
inal actions to enforce the FCPA. Settlements often include recovery of the
benefi ts of wrongful acts or illicit enrichment. In cases where a government
contract was awarded as a result of bribery, the illicit enrichment is normally
calculated by deducting direct and legitimate expenses linked to the contract
from the gross revenue. The amount of the bribe and the taxes are generally not
considered deductible expenses. In other civil actions brought by parties as
private plaintiffs, U.S. courts have ruled that an employer or buyer is entitled to
recover the amount of the bribe received by an employee even if the goods or
services were exactly what the employer was seeking and even if the price was
reasonable.
a
a. Sears, Roebuck & Co. v. American Plumbing & Supply Co., 19 F.R.D. 334, 339 (E.D.Wis., 1956) (U.S.).
Civil Proceedings I 169
8.2 Bringing a Civil Action to Recover Assets
8.2.1 Initiating a Civil Action
A civil action to recover assets may be brought to courts or to arbitration. Courts of a
foreign jurisdiction may be competent if a defendant is living (an individual), was
incorporated or does business (an entity) in the jurisdiction; if the assets are within or
have transited the jurisdiction; or if an act of corruption or money laundering was com-
mitted within the jurisdiction. It is generally possible to use evidence gathered in the
course of a criminal proceeding in a civil litigation.
Arbitration may be used when an international contract provides for an arbitration
clause; alternatively, a bilateral investment treaty may be the basis for investment arbi-
tration. Most bilateral investment treaties provide for mandatory dispute resolution
mechanisms or permit recourse to international arbitration under the auspices of the
ICSID. e center’s jurisdiction extends to any legal dispute arising directly out of an
investment between a contracting state (or any constituent subdivision or agency of a
contracting state designated to the center by that state) and a national of another con-
tracting state, which the parties to the dispute consent in writing to submit to the
center.
8.2.2 Collecting Evidence and Securing Assets
As with criminal proceedings, the plainti in a civil court will have to provide direct or
circumstantial evidence to establish the cause of action. Box 8.7 describes the use of
circumstantial evidence in private civil proceedings.
Using Evidence Gathered in Criminal Proceedings
Although it generally is possible to use evidence gathered in the course of a criminal
proceeding in a civil action, it may not be permitted in some jurisdictions because of
the secrecy and con dentiality of investigation laws.
255
Similarly, evidence initially
gathered to support foreign criminal investigations and prosecutions may be used in
civil proceedings initiated in some common law jurisdictions.
256
255. In France, for example, it is a crime to disclose elements of ongoing criminal proceedings to third par-
ties. However, when criminal proceedings are completed, civil parties to the criminal procedure are allowed
to use and disclose related documents in a civil proceeding.
256. In Federal Republic of Nigeria v. Santolina, Solomon & Peters and Diepreye Alamieyeseigha, the Pro-
ceeds of Corruption Unit of the Metropolitan Police gathered information about the corrupt assets and
activities of Alamieyeseigha in support of its own criminal investigations and pursuant to requests for MLA
from the federal government of Nigeria. Alamieyeseigha ed the United Kingdom before prosecution
could be brought, and he enjoyed immunity from prosecution in Nigeria while in o ce. Nigeria brought
civil proceedings in England to recover its assets. e High Court of England ordered the Metropolitan
Police to disclose to Nigeria the information gathered during the criminal investigations on con rmation
by the police agency that such disclosure would not prejudice its investigations.
170 I Asset Recovery Handbook
Disclosure and No-Say (or “Gag”) Orders
Depending on the applicable civil procedure, documents held by the parties and third
parties are subject to disclosure. In asset recovery cases, it is particularly useful to
request disclosure of documents held by third parties—banking and nancial docu-
ments, including account-opening forms, the identity of bene cial owners of accounts
or of companies and trusts, bank statements, and know-your-customer information. A
third party could also be ordered to disclose the identity of a wrongdoer.
257
In some civil law jurisdictions, disclosure is ordered by a judge, and the application can
be made without any formality.
258
In other civil law jurisdictions, any interested party
may make an ex parte request in a civil court to issue orders for the taking of evidence
prior to ling a civil action. In common law jurisdictions, the parties must usually pro-
vide their opponents with all relevant documents under their control, and applications
can be made to the court for disclosure of third-party documents.
In some jurisdictions, courts are permitted to order worldwide disclosure of assets (see
box 7.11 of chapter 7). To be truly e ective in the foreign jurisdiction, such worldwide
orders must also be enforced by foreign courts. Such orders are typically made ex parte.
257. Norwich Pharmacal Co. v. Customs and Excise Commissioners [1974] AC 133 (U.K.).
258. Code of Civil Procedure (France), art. 139.
BOX 8.7 Circumstantial Evidence Considered in Federal Republic of
Nigeria v. Santolina Investment Corp., Solomon & Peters, and
Diepreye Alamieyeseigha (2007)
a
The case was adjudicated in the absence of defendants who were notifi ed of the
proceedings. The court relied on inferences to fi nd that funds deposited in Lon-
don bank accounts and properties held by the two companies controlled by
Diepreye Alamieyeseigha were bribes and secret profi ts to be returned to the
government of Nigeria. To explain this conclusion, the court mentioned several
elements that served as circumstantial evidence:
There was a huge discrepancy between assets and income offi cially declared •
by Alamieyeseigha and the funds deposited in foreign bank accounts.
The defendant held these foreign bank accounts in breach of a constitu-•
tional prohibition.
The defendant could not give any plausible and legitimate explanation of his •
ability to acquire such amount of assets outside Nigeria.
Funds were transferred by government contractors in separate transactions •
and held by offshore corporate vehicles.
Residential properties were purchased with transfers or loans from those •
corporate vehicles.
a. Federal Republic of Nigeria v. Santolina Investment Corp., Solomon & Peters and Diepreye Alamieyeseigha [2007] EWHC 437
(Ch.) (U.K.).
Civil Proceedings I 171
To prevent third parties, including banks, from informing a defendant that a disclosure
order exists, the court may impose a “gag” or “no-say” order. Any breach of con denti-
ality may be considered contempt of court. Courts may also order disclosure and
restraint of bank accounts prior to service of the proceedings on the defendants.
259
Restraint Orders
Interim injunctions or restraint orders are frequently used to restrain assets suspected
of being the proceeds of crime.
260
A restraint order may also be obtained during the
proceedings (to ensure that a defendant has su cient assets to satisfy a judgment against
him or her) or a er judgment (to enforce the court’s decision).
e applicant must meet certain requirements to obtain the order, and these require-
ments will vary among jurisdictions. Generally, the applicant must establish that there
is justi cation for the order (an arguable case) and a risk of dissipation of the assets. e
applicant may also be required to give an undertaking or post a bond that he or she will
compensate the defendant for losses su ered in the event the court nds that it should
not have granted the order (see box 8.8 for examples of some requirements).
259. ese orders are referred to as “bankers trust” orders in some jurisdictions.
260. ese are o en referred to as “Mareva injunctions,” a er Mareva Compania Naviera S.A. v. Interna-
tional Bulk Carriers S.A. [1980] 1 All ER 213; [1975] 2 Lloyd’s Rep. 509 (CA) (U.K.).
BOX 8.8 Requirements for Restraint Orders in France, Panama, and the
United Kingdom
In France, courts
a
may order the restraint or seizure of assets (movable or immov-
able, tangible or intangible) pending the outcome of a trial when the applicant
shows that there is a risk of dissipation. For funds in bank accounts, the applicant
must demonstrate that the order would be “justifi ed in principle” and that there
is “peril with respect to the recovery of the obligation.”
In Panama, the plaintiff must meet the basic pleading requirements and post an
adequate bond, set by the court. Furthermore, the plaintiff must follow the
restraint order with an action at law against the defendant. The restraint order
remains in place unless these requirements are not met. When a favorable judg-
ment is obtained, the prevailing plaintiff is entitled to recover from the frozen
assets if the defendant does not pay the judgment. If, however, the ruling favors
the defendant, on a showing of bad faith, the party whose assets were frozen
may recover from the bond posted by the plaintiff.
In the United Kingdom, the applicant must show a good, arguable case, suffi -
cient evidence identifying and locating the assets, and the existence of a real risk
of asset dissipation. The applicant must give an undertaking that he or she will
compensate the defendant for losses suffered if the court fi nds that it should not
have granted the restraint order.
a. In France, the court is referred to as le juge de l’exécution.
172 I Asset Recovery Handbook
Ex parte applications may be permitted in both civil and common law jurisdictions to
avoid tipping o the asset holder and risking the dissipation of assets. In some jurisdic-
tions, that requires the applicant to give full and frank disclosure of all factual elements
and evidence in his or her possession.
261
Others require evidence of the risk of dissipa-
tion in the event of notice.
Some jurisdictions permit courts to order worldwide restraint to cover assets in both
the jurisdiction in question and foreign jurisdictions, and may reach defendants who
are not resident within the jurisdiction (see box 7.11 in chapter 7).
262
Similar to the
worldwide disclosure orders outlined above, worldwide restraint orders must be
enforced by foreign courts to be truly e ective in the foreign jurisdiction. Defendants
or third parties (including banks or lawyers) who are noti ed may be held in contempt
of court for failing to comply with such orders; possible sanctions include imprison-
ment, nes, or seizure of assets.
A victim of corruption may also employ a “Mareva by Letter,” a technique that puts a
third-party guardian or holder of assets on notice that he or she holds potentially cor-
rupt proceeds.
263
Such notice e ectively constitutes an immediate and de facto restraint
of assets and avoids the costly and lengthy process of making an application with a
court to restrain assets. It operates by triggering the due diligence and reporting require-
ments that nancial institutions and some non- nancial businesses have in place for
detecting and preventing the laundering of crime proceeds. Receipt of notice that an
account holder or bene cial owner (who is neither the current guardian nor the holder
of the assets) holds the proceeds of crime is typically su cient for the nancial institu-
tion or business to report the suspicious activity and hold the funds; otherwise, it is
opening itself to potential liability as an accessory to the crime. A Mareva by Letter can
be e ected by sending a letter to the current guardian or asset holder, notifying him or
her that the true or bene cial owner holds the proceeds of crime and providing an advi-
sory warning that he or she may be an accessory to civil or criminal liability (or both)
if the funds are disposed of or transferred. e letter should be accompanied by ade-
quate proof of the true or bene cial owner’s link to criminal activity to give the third-
party holder su cient justi cation for the restraint.
In some cases, the plainti may bene t from the restraint of assets that has occurred on
the basis of criminal law provisions (see box 8.9).
Search and Seizure Orders
Civil proceedings may permit a plainti ’s lawyer to enter premises to preserve evidence
that might be destroyed (also referred to as an “Anton Piller order”). In some jurisdictions,
261. ese are the requirements in the United Kingdom. See U.K. Ministry of Justice, Rules of Civil Proce-
dure, Practice Direction, Freezing Injunctions.
262. In International Bulk Carriers S.A., 1 All ER at 213 and 2 Lloyd’s Rep. at 509, the court covered assets
in both England and foreign jurisdictions.
263. See also Martin S. Kenney, “‘Mareva by Letter’—Preserving Assets Extra-Judicially—Destroying a
Bank’s Defence of Good Faith by Exposing It to Actual Knowledge of Fraud” (November 27, 2006), http://
www.martindale.com/international-law/article_Martin-Kenney-Co._258798.htm (2010).
Civil Proceedings I 173
BOX 8.9 The Ao Man Long Case
In 2008, Ao Man Long, former minister of transport and public works in Macao
SAR, China, was convicted of corruption offenses involving about HK$800 million
(approximately $103 million). He was sentenced in Macao SAR, China, to 27
years’ imprisonment; and a confi scation order of approximately HK$250 million
(roughly $32 million) was entered.
A signifi cant amount of his bribery proceeds had been deposited into accounts in
Hong Kong SAR, China. There was no MLA agreement between the jurisdic-
tions, but authorities in Macao SAR, China, used informal channels (the Hong
Kong Independent Commission against Corruption) to restrain the proceeds and
obtain search warrants. Because MLA channels were unavailable to recover the
proceeds, Macao SAR, China, subsequently launched a civil suit in Hong Kong
SAR, China, for more than HK$230 million (approximately $30 million). The origi-
nal restraint order, obtained pursuant to antibribery legislation in Hong Kong SAR,
China, remained in place even though a criminal prosecution was not launched in
that jurisdiction.
a
a. Simon N. M. Young, “Why Civil Actions against Corruption?” Journal of Financial Crime 16, no. 2 (2009): 144–59.
courts may grant such orders if there is strong prima facie evidence that incriminating
documents are in the defendant’s possession and there is a real possibility that such
material will be destroyed. In addition, the defendant’s activities must cause very seri-
ous potential or actual harm to the plainti ’s interest.
264
8.3 Final Dispositions
In many cases, the disputing parties will choose to settle the matter before or a er the
court proceedings have begun. Both sides typically have a strong incentive to settle to
avoid the costs (such as fees for lawyers and expert witnesses), time, and stress associ-
ated with a trial; and to maintain some control over the amount of the nal order.
Authorities should verify that settlements do not include a waiver of future claims
related to assets that were not fully disclosed at the time of the agreement.
Alternatively, the parties will have to await the judgment of the court. is may occur at the
end of trial proceedings. Summary judgments may be sought when the jurisdiction seek-
ing redress shows strong evidence, and where the defendants do not present a reasonable
264. Applications for search orders (as well as freezing injunctions) submitted to competent judges must be
supported by a davit evidence. Urgent applications can be made without notice and even before a claim
form has been issued. Where it is not possible to arrange a hearing, applications may also be made by tele-
phone or by fax sent to a duty judge. See U.K. Ministry of Justice, Rules of Civil Procedure, Freezing and
Search Orders and Practice Direction 25A (Supplements), para. 4.5. For additional details, see http://www.
justice.gov.uk/civil/procrules_ n/contents/practice_directions/pd_part25a.htm.
174 I Asset Recovery Handbook
defense. Similarly, judgments by default may be obtained when defendants do not com-
ply with court orders asking for detailed explanations on facts and documents. Both
summary and default judgments allow courts to shorten the process and grant deci-
sions without a full trial.
In civil actions, the absence of the defendant is much less likely to be a barrier to adju-
dicating a case than it would be in a criminal action. However, it may complicate
enforcement in foreign jurisdictions (see box 8.10).
8.4 Formal Insolvency Processes
Insolvency processes are class remedies. erefore, they will not provide recovery for
one creditor (or victim) alone. However, the fact that those formal insolvency regimes
provide powerful tools for investigation, preservation, and recovery of assets o en out-
weighs the class nature of these processes.
Under many formal insolvency processes, there is an automatic moratorium on dissipa-
tion of assets when an o ceholder has been appointed. As a result, if a perpetrator has
assets within the jurisdiction in which he or she has been made bankrupt, insolvency
regimes will prevent any further dissipation. e e ect of such a moratorium interna-
tionally is o en complex, but the existence of international regimes such as the Council
BOX 8.10 Enforcement of Judgments When the Defendant Is Absent
from the Proceeding
In Attorney General of Zambia v. Meer Care & Desai & Others
(2007),
a
a civil
action was brought in the United Kingdom against the former president of Zam-
bia, Frederick Chiluba, and his associates (see section 1.3.2 of chapter 1 for addi-
tional details on this case). Because the terms of bail required the defendants to
remain in Zambia, the court made special arrangements to address the situation.
These arrangements included sitting in Zambia as a special examiner to hear
evidence and, for proceedings in London, setting up a live video link between
London and Zambia and recording daily transcripts.
The London court held in favor of the attorney general of Zambia, who then reg-
istered the judgment in the Lusaka High Court in Zambia. The former president
applied to set aside the judgment on the basis that he was not able to participate
in the hearings in London and was not afforded the opportunity to be heard by
the National Assembly (which had stripped him of his immunity against criminal
prosecution in Zambia). In 2010, Zambia’s Supreme Court rejected Chiluba’s
appeal on the basis that suffi cient actions had been taken.
a. Attorney General of Zambia v. Meer Care & Desai & Others [2007] EWHC 952 (Ch.) (U.K.).
Civil Proceedings I 175
of the European Union’s regulation on insolvency proceedings
265
and the Model Law on
Cross-Border Insolvency of the United Nations Commission on International Trade
Law o en gives this stay on proceedings extraterritorial e ect.
Investigatory powers frequently include the ability to cross-examine the bankrupt party
and directors of the insolvent entity, as well as any person with information related to
the person or entity (including accountants and lawyers). Such powers are wide-ranging
and may be enforced by court order. Many of them are also backed by the ability to
arrest and imprison a recalcitrant debtor.
266
Investigatory powers also usually involve
the ability to compel production of books and records, including those from lawyers
and banks. Any legal privilege of the bankrupt person or insolvent entity is typically
overridden, denying a perpetrator of crime the ability to hide behind his or her legal
advisers.
Generally, the de nition of property owned by a bankrupt person or insolvent entity is
interpreted broadly to include not only tangible property, but also intangible property
and any assets that are the traceable products of such property. Insolvency o ceholders
(the trustees, administrators, liquidators, insolvency representatives, or similar func-
tionaries who make many insolvency systems work in insolvency cases), too, may have
speci c claims to recover assets—some of which are unavailable to any other party.
Examples of such claims include claims for misfeasance, preferences, transactions that
were undervalued, and wrongful and fraudulent trading. Remedies for such claims
o en include the ability to undo transactions, reverse transfers of property to third par-
ties, and void security rights.
265. Council Regulation (EC) No. 1346/2000 of May 29, 2000, on insolvency proceedings.
266. In the United Kingdom, for example, there is no privilege against self-incrimination; and failure to
answer questions may lead to imprisonment for contempt of court.
Practitioners may nd themselves in circumstances where obtaining a domestic
criminal or non-conviction based (NCB) con scation order and foreign enforcement
pursuant to a mutual legal assistance (MLA) request and civil proceedings is not pos-
sible. ere may be an insu cient legal framework, legal obstacles (for example, immu-
nities, statute of limitations, or refusal to extradite), and a lack of resources and political
will (see chapter 2 for a description of these obstacles). In those circumstances and
where o enses have crossed into other jurisdictions (such as with bribery or the laun-
dering of proceeds of corruption), practitioners may decide to support the e orts of a
foreign authority to bring con scation or civil proceedings against those individuals
and assets over which they have jurisdiction. Alternatively, a foreign authority may
decide independently to initiate criminal or NCB con scation or civil proceedings.
When a foreign jurisdiction brings con scation or civil proceedings against a target, the
authority in the jurisdiction harmed by corruption o enses e ectively loses control
over the case. Because the case is a domestic proceeding of the foreign jurisdiction, the
jurisdiction harmed by corruption o enses has no authority to choose the direction of
the proceedings or to decide how the case is conducted. It has limited standing (if any)
and may have fewer options for the recovery of assets. As a result, practitioners o en
choose this method only a er they have considered or attempted all other mechanisms,
including domestic criminal or NCB con scation (and enforcement pursuant to an
MLA request) or civil proceedings. Proactively selecting this approach will depend on
a number of factors that should be veri ed at the outset, including the foreign jurisdic-
tion’s capacity and willingness to undertake investigation and con scation proceedings,
the commitment by the jurisdiction harmed by corruption o enses to provide requested
MLA in the foreign proceedings, and an agreement on the return of assets.
9.1 Jurisdiction
e foreign authority must have jurisdiction to investigate and prosecute the o ense.
International treaties require or encourage states parties to adopt measures that estab-
lish broad jurisdiction over corruption o enses.
267
States parties to the United Nations
267. United Nations Convention against Corruption (UNCAC), art. 42; United Nations Convention against
Transnational Organized Crime (UNTOC), art. 15; United Nations Convention against Narcotic Drugs
and Psychotropic Substances, art. 4. See also the Organisation for Economic Co-operation and Develop-
ment (OECD) Bribery Convention, art. 4. Recommendation 1 of the Financial Action Task Force 40+9
Recommendations states that “predicate o ences for money laundering should extend to conduct that
9. Domestic Confi scation Proceedings
Undertaken in Foreign Jurisdictions
178 I Asset Recovery Handbook
Convention against Corruption (UNCAC), for example, must have jurisdiction over
corruption o enses committed within their territory, by or against one of their nation-
als, or by or against a stateless person who has his or her habitual residence in their
territory.
268
In cases of “extradite or prosecute” (described below), jurisdiction is estab-
lished by virtue of the delegation of legal proceedings.
In cases that do not involve nationals and where only some of the elements of a
criminal o ense are committed in or to the detriment of a foreign jurisdiction,
establishing jurisdiction may still be possible. Some authorities will claim jurisdic-
tion even if only peripheral acts related to the o ense have “touched” their territory
(see box 9.1).
Most laws extend jurisdiction beyond nationals to include companies incorporated (or
simply active) in the jurisdiction for acts of bribery committed in another jurisdiction
(see box 9.2).
269
Legislation may also use broadly de ned money laundering o enses to establish
jurisdiction—such as legislation that permits money laundering predicates to have
been committed in another jurisdiction (see box 9.3). In some jurisdictions, authori-
ties will prosecute ancillary o enses committed domestically that are intended to
prepare or promote acts of corruption committed in another jurisdiction—for exam-
ple, conspiracy, receipt of criminally derived assets, and complicity.
270
Finally, some
jurisdictions permit NCB con scation proceedings against correspondent accounts
of foreign banks holding illicit proceeds in a customer account abroad.
271
9.2 Procedure for Beginning an Action
It is important for practitioners to recognize that domestic con scation proceedings in
foreign jurisdictions are not solely dependent on a request from the jurisdiction that
has been harmed by corruption o enses. e foreign authorities may initiate a case
occurred in another country, which constitute an o ence in that country, and which would have consti-
tuted a predicate o ence had it occurred domestically.”
268. UNCAC, art. 42. O enses under UNCAC include bribery of national and foreign public o cials (art.
15–16); the embezzlement, misappropriation, or other diversion of property by a public o cial (art. 17);
and the knowing acquisition, possession, or use of the proceeds of crime and money laundering (art. 23).
Possible o enses that UNCAC encourages states parties to legislate include in uence peddling, abuse of
functions, illicit enrichment, and private sector bribery or embezzlement.
269. irty-seven of the 38 OECD parties have jurisdiction over nationals and companies.
270. For example, French authorities may bring charges against a foreigner for participating in a conspiracy
intended to prepare a money laundering operation in France, even if he or she did not commit the actual
criminal act in France. Cassation Court, February 20, 1990.
271. Under Title 18, United States Code, sec. 981(k), courts in the United States have jurisdiction to order
the con scation of an amount of funds located in a foreign bank’s U.S. correspondent account that is
equivalent to the amount of illicit proceeds deposited by a customer in the foreign bank. e provision is
generally used only if the foreign jurisdiction is unable or unwilling to provide MLA to restrain and con-
scate those assets.
Domestic Confi scation Proceedings Undertaken in Foreign Jurisdictions I 179
independently based on information obtained through various avenues (see box 9.4).
As indicated above, the foreign authorities ultimately decide whether to pursue the case
and how it is conducted.
9.3 Role of the Jurisdiction Harmed by Corruption Offenses
in Foreign Investigation and Prosecution
Once a foreign investigation is initiated, practitioners in the foreign jurisdiction will
need to gather evidence in the jurisdiction harmed by corruption to prove corruption
or the predicate crimes of money laundering o enses. Even if the jurisdiction harmed
BOX 9.1 Establishing Jurisdiction Where Limited Acts Have Occurred
in the Territory
It may appear to be diffi cult to establish jurisdiction in cases that do not involve
nationals and where only some of the elements of the offense are committed
in or against a particular jurisdiction. However, many jurisdictions have found
innovative ways to accomplish this. Here are some factors on which they have
focused:
Financial transactions in the territory. • The U.S. Supreme Court has upheld
convictions of defendants who used interstate wires to execute a scheme
to defraud a foreign government of tax revenue.
a
Origin of activities. • In Brazil, a telephone call, fax, or e-mail emanating
from Brazil would be suffi cient to establish jurisdiction over an act of for-
eign bribery.
Links to other crimes committed in the territory. • In France, jurisdiction
can be established over crimes committed in a foreign jurisdiction if those
crimes can be linked to crimes committed in France.
b
Transfers of national currency (even if outside the territory). • In 2009,
the U.S. Department of Justice fi led a confi scation action against bribery
proceeds paid (in Singapore, with U.S. currency) by a foreign company to
the son of the former prime minister of Bangladesh.
c
The Department of
Justice successfully argued that the transfer of U.S. currency between
fi nancial institutions outside the United States necessarily transited through
U.S. correspondent banks. Also supporting the establishment of jurisdic-
tion was the fact that the foreign company making the bribe was registered
on the New York Stock Exchange and subject to U.S. laws and regulations.
Offenses against national interests. • Foreign nationals are criminally liable
for offenses committed outside Ukraine if they commit grave offenses
against rights and freedoms of Ukrainian nationals or against the interests
of Ukraine.
a. Pasquantino v. United States, 544 U.S. 349 (2005) (U.S.). b. Cour de cassation, April 23, 1981, January 15, 1990 (France). c. Title 18,
United States Code, sec. 981(a)(1)(C): any property.
180 I Asset Recovery Handbook
by corruption o enses has provided the case le at the outset, the foreign jurisdiction
likely needs additional information and legal assistance (including witness statements,
nancial records, and banking or corporate documents). is information may be
sought through informal assistance or an MLA request. However the information is
requested, it is imperative that a response be transmitted. Without continued attention
to the case and responses to foreign requests, success in the foreign case will be limited
or impossible (see box 9.5).
In most countries, a foreign jurisdiction that has been harmed by corruption o enses
can participate as a complainant or victim (referred to in some jurisdictions as “the
plainti ”) to some extent in the investigation, trial, and sentencing or con scation pro-
ceedings. Complainants and victims may attend trial proceedings and consult with
practitioners on the progress of the investigation and prosecution. Many jurisdictions
encourage practitioners to involve victims in all phases—particularly in the sentencing
or con scation proceedings to facilitate direct recovery from the court. Victims may be
consulted on orders to be requested of the court or may be given the opportunity to
BOX 9.2 Establishing Jurisdiction over Nationals in the United Kingdom
and the United States
In the United Kingdom, the Bribery Act, 2010,
a
imposes criminal penalties on
organizations or companies whose employees, subsidiaries, agents, or consul-
tants pay bribes in the context of the organization’s business activities anywhere
in the world. A foreign bank operating a small branch in London will be criminally
liable if an employee, agent, or subsidiary pays a bribe in any country, even if the
bribe is not approved by or paid through the branch in the United Kingdom. The
mere existence of the branch offi ce will give jurisdiction to U.K. prosecutors and
courts.
In the United States, the Foreign Corrupt Practices Act (FCPA) establishes juris-
diction over any individual, fi rm, offi cer, director, employee, or agent of a corpora-
tion that issues securities registered in the United States; any legal person estab-
lished under U.S. law or headquartered in the United States; and any U.S. citizen
for acts related to a corrupt payment, even where those acts took place outside
the United States. The FCPA also holds liable foreign nationals or companies who
take an action in furtherance of a corrupt payment while in the United States or
who cause an international or interstate wire communication into or through the
United States. Foreign offi cials who receive the corrupt payments are exempt
from prosecution under the FCPA, but can be prosecuted for money laundering
in relation to the payment if the United States otherwise has jurisdiction over the
money laundering. In addition, a foreign offi cial receiving a corrupt payment may
be prosecuted under the Travel Act (Title 18, United States Code, sec. 1952) or
for wire or mail fraud (Title 18, United States Code, sec. 1341 and 1343) and
related statutes, even where they cannot be prosecuted under the FCPA.
a. The Bribery Act, 2010 (United Kingdom), is expected to enter into force in April 2011.
Domestic Confi scation Proceedings Undertaken in Foreign Jurisdictions I 181
testify. However, decisions on how to proceed, the people to interview, the records to
obtain, and the compensation or damages to be requested of the court ultimately lie
with practitioners.
In civil law jurisdictions or mixed systems, victims (including a state or government)
may initiate criminal investigations or proceedings in the foreign jurisdiction as a civil
party. Civil parties may be permitted to submit evidence or claims to the prosecutor or
investigative magistrate, participate in interviews of witnesses and targets, and have
access to the case le. e prosecutor or investigating magistrate ultimately determines
if the case has su cient evidence to proceed to trial. If a trial proceeds, civil parties may
apply to the court for a judgment awarding damages in the same manner that they
would before a civil court (see chapter 8 for more information on this topic). e action
for damages proceeds with the criminal case, on the same basis and evidence.
BOX 9.3 Jurisdiction to Prosecute Money Laundering Offenses
in France, the United Kingdom, and the United States
In France, courts have convicted defendants accused of receiving the proceeds
of crimes committed overseas
a
when circumstantial evidence proved that they
knew or should have known that the asset was of illegal origin.
b
Similarly, France
criminalizes the laundering of proceeds of predicate offenses committed abroad.
For example, French courts convicted a former Nigerian minister who used bribes
collected in Nigeria to purchase residences in France. All elements of the bribery
offense were committed in Nigeria, but French courts took jurisdiction on the
money laundering activities.
c
In the United Kingdom, authorities may prosecute the concealing, disguising,
converting, or transferring of criminal assets derived from crimes committed
abroad if the predicate offense also constitutes an offense under U.K. law.
d
Pros-
ecutors can rely on circumstantial evidence to prove that the asset is generally
derived from “criminal conduct”; they are not required to show that the asset
was acquired by means of a specifi c criminal act.
e
In the United States, money laundering predicates include bribery of foreign offi -
cials, embezzlement of public funds, fraud by or against a foreign bank, and any
crime for which the United States will be obliged to extradite under an interna-
tional treaty.
f
In the prosecution of the former Ukraine prime minister, Pavlo Laza-
renko, for money laundering, prosecutors established jurisdiction by demonstrat-
ing that funds received through banks in San Francisco, California, were the
proceeds of acts of extortion and bribery committed in Ukraine.
g
a. Article 321–1 of France’s Criminal Code criminalizes recel—the receiving, retaining, concealing, or transferring of ill-gotten
items or acting as an intermediary therein, knowing that the items were obtained by a felony or misdemeanor.
b. Tribunal of Paris, 11th chamber, 3d section, October 29, 2009, “Angolagate.” c. Court of Appeals of Paris, criminal chamber,
section A, March 8, 2009 (France). d. Title 18, United States Code, sec. 1956(c)(7)(B) and sec. 981. NCB confi scation actions may
be used to confi scate the proceeds of those same foreign criminal off enses, as well as assets involved in money laundering
transactions (sec. 981[a][1][C]). In such cases, the United States can seek confi scation of corruption proceeds held inside and
outside of the United States if the underlying crime occurred in the United States (sec. 1355[b][2]). e. United States of America
v. Lazarenko, 564 F.3d 1026 (9th Cir., 2009) (U.S.). f. Proceeds of Crime Act, 2002 (United Kingdom), sec. 327 and 340(2). g. Crown
Prosecution Service, Proceeds of Crime Act, 2002, Money Laundering Off enses (United Kingdom).
182 I Asset Recovery Handbook
BOX 9.4 Confi scation Proceedings Initiated by Foreign Authorities
A jurisdiction harmed by corruption offenses fi les a complaint or shares •
evidence and case fi le with authorities in a foreign jurisdiction. This
source is most often used when the jurisdiction harmed by corruption
offenses is seeking to have the case proceed in a foreign jurisdiction. In civil
law jurisdictions, those jurisdictions seeking the return of corruptly acquired
assets may also be permitted to initiate (as a civil party) criminal investiga-
tions or proceedings concerning those assets. For example, investigations
into or proceeding against the laundering of those assets.
An MLA request is submitted by a jurisdiction harmed by corruption •
offenses. An MLA request typically contains detailed information on tar-
gets, alleged offenses, and money fl ows; and this information may lead a
requested jurisdiction to initiate its own investigation into money launder-
ing, foreign bribery, or other offenses that may have been undertaken within
its territory or involving its nationals. This is done almost systematically in
Switzerland, and relatively frequently in other jurisdictions. In most cases,
two different proceedings will be conducted in the requested jurisdiction:
the fi rst will respond to the request for MLA and the second will pursue the
domestic charges of money laundering.
Media report on corruption or money laundering. • Corruption cases—
particularly those involving politically exposed persons—typically attract
substantial media coverage. That coverage may reveal links to foreign juris-
dictions, and those links may be picked up by foreign practitioners who
decide to initiate a case or by bank compliance offi cers who fi le a suspicious
transaction report (STR) that ultimately leads to an investigation.
STRs are fi led. • Financial institutions that suspect activity or transactions
are involved in money laundering or terrorist fi nancing must report their
suspicions to fi nancial intelligence units (FIUs) by fi ling STRs. The FIUs are
required to analyze the STRs and disseminate reports to law enforcement
or through the Egmont Group to other FIUs. Law enforcement agencies
may subsequently decide to open an investigation based on information
provided by the FIU.
The “extradite or prosecute” principle is applied. • Jurisdictions that refuse
to grant extradition of nationals under the United Nations Convention against
Corruption (UNCAC) have an obligation to submit the case to their domestic
authorities for prosecution, if asked by the requesting jurisdiction.
a
In France,
offenses carrying a penalty of at least fi ve years in prison will be prosecuted
whenever an extradition requested by a foreign jurisdiction is refused on
the grounds of due process or if the penalty in the requesting country is not
compatible with French public order.
b
Transfer of proceedings. • Pursuant to article 47 of UNCAC, states parties
shall consider transferring cases established in accordance with the conven-
tion where such a transfer is in the interests of the proper administration of
justice. When several jurisdictions are involved, this serves to concentrate
the prosecution of such cases.
a. UNCAC, art. 44(11); United Nations Convention against Transnational Organized Crime, art. 16(12); United Nations Convention
against Narcotic Drugs and Psychotropic Substances, art. 6(9)2. b. Criminal Code (France), art. 113–8–1.
Domestic Confi scation Proceedings Undertaken in Foreign Jurisdictions I 183
Some jurisdictions will allow complainants and civil parties access to case information,
including a copy of the case le. For example, if a prosecutor or investigating magistrate
is appointed, a copy of the case le will be provided, on request, to attorneys represent-
ing victims who have joined the action as civil parties.
272
9.4 Ensuring Recovery of Assets from the Foreign Jurisdiction
In some jurisdictions, the courts or other competent authorities will order victim
restitution from any seized or restrained assets as part of the criminal proceeding.
Such an order may take the form of an order for compensation, damages, or claims of
legitimate ownership; and it can be awarded to a jurisdiction harmed by corruption
272. Code of Criminal Procedure (France), art. 114, R.155, R.165.
BOX 9.5 Important Role of the Jurisdiction Harmed by Corruption—A
Case Example from Haiti
From May 2001 to April 2003, Robert Antoine, the former director of international
affairs for Haiti’s state-owned national telecommunications company, accepted
bribes from three U.S. telecommunications companies and laundered the bribes
through intermediaries.
Haiti was unable to proceed against Antoine or any of the intermediaries involved
because it did not have suffi cient legal provisions in place, including the neces-
sary anti-corruption offense legislation and investigative tools required to estab-
lish an offense. Haitian authorities reviewed the case with U.S. personnel and
ultimately decided that the best course of action would be to support a case initi-
ated by the United States.
The United States initiated a case against Antoine for money laundering con-
spiracy in connection with the foreign bribery scheme and cases against the
briber and the intermediaries for conspiracy to commit violations of the FCPA and
money laundering. Haitian authorities collaborated by actively seeking and pro-
viding all evidence and expertise required by the U.S. prosecutors. Assistance
was required from and provided by a range of authorities, including the fi nancial
intelligence unit, national police, and the Ministry of Justice and Public Security.
Without that specifi c collaboration, it would have been impossible to proceed in
the United States.
Antoine pleaded guilty to the offenses and was sentenced in June 2010 to 48
months in prison. He was ordered to pay $1,852,209 in restitution and more than
$1,500,000 was confi scated.
a
A discussion of the sharing of the proceeds is
ongoing.
a. Department of Justice, Offi ce of Public Aff airs, “Former Haitian Government Offi cial Sentenced for His Role in Money
Laundering Conspiracy Related to Foreign Bribery Scheme,” news release, June 2, 2010, http://www.justice.gov/opa/pr/2010/
June/10-crm-639.html.
184 I Asset Recovery Handbook
o enses.
273
Any assets not ordered returned through such an order is likely to become
the property of the foreign jurisdiction. As a result, the jurisdiction seeking to recover
assets should consider, at the outset, whether recovery or sharing of these con scated
proceeds will be possible. Depending on the jurisdiction and the procedures fol-
lowed, recovery may be available through international conventions, MLA treaties,
asset sharing agreements, or legislation. Even if a foreign jurisdiction independently
initiates a case, the jurisdiction harmed by corruption o enses may be able to avail
itself of procedures to obtain restitution of the assets.
9.4.1 Claiming Ownership of Stolen Assets during
Criminal Investigations
In some jurisdictions, claiming ownership of stolen assets is possible at an early stage of
an investigation.
274
When assets are found and the o ender remains unknown, the
prosecutor or investigating magistrate will attempt to establish or determine whether
the assets are the proceeds or an instrumentality of the alleged o ense. If a connection
is established, restitution of the restrained assets may be ordered. ese orders can be
appealed.
9.4.2 Direct Recovery of Assets through Foreign Courts
Many courts will order direct recovery to a foreign jurisdiction that can demonstrate its
status as a victim or a legitimate owner of the asset. is practice is included in interna-
tional agreements and will permit courts to order compensation or damages to the
jurisdiction harmed by corruption o enses and allow courts or competent authorities
to recognize the jurisdiction’s claim as a legitimate owner of an asset in con scation
proceedings.
275
Direct recovery is o en facilitated through the participation of the jurisdiction harmed
by corruption o enses, whether as a plainti in a civil action, a complainant or victim
(plainti ) in a domestic proceeding, or a civil party to a criminal action. In jurisdictions
that allow the injured party to join as a civil party, the jurisdiction harmed by corrup-
tion o enses has the opportunity to apply to the court for damages or compensation.
Otherwise, the jurisdiction will need to discuss potential compensation or damages
with the prosecutor, who can then apply to the court for the order. Box 9.6 o ers exam-
ples of direct recovery in practice.
e treatment of a claim for damages in the event of acquittal varies among jurisdic-
tions. In some places, the claim cannot be considered and the injured party must le a
civil action for damages. In others, the court may reach a decision on damages despite
the acquittal if the facts are su ciently established.
273. UNCAC, art. 53.
274. France and Switzerland permit this procedure.
275. UNCAC, art. 53.
Domestic Confi scation Proceedings Undertaken in Foreign Jurisdictions I 185
9.4.3 Recovering Assets Pursuant to Treaties, Agreements,
or Statutory Authorities
Several international conventions introduce obligations on the return of assets.
276
To
enforce these international conventions—or when international conventions do not
276. UNCAC, art. 57; UNTOC, art. 14; United Nations Convention against Narcotic Drugs and Psychotro-
pic Substances, art. 5. Note that the UNCAC provisions set forth mandatory requirements on the return of
BOX 9.6 Direct Recovery in Practice
Civil party to criminal proceedings. • In France, article 2 of the Code of
Criminal Procedure provides that a victim may obtain civil compensation
from a criminal law court offense if the plaintiff is able to prove personal and
direct damage resulting from the corrupt act. In a corruption case involving
the former mayor of Cannes, the city of Cannes—which joined as a civil
party to the criminal action—was able to obtain from the court an order for
damages, but was not granted material compensation. The damages were
awarded on the basis of the loss of reputation; the compensation order
was refused on the basis that the damage suffered was the consequence
of a ministerial decision to revoke and refuse a license rather than a conse-
quence of corruption.
Compensation pursuant to a criminal plea agreement. • In the United
Kingdom, a bridge-building company, Mabey & Johnson Ltd., pled guilty to
conspiracy relating to the payment of bribes to public offi cials in Ghana and
Jamaica and to “making funds available” in connection with illegal kickbacks
to the Saddam Hussein regime in Iraq through contracts awarded under
the United Nations Oil-for-Food Program. The company admitted that, but
for the bribe, the contract would have been for less money and that the
Iraqi people lost out on funds diverted to pay the kickback.
a
The settlement included £4.6 million (approximately $7.2 million) in criminal
penalties and an additional £2 million (approximately $3.1 million) in repara-
tions and costs to be paid to the governments of Ghana, Iraq, and Jamaica.
With regard to the Iraq case, confi scation was awarded for the value of the
contract, €4.22 million plus interest (approximately $5.41 million), and
compensation of £618,484 (approximately $969,100) was awarded to the
Iraqi people (Development Fund for Iraq).
Compensation through a civil action. • In a case involving funds and real
estate in London held in the name of a corrupt Nigerian offi cial, investiga-
tions conducted by the Metropolitan London Police resulted in a property
manager being criminally convicted of money laundering. Following this
conviction, a civil action brought in the London High Court by a U.K. law
fi rm resulted in the recovery of stolen assets to the benefi t of Nigeria.
a. A news release and the prosecution’s opening statements are available at http://www.sfo.gov.uk/press-room/latest-press-
releases/press-releases-2009/mabey—johnson-ltd-sentencing-.aspx.
186 I Asset Recovery Handbook
apply—multilateral and bilateral treaties (such as MLA treaties), agreements, and statu-
tory authorities are o en used to allow for the return of assets.
If no obligation to return con scated assets is in place, multilateral and bilateral asset
sharing agreements between jurisdictions may set out speci c procedures for these
sharing mechanisms.
277
Such agreements may be negotiated on a case-by-case basis or,
more expediently, through an ongoing sharing agreement designed to cover all sharing
cases that arise.
278
Some jurisdictions prefer to negotiate a sharing arrangement either
before providing the requested restraint or following the restraint but before the entry
of a nal order of con scation.
Con scated assets may also be returned under an ad hoc agreement with the requesting
jurisdiction. In the absence of a treaty or agreement, some jurisdictions will have statutory
provisions that give the state, the government, or a competent authority the discretion
to return assets. Box 9.7 describes some of the asset return options that are available in
Switzerland.
assets, as opposed to the discretionary requirements outlined in UNTOC and the United Nations Conven-
tion against Narcotic Drugs and Psychotropic Substances.
277. Sharing agreements are also included in the following international agreements: UNCAC, art. 57;
UNTOC, art. 14; United Nations Convention against Narcotic Drugs and Psychotropic Substances, art. 5.
278. In the United States, the formal sharing agreement is not con rmed until the conclusion of the case,
and it is based on the amount of cooperation provided by each jurisdiction: 50–80 percent of con scated
assets if the foreign jurisdiction provided essential assistance, 40–50 percent in the case of “major assis-
tance,” and up to 40 percent if the foreign jurisdiction provided “facilitating” assistance.
BOX 9.7 Asset Return Options Available in Switzerland
Assets in Switzerland are returned to their legitimate owner if the judge is “inti-
mately convinced” that the assets are linked to the crime and that ownership is
clearly established. If ownership is uncertain or cannot be determined (as with
funds transferred, withdrawn, or mingled with other amounts of money), the
judge will order confi scation of the proceeds of crime or assets, and the confi s-
cated assets will become the property of the government of Switzerland. The
jurisdiction seeking recovery of stolen assets may be able to negotiate with
Swiss political authorities to obtain the return of confi scated assets on the basis
of specifi c agreements or discretionary decisions. Alternatively, the criminal court
may order the equivalent of contractual or tort damages to the jurisdiction seek-
ing redress.
Appendix A. Offenses to Consider in
Criminal Prosecution
breach of public procurement
regulations
•
•
collusion
•
forgery / falsification of documents
•
accounting crimes
•
tax violations
•
customs fraud / smuggling
•
mail and wire fraud
•
conspiracy
•
assistance by aiding or
abetting
•
obstructio
n of justice
Misappropriation
or Diversion of
Funds and
Property
theft or larceny
embezzlement
fraud, false pretenses,
misrepresentation
conversion or transfer of property
concealment and disguise
acquisition, possession, or use of
proceeds of crime
Possible
Corruption Case
Charges
Bribery and
Related
Offenses
Laundering,
Concealment,
Acquisition,
Possession, or
Use of Proceeds
of Crime
Facilitating
Crimes
bribery (national and foreign
public officials)
trading in influence
abuse of functions
illicit enrichment
conflict of interest
illegal financing of political
parties or campaigns
extorting
FIGURE A.1
Criminal Charges to Consider
Source: Authors’ illustration.
188 I Asset Recovery Handbook
Misappropriation or Diversion of Funds and Property (United Nations
Convention against Corruption [UNCAC], article 17)
e or larceny.• ese crimes are generally de ned as the unlawful appropria-
tion of personal and tangible assets with the intention of depriving the legitimate
owner of this property. In this case, assets are simply taken without the consent of
the legitimate owner (or, in some jurisdictions, with consent obtained by fraud).
Unauthorized harvesting in protected areas or public forests, or looting cash,
checks, and other nancial instruments from a central bank are well-known
examples of the committed by public o cials. In many jurisdictions, real prop-
erty, services or intangible assets are not included in the de nition of larceny.
Embezzlement.• is o ense is generally de ned as the fraudulent transfer of
property by an individual or legal entity in lawful possession of assets belonging
to another individual or legal entity. is criminal o ense applies to public o -
cials or executives who misappropriate or misuse funds or property that they are
supposed to manage for a government entity (central, local, or city government;
government agency; or state-owned company). It involves violation of the terms
of a trust agreement authorizing the o ender to hold the assets and manage them
in the interest of the legitimate owner. In several jurisdictions, embezzlement
does not apply to the misappropriation of real estate or services. Examples of
embezzlement include hiring and paying employees who do not perform their
duties (no-show jobs), purchasing goods or services at above-market rates (over-
billing), paying fees for nonexistent goods or services that do not correspond to a
real counterpart ( ctitious billing).
Fraud, false pretenses, and misrepresentation.• ese o enses are generally
de ned as the acquisition of a title or the possession of property belonging to
another person by intentional deception, or false statements of past or existing
fact. In some jurisdictions, the applicable o ense may be considered to be larceny
or the by trick if only possession of property is obtained. In other jurisdictions,
the crime will extend to obtaining possession of the property even in the absence
of title. Although the de nition of this o ense is always based on intentional
deception, the speci c legal de nition of deceptive actions may vary. Here is a
typical example: a public o cial instructs his subordinates to pay money or grant
loans to ctitious companies that have no real business activity and are managed
by straw men or the o cial’s relatives.
Bribery, Trading in Infl uence, Abuse of Functions, and Related Offenses
Bribery of national public o cials (UNCAC, article 15).• Consists of intentionally,
(a) directly or indirectly promising, o ering, or giving to a public o cial an
undue advantage for the o cial himself or herself or for another person or
entity in return for the o cial acting or refraining from acting in the exer-
cise of his or her o cial duties;
Offenses to Consider in Criminal Prosecution I 189
(b) directly or indirectly soliciting or accepting as a public o cial an undue
advantage for oneself or for another person or entity in return for acting or
refraining from acting in the exercise of one’s o cial duties.
Bribery of foreign public o cials and o cials of public international organi-•
zations (UNCAC, article 16). Consists of intentionally,
(a) either directly or indirectly promising, o ering, or giving a foreign public o -
cial or an o cial of a public international organization an undue advantage
for the o cial himself or herself or for another person or entity in return for
the o cial acting or refraining from acting in the exercise of his or her o cial
duties in a way that enables the o ender to obtain or retain business or other
undue advantage in relation to the conduct of international business;
(b) either directly or indirectly soliciting or accepting as a foreign public o cial
or an o cial of a public international organization an undue advantage for
oneself or for another person or entity in return for acting or refraining
from acting in the exercise of one’s o cial duties.
Trading in in uence (UNCAC, article 18).• Consists of intentionally,
(a) directly or indirectly promising, o ering, or giving a public o cial or any
other person an undue advantage in return for the public o cial or other
person abusing his or her real or supposed in uence with a view to obtain-
ing from an administration or public authority of the state party an undue
advantage for the original instigator of the act or for any other person;
(b) directly or indirectly soliciting or accepting as a public o cial or any other
person an undue advantage for oneself or for another person in return for
abusing one’s real or supposed in uence with a view to obtaining an undue
advantage from an administration or public authority of the state party.
Abuse of functions (UNCAC, article 19).• Consists of a public o cial perform-
ing or failing to perform an act, in violation of laws, in the discharge of his or her
functions, for the purpose of obtaining an undue advantage for himself or herself
or for another person or entity.
Illicit enrichment (UNCAC, article 20).• Generally de ned as “a signi cant
increase in the assets of a public o cial that he or she cannot reasonably explain
in relation to his or her lawful income.” Authorities prosecuting illicit enrichment
are not required to demonstrate the illegal origin of property to obtain convic-
tions or con scation orders. It will be su cient to show that the legitimate income
of a public o cial cannot explain an increase in assets or expenditures. e public
o cial must then explain how the property in question accrued from legal sources
(see box A.1 for an example from France).
Con ict of interest.• In some jurisdictions, it is a crime for public o cials to take or
accept any direct or indirect interest in any grant, contract, or decision subject to his
or her opinion, supervision, control, or administration. In many jurisdictions, it is a
crime for public servants whose duties include supervising private activities or com-
panies to take a nancial interest in those activities or companies. e typical exam-
ple of con ict of interest is a public o cial’s awarding of a government contract to a
company for which the o cial has direct or indirect ownership or control.
190 I Asset Recovery Handbook
Illegal nancing of political parties or campaigns.• Covered by statutes pro-
scribing the illicit nancing of political activities and those relating to corruption,
these schemes typically involve contractors who in ate the price of government
contracts. From the proceeds of overbilling, these contractors relay funds to “taxi”
rms (so called because they receive the equivalent of illicit taxes) that submit
forged invoices. In return, these taxi rms nance political activities. ese
schemes also fall under racketeering or extortion statutes when it is clear that
reluctant contractors will lose government business if they refuse to participate in
these schemes.
Extortion.• In some jurisdictions, this crime is de ned as the collection of unlaw-
ful fees by a public o cial in his or her o cial capacity by means of oral or writ-
ten threats, fear, coercion, and intimidation.
Laundering, Concealment, Acquisition, Possession, or Use
of the Proceeds of Crime
ese o enses are de ned in UNCAC, articles 23 and 24 as the •
(a) conversion or transfer of property, knowing that such property is the pro-
ceeds of crime, for the purpose of concealing or disguising the illicit origin
of the property or of helping any person who is involved in the commission
of the predicate o ense to evade the legal consequences of his or her
action;
(b) concealment or disguise of the true nature, source, location, disposition,
movement, or ownership of or rights with respect to property, knowing that
such property is the proceeds of crime;
BOX A.1 Illicit Enrichment Provisions in France
In France, the following two provisions of the Criminal Code are relevant in the
context of illicit enrichment:
Conviction proceedings. • Article 321-6 provides that a person can be con-
victed because of his or her “inability to justify an income corresponding to
his lifestyle or the origin of a property, while maintaining regular relation-
ships with one or more persons involved in felonies or misdemeanors pun-
ishable by at least fi ve years imprisonment and from which they drew a
direct or indirect benefi t, or who are the victims of these offences.” This
offense is punishable by three to seven years’ imprisonment and allows the
confi scation of the convicted person’s entire assets.
Confi scation proceedings. • Article 131-21 provides that confi scation may
be carried out on all properties of the defendant, unless he or she can jus-
tify those properties are of legitimate origin. The offense must be punisha-
ble by at least fi ve years’ imprisonment and must have procured a direct or
indirect profi t.
Offenses to Consider in Criminal Prosecution I 191
(c) acquisition, possession, or use of property, knowing at the time of receipt
that such property is the proceeds of crime;
(d) participation in; association with; conspiracy to commit; attempts to com-
mit; and aiding, abetting, facilitating, and counseling the commission of any
of the o enses established in accordance with this article; and
(e) concealment or continued retention of property when the person involved
knows that such property is the result of corruption o enses.
Money laundering o enses will usually be applicable to all nancial or non nan-•
cial institutions, businesses, individuals, and intermediaries who knowingly
engage in transactions intended to disguise the illicit source of the property.
Money laundering charges should be considered in plotting asset recovery strat-
egy because corrupt o cials need to invest or to spend illegally derived property
in nancial centers. In many corruption cases, money laundering schemes facili-
tate the commission of the corruption o ense. In particular, a company may pay
ctitious invoices, with the funds going to o shore accounts held by contractors
or consultants. ose intermediaries then use the funds to bribe corrupt public
o cials on behalf of the company. In most legal jurisdictions, the organization of
such slush funds falls under money laundering statutes.
Facilitating Crimes
Breach of public procurement regulations.• When public o cials fail to comply
with procurement regulations, they frequently intend to grant an undue advantage
to certain government contractors. As an example, a public o cial in charge of
procurement operations may provide a bidder with sensitive information, includ-
ing government cost estimates, to ensure that this potential contractor will enjoy a
signi cant advantage. Similarly, large procurement contracts may be arti cially
divided into smaller “slices” to avoid a competitive bidding process that would be
mandatory, given the total cost of the project. Or, during the execution of a contract,
administrative o cers may agree to pay for goods that are not delivered, for services
that are not rendered, or for a quantity or quality of goods that does not correspond
to the provisions of the contract. Government contracts awarded or executed at
signi cantly in ated costs illicitly bene t the contractor. In return, kickbacks or
other advantages received from this contractor may reward the public o cial.
Collusion.• is o ense criminalizes (usually secretive) agreements that occur
between two or more persons to deceive, mislead, or defraud others of their legal
rights; to obtain an objective forbidden by law; or to gain an unfair advantage. In
particular, secret agreements among rms or between a rm and a public o cial
to limit or organize competition or set prices in public procurement will be fre-
quently encountered in corruption cases. A public o cial who dra s work state-
ments or terms of reference for a competitive bidding process based on informa-
tion provided by a potential bidder commits collusion.
Forgery/falsi cation of documents.• is o ense involves forging or altering the
substance, the date, or the signatures of parties or witnesses in any private or
public documents having the e ect of an obligation, discharge, or disposition.
192 I Asset Recovery Handbook
Accounting crimes.• A very common tool to organize or facilitate corruption or
misappropriation of funds, accounting crimes include falsifying accounts, books,
records, or nancial statements. In particular, companies will issue or record c-
titious or false invoices to justify and conceal improper payments to intermediar-
ies, to manage slush funds, and to pay bribes. A very common scheme consists of
private rms paying false invoices submitted by intermediaries posing as consul-
tants who use the funds to bribe o cials. In this case, the accounts of both the
company and the “consultant” will record ctitious transactions.
Tax violations.• Schemes involving the misrepresentation of transactions in the
accounts or the nancial records of a company will result in the over- or underes-
timation of assets, revenues, or expenses; and illegally will modify taxable reve-
nues or deductible expenses. is is typically the case for ctitious or falsi ed
invoices that increase purchase accounts, reducing the taxable pro t of an entity.
Customs fraud/smuggling.• Corruption, misappropriation of assets, and money
laundering frequently involve illegal transportation of money or the transfer of
goods out of or into the victim country. Customs fraud may also involve the duty-
free import of goods that will supposedly transit the country, but are actually
illegally sold within the country.
Mail and wire fraud.• Some jurisdictions criminalize mail and wire fraud. For
example, in the United States it is a crime to devise a scheme to defraud or to
obtain money or property by means of false or fraudulent pretenses, and to use
the mail or telecommunications infrastructure (telephone, facsimile transmis-
sions, and e-mail) to execute the plan. is criminal o ense is also applicable to
public o cials who obtain money in ways that may not be commonly de ned as
illicit.
Conspiracy.• is o ense involves agreements between two or more persons to
break the law at some time in the future. Actions agreed to in conspiracy o en
include fraud, corruption, and misappropriation of property. In some jurisdic-
tions, conspiracy charges can be lodged only if malefactors commit at least one
overt act in furtherance of the conspiracy agreement.
Assistance by aiding or abetting.• An accomplice takes no part in a criminal
o ense, but participates by assisting the principal o ender. Subject to prosecution
for the same crime, the accomplice faces the same criminal penalties.
Obstruction of justice (UNCAC, article 25).• Consists of
(a) the use of physical force, threats, or intimidation; or the promise, o ering,
or giving of an undue advantage to induce false testimony or to interfere in
the giving of testimony or the production of evidence in a proceeding in
relation to the commission of o enses established in accordance with this
convention; and
(b) the use of physical force, threats, or intimidation to interfere with the exer-
cise of o cial duties by a justice or law enforcement o cial in relation to the
commission of o enses established in accordance with this convention.
Appendix B. Explanation of Selected
Corporate Vehicles and Business Terms
“Corporate vehicle” is a broad concept that refers to all forms of legal entities and legal
arrangements through which a wide variety of commercial activities are conducted and
assets are held. Below are de nitions, descriptions, and examples of a range of such
vehicles and related business terms.
Agency: Under an agency relationship, the principal (normally, the client) engages an
agent to perform duties by agreement. Examples of a principal agent relationship are
client and attorney/accountant or employer and employee. An agent may create a cor-
porate vehicle or open a bank account or perform management services on behalf of
the principal, but may not do so in his or her own name. Unlike a trust, there is no
conveyance of title to the account assets when the agency relationship is established;
legal title to the property remains with the principal.
Association: is is a membership-based organization whose members (legal or nat-
ural persons) or their elected representatives constitute the highest governing body
of the organization. An association may be formed to serve the public bene t or the
mutual interest of members. Whether an association is a legal entity o en depends
on registration. Registered associations may enjoy the same bene ts as other legal
entities.
Bearer share: is negotiable instrument accords ownership of a corporation to the
person who possesses the bearer share certi cate. e person who has physical posses-
sion of the bearer share certi cate is deemed to be the lawful shareholder of the corpo-
ration that issues such bearer share, and he or she is entitled to all of the rights of a
shareholder. Many jurisdictions have introduced safeguards to ensure that these instru-
ments are not abused—for example, immobilization or dematerialism. Immobilization
requires that bearer shares be deposited with the authorities or a licensed corporate
service provider. Bearer shares are dematerialized when the bearer shareholder must
report his or her identity to vote the shares, collect their dividends, or hold a certain
level of control.
Bene cial owner: A bene cial owner is the natural person who ultimately owns or
controls the corporate vehicle or bene ts from its assets, the person on whose behalf a
transaction is being conducted, or both. e term also encompasses those persons who
exercise ultimate e ective control over a legal person or arrangement.
Chain of corporate vehicles: is term generally refers to groups of two or more cor-
porate vehicles connected through legal ownership.
194 I Asset Recovery Handbook
Control: e term means the direct or indirect possession of the power to direct or
cause the direction of the management and policies of a corporate vehicle.
Corporate director: ese are corporate entities, not natural persons, that serve as and
perform the duties of a director for another corporate entity.
Corporation: Corporations maintain a legal personality separate from their sharehold-
ers, the owners. Control of a corporation is ordinarily vested in the board of directors,
and shareholders have limited power to manage the corporation directly. Powers
granted to shareholders usually include the right to elect directors, to participate and
vote in general shareholders’ meetings, and to approve extraordinary transactions that
e ectively result in the sale of the company. A corporation typically enjoys unlimited
duration. In most cases, the shareholders of a corporation are granted limited liability
protection, which means that their liability to the company and the company’s creditors
is limited to their investment. Many o shore jurisdictions o er registration for foreign/
o shore companies and international business corporations/exempt companies. For-
eign/o shore companies are companies incorporated in a di erent jurisdiction, but
registered to do business in the host jurisdiction. International business corporations/
exempt companies are companies incorporated in the host jurisdiction, but not permit-
ted to do local business. ese latter rms generally receive an exemption from local
taxes.
Designated non nancial businesses and professions: is term encompasses casinos
(including Internet-based casinos), real estate agents, dealers in precious metals, deal-
ers in precious stones, lawyers, notaries, other independent legal professionals and
accountants, and trust and company service providers.
Enforcer: For a purpose trust or a foundation, an enforcer is the person who holds the
rights to enforce the trust and to apply to the courts, if necessary. For charitable trusts,
the enforcer is usually the senior law o cer of the jurisdiction—the attorney general or
some equivalent authority. But for non-charitable purpose trusts, a separate person,
accountable to the court, is appointed.
Foreign/o shore company: ese companies are incorporated in a di erent jurisdic-
tion, but registered to do business in the host jurisdiction.
Foundation: A foundation is a legal entity that consists of a property that has been
transferred into it to serve a particular purpose and has no owners or shareholders.
Foundations are ordinarily managed by a board of directors, according to the terms of a
foundation document or constitution. Some jurisdictions restrict foundations to public
purposes (public foundations); other jurisdictions allow foundations to be established
to ful ll private purposes (private foundations). Common law jurisdictions generally
permit the formation of companies limited by guarantee (essentially equivalent to a
civil law foundation), but regulated by company law. Some of these jurisdictions also
permit companies to be limited by guarantee and have shares (hybrid companies). A
hybrid functions as a foundation, but issues shares like a company.
International business corporation (IBC): is vehicle, sometimes called an exempt
company, is the primary corporate form employed by nonresidents in o shore nancial
Explanation of Selected Corporate Vehicles and Business Terms I 195
centers. An IBC has the features of a corporation, but is not permitted to conduct busi-
ness within the incorporating jurisdiction and is generally exempt from local income
taxes. In most jurisdictions, an IBC is not permitted to engage in banking, insurance,
and other nancial services.
Legal owner: e legal owner of a corporate vehicle is de ned as the natural person,
legal entity, or combination of both recognized by law as the owner of the corporate
vehicle.
Legal person: e term refers to bodies corporate, foundations, anstalts, partnerships,
associations, or any similar bodies that may establish a permanent customer relation-
ship with a nancial institution or otherwise own property.
Letter of wishes: is letter, which o en accompanies discretionary trusts, sets out the
settlor’s wishes regarding how he or she desires the trustee to carry out trustee duties,
from whom the trustee should accept instructions, and who the bene ciaries should be
(may include the settlor himself or herself). Although a letter of wishes is not legally
binding on trustees, the trustee usually follows the wishes expressed there.
Limited liability company (LLC): is is a business entity that provides limited liabil-
ity to its owners (known as members). Unlike a corporation that has a legal personality
separate from its owners, an LLC is deemed to be a ow-through vehicle for tax pur-
poses. erefore, it permits pro ts and losses to be allocated to, and taxed at, the mem-
ber level. An LLC may be managed either by members themselves or by one or more
separate managers engaged by the LLC under the terms contained within its articles of
organization.
Nominee director: is person appears as the registered director in a company on
behalf of another person (normally undisclosed) who is called the bene cial owner. In
some nominee director arrangements, a con dential legal document (such as a man-
date agreement, a nominee services agreement, or something similar) is issued by the
nominee and held by the bene cial owner. When the nominee director is a corporate
entity, the nominee is referred to as a corporate director. Certain jurisdictions do not
recognize nominee directors. Consequently, a person who accepts a directorship is
subject to all of the requirements and obligations of a director (including duciary
obligations), notwithstanding the fact that he or she is acting as a nominee. In certain
jurisdictions, nominee directors cannot be indemni ed by the bene cial owner.
Nominee shareholder: is is a company or person who appears as the registered
shareholder in a company, but who holds the shares on behalf of another person (nor-
mally undisclosed) who is called the bene cial owner. Sometimes, in a nominee share-
holder arrangement, a con dential legal document (such as a declaration of trust, a
deed of transfer, a nominee services agreement, or something similar) is issued by the
nominee and held by the bene cial owner. With respect to publicly traded shares,
nominees who, for example, are registering shares in the names of stockbrokers are
commonly and legitimately used to facilitate the clearance and settlement of trades.
Partnership: A partnership is an association of two or more individuals or entities
formed for the purpose of carrying out business activity. In contrast to corporations,
196 I Asset Recovery Handbook
traditional partnerships are entities in which at least one (in the case of limited partner-
ships) or all (in the case of general partnerships) partners have unlimited liability for
the obligations of the partnership. In a limited partnership, the limited partners enjoy
limited liability, provided that they do not participate actively in management decisions
or bind the partnership. In recent years, certain jurisdictions have introduced limited
liability partnerships whereby all partners, regardless of the extent of their involvement
in the management of the partnership, have limited liability. For tax purposes, partner-
ships are deemed to be ow-through vehicles that permit pro ts and losses to be allo-
cated to and taxed at the partner level.
Power of attorney: A power of attorney or letter of attorney in common law systems,
or a mandate in civil law systems, is an authorization to act on someone else’s behalf in
a legal or business matter. e person authorizing the other to act is the principal,
grantor, or donor of the power; and the one authorized to act is the agent, the attorney-
in-fact, or (in many common law jurisdictions) simply the attorney.
Private trust company (PTC): is vehicle is a corporation formed for the express and
sole purpose of acting as the trustee of a speci c trust or a group of trusts, where each
trust bene ciary is a connected person in relation to the settlor of the trust, and each
settlor of such a trust is a connected person in relation to any other settlor of any other
trust to which that corporation provides trust business services. “Connected person”
includes all relationships established by blood, marriage, and adoption. PTCs must not
solicit trust business from nor provide trust business services to the public. Normally, a
PTC will be managed by its board of directors, comprising a combination of family
members or representatives and professionals who are experienced in trust law and
administration.
Protector: e protector to a company, trust, or foundation is the person who is given
supervisory power over the company, trust, or foundation. e supervisory power
granted to the protector is determined by the incorporator, settlor, or founder. Although
the protector is not a trustee, director, or foundation council, he or she does have the
right to full information—including the right to attend organizational meetings. e
protector may also have veto powers in certain key areas, such as fees, the timing and
recipients of distributions, and the appointment of bene ciaries; and may have the
power to hire and re trustees and directors.
Purpose trust: In this trust, the trust fund is held by the trustees to meet prescribed
purposes rather than for the bene t of the bene ciaries. Purpose trusts may be chari-
table or non-charitable, depending on the jurisdiction. Asset protection trusts are a
type of purpose trust.
Shelf company: is term is generally used to describe an arrangement where a com-
pany is incorporated (with a standard memorandum or articles of association and with
inactive shareholders, directors, and secretary) and le dormant for the purpose of later
being sold. When the shelf company is sold, the inactive shareholders transfer their
shares to the purchaser, and the directors and secretary submit their resignations. On
transfer, the purchaser also receives the companies’ credit and tax history.
Explanation of Selected Corporate Vehicles and Business Terms I 197
Shell company: is company has no independent operations, signi cant assets, ongo-
ing business activities, or employees. Shell companies are not illegal and may have legit-
imate business purposes.
Trust: is vehicle provides for the separation of legal ownership from bene cial own-
ership. It is an arrangement whereby property (including real, tangible, and intangible)
is managed by one person for the bene t of others. A trust is created by one or more
settlors who entrust property to the trustee or trustees. e trustees hold legal title to
the trust property, but are obliged to hold the property for the bene t of the bene cia-
ries (usually speci ed by the settlors who hold what is termed equitable title). e trust-
ees owe a duciary duty to the bene ciaries, who are the bene cial owners of the trust
property. e trust is not, of itself, an entity having legal personality. Any transactions
undertaken by the trust are undertaken in the names of the trustees. Although the
trustees are the legal owners, the trust property constitutes a separate fund that does
not form part of the trustees’ personal estates. us, neither the personal assets nor the
personal liabilities of the trustees attach to the trust, and the trust assets are accordingly
insulated from any personal creditors of the trustees.
Trust and company service provider: e term refers to any person or business pro-
viding any of the following services to third parties: acting as a formation agent of legal
persons; acting as (or arranging for another person to act as) a director or secretary of
a company, a partner of a partnership, or a similar position in relation to other legal
persons; providing a registered o ce, business address or accommodation, a corre-
spondence address, or an administrative address for a company, partnership, or any
other legal person or arrangement; acting as (or arranging for another person to act as)
a trustee of an express trust; acting as (or arranging for another person to act as) a
nominee shareholder for another person.
Financial Intelligence Unit
To : Chief of Police, Prosecutor’s O ce, or Other Competent Authority
From : Director, Financial Intelligence Unit
Date : March 1, 2010
Subject : John Smith Charity Fund
STRICTLY CONFIDENTIAL
is document is con dential and is to be considered as law enforcement–sensitive
nancial information. e data contained in this document are to be used only for
intelligence purposes; are not to be disseminated or disclosed, in whole or in part, to
any person, agency, or organization; and may not be used in any judicial or admin-
istrative proceeding, without the prior written consent of the nancial intelligence
unit.
is case was initiated by the nancial intelligence unit (FIU) a er the FIU received a
suspicious transaction report (STR) indicating there are irregularities in an account
related to the John Smith Charity Fund. e irregularities indicate that the John Smith
Charity Fund could be involved in possible money laundering violations or in viola-
tion of other provisions of the Money Laundering Act.
On January 25, 2010, the FIU received an STR concerning suspicious transactions of the
John Smith Charity Fund. e FIU discovered that account number 17026557 was
involved in roughly 48 suspicious transactions of $9,000.00 each. is account number
belongs to a nongovernmental organization (NGO) named the John Smith Charity
Fund. is NGO was registered with number 5110282 as the John Smith Charity Fund
on March 23, 2007, under Regulation 1985, section 18 on the Registration and Opera-
tion of NGOs. Registration certi cate carries serial number 99951. Contact address of
this NGO is 100 Palm Street, Smithville, Smith Islands, mobile number 255-401-050,
fax number 251-401-202. General activity of this NGO as stipulated within the registra-
tion documents is “Developing of donations from Smith Island citizens, and from insti-
tutions and nongovernment organizations and charity organizations, organizing of con-
certs, theatre plays, and sports matches.” ere are three founders of this NGO:
Robert FRANK,1. D.O.B. May 1, 1970, in Jonesville, Smith Islands; ID 1000718145;
address 195 Palm Street, Smithville; mobile 255-505-233; current minister of
Appendix C. Sample Financial
Intelligence Unit Report
200 I Asset Recovery Handbook
sports and gaming; member of Alliance for the Smith Islands (ASI) political
party; rst cousin of the current prime minister, omas MARK.
Betty FRANK2. , D.O.B. May 17, 1975, in Jonesville, Smith Islands; ID 1009875847;
address 195 Palm Street, Smithville; mobile 255-211-440; email betty.frank@
gmail.com; spouse of Robert FRANK.
Anthony SMITH, 3. D.O.B. June 14, 1965, in Marksville, Smith Islands; ID
1000719109; address 8097 Yankee Way, Marksville; mobile 255-540-050; email
tony[email protected]; person authorized to open and operate the John Smith
Charity Fund bank accounts in Peoples Bank, Mountain Bank, and River Bank;
businessman, co-owner of Smithville Brewery; second cousin of Robert FRANK;
current adviser to Prime Minister MARK, and treasurer of ASI political party.
Account 17026557 opened in Peoples Bank. Peoples Bank holds the above-mentioned
account, no. 17026557. Between March 31, 2008, and January 3, 2009, it recorded a
total cash ow of $733,987.52. Anthony SMITH signed the deposit orders for the sus-
picious deposits described above. On at least three occasions, SMITH went to Peoples
Bank with several hundred thousand dollars in new $100 notes in stacks of 100 notes
each. He told bank o cials that the money represented donations to the John Smith
Charity Fund from several people, and that he was there to deposit the money into the
fund account. On each occasion, he proceeded to complete several deposit orders,
mostly in the sum of $9,000 (although a few were for lesser sums), signing each deposit
order with his own name. At present, no information is available regarding the actual
source of the currency deposited.
Between August 19, 2008, and June 24, 2009, a total amount of $492,000 was deposited
in this account. Most of this money was 48 deposits of $9,000. Money was deposited as
follows:
Date Number of deposits Value/deposit ($)
08/19/2008 5 9,000
09/05/2008 20 9,000
09/05/2008 1 10,000
09/05/2008 3 5,000
09/06/2008 20 9,000
09/06/2008 7 5,000
09/20/2008 2 9,000
10/03/2008 1 9,000
ere were roughly 59 transactions in the fund account. Most of the roughly 48 cash
deposits were for $9,000, and were deposited by one individual. e NGO John Smith
Charity Fund opened accounts in all banks that operate in the Smith Islands. Anthony
SMITH is an authorized person on all of the accounts. Since January 1, 2008, the total
turnover in these accounts is roughly $1,766,039.47.
Identify assets in bank accounts and take steps to secure them, either in advance •
of the search or simultaneously (for example, through freezing orders).
Identify the type of location to be searched—residence, business.•
Determine the probability that civilians or non-targets will be present, and plan •
accordingly. Avoid peak business times, if possible.
Consider closing the business during execution of the warrant, if appropriate.•
Determine the number of o cers required to conduct a safe and thorough •
search.
Take necessary precautions to maintain operational integrity. Don’t let the •
target(s) get word of an impending search.
Execute the warrant in accordance with the authorization—that is, during nor-•
mal business hours.
If permitted by law and if bene cial to the investigation, consider executing the •
search warrant a er normal business hours.
Determine if the location is out tted with an alarm system or has armed security •
personnel, cameras, canine patrol, and the like. Plan the operation accordingly.
Provide a comprehensive brie ng to all o cers involved in the execution of the •
warrant.
Include in the brie ng any relevant intelligence about the target(s) and location(s) •
to be searched.
Provide maps, schematic drawings, or other pertinent information about the •
residence(s) or business(es), if available.
Assign a role to each o cer involved in the warrant execution. Assignments •
should be made by the lead investigator. Some of these roles include the fol-
lowing:
°
An entry team enters rst and secures the premises so that other o cers can
conduct a safe and thorough search. is team should disconnect telephone
lines when it enters the premises.
°
A perimeter team may be useful when conducting a search in a hostile envi-
ronment. ese o cers provide security in the area and allow the search team
to conduct a safe and thorough search.
°
Search o cers work in teams of two, if possible, to help avoid or refute any
accusations of evidence planting. e lead investigator may identify speci c
places to be searched by each team.
°
A videographer/photographer records the execution of the warrant and docu-
ments where evidence is discovered. Where it is appropriate, remember to
Appendix D. Planning the Execution of a
Search and Seizure Warrant
202 I Asset Recovery Handbook
demonstrate scale when taking photos: place a ruler or other object that indi-
cates size alongside object(s) being photographed.
°
An evidence custodian receives and records all evidence discovered and seized
by search o cers, thus maintaining a chain of custody record.
°
An interview team, including the lead investigator, should be identi ed during
the planning stage. If target(s) are present and agree to be interviewed, ques-
tioning should occur in an area that is conducive to interviews and does not
impede the ongoing search.
°
A computer forensic specialist may be helpful in gathering and securing evi-
dence. Electronic and computer data must be gathered in a manner that avoids
its loss, destruction, or damage; and that avoids potential claims by the sus-
pect that the data were subsequently manipulated by law enforcement o cials
(for example, by preparing a mirror copy of the data). If there are no trained
computer forensic experts within the investigator’s unit or other related units,
the investigator should consider securing such services from the private sec-
tor or requesting assistance from other jurisdictions that have this capacity.
Appendix E. Sample Document
Production Order for Financial Institutions
Document Production Order to BANK ABC to Be Served on an
Authorized Offi cial of BANK ABC
Re: Investigation of
Account number 12345678 at BANK ABC in the name of John Doe•
XYZ Company incorporated in Delaware, United States; with a registered agent •
in Douglas, Isle of Man; and an o ce in London, England.
Unknown bene cial owners of accounts or funds related to the persons and enti-•
ties above.
The Order to Produce Documents
In accordance with [applicable law], the authorized representative of BANK ABC is
commanded to produce the documents identi ed below to the public prosecutor’s
o ce [judge, investigating magistrate, or other appropriate authority] on [date]. An
intentional failure to comply with this document production order is a criminal o ense
punishable by ne, imprisonment, or both.
[Where authorized by law] BANK ABC is ordered not to disclose to anyone outside of
BANK ABC the fact of this production order, the identity of the subjects of the produc-
tion order, or the documents ordered produced. Nor is it to disclose what is produced
to the public prosecutor’s o ce [judge, investigating magistrate, or other appropriate
authority] until further order.
is order shall cover the time period from [date] to [date] or beginning the date this
order is received by BANK ABC.
e order shall cover all documents related to the individuals, legal entities, and bene -
cial owners listed above, either individually or in combination with any other individual
or legal entity; and documents for accounts for which these individuals are/were trust-
ees, have/had signature authority, power of attorney, or the authority to transact busi-
ness. is includes but is not limited to the following:
Account Opening, Client Identi cation, and Instructions
Account opening documents for any service or line of business provided by BANK 1.
ABC, including but not limited to any subsidiary and correspondent institution;
204 I Asset Recovery Handbook
and, if applicable, closing documents for all accounts related to the individuals and
legal entities listed above. For XYZ Company, the documents should include arti-
cles of incorporation, corporate resolutions and minutes, partnership agreements,
powers of attorney, and signature cards (front and back) related to any person or
bene cial owner referenced above.
Bank statements, periodic statements, and transcripts of accounts for any person 2.
or bene cial owner referenced above.
e identity of the bene cial owner of any account related to any person refer-3.
enced above, and the documents in which this information appears. is is to
include but is not limited to all supporting documentation submitted by the con-
tracting party or bene cial owner or prepared by any nancial institution, employee,
or third party on behalf of the contracting party or the bene cial owner.
Information obtained by BANK ABC relating to the identi cation and veri ca-4.
tion of any person or bene cial owner referenced above.
National identity numbers, tax numbers, customer identi cation numbers, date 5.
and place of birth, and any reference number or method (other than the account
number) used by BANK ABC to identify any person or bene cial owner refer-
enced above.
For any person referenced above, any safe deposit box contract, identity of all 6.
persons with access to the box, documents showing dates when the safe deposit
was accessed, and any video or other electronic medium showing the authorized
person(s) who visited the safe deposit box area.
Client instructions regarding when and how account statements are to be deliv-7.
ered; and client instructions regarding mail, electronic, or voice contact by
BANK ABC.
e identity of any BANK ABC employee who has or had any responsibility for 8.
dealing with or handling the accounts of any person or bene cial owner refer-
enced above.
All records of charges for local and long-distance telephone calls, including tele-9.
phone bills; and all records of charges for other communication services, telexes,
courier and mail services incurred by or on behalf of any person or bene cial
owner referenced above. In each case where there has been contact, the bank
o cial who had the contact is to be identi ed; and any notes, documents, and
information given or received during the contact or the sending or receiving of
packages, letters, faxes, and e-mails are to be produced.
Due Diligence Documentation
e “know your customer” due diligence documents prepared by BANK ABC on 10.
any person or bene cial owner referenced above.
Where a person related to a transaction, account, wire transfer, Society for World-11.
wide Interbank Financial Telecommunications (SWIFT) message, or other action
identi ed by this order has been identi ed by BANK ABC as a bene cial owner
or a politically exposed person (PEP) (as de ned in your bank policies and pro-
cedures), provide
Sample Document Production Order for Financial Institutions I 205
a. all due diligence and enhanced due diligence les created;
b. documents identifying the rules and alerts placed in your processing and
compliance systems to identify and segregate transactions related to the
clients, accounts, identi ed PEPs, other public o cials, those who have
recently le public o ce, and bene cial owners; and the documents related
to any transactions or question that triggered an alert; and
c. the identity of any BANK ABC employee handling the due diligence les and
the alert systems related to this order.
Incoming and Outgoing Wire Transfers and Related Documents
Documents related to incoming and outgoing, domestic or cross-border funds 12.
transfers (for example, by Fedwire, CHIPS, or CHAPS) for or on behalf of any
person or bene cial owner referenced above, including but not limited to, wire
transfer request forms, advice statements, con rmation statements, debit memos,
journal entries, or internal logs.
Documents related to SWIFT messages originating, terminating, or passing 13.
through BANK ABC and any related intermediary or correspondent institution,
for or on behalf of any person or bene cial owner referenced above, including but
not limited to
a. SWIFT messages, including but not limited to SWIFT MT 100, MT 103, MT
202, MT 202 Cov, MT 199, and MT299 messages and any other SWIFT mes-
sage (including those related to securities and trade transactions);
b. fax, mail, e-mail, or telephone instructions; wire transfer request forms; advice
statements; con rmation statements; debit memos; journal entries; or inter-
nal logs; and
c. any “repair items” or rejected funds transfers or SWIFT messages; and any
documents related to the repair and retransmission of the funds transfer or
SWIFT message related to the persons, legal entities, and bene cial owners
referenced above.
SWIFT bank identi er codes (BICs) for BANK ABC, including its business lines 14.
(for example, private banking), subsidiaries, and branches for which the codes
di er from the main BIC code.
All names by which BANK ABC and its subsidiaries are identi ed.15.
Account Transactions
Documents related to funds that went into or out of any BANK ABC account 16.
related to any person or bene cial owner referenced above, including client
orders, deposit slips, deposit items (front and back), withdrawal slips and can-
celled checks (front and back), debit and credit memos, book transfers, and
interbank transfer slips related to any person or bene cial owner referenced
above.
Documents sent to or received from any intermediary or correspondent nancial 17.
institution related to any person or bene cial owner referenced above.
206 I Asset Recovery Handbook
Other Transactions
Copies of certi cates of deposit, including interest payments, redemption records, 18.
and disposition of the proceeds regarding any person or bene cial owner refer-
enced above.
Records of purchase or sale of bearer bonds or other securities by any person or 19.
bene cial owner referenced above.
Documents for purchase of manager’s checks, cashier’s checks, and bank money 20.
orders, together with the checks that were purchased by or on behalf of any per-
son or bene cial owner referenced above.
BANK ABC Submissions to Financial Intelligence Units [where authorized]
Currency transaction reports relating in any manner to the persons or bene cial 21.
owners referenced above.
Currency and monetary instruments reports relating in any manner to the per-22.
sons or bene cial owners referenced above.
Suspicious activity/transaction reports led, relating in any manner to the per-23.
sons or bene cial owners referenced above.
Include all additional documents that may have connection to the o ense committed.
Defi nitions and Instructions
e terms “BANK ABC” and “XYZ Company” shall mean the business entity to A.
which this order is addressed. It shall include all of the entity’s a liates, joint
ventures, subsidiaries, subdivisions, and successors in interest; and all of its pres-
ent and former directors, o cers, partners, employees, agents, and other persons
purporting to act on behalf of any of the foregoing.
e term “document(s)” means all written or printed matter of any kind, formal B.
or informal, including the originals and all non-identical copies thereof (whether
di erent from the original by reason of any notation made on such copies
or otherwise) in the possession, custody, or control of the Company, wherever
located, including, without limitation, papers, correspondence, memoranda, notes,
diaries, statistical materials, letters, telegrams, minutes, contracts, reports, studies,
checks, statements, receipts, returns, summaries, pamphlets, books, intero ce and
intrao ce communications, o ers, notations of any sort of conversations, tele-
phone calls, meetings or other communications, bulletins, credit matter, computer
printouts, hard discs, ash drives, removable hard drives, oppy discs, mainframe
and personal computer databases, teletypes, telex materials, invoices, worksheets;
all dra s, alterations, modi cations, changes, and amendments of any nature
or kind to the foregoing. Also included are all graphic and aural records or repre-
sentations of any kind, videotapes, sound recordings, and motion pictures; any
electronic, mechanical, or electrical recordings, including without limitation tapes,
cassettes, discs, recordings, and lms.
Sample Document Production Order for Financial Institutions I 207
e term “document(s)” also means any container, le folder, or other enclosure C.
bearing any marking or identi cation, in which other “documents” are kept; but
it does not include le cabinets. In all cases where any original or non-identical
copy of any original is not in the possession, custody, or control of the legal entity
to which this production order is directed, the term “document(s)” shall include
any copy of the original and any non-identical copy thereof.
e word “and” should be interpreted as including “or,” and vice versa. D.
e term “person” shall mean any natural person, legal entity, proprietorship, E.
corporation, partnership, joint venture, unincorporated association, and govern-
mental agency; or any subdivision, a liate, o cer, director, employee, agent, or
other representative thereof.
e term “bene cial owner” includes the natural person(s) who ultimately owns F.
or controls a customer and/or the person on whose behalf the transaction is being
conducted. It also incorporates those persons who exercise ultimate e ective
control of a legal person or arrangement, and relevant third parties.
e term “identity” shall mean the full name, including middle name; date of G.
birth; place of birth; national identity or passport number; all positions held dur-
ing employment; dates of service; responsibilities and duties in each position;
termination date, if any; and the reasons for such termination.
“Public o cial” shall mean (1) any person holding a legislative, executive, admin-H.
istrative, or judicial o ce, whether appointed or elected, whether permanent or
temporary, whether paid or unpaid, irrespective of that person’s seniority; (2) any
other person who performs a public function, including for a public agency or
public enterprise, or provides a public service.
e terms “wire transfer” and “funds transfer” refer to any transaction carried out I.
on behalf of a person through a nancial institution by electronic means, with a
view to making an amount of money available to a bene ciary person at another
nancial institution. e originator and the bene ciary may be the same person.
“Cross-border transfer” means any wire transfer for which the originator and J.
bene ciary institutions are located in di erent countries. e term also refers to
any chain of wire transfers that involve at least one cross-border element.
e “originator” is the account holder; where there is no account, the originator K.
is the person who places the order with the nancial institution.
“SWIFT” refers to the Society for Worldwide Interbank Financial Telecommuni-L.
cations.
“CHIPS” refers to the Clearing House Interbank Payments System.M.
“Fedwire” refers to the electronic funds transfer system owned and operated by N.
the U.S. Federal Reserve System.
“CHAPS” refers to the Clearing House Automated Payments System, which o ers O.
same-day sterling and euro fund transfers.
Claim of Privilege
If any document is withheld by BANK ABC under claim of privilege, including the
attorney-client privilege, BANK ABC shall furnish a schedule setting forth the date; the
name and title of the author, addressee, recipient; and the subject matter of each such
208 I Asset Recovery Handbook
document, the nature of the privilege claimed, the basis on which it is claimed, and the
paragraph of this order to which each such document is responsive.
Identifying Documents
To facilitate the handling of documents submitted pursuant to this order, to preserve
their identity, and to ensure their accurate and expeditious return, it is requested that
each document be marked with an identifying number and that the documents be
numbered consecutively. Only the rst page of multipage, bound documents should be
numbered; and the total number of pages in a document should be noted. Documents
should also remain within the le folders in which they were located at the time this
order is served. Such le folders should also be numbered as if they were another docu-
ment. Within each le folder, documents should remain in the same order they were at
the time this order is served. Multipage documents should remain intact.
Document Production
e person appearing before the court or prosecutor in response to this order must be
a person who is fully knowledgeable concerning BANK ABC’s search for the docu-
ments responsive to this order, as well as one who can authenticate the documents as
business records. Should the same person not be competent to perform both require-
ments, BANK ABC should designate such additional persons as may be necessary to
appear on the same time and date.
Documents that exist in an electronic format should be produced electronically along
with a paper copy certi ed by the BANK ABC custodian of records to be a true and
accurate copy of the electronic original. All electronic documents should be produced
in a form that is reasonably usable and searchable without the use of any specialized
so ware.
Originals Required
is order requires the production of the originals of all documents ordered herein,
except as particularly noted below. Submission of photocopies in lieu of originals shall
not comply with this order.
Appendix F. Serial and Cover Payment
Methods in Electronic Funds Transfers
Society for Worldwide Interbank Financial Telecommunications (SWIFT) messaging is
an integral part of correspondent banking communication between nancial institu-
tions that do not have a direct account relationship with each other. SWIFT has devel-
oped xed messaging formats for the two payment processing methods used between
such institutions: the serial (or sequential) method and the cover method.
With the serial payment method, as gure F.1 depicts, a transfer is sent from the origi-
nating customer’s nancial institution through any correspondent banks and then on to
the bene ciary customer’s nancial institution. e steps around this process are sequen-
tial in that clearing and settlement occur directly and at each point. Accordingly, relevant
payment and customer information can be preserved along the way. e applicable
SWIFT messaging format used for such a transfer is the MT 103—a direct payment
order to a bene ciary bank that contains both originator and bene ciary information.
MT 103s are the most heavily used message format on the SWIFT network, accounting
for 15 percent of total SWIFT messaging volume.
e cover payment method also uses correspondent banks to intermediate transfers
from one unrelated bank to another. However, as gure F.1 shows, the lack of a direct
banking relationship requires correspondent accounts between banks to facilitate set-
tlement. In this case, the originating bank may directly instruct the bene ciary bank to
make payment to the customer and to advise that the transfer of funds to “cover” the
payment obligation has been arranged through a separate interbank relationship. Set-
tlement of the funds may then take place through another correspondent, if no relation-
ship exists with the originating bank’s correspondent bank and that of the bene ciary
institution. In this way, the bene ciary customer can typically have his or her account
credited by his or her own bank before interbank settlement is completed, especially
where an established commercial relationship exists. Cover payments are also frequently
used to help reduce overall transaction costs and the timing of commercial transactions
for clearing banks.
In the context of SWIFT messaging, the bank-to-bank order to a correspondent bank
to cover the originating bank’s obligation to pay the ultimate bene ciary bank is e ected
through the use of an MT 202. ese messages are used primarily for cover payments
and settlement between nancial institutions (for example, foreign exchange trades,
payment of interest, and so forth). It is important to note that a correspondent bank
that receives an MT 202 cover payment instruction does not receive an MT 103, which
means that this bank is unable to monitor or lter payment details contained in an MT
210 I Asset Recovery Handbook
103 or to determine the purpose of the transfer (that is, cover payment or interbank
settlement). For this reason, it is important that an investigator obtains all incoming
and outgoing MT 103s related to a cover payment.
New Cover Payment Standards (MT 202 COV)
e Financial Action Task Force (FATF) has addressed only direct sequential payments
(or SWIFT MT 103s) in which (as contemplated by FATF Special Recommendation VII
on wire transfers) information sent to a bene ciary institution travels with the wire
through the various intermediaries. e FATF has not dealt with cover payment sce-
narios in which payment information available to the originating nancial institution is
not communicated to correspondent banks involved in making the payments. As a
FIGURE F.1
Serial/Sequential and Cover Payment Methods
Originating
Bank
Originating
Customer
Originating
Bank’s
Correspondent
Bank
MT 103
MT 103
Beneficiary
Bank’s
Correspondent
Bank
MT 103
Beneficiary
Bank
Beneficiary
Customer
Serial/Sequential Payment Chain
Location: Country A Location: Country CLocation: Country B
Originating
Bank
Originating
Customer
Originating Bank’s
Correspondent
Bank
MT 202
Beneficiary Bank’s
Correspondent
Bank
MT 9xx
Beneficiary
Customer
Cover Payment Chain
Location: Country A Location: Country CLocation: Country B
MT 103
Beneficiary
Bank
MT 202
a
Source: Adapted from Basel Committee on Banking Supervision, “Due Diligence and Transparency Regarding Cover
Payment Messages Related to Cross-Border Wire Transfers” (May 2009), p. 3.
a. Alternatively, this could be a local clearing system.
Serial and Cover Payment Methods in Electronic Funds Transfers I 211
result, particularly in the context of international funds transfers, the use of multiple
nancial institutions and reliance on interbanking relationships to facilitate transfers
on behalf of a customer to a bene ciary located elsewhere (o en in another country)
has raised concerns about the preservation and transparency of information and pos-
sible implications for money laundering and terrorist nancing activities (see box F.1
for further discussion of this issue).
BOX F.1 Hiding Originating Customer Information
To hide originator information, wire transfers may contain incomplete informa-
tion, meaningless keystrokes, or false client names (such as “Mickey Mouse”).
According to the Basel Committee on Banking Supervision, “[w]here fi elds are
manifestly meaningless or incomplete, responses could include, for example, (i)
contacting the originator’s bank or precedent cover intermediary bank in order to
clarify or complete the information received in the required fi elds; (ii) considering
(in the case of repeated incidents involving the same correspondent or in the
case where a correspondent declines to provide additional information) whether
or not the relationship with the correspondent or the precedent cover intermedi-
ary bank should be restricted or terminated; banks should report such situations
to their supervisor; and/or (iii) fi ling a report of suspicious activity with the local
authorities, when the situation satisfi es the local defi nition of reporting
requirements.”
a
These actions create internal bank records that will help the
investigator trace and expose laundered funds.
Note: a. Basel Committee on Banking Supervision, “Due Diligence and Transparency Regarding Cover Payment Messages
Related to Cross-Border Wire Transfers” (May 2009), para. 30.
BOX F.2 Monitoring Records from Financial Institutions
Generally, fi nancial institutions use two types of monitoring where wire transfers
are concerned:
Sanction screening. 1. Conducted automatically and in real time, the system
will read the originator, benefi ciary, and payment information; and will check
for any name matching United Nations or other sanctions lists. If there is a
match, the message will be segregated for review; and payment is either
released for processing or the fi nancial intelligence unit or other appropri-
ate offi cials are notifi ed. This entire process creates electronic and paper
records that the investigator should subpoena from a bank and review.
Back-end monitoring.2. Performed after transmission, it uses a risk-based
approach to look for patterns of activity that appear unusual or potentially
suspicious. This process will also generate records that the investigator
should subpoena from a bank and review.
212 I Asset Recovery Handbook
As the leader in global interbank telecommunications, and in an e ort to standardize
international cover payment messaging practices in cross-border wire transfers, SWIFT
developed new standards for all cover payments. ese standards became e ective in
November 2009. e new MT 202 COV, which is simply a variant of the MT 202, is
aimed at providing greater transparency by making all payment information available to
the originating institution also available to other institutions in the payment process.
e MT 202 COV, which must now be used for all cover payments, replicates certain
information elds from the MT 103 (namely, the originator and bene ciary informa-
tion elds). e MT 202 may still be used for interbank settlement payments, but not
for cover payments. e creation of this new standard now requires nancial institu-
tions, and speci cally correspondent banks, to apply risk-based monitoring practices to
customer and payment information to which they were not previously privy.
Although the MT 202 COV mandates the inclusion of all customer and nancial insti-
tution identifying information, it is important to note that SWIFT does not play a role
in validating or policing the standard. is responsibility falls to member institutions
themselves. e SWIFT system will reject a transfer where the originator and bene -
ciary elds are blank; however, it is unable to determine if information entered in those
elds contains false or incomplete data. Box F.2 describes two ways that nancial insti-
tutions attempt to wire transfer information.
Financial Profi le
Surname URN
Last names
Alias Date of Birth
Address
Commercial
Drugs
Criminal Case Offi cer . . . . . . . . . . . . . . . . . . . . . . . Team/Branch . . . . . . . . . . . . . . . . . . . . .
Tel . . . . . . . . . . . . . . . . . . . . .
Financial Investigator . . . . . . . . . . . . . . . . . . . . . . . Team/Branch . . . . . . . . . . . . . . . . . . . . .
Tel . . . . . . . . . . . . . . . . . . . . .
Criminal Case Solicitor . . . . . . . . . . . . . . . . . . . . .
Tel . . . . . . . . . . . . . . . . . . . . . Fax . . . . . . . . . . . . . . . . . . . . .
Criminal Case Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tel . . . . . . . . . . . . . . . . . . . . . Fax . . . . . . . . . . . . . . . . . . . . .
Financial Solicitor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tel . . . . . . . . . . . . . . . . . . . . . Fax . . . . . . . . . . . . . . . . . . . . .
Financial Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tel . . . . . . . . . . . . . . . . . . . . . Fax . . . . . . . . . . . . . . . . . . . . .
Forensic Accountant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tel . . . . . . . . . . . . . . . . . . . . . Fax . . . . . . . . . . . . . . . . . . . . .
Appendix G. Sample Financial
Profi le Form
214 I Asset Recovery Handbook
Financial Profi le — Index & Check Sheet
Part 1: Personal Financial Profi le
ASSETS
Cash/valuables seized
Bank accounts
Other bank/building society accounts
National savings
Premium bonds
Shares
Unit trusts
Life policies/endowments
Motor vehicles
Boats/caravans etc.
Other
Value of gifts to third parties
LIABILITIES
Credit cards
Store cards
Credit agreements
Maintenance/CSA payment
Court judgments/fi nes/previous forfeiture orders
Other liabilities/debts
Overdraft current
Personal solvency
DECLARED
INCOME
Employment
Previous employment
Income tax details
Other sources of income in property
PROPERTY
Property details
Occupiers
Rented property
Owned property
Value
Mortgage
Other property charges
Ground rent (leasehold)
Third-party interest
House contents
Sample Financial Profi le Form I 215
UTILITIES (Property
Liabilities)
Community charge
Water rates
Electricity
Gas
Telephone
Mobile telephone
Property insurance
Part 2: Business Financial Profi le
BUSINESS ASSETS
Bank accounts
Motor vehicles
Plant/machinery etc.
Offi ce/trade fi xtures and fi ttings
Other valuable property
Stock in trade
Work in progress
Fully secured debtors
Partly secured debtors
BUSINESS
LIABILITIES
Employees
Fully secured creditors
Partly secured creditors
Credit cards
Debit cards
Credit agreements
Direct debit/standing orders
Court judgments
Winding-up order/voluntary liquidation
Other contractual liabilities
Corporation tax/income tax
Value added tax
BUSINESS
INTEREST
Preliminary assessment
Trading partnership/company
Company directors/partners
Company’s documentation
Interest in business
Realizable property held by business
216 I Asset Recovery Handbook
BUSINESS
PREMISES
Assets
Other occupiers
Liabilities
Mortgage (business)
Other charges on property
Rates/business expenses
Water rates (business)
Electricity (business)
Gas (business)
Telephone (business)
Premises insurance (business)
Contents insurance (business)
Company insurance claims
Part 1: Personal Financial Profi le of . . . . . . . . . . . . . . . . . . . . .
DECLARED INCOME
Employment
Current Employment Previous Employment
Name of employer or
self-employed:
Occupation:
Net income:
Weekly/monthly or annually:
Commencement date:
Leaving date:
Notes:
Income Tax Details
Period covered:
Tax reference number:
Tax paid:
Tax offi ce:
Notes:
Sample Financial Profi le Form I 217
Other Sources of Income
Source of income
Notes:
PROPERTY
Property Details
Current Property Previous Address
Full address and postcode:
Date of purchase:
Purchase price:
Current value:
Date last value:
Valuer’s name and
address:
Name in which property
heId:
Mortgage/charges:
Land registry offi ce copy,
attached (Y/N), and date:
Notes:
Mortgage
Name of mortgagee:
Address of mortgagee:
Account name(s):
Account number:
Amount borrowed:
Date commenced:
Balance of account:
Payment week/month:
Method of payment:
Arrears:
Notes:
218 I Asset Recovery Handbook
Other Charges on Property
Charge holder:
Address:
Amount of charge:
Date of charge:
Reason for charge:
Notes:
Ground Rent (leasehold property)
Name of landlord:
Address of landlord:
Payable month/year:
When due:
Method of payment:
Notes:
Third-Party Interest in Property
Status:
Name:
Amount:
Contribution mortgage:
Contribution expenses:
Notes:
House Contents (signifi cant value only, antiques, paintings, jewelry, etc., and
videos/photos)
Description Value
Notes:
Sample Financial Profi le Form I 219
UTILITIES (Property Liabilities) (include mortgage payments
from above)
Community Charge
Community
Charge Water Rates Electricity Gas
Authority paid:
Payable annually:
When and how paid:
Current arrears:
Notes:
Telephone
Telephone
Mobile
Telephone
Telephone number:
Authority paid:
Payable annually:
When and how paid:
Current arrears:
Itemized billing attached
(Y/N):
Notes:
Property Insurance
Insurance company:
Amount insured:
Risks covered:
Amount paid
week/year:
When paid:
How paid:
Any special risks:
Notes:
220 I Asset Recovery Handbook
ASSETS
Cash/Valuables Seized by Police/Customs
Amount/value:
Where deposited:
Date of deposit:
Deposit reference:
From where seized:
Restrained (Y/N):
Notes:
Bank/Building Society Accounts
Bank name:
Bank address:
Sort code:
Account number:
Type of account:
Full name of account holder:
Current balance:
Annual credit turnover:
Annual debit turnover:
Notes:
National Savings
Certifi cate numbers:
Value:
Where held:
Amount held and dates of acquisition:
Notes:
Premium Bonds
Certifi cate numbers:
Value:
Where held:
Amount held and dates of acquisition:
Notes:
Sample Financial Profi le Form I 221
Shares
Quoted Shares Nonquoted Shares
Name of company:
Amount of holding:
Location of certifi cates:
Value of holding:
Share transfer offi ce:
Notes:
Unit Trusts
Description of trusts:
Number of units held:
Value:
Name and address of
holder:
Notes:
Life Policies/Endowments
Insurance company:
Branch address:
Policy details:
Surrender value:
Benefi ciary:
Premium amount week/month/year:
How and when paid:
Mortgage linked (Y/N):
Notes:
Motor Vehicles, Boats/Caravans, etc.
Motor Vehicles Boats/Caravans etc.
Make and model:
Location:
Registration mark (if applicable):
Dealer’s details (motor vehicles):
222 I Asset Recovery Handbook
Motor Vehicles Boats/Caravans etc.
Purchase price:
Current value:
(Registered) keeper:
Hire purchase (Y/N):
Name of company:
Address of company:
Date of agreement:
Balance of agreement:
Notes:
Other Personal Property
Description Holder Location
Purchase
Price Value
Notes:
Gifts to Third Parties
Description Holder Location
Purchase
Price Value
LIABILITIES
Credit Cards
Name of card, i.e., access:
Amount owed or credit:
Average payments:
Name of holder:
Notes:
Sample Financial Profi le Form I 223
Store Cards
Name of card:
Amount owed or credit:
Average payments:
Name of holder:
Notes:
Credit Agreements
Name of company:
Branch:
Purpose of loan:
Amount borrowed:
Amount owed:
Monthly payments:
Arrears:
Notes:
Maintenance Payment
Court/offi ce:
Date of order:
Benefi ciary:
Amount of payment:
When payable:
Method of payment:
Notes:
Court Judgments/Fines/Previous Forfeiture Orders
Court:
Date of order:
Benefi ciary:
Amount of payment:
When payable:
Method of payment:
Notes:
224 I Asset Recovery Handbook
Other Liabilities/Debts
Creditor:
Creditor address:
Amount of debt/liability:
Particulars of debt:
Notes:
Actual Overdrafts
Bank:
Address and telephone no.:
Sort code/Account no.:
Amount:
Notes:
Personal Solvency
Bankruptcy order (Y/N):
Date of order:
Trustee/offi cial receiver:
Address:
Contact and telephone no.:
Notes:
Part 2: Business Financial Profi le of . . . . . . . . . . . . . . . . . . . . .
BUSINESS INTEREST
Preliminary Assessment
Sole trader and business premises are
realizable property (Y/N):
Substantial interest in partnership/limited
com pany and interest is in itself realizable
property (Y/N):
Partnership/company holds realizable property
(Y/N):
Notes:
Sample Financial Profi le Form I 225
Trading Partnership/Company
Name:
Date commenced:
Company registration no.
(if applicable):
VAT registration no.:
Trading address:
Registered address:
Notes:
Company Directors/Partners
Name:
Address:
Position:
Notes:
Company’s Documentation
Company details (Y/N): Dated:
Financial accounts (Y/N): Dated:
Annual returns: Dated:
Notes:
Subject’s Interest in Business
Details Value
Notes:
Realizable Property Held by Business
Details Value
Notes:
226 I Asset Recovery Handbook
BUSINESS PREMISES
Assets
Trading name:
Business address:
Freehold/leasehold/rented
(if rented, see below):
Registered land (Y/N):
Title number:
Purchase price:
Date of purchase:
Amount outstanding:
Current arrears:
Current value:
Date last valued:
Name of valuer:
Address of valuer:
Notes:
Other Occupiers
Part of premises
sublet (Y/N):
Details of area 1 sublet:
Name of lessee:
Address of lessee:
Amount paid:
To whom paid:
Details of area 2 sublet:
Name of lessee:
Address of lessee:
Amount paid:
To whom paid:
Details of any third-party
interest:
Notes:
Sample Financial Profi le Form I 227
Rented Premises
Landlord’s name:
Landlord’s address:
Rental week/month:
How paid/by whom:
Notes:
Mortgage
Name of mortgagee:
Address of mortgagee:
Account number:
Account name(s):
Amount of loan:
Payment week/month:
How paid/by whom:
Notes:
Other Charges on Property
Name of charge holder:
Address of charge holder:
Amount of charge:
Date of registration:
Notes:
Business Expenses
Rates/
Busi ness
Charge Water Electricity Gas Telephone
Authority paid:
Amount week/
month:
Method of
payment:
Current ar rears:
Notes:
228 I Asset Recovery Handbook
Business Insurance
Premises Contents
Name of insurer:
Address of insurer:
Amount insured:
Risks covered:
Payment week/month:
How/by whom paid:
Notes:
Company Insurance Claims
Insurance company:
Date claimed:
Claim type:
Amount claimed:
Amount paid:
When paid:
How paid:
Copy of claim attached (Y/N):
Notes:
BUSINESS ASSETS
Business Bank Accounts
Name of bank:
Branch address:
Sort code:
Account number:
Account name(s):
Current balance:
Date of balance:
Credit turnover:
Debit turnover:
Account signatories:
Name:
Notes:
Sample Financial Profi le Form I 229
Motor Vehicles, Plant/Machinery, etc.
Motor Vehicles Plant/Machinery etc.
Make and model:
Registration mark if applicable:
Dealer’s details (motor vehicles):
Purchase price:
Current value:
(Registered) keeper:
Hire purchase (Y/N):
Name of company:
Address of company:
Date of agreement:
Balance of agreement:
Notes:
Offi ce/Trade Fixtures and Fittings
Make and model:
Serial number:
Purchase price:
Current value:
Lease purchase (Y/N):
Name of lease company:
Address of company:
Date of agreement:
Notes:
Other Valuable Property
Details:
Registration details if applicable:
Purchase price:
Current value:
Keeper/location:
Hire/lease purchase (Y/N):
Name of company:
Address of company:
230 I Asset Recovery Handbook
Date of agreement:
Balance of agreement:
Notes:
Stock in Trade
Details Value Date of Value
Notes:
Work in Progress
Details Value Date of Value
Notes:
Fully Secured Debtors (Business)
Name Address Amount Security
Notes:
Partly Secured Debtors (Business)
Name Address Amount Security
Notes:
BUSINESS LIABILITIES
Employees
Full time:
Part time:
Outstanding wages:
Notes:
Sample Financial Profi le Form I 231
Fully Secured Creditors
Name Address Amount Security
Notes:
Partly Secured Creditors
Name Address Amount Security
Notes:
Credit Cards, Debit Cards
Credit Cards Debit Cards
Name of card:
Amount owed or credit:
Average payments:
Name of holder:
Notes:
Credit Agreements (Business)
Name of company:
Branch:
Purpose of loan:
Amount borrowed:
Amount owed:
Monthly payments:
Arrears:
Notes:
Direct Debit/Standing Orders
Bank name:
Branch details:
Account number:
Account name(s):
Amount week/month:
232 I Asset Recovery Handbook
When due:
Payable to:
Notes:
Court Judgments
Court:
Date of order:
Amount of order:
Method of payment:
Notes:
Winding-Up Order/Voluntary Liquidation
Winding up (Y/N):
Liquidation (Y/N):
Date of order:
Resolution:
Notes:
Other Contractual Liabilities
Details Amount When Payable
Notes:
Corporation Tax/Income Tax
Tax inspector name:
Tax inspector address:
District:
Reference number:
Amount due:
Notes:
Sample Financial Profi le Form I 233
Value Added Tax
VAT offi ce:
Address:
VAT registration no.:
Amount due:
Prosecutions pending (Y/N):
Notes:
Articles on Premises Controlled by Subject but Not Belonging to Subject (such
as goods on hire, on loan, for repair, or otherwise claimed by some other
person) (Supporting evidence of claim should be sought.)
Article Value Third-Party Interest
Notes:
Source: Reproduced from Theodore S. Greenberg, Linda M. Samuel, Wingate Grant, and Larissa Gray, Stolen Asset
Recovery—A Good Practices Guide to Non-Conviction Based Asset Forfeiture (Washington, DC: World Bank, 2009), 213.
Appendix H. Possible Discussion
Points with Contacts—Informal
Assistance Stage
Discussion Points
Verify the information you have obtained.•
Obtain information and intelligence for asset tracing and investigation, including •
nancial intelligence through nancial intelligence units.
Obtain background information to support mutual legal assistance (MLA) •
requests to trace and seize or restrain assets (for example, names, dates of birth,
and addresses of witnesses; bank account locations; bank account numbers; link
with the assets and the o ense or o ender).
Con rm any requirements or procedures for obtaining noncoercive measures.•
Learn of any options for an emergency provisional measure (non-MLA) to avoid •
the risk of dissipation. If there are such options, what are the procedures and
requirements?
De ne additional needs: urgency, con dentiality, procedures that must be followed.•
Review case strategy, including potential barriers to international cooperation, •
the best venue(s) for prosecution, the possibility of conducting a joint investiga-
tion or using case conferences.
Where there are multiple investigative agencies, identify relevant agencies that •
could provide assistance.
Review resource issues.•
Get guidance on next steps, including MLA requirements, processes, and contacts.•
Issues to Keep in Mind (and Clarify with Counterpart before Discussing Substance)
A memorandum of understanding may be required to share in some jurisdictions.•
Di erences in legal traditions and con scation systems may result in di erences •
in what can be provided, what is required, and the process.
Information you provide may be used by a foreign jurisdiction to open its own •
case.
Information you request must be gathered lawfully in both the requested and the •
requesting jurisdictions.
With large cases, consider joint investigation and a face-to-face meeting with •
counterparts.
Appendix I. Mutual Legal Assistance
Template and Drafting Tips
Letter of Request
TO: [Name and address of central authority in requested jurisdiction]
FROM: [Name and address of judge, prosecutor, central authority, or other competent
authority under domestic law in requesting jurisdiction]
[I/we] make this request pursuant to [insert relevant domestic legislation authorizing
request]. [I/we] have the honor to request your assistance in relation to a criminal
[investigation or prosecution] being conducted by [name of agency].
Include names and contact information of investigators and prosecutors leading the •
proceedings.
Legal Basis
is request is made pursuant to [cite legal basis (such as domestic or multilateral
treaty)].
Nature of the Criminal Matter
is request relates to [prosecution against or ongoing investigation involving or restraint
of assets suspected to be the proceeds of crime and subject to con scation proceedings
against] the following individuals: [list targets]
Specify the assets to be restrained. Most o en, it is best to list these assets in an •
appendix and reference that appendix here.
List target(s), with as much information as possible—passport number, date and •
place of birth, nationality, address, employer.
Assistance is sought in relation to the following o enses: [list o enses with maximum
penalty].
For wording of o enses, it is best to use that which was used in the charge or pro-•
posed charge, with reference to the applicable statutory authority. Include extracts of
relevant domestic law in an appendix and reference that appendix here.
238 I Asset Recovery Handbook
Purpose of the Request
In relation to this matter, the following is requested: [state brie y the assistance
required].
Remember that MLA is a step-by-step process. Avoid asking for everything (docu-•
ments, restraint, con scation) in one request.
Statement of Facts
[Describe here the relevant facts of the case in a clear and concise manner.]
ere must be su cient facts for the foreign authority to assess whether MLA •
requirements have been met (for example, dual criminality) and whether to grant
the request. is necessitates a fact-gathering investigation in the requesting juris-
diction.
Include an explanation of the link between the assets and the o ense(s) or •
target(s).
If requesting the use of coercive measures (for example, a search warrant or produc-•
tion order), include su cient facts to show that the requirements in the requested
jurisdiction are met. (For examples of requirements, see chapter 4.)
Include in an appendix any documents that may assist in executing the request, and •
reference that appendix here. For example, certi ed court orders, a davit or cer-
ti cate supporting the application.
Assistance Requested
[State the assistance requested.] We request that any mandatory court order or other
order necessary to enable the provision of this assistance be sought.
e description of assistance should focus on what you are seeking—not the name of •
the measure for obtaining it—because measures used will vary among jurisdictions.
For example, one jurisdiction will use a search and seizure order to obtain bank
records, and another will use production orders.
Provide su cient justi cation for the request, particularly with coercive measures.•
Provide details of any procedures that must be followed in gathering evidence to ensure •
admissibility. Include oaths or warnings that are required or the format of the evidence—
for example, witness statements must be taped, documents must be certi ed.
For tracing e orts, provide as much information as possible on the location of the •
assets. Greater speci city will be required in requests for restraint and con scation—
name of account holder, account number, branch, amount to be restrained, location
of property, and so forth.
For restraint requests, it may be necessary to explain the risk of dissipation, con rm •
that a conviction likely will result in the assets being restrained (and listed in appen-
dix), provide relevant statutory authority showing that the requesting country has
extraterritorial jurisdiction over the assets, and explain any other restraint proceed-
ings that have taken place.
Mutual Legal Assistance Template and Drafting Tips I 239
For interviews, consider including an appendix with a proposed line of questioning. •
To leave open the scope for additional information, an additional statement can be •
added (although it is not su cient on its own). For example, “It is also requested
that such other inquiries be made and evidence gathered as appears to be neces-
sary to further this investigation.”
Confi dentiality
[If con dentiality is required, provide a statement requesting it and the reasons it is impor-
tant.]
Period of Execution
[Provide details on when the information is needed. Include court dates, if applicable.
Preserve “urgent” requests for cases of actual urgency.]
Assurances or Undertakings
Reciprocity: e government of [name of requesting jurisdiction] undertakes that it will
comply with a future request by the government of [name of requested jurisdiction] for
similar assistance, by providing assistance having a comparable e ect in respect to an
equivalent o ense to that requested from the government of [name of requested juris-
diction] in this case.
Limits on Use: [It may be necessary to promise that information will be used only in the
investigation speci ed.
279
Some jurisdictions will not require this assurance, and it may be
possible to state explicitly that information can be used for other purposes.
280
]
Prior Contact or Use of Other Channels
ere has been previous contact between [name of relevant agency or authority in request-
ing jurisdiction] and [name of relevant agency or authority in requested jurisdiction].
Contact Information
e [judge, prosecutor, or central authority o cer] who is in charge of this matter is
[name of o cer], and he/she can be contacted at [street address, telephone number,
e-mail address].
279. An assurance regarding use of evidence may be stated as follows: “ e government of [name of request-
ing jurisdiction] undertakes that all information, documentation, or other evidence obtained pursuant to
this request will be used only for the purposes of the request in connection with the o enses described
above. It should not be used for any other purpose, except with prior consultation with and the consent of
the appropriate authorities of [name of requested jurisdiction].
280. In the United Kingdom, an MLA template includes the following phrase: “Unless you indicate otherwise,
any evidence obtained pursuant to this request may be used in any criminal prosecution or other judicial
proceedings connected with this investigation, including any restraint or con scation proceedings, whether
relating to the above-named subject(s) or to any other person who may become a subject of this investigation.”
See http://www.sfo.gov.uk/media/57234/sample%20letter%20of%20request%20for%20evidence.pdf.
240 I Asset Recovery Handbook
e case o cer in [name of the enforcement agency or prosecutorial authority] who has
knowledge of this matter is [name of o cer] and he/she can be contacted at [street
address, telephone number, e-mail address].
BOX I.1 MLA Drafting and Execution Tips
• Contact your counterpart (including through a face-to-face meeting, if pos-
sible) to
°
confi rm general and evidentiary requirements;
°
discuss how thresholds might be met, and obtain examples of the types
of evidence required;
°
confi rm the format for evidence (for example, affi davit, signed state-
ment, certifi ed court documents);
°
discuss undertakings or assurances that may be required;
°
discuss needs of urgency, confi dentiality, or procedure;
°
seek drafting assistance and templates;
°
determine if it is possible to participate in the execution of the request;
°
assess potential barriers in fulfi lling the request, such as disclosure obli-
gations; and
°
raise potential resource issues.
• Ensure general and evidentiary requirements are met.
• Exclude requests when property is of a de minimis value.
• Provide a clear and concise description of the facts and the state of pro-
ceedings in the requesting jurisdiction.
• If translation is required, use professional services.
• If tracing or freezing, include as much information as possible about the
location of the assets and the link between the assets and the offense or
offender.
• Do not ask for everything (trace, freeze, and confi scate) in one request.
Start early and proceed step by step.
• Allow suffi cient time for the request to be processed and action to be
taken.
• Ensure that your domestic investigations and proceedings continue because
a fi nal order of confi scation will be required before funds can be returned.
Also ensure that due process (including notice to parties and opportunity to
appear) is followed.
Appendix J. Web Site Resources
Stolen Asset Recovery (StAR) Initiative
StAR: http://www.worldbank.org/star•
World Bank Group
World Bank: http://www.worldbank.org•
Financial Market Integrity Group: http://www.worldbank.org/amlc •
United Nations
United Nations: http://www.un.org•
United Nations O ce on Drugs and Crime: http://www.unodc.org•
United Nations Mutual Legal Assistance Request Writer Tool (for justice system •
practitioners only): http://www.unodc.org/mla/introduction.html
International Conventions, Treaties, and Agreements
United Nations Convention against Corruption (UNCAC): http://www.unodc.org/•
unodc/en/treaties/CAC/index.html
United Nations Convention against the Illicit Tra c in Narcotic Drugs and Psycho-•
tropic Substances, 1988: http://www.unodc.org/unodc/en/treaties/illicit-tra cking
.html
United Nations Convention against Transnational Organized Crime (UNTOC): •
http://www.unodc.org/unodc/en/treaties/CTOC/index.html
Organisation for Economic Co-operation and Development Convention on •
Combating Bribery of Foreign Public O cials in International Business Transac-
tions: http://www.oecd.org/document/20/0,3343,en_2649_34859_2017813_1_1
_1_1,00.html
Southeast Asian Mutual Legal Assistance in Criminal Matters Treaty: http://www.•
aseansec.org/17363.pdf
Inter-American Convention against Corruption: http://www.oas.org/juridico/•
english/treaties/b-58.html
Council of Europe Conventions: http://conventions.coe.int•
º
Council of Europe Convention on Laundering, Search, Seizure and Con sca-
tion of the Proceeds of Crime, 1990; and revised Council of Europe Conven-
tion on Laundering, Search, Seizure and Con scation of the Proceeds of
Crime and on the Financing of Terrorism, 2005
º
European Convention on Human Rights
242 I Asset Recovery Handbook
º
Convention on Jurisdiction and the Enforcement of Judgments in Civil and
Commercial Matters (Convention of Lugano): http://curia.europa.eu/common/
recdoc/convention/en/c-textes/lug.htm
Council of the European Union Decisions and Regulations: http://eur-lex•
.europa.eu
º
Council of the European Union Framework Decision 2003/577/JHA on the
Execution in the European Union of Orders Freezing Property or Evidence
and Corrigendum to Council Framework Decision 2003/577/JHA
º
Council of the European Union Framework Decision 2005/212/JHA of 24
February 2005 on Con scation of Crime-Related Proceeds, Instrumentalities
and Property
º
Council of the European Union Framework Decision 2006/783/JHA on the
Application of the Principle of Mutual Recognition to Con scation Orders
º
Council Decision 2007/845/JHA of 6 December 2007 Concerning Coopera-
tion between Asset Recovery O ces of the Member States in the Field of Trac-
ing and Identi cation of Proceeds from, or Other Property Related to, Crime
º
Council Regulation (EC) No. 44/2001 of 22 December 2000 on Jurisdiction
and the Recognition and Enforcement of Judgments in Civil and Commercial
Matters
º
Council Regulation (EC) No. 1206/2001 of 28 May 2001 on Cooperation
between the Courts of the Member States in the Taking of Evidence in Civil
or Commercial Matters
Southern African Development Community Protocol against Corruption 2001: •
http://www.sadc.int/index/browse/page/122
African Union Convention on Preventing and Combating Corruption and Related •
O ences, 2003: http://www.africa-union.org/O cial_documents/Treaties_%20
Conventions_%20Protocols/Convention%20on%20Combating%20Corruption
.pdf
Commonwealth of Independent States Convention on Legal Assistance and Legal •
Relations in Civil, Family and Criminal Matters: http://www.hcch.net/upload/
wop/jdgm_info01e.pdf
Financial Action Task Force (FATF) on Money Laundering
FATF: http://www.fatf-ga .org•
FATF 40+9 Recommendations: http://http://www.fatf-ga .org/pages/0,3417,en_•
32250379_32236920_1_1_1_1_1,00.html
G-8 Best Practice Principles
G-8 Best Practice Principles on Tracing, Freezing and Con scation of Assets: •
http://www.justice.gov/criminal/cybercrime/g82004/G8_Best_Practices_on_
Tracing.pdf
G-8 Best Practices for the Administration of Seized Assets: http://www.apgml.•
org/issues/docs/15/G8%20Asset%20Management%20Best%20practices%20
042705%20FINAL.doc
Web Site Resources I 243
European Union and Council of the European Union
Main sites: http://europa.eu/index_en.htm and http://www.consilium.europa.eu/•
showPage.aspx?lang=EN
Civil and commercial matters:•
º
Civil and commercial matters: general framework for community activity;
European judicial network; judicial cooperation between member-states; ser-
vice of documents; taking evidence; jurisdiction, recognition, and enforcement
of judgments:
■ http://ec.europa.eu/civiljustice/index_en.htm
■ http://ec.europa.eu/justice_home/doc_centre/civil/doc_civil_intro_en.htm
■ http://europa.eu/legislation_summaries/justice_freedom_security/judicial
_cooperation_in_civil_matters/index_en.htm
Criminal matters:•
º
General Framework for Community Activity: http://ec.europa.eu/justice_
home/doc_centre/criminal/assistance/doc_criminal_assistance_en.htm
º
Green Paper on Obtaining Evidence in Criminal Matters From One Member
State to Another and Securing Its Admissibility, November 2009: http://eur-lex
.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2009:0624:FIN:EN:PDF
Country Legislation
International Money Laundering Information Network: http://www.imolin.org•
UNCAC Knowledge Management Consortium and Legal Library: http://www•
.unodc.org (to be launched in fall 2010)
Asset Tracing Resources
Free sites (general information, public records, business records):
http://www.google.com (general information, news)•
http://www.icerocket.com (blog search)•
http://www.archive.org/web/web.php (Internet archives)•
http://www.searchsystems.net (“invisible Web” search of public records, company •
records—worldwide)
http://www.publicrecord nder.com (public records, company records—•
worldwide)
http://www.sec.gov/edgar.shtml (U.S. company records)•
http://www.zoominfo.com (people and company nder)•
http://www.superpages.com (people nder)•
Subscription sites:
http://www.worldlii.org (legislation, court decisions)•
http://www.lexisnexis.com (public records, court decisions, media, business •
records, people search)
http://www.companydocuments.com (business records—worldwide)•
244 I Asset Recovery Handbook
http://www.clear.thomsonreuters.com (public records, company records—•
worldwide)
http://www.corporateinformation.com (company records)•
http://www.companieshouse.gov.uk (U.K. company records) •
http://• www.pacer.gov (US court records)
http://www.freeerisa.com (US employee bene ts data)•
Professional and international organizations:
International Association of Prosecutors: http://www.iap-association.org/•
Camden Asset Recovery Inter-Agency Network: http://www.europol.europa.eu/•
publications/Camden_Assets_Recovery_Inter-Agency_Network/CARIN_
Europol.pdf
e Egmont Group: http://www.egmontgroup.org•
Latin American Association of Public Ministers (in Spanish and Portuguese •
only): http://www.aiamp.net
MLA and Con scation Information: http://www.aiamp.net/ chasaiamp/index•
.html
Country-specifi c Mutual Legal Assistance Resources
Australia:
Information on mutual legal assistance, treaty agreements, and a checklist: http://•
www.ilsac.gov.au
Information on civil processes, service of documents, taking of evidence, and •
model letter of request: http://www.ag.gov.au/www/agd/agd.nsf
Ministry of Foreign A airs: http://www.afp.gov.au/•
Attorney-General of Australia: http://www.ag.gov.au/•
Australian Transaction Reports and Analysis Centre ( nancial intelligence unit): •
http://www.austrac.gov.au/
Commonwealth Director of Public Prosecutions: http://www.cdpp.gov.au/•
Brazil:
Department of Asset Recovery and International Legal Cooperation (within the •
Ministry of Justice): http://portal.mj.gov.br/drci/data/Pages/MJ7A4BFC59
ITEMID401B422470464DA481D21D6F2BBD1217PTBRNN.htm
Ministry of Foreign A airs: http://www.itamaraty.gov.br/•
Ministry of Justice: http://portal.mj.gov.br•
Council for Financial Activities Control ( nancial intelligence unit): http://www•
.coaf.fazenda.gov.br/
France:
Ministry of Foreign A airs, O ce of Conventions and Mutual Legal Assistance: •
http://www.Diplomatie.gouv.fr
Ministry of Justice: http://www.justice.gouv.fr•
Trac n ( nancial intelligence unit): http://www.bercy.gouv.fr•
Web Site Resources I 245
Germany:
Information on civil processes, judicial cooperation, taking of evidence and mode •
of proof, service of documents, and enforcement of judgments:
º
http://www.bmj.bund.de/enid/9de2c6dac41fc4c549b89d79e577a825,0/
Legal_and_Justice_Policy/Judical_Cooperation_in_Civil_Matters_15b.html
º
http://ec.europa.eu/civiljustice/homepage/homepage_ger_en.htm
Federal Foreign O ce: http://www.auswaertiges-amt.de/diplo/en/Startseite.html•
Federal Ministry of Justice: http://www.bmj.bund.de/enid/9de2c6dac41fc4c549b•
89d79e577a825,0/aktuelles_13h.html
Financial intelligence unit: http://www.bka.de/•
Hong Kong SAR, China:
MLA information:•
281
http://www.legislation.gov.hk/choice.htm#intro
Foreign Ministry of A airs (Commissioner’s O ce of China’s Foreign Ministry •
in Hong Kong SAR, China): http://www.fmcoprc.gov.hk/eng/
Department of Justice (International Law Division, Mutual Legal Assistance •
Unit): http://www.doj.gov.hk/publications/doj2010/en/international.html
Independent Commission Against Corruption: http://www.icac.org.hk/•
Joint Financial Intelligence Unit: http://www.j u.gov.hk/ •
India:
MLA information: http://www.mha.nic.in/uniquepage.asp?ID_PK=241&Search•
=mutual%20legal%20assistance
Investigation assistance, letters rogatory, MLA treaties (Indian Central Bureau of •
Investigation): http://cbi.nic.in/interpol/assist.php
Ministry of Justice: http://lawmin.nic.in/•
State anticorruption bureaus (for example, Anti-Corruption Bureau, Maharash-•
tra): http://www.acbmaharashtra.org/
Financial intelligence unit: http:// uindia.gov.in/•
Luxembourg:
Information on civil processes, taking of evidence and mode of proof, and service •
of documents: http://ec.europa.eu/civiljustice/homepage/homepage_lux_en.htm
Ministry of Foreign A airs: http://www.mae.lu•
Ministry of Justice: www.mj.public.lu/•
Financial intelligence unit: http://www.gouvernement.lu/dossiers/justice/crf/•
index.html
Mexico:
Information on letters rogatory: http://www.sre.gob.mx/english/•
Tracking service for letters rogatory: http://webapps.sre.gob.mx/rogatorias/•
281. A manual for assisting countries is available from the International Mutual Assistance in Criminal
Matters (IMAC) o ce in Hong Kong SAR, China.
246 I Asset Recovery Handbook
Ministry of Foreign A airs: http://www.sre.gob.mx/english•
Attorney-General’s O ce (requests and receives MLA requests on criminal mat-•
ters): http://www.pgr.gob.mx/
Assistant Attorney General for Special Investigations and Organized Crime: •
http://www.pgr.gob.mx/prensa/2007/coms07/170407.shtm
Financial intelligence unit: http://www.apartados.hacienda.gob.mx/uif/index.html•
Singapore:
MLA information and forms: http://www.agc.gov.sg/criminal/mutual_legal_asst•
.htm
Ministry of Foreign A airs: http://www.mfa.gov.sg•
Suspicious Transaction Reporting O ce ( nancial intelligence unit): http://www•
.cad.gov.sg/amlc /STRO.htm
South Africa:
MLA treaties: http://www.justice.gov.za/docs/emlatreaties.htm•
National Prosecuting Authority (central authority for MLA): http://www.npa•
.gov.za/
Department of International Relations and Cooperation: http://www.dfa.gov.za•
Department of Justice and Constitutional Development: http://www.justice.gov.za/•
Financial Intelligence Centre ( nancial intelligence unit): http://www. c.gov.za/•
Default.aspx
Public Service Commission (anticorruption authority): http://www.psc.gov.za/•
Asset Forfeiture Unit: http://www.npa.gov.za/ReadContent387.aspx•
Spain:
Information on civil processes, taking of evidence and mode of proof, and service •
of documents: http://ec.europa.eu/civiljustice/homepage/homepage_spa_es.htm
Ministry of Foreign A airs and Cooperation: http://www.maec.es/en•
Ministry of Justice: http://www2.mjusticia.es/•
Financial intelligence unit: http://www.sepblac.es/ingles/acerca_sepblac/acercade•
.htm
Switzerland:
MLA information on civil and criminal matters: http://www.bj.admin.ch/bj/en/•
home/themen/sicherheit/internationale_rechthilfe.html
Database of Swiss localities and courts: http://www.elorge.admin.ch/elorge/e/•
Swiss Foreign Ministry: http://www.eda.admin.ch/eda/en/home.html•
O ce of the Attorney-General: http://www.ba.admin.ch/ba/en/home.html•
Federal O ce of Justice: http://www.bj.admin.ch/bj/en/home.html•
Federal Department of Justice and Police, Section for Mutual Legal Assistance in •
Criminal Matters: http://www.rhf.admin.ch
Web Site Resources I 247
Money Laundering Reporting O ce ( nancial intelligence unit): http://www•
.fedpol.admin.ch/fedpol/en/home/themen/kriminalitaet/geldwaescherei.html
United Arab Emirates (UAE):
Ministry of Justice: http://www.elaws.gov.ae/DefaultEn.aspx•
Abu Dhabi O ce of Public Prosecution: http://www.adjd.gov.ae/en/portal/pub-•
lic.prosecution.aspx
Central Bank of the UAE, Anti-Money Laundering and Suspicious Case Unit •
( nancial intelligence unit): http://www.centralbank.ae/AMLSU.php
United Kingdom:
MLA information•
º
Homes O ce: http://www.homeo ce.gov.uk/police/mutual-legal-assistance/
Assistance-from-UK/
º
Serious Fraud O ce: http://www.sfo.gov.uk/about-us/what-we-do-and-who-
we-work-with/international-collaboration.aspx
º
Crown Prosecution Service: http://www.cps.gov.uk/legal/l_to_o/obtaining_
evidence_and_information_from_abroad/mutual_legal_assistance_
(mla)_-_letters_of_request/
º
Serious Organized Crime Agency ( nancial intelligence unit): http://www
.soca.gov.uk/
United States:
O ce of International A airs, Department of Justice: http://www.usdoj.gov/•
criminal/oia.html
Department of Justice Asset Forfeiture and Money-Laundering Section: http://•
www.justice.gov/criminal/afmls/
Department of State: http://www.state.gov•
Financial Crimes Enforcement Network ( nancial intelligence unit): http://www•
. ncen.gov/
Glossary
Administrative con scation. A non-judicial mechanism for con scating proceeds of
crime or assets used or involved in the commission of an o ense.
Assets. Assets of every kind, whether corporeal or incorporeal, movable or immovable,
tangible or intangible, and legal documents or instruments evidencing title to or inter-
est in such assets.
282
e term is used interchangeably with property.
Bona de purchaser. See innocent owner.
Civil action. See private law action.
Claimant. e party asserting an interest in the asset. is may include a third party,
innocent owner, defendant, target, or o ender.
Commingled assets. Proceeds or instrumentalities of an o ense that have been mixed
with other assets that may not be proceeds of crime.
Con scation. e permanent deprivation of assets by order of a court or other compe-
tent authority.
283
e term is used interchangeably with forfeiture. e persons or enti-
ties that hold an interest in the speci ed funds or other assets at the time of the con sca-
tion lose all rights, in principle, to the con scated funds or other assets.
284
Conviction-based con scation. Describes all forms of con scation that require the
defendant to be convicted of an o ense before con scation proceedings can be initi-
ated and con scation can take place.
Criminal con scation. See conviction-based con scation.
Defendant. Any party who is required to answer the complaint of a plainti in a civil
lawsuit before a court, or any party who has been formally charged or accused of violat-
ing a criminal statute.
Ex parte proceedings. Legal proceedings brought by one person in the absence of, and
without representation or noti cation of, other parties.
Financial intelligence unit (FIU). “A central, national agency responsible for receiv-
ing, (and as permitted, requesting), analyzing and disseminating to the competent
authorities, disclosures of nancial information: (i) concerning suspected proceeds of
282. United Nations Convention against Corruption (UNCAC), art. 2(e).
283. UNCAC, art. 2(g). See also “Best Practices: Con scation (Recommendations 3 and 38),” adopted by
the plenary of the Financial Action Task Force (FATF), February 19, 2010.
284. FATF, “Interpretative Note to Special Recommendation III: Freezing and Con scating Terrorist
Assets,” para. 7(c), http://www.fatf-ga .org/dataoecd/53/32/34262136.pdf.
250 I Glossary
crime and potential nancing of terrorism, or (ii) required by national legislation or
regulation, in order to combat money laundering and terrorism nancing.”
285
Forfeiture. See con scation.
Freezing. See provisional measures. See also chapter 4.
Gatekeeper. Includes accountants, lawyers, nancial consultants, or other profession-
als holding accounts at a nancial institution and acting on behalf of their clients, either
knowingly or unwittingly, to move or conceal the proceeds of illegal activity. A criminal
may seek to use the gatekeeper to access the nancial system, while remaining anony-
mous themselves.
286
Hearsay. An out-of-court statement that is o ered in court as evidence to prove the
truth of the matter asserted. Whereas civil law jurisdictions do not usually exclude
hearsay from proceedings, hearsay is inadmissible in common law (with a number of
exceptions). If hearsay is admitted, the court must also consider the appropriate weight
to give the evidence.
Informal assistance. Any activity or assistance that is provided without the need for a
formal mutual legal assistance (MLA) request. ere may be legislation that permits
this type of practitioner-to-practitioner assistance, including MLA legislation.
Innocent owner. A third party with an interest in an asset subject to con scation who
did not know of the conduct giving rise to con scation or, on learning of the conduct
giving rise to con scation, did all that reasonably could be expected under the circum-
stances to terminate use of the asset. e term is used interchangeably with bona de
purchaser for value.
In personam. Latin for “directed toward a particular person.” In the context of con sca-
tion or a lawsuit, it is a legal action against a speci c person.
In rem. Latin for “against a thing.” In the context of con scation, it is a legal action
against a speci c thing or asset. See property-based con scation.
Instrument or instrumentality. e assets used to facilitate crime, such as a car or boat
used to transport narcotics or cash.
Know your customer. e due diligence and bank regulation that nancial institutions
and other regulated entities must perform to identify their clients and ascertain relevant
information pertinent to doing nancial business with them.
Letters rogatory. A formal request from a court to a foreign court for some type of judi-
cial assistance. It permits formal communication between the judiciary, a prosecutor, or
285. De nition adopted at the plenary meeting of the Egmont Group, Rome, Italy, November 1996; as
amended at the Egmont plenary meeting, Guernsey, June 2004.
286. FATF, “Guidance on the Risk-Based Approach to Combating Money Laundering and Terrorist Financ-
ing: High Level Principles and Procedures” (June 2007), http://www.fatf-ga .org/dataoecd/43/46/38960576
.pdf; FATF, “Report on Money Laundering Typologies, 2000—2001” (February 2001), http://www.fatf-ga
.org/dataoecd/29/36/34038090.pdf.
Glossary I 251
law enforcement o cial of one jurisdiction, and his or her counterpart in another juris-
diction. A particular form of mutual legal assistance.
Mutual legal assistance. e process by which jurisdictions seek and provide assis-
tance in gathering information, intelligence, and evidence for investigations; in imple-
menting provisional measures; and in enforcing foreign orders and judgments. is
handbook distinguishes between assistance that can be provided informally (see infor-
mal assistance) and formally (see mutual legal assistance request).
Mutual legal assistance request. Distinguished from informal assistance, an MLA
request is typically a request in writing that must adhere to speci ed procedures, proto-
cols, and conditions set out in multilateral or bilateral agreements or domestic legisla-
tion. ese requests are generally used to gather evidence (including through coercive
investigative techniques), obtain provisional measures, and seek enforcement of domes-
tic orders in a foreign jurisdiction.
Non-conviction based con scation (NCB con scation). Con scation for which a
criminal conviction is not required.
287
Politically exposed persons (PEPs). “Individuals who are, or have been, entrusted with
prominent public functions, their family members, and close associates.”
288
Practitioner. Refers to law enforcement investigators, investigating magistrates, pri-
vate lawyers, forensic accountants, nancial analysts, and prosecutors. One or all of
these roles may be involved in a component of the investigation, depending on the laws
of the jurisdiction.
Proceeds of crime. Any asset derived from or obtained, directly or indirectly, through
the commission of an o ense.
289
In most jurisdictions, commingled assets are
included.
290
Property. See assets.
Property-based con scation. A con scation action that targets a speci c thing or asset
found to be the proceeds or instrumentalities of crime. Also known as in rem con sca-
tion or a tainted property system.
Provisional measures. Temporarily prohibiting the transfer, conversion, disposition,
or movement of assets or temporarily assuming custody or control of assets on the basis
of an order issued by a court or other competent authority.
291
e term is used inter-
changeably with freezing, restraint, seizure, and blocking.
287. “Best Practices: Con scation (Recommendations 3 and 38),” adopted by the plenary of the FATF,
February 19, 2010.
288. eodore S. Greenberg, Larissa Gray, Delphine Schantz, Carolin Gardner, and Michael Lathem, Polit-
ically Exposed Persons: Preventive Measures for the Banking Sector (Washington DC: World Bank, 2010), 3,
http://www.worldbank.org/star.
289. UNCAC, art. 2(e).
290. See section 6.2.1 of chapter 6 for a discussion of commingled assets.
291. Adapted from UNCAC, art. 2(f).
252 I Glossary
Requested jurisdiction. A jurisdiction that is asked to provide assistance to another
jurisdiction for the purpose of assisting a foreign investigation or prosecution or enforc-
ing a judgment.
Requesting jurisdiction. A jurisdiction that asks for the assistance of another jurisdic-
tion for the purpose of assisting with a domestic investigation or prosecution or enforc-
ing a judgment.
Restraint. See provisional measures. See also chapter 4.
Seizure. See provisional measures. See also chapter 4.
Seller for value. See innocent owner.
Substitute assets. Assets that cannot be linked to an o ense giving rise to con scation,
but that may be con scated in substitution for such assets if the assets that are directly
subject to con scation cannot be located or are otherwise unavailable.
Suspicious activity report. See suspicious transaction report.
Suspicious transaction report (STR). A report led by a nancial institution about a
suspicious or potentially suspicious transaction or activity. e report is led with the
jurisdiction’s FIU. e term is used interchangeably with suspicious transaction
report.
Tainted property. See property-based con scation.
Target or targets. e suspect or suspects of an investigation.
Value-based con scation. A con scation action to recover the value of bene ts that
have been derived from criminal conduct and to impose a monetary penalty of an
equivalent value.
asset recovery
case management, 19–40. See also case
management
cases, 14–18. See also cases
civil proceedings, 159–75. See also civil
proceedings
con scation, 91–120. See also con scation
domestic con scation in foreign jurisdictions,
177–86. See also domestic con scation
in foreign jurisdictions
evidence and tracing assets, 41–74. See also
evidence and tracing assets
general process, 5–8, 6b
glossary of terms, 249–52
handbook, how to use, 3–4
international cooperation, 121–58. See also
international cooperation
legal avenues for, 9–14, 10b
methodology of handbook, 2–3
overview, 4, 5–18
securing assets, 75–89. See also securing assets
asset transfers, 116, 117
Attorney General of Hong Kong v. Reid (1994),
161, 161b
Attorney General of Zambia v. Meer Care & Desai
(2007), 16–17, 174b
auditors, 21–22, 50
“audit trails,” 68
Australia
asset con scation funds, 120
Con scation Act, 115n158
evidentiary requirements, 76n98
Insolvency and Trustee Service
Australia, 92n118
Proceeds of Crime Act, 115n158
automatic con scation, 117–18
avoidance of contract, 167, 167b
Azerbaijan, jewels seized in, 98n
B
B
back-end monitoring of nancial records, 211b
back-to-back loan schemes, 16
BAE Systems, 36b
Bahamas, corruption scheme in, 18
A
A
Abacha, Sani, 115n159
abandonment con scation, 14
abuse of functions, 188–89
accounting
crimes, 192
of pro ts, 165, 165n243
records, 36, 36b, 67–70
account monitoring orders, 53
account-opening documents, 61–62, 203–4
accused persons, rights of, 45
administrative con scation, 14, 107
a davits, 77, 78b
aiding or abetting, 192
airplanes, seizure of, 96–97
Alamieyeseigha, Diepreye Peter Solomon, 17–18,
160b, 169, 170b
Alien Tort Claims Act (U.S.), 163b
ancillary orders, 87
Ao Man Long, 173b
arbitration proceedings, 13, 169
Argentina
discovery principle, 31n48
illicit enrichment, 36
integrity pacts, 168
resource persons, 124b
artwork, seizure of, 98
asset and income declarations, 22, 22n32
asset con scation funds, 120
asset managers and management. See also case
management
assets, use of, 100–101
consultations, 101
expenses, 99–100
fees payable to, 101–2
funding of, 102
heavy debts, 100
inventory and reporting, 94–95
as key players, 92
liquidation of assets, 101
living, legal, and business expenses, 100
physical possession of assets, 82, 84–85
powers of, 93–94, 99
securing assets, considerations for, 81–82, 83b
Index
Boxes, gures, notes, and tables are indicated with b, f, n, and t following the page number.
254 I Index
“balance of probabilities” standard of proof, 9, 11,
13, 33, 106, 156, 159
bank accounts, 62, 95
“bankers trust” orders, 171n259
bank identi er codes (BICs), 67, 205
bankruptcy. See insolvency processes
Basel Committee on Banking Supervision, 211b
Belgium, money laundering in, 36n55
bene cial owners, 43, 43n63
bene ts, assessment of, 112–13, 112n149
“beyond a reasonable doubt” standard
of proof, 9, 33, 106
BICs (bank identi er codes), 67, 205
bill of costs, 86
“blocking” assets, 76
boats, seizure of, 96–97
bona de purchasers, 87, 95
bond deposits, 62
book transfers, 64, 66
border-crossing authorities, 50
Brazil
case conferences, 123n
disclosure orders, 94n121
illicit enrichment, 36
jurisdiction issues, 179b
breaches of contract actions, 165–68
bribery
damages, 163–65, 166b
disgorgement of pro ts, 168
elements of o ense, 37b
illicit enrichment and, 168b
jurisdiction issues, 178, 179–80b
Siemens; United States v. (2008), 36b
tort actions and, 162–63
under UNCAC, 188–89
British Virgin Islands, corruption scheme
in, 18, 160b
Brussels Convention on recognition
of foreign court decisions
in Europe, 16–17
Bulgaria, Zambian arms deal with, 17
businesses, seizure of, 97–98
business terms
explanation of, 193–97
glossary, 249–52
C
C
California, NCB con scation in, 16
Cameroon, con scation in, 105n134
Canada
asset con scation funds, 120
Civil Remedies Act, 86–87n111
Seized Property Management
Directorate, 92n116
capital improvements, 96
case conferences, 25, 123, 123n
case management, 4, 9, 19–40. See also asset
managers and management
criminal cases, speci c considerations
in, 11, 34–38
conviction, inability to obtain, 38
criminal o enses, identifying, 34–37, 35f
evidentiary challenges, 37–38
fact gathering, 19–22
foreign counterparts and international
cooperation, 25–27
legal issues and obstacles, 29–33
immunity from prosecution of o cials, 30
jurisdiction, 29–30, 29n40
legislative provisions on asset return, 32
period of prescription or statute of
limitations, 31–32, 32n49
standards of proof, 32–33, 33b
legislation and legal reforms, 28–29
liable parties, identi cation of, 34
support and resources, 27–28
system implementation, 38–40
le organization and report writing, 40
media inquiries, 40
strategic planning and leadership, 39
timing and coordination, 39
teams, tasks forces, and joint investigations,
22–25
with foreign authorities, 24–25, 24n36
investigative and prosecutorial, 23–24, 23n33
joint task forces, 24
cases
Ao Man Long case, 173b
Attorney General of Hong Kong v. Reid (1994),
161, 161b
Chiluba and associates (Meer Care & Desai
case, 2007), 16–17, 174b
Federal Republic of Nigeria v. Santolina
Investment Corp., Solomon & Peters,
and Alamieyeseigha (2007), 17–18,
160b, 169, 170b
Fy es v. Templeman and Others (2000),
165, 166b
Montesinos and associates, 14–16, 28,
28b, 32n51, 124b, 157n220
ahir v. Pertamina (1992–94), 161,
161–62b
World Duty Free Company Limited v. Republic
of Kenya (2006), 167
b
cash, seizure of, 95
cash movement, 62
Cayman Islands, Montesinos case and, 14, 16
check deposits, 62
Index I 255
Chile
informal assistance, 128n180
resource persons, 124b
Chiluba, Frederick, 16–17, 174b
China
Ao Man Long case, 173b
integrity pacts, 168
NCB con scation, 157n219
CHIPS (Clearing House Interbank Payments
System), 64, 67
circumstantial evidence, 170b
civil proceedings, 4, 5–6, 12–13, 159–75
asset recovery actions, 169–73
evidence collection and securing
assets, 169–73
criminal proceedings, evidence
gathered in, 169
no-say (gag) orders, 170–71
restraint orders, 107n140, 171–72
initiating action, 169
civil recovery (private law) cases, 157
claims and remedies, 160–68
illicit or unjust enrichment actions, 168, 168b
invalidity or breach of contract
actions, 165–68
proprietary (ownership) actions,
160–61b, 160–62
tort actions, 162–65, 163b
fact gathering and, 20
nal dispositions, 173–74
insolvency processes, formal, 8, 174–75
civil records repositories, 50
civil society, 8, 22
claims in civil proceedings, 160–68
“claw back” provisions, 80
Clearing House Interbank Payments System
(CHIPS), 64, 67
client identi cation, 203–4
collusion, 191
Colombia
antinarcotics agency, 92n117
asset transfer, 80n103
Federal Reserve Bank (U.S.), transfers to, 95n124
illicit enrichment, 36
integrity pacts, 168
resource persons, 124b
commingled proceeds, 42, 109–10
“commission rogatoire,” 54n75
compensation orders, 15b
computer forensic specialists, 55, 55n
con scation, 91–120. See also domestic
con scation in foreign jurisdictions
abandonment, 14
administrative, 14, 107
administrative mechanisms, 107
asset managers
fees payable to, 101–2
powers of, 93–94
asset types and problems, 95–99
businesses, 97–98
foreign jurisdictions, assets located in, 99
livestock and farms, 98
motor vehicles, boats, and airplanes,
96–97, 97f
perishable and depreciating assets, 98–99
precious metals, jewels, and artwork, 98, 98n
real property, 95–96
seized cash, bank accounts, and nancial
instruments, 95
automatic con scation, 117–18
civil, 156
consultations, 101
criminal prosecution and, 9, 11, 105–6
enhancements for, 9n, 114–18
extended con scation, 117, 117n165
foreign jurisdictions, assets located in, 119, 120f
funding asset management, 102
historical background, 104, 104b
inventory and reporting, 94–95
investigators, 24
key players, 92
liquidation of assets, 101
management issues, ongoing, 99–101
assets, use of, 100–101
expenses, 99–100
heavy debts, 100
living, legal, and business expenses, 100
managing assets subject to, 4, 6, 91–102
mechanisms, 4, 7, 11, 103–20
crime victims, 119–20
criminal, 105–6
disposal of assets, 120
enhancements, 9n, 114–18
process, 107–14
third-party interests, 118–19
NCB con scation, 106–7. See also
non-conviction based (NCB)
con scation
property-based, 108–11. See also
property-based con scation systems
rebuttable presumptions, 114–16
substitute asset provisions, 116–17
value-based, 111–14. See also value-based
con scation systems
voiding transfers of assets, 117
con icts of interest, 189
consensual monitoring of communications,
59, 59n80
256 I Index
conspiracy, 192
constructive trusts, 161b
consultations, 101
“continuing o ense doctrine,” 31n47
contracts
avoidance of, 167, 167b
gross value, 109
invalidity or breaches of, 165–68
net pro ts, 109
rescission of, 166, 166n248
Convention on Laundering, Search, Seizure and
Con scation of the Proceeds of Crime
(Council of Europe), 157n219
Conventions, UN. See United Nations
coordination case management, 39
corporate registries, 50
corporate vehicles, 42, 42n62, 193–97. See also
motor vehicles, seizure of
corruption o enses, role of jurisdiction harmed
by, 179–83, 183b. See also speci c types
of corruption (e.g., illicit enrichment)
cost-bene t analyses, 81
Council of the European Union, 174–75
counsel, rights to, 86
court records repositories, 50–51
cover payment methods, 209–12, 210f
crime victims
con scation mechanisms for, 119–20
criminal proceedings, involvement in, 13
foreign jurisdictions, 180–81
criminal organizations, 115, 115n159
criminal proceedings
case management considerations, 11, 34–38
con scation, 9, 11, 105–6
conviction, inability to obtain, 38
“course of conduct,” 113
crime victims’ involvement in, 13
evidence in, 37–38, 169
fact gathering and, 20
o enses, 34–38, 35f, 37b, 187–92, 187f. See also
speci c o enses (e.g., bribery)
prosecutions, 9, 11
currency transactions reports (CTRs), 20,
21b, 48–49
customer information, 61–62, 65
customs
declarations forms, 50
fraud, 192
Cyprus, Alamieyeseigha corruption scheme and, 18
D
D
damages
for breach of contract, 165–66
in bribery cases, 163–65, 166b
liquidated, 168
tort, 12, 163
Dariye, Joshua, 46–47b
declarations of assets. See asset and income
declarations
default judgments, 174
Denmark, corruption scheme and, 18
depreciation of seized assets, 96–97, 98–99
direct proceeds, 108–9
direct recovery of assets, 8, 158, 184, 185b
disclosure obligations
ex parte requests, 170
for MLA requests, 127b
no-say (gag) orders and, 170–71
orders, 57–59, 58–59b, 94, 94n121
spontaneous disclosures, 20
discovery, pretrial, 106n139
discovery principle, 31, 31n48
discretion to con scate, 114
disgorgement of pro ts, 168, 168b
disposal of assets, 120
dissipation of assets, 171–72, 174
diversion of funds, 188
documents, production of. See production
of documents
domestic con scation in foreign jurisdictions, 4,
13–14, 177–86
asset recovery, 183–86
direct recovery, 184, 185b
ownership of stolen assets, 184
treaties, agreements, or statutory
authorities, 185–86
corruption o enses, role of jurisdiction
harmed by, 179–83, 183b
jurisdiction issues, 177–78, 179–81b
procedure for beginning action, 178–79, 182b
do-not-destroy orders, 57, 59b
dual criminality requirements, 26,
26b, 37, 38n58
due diligence records, 61–62, 204–5
due process rights, 45, 86
E
E
ECHR (European Court of Human Rights),
104n132
Ecuador, integrity pacts in, 168
Egmont Group, 49, 74, 126b
electronic funds transfers. See wire transfers
electronic surveillance, 59–60
embezzlement, 37b, 188
enhancements for con scation, 9n, 114–18
ethics or integrity o ces, 50
European Court of Human Rights (ECHR),
104n132
Index I 257
evidence and tracing assets, 4, 5, 41–74. See also
securing assets
case management challenges, 37–38
circumstantial, 170b
in civil proceedings, 169–73
in criminal proceedings, 169
documents, commonly sourced, 61–71
accounting records, 67–70
account-opening documents and
know-your-customer or due
diligence records, 61–62
bank account statements, 62
insurance policies, 70–71
purchase and sale documents, 71
suspicious transaction reports
(STRs), 61
wire transfers, 63–67, 63f,
63n85, 65b
nancial data and other evidence, 43–60
account monitoring orders, 53
basic techniques, 45, 48f
disclosure orders or production of
documents, 57–59, 58–59b
electronic surveillance, 59–60
interviews, 52–53, 52–53nn69–70
mail cover, 52
physical surveillance, 51
public sources and government
agencies, 48–51, 49f
search and seizure warrant,
54–57, 55–56b
trash runs, 51–52
undercover operations, 60
nancial ows, 72–74, 73f
nancial pro le, 71–74, 72f, 213–33
hearsay evidence, 78b
international cooperation, 74
plan for, 41–43
preserving, 56–57
securing assets, requirements for, 76–77
subject pro le, creation of, 43, 44b
vive voce evidence, 78b
ex parte
disclosure requests, 57, 59, 170
provisional measures, 77–78
restraint order applications, 97, 172
expert testimony, 114
extended con scation, 117, 117n165
“extinción de dominio”. See non-conviction based
(NCB) con scation
extortion, 190
extradition
de nition of, 122n175
“extradite or prosecute” principle, 178, 182b
of fugitives, 38
in international cooperation, 6, 122
extraterritorial jurisdiction, 79n102
F
F
face-to-face meetings, 25, 123, 128, 240b.
See also interviews
fact gathering, 19–22, 94
false pretenses, 188
falsi cation of documents, 37b, 191
farms, seizure of, 98
FATF. See Financial Action Task Force
FCPA. See Foreign Corrupt Practices Act
Federal Reserve Bank (U.S.), 66, 95n124
Fedotov, Yury, xi–xii
Fedwire Funds Service (Fedwire), 64, 67
fees
asset managers, payable to, 101–2
unpaid, 166, 166n247
le organization for case management, 40
Financial Action Task Force (FATF),
63n85, 74, 92n116, 103,
128n179, 128n181, 156n216,
177–78n, 210
nancial data as evidence, 43–60
nancial ows, 72–74, 73f
nancial instruments, 95
nancial intelligence units (FIUs)
in criminal prosecutions, 11
documentation requests and, 58b, 205
fact gathering and, 20
as government information source, 48–49
informal assistance, 131
Montesinos corruption case, 16
reports by, 74, 199–200
role and contribution of, 21b
STRs and, 89
nancial pro les, 71–74, 72f, 213–33
“ shing expeditions,” 26b
FIUs. See nancial intelligence units
Florida, NCB con scation in, 16
ows, nancial, 72–74, 73f
Foreign Corrupt Practices Act (FCPA),
163b, 168b, 180b
foreign jurisdictions. See also domestic
con scation in foreign jurisdictions;
jurisdictional issues
con scation mechanisms, 119, 120f
cooperation, 25–27
joint investigations, 24–25, 24n36
provisional restraint, 79
seizure of assets located in, 79, 99
foreign o enses, proceeds derived from, 110–11
forgery, 37b, 191
258 I Index
40+9 Recommendations (Financial Action Task
Force), 103, 128n179, 128n181,
156n216, 177–78n
Framework Decision on Con scation of
Crime-Related Proceeds,
Instrumentalities and
Property (European Union
Council), 117n165
France
“commission rogatoire,” 54n75
criminal damages, 162n229
criminal proceedings, 169n255
direct recovery of assets, 185b
discovery principle, 31n48
illicit enrichment, 190b
MLA requests, 158b
money laundering, 178n270, 181b
NCB con scation, 157n219
resource persons, 124b
restraint orders, 171b
fraud, 37b, 188, 192
“freezing” assets, 76, 76n97
Fujimori, Alberto, 28b, 124b
Fy es v. Templeman and Others
(2000), 165, 166b
G
G
gag orders. See no-say orders
Garrido, Victor Venero, 16, 157n220
general liability statutes, 162
Germany
bribes, proceeds from, 168n253
integrity pacts, 168
glossary of terms, 249–52
government agencies as information sources,
48–51, 49f
gross bene ts, 113
gross value of contracts, 109
“guilty pleas,” 28, 28b
H
H
Haiti
Bureau d’Administration du Fond Special de
lutte contre la drogue, 92n116
whistle-blowers, 22n31
hearsay evidence, 78b
High Court of London, 17
Hong Kong Attorney General v. Reid (1994), 161,
161b
Hong Kong SAR
antibribery legislation, 173b
NCB con scation, 157n219
Reid case, 161b
Hussein, Saddam, 185b
I
I
ICSID. See International Centre for Settlement of
Investment Disputes
identi cation of client, 203–4
illicit enrichment, 36–37, 37b, 38n58,
168, 168b, 189
illicit nancing of political activities, 190
immigration authorities, 50
immunities from prosecution, 30
income declarations, 22, 22n32
India, integrity pacts in, 168
indirect proceeds, 108–9
in uence, trading in, 37b, 188–89
informal assistance
de nition of, 122n174
discussion points for, 235
FIUs, 131
foreign jurisdictions, 99
in international cooperation, 6–7, 6n,
121–22, 132–37, 235
MLA requests vs., 124, 127–31, 129t, 131f.
See also mutual legal assistance
(MLA) requests
information-gathering powers of
asset managers, 19–22, 94
“in rem” con scation. See property-based
con scation systems
insolvency processes, 8, 100, 174–75
instrumentalities of o ense, 111
insurance policies, 70–71
integrity o ces, 50
integrity pacts, 167–68
intelligence collecting and reporting, 5, 22, 49,
49n66. See also evidence and tracing
assets; nancial intelligence units (FIUs)
interim injunctions. See restraint orders
interlocutory sales, 93
International Centre for Settlement of Investment
Disputes (ICSID), 167, 167b, 169
international cooperation, 4, 6–7, 121–58, 122b
asset return, 158
barriers, awareness of, 26–27, 27b, 126–27, 127b
in case management, 25–27
civil recovery (private law) cases, 157
evidence and, 74
informal assistance, 6–7, 6n, 121–22, 124,
127–37, 129t, 131f, 235
informal assistance and MLA requests, 124
key principles, 122–27
MLA requests, 6–7, 122, 124, 127–31, 129t,
131f, 138–56
NCB con scation, 156–57
personal connections, development
of, 123–24, 124–26b
Index I 259
phases of case, cooperation in, 123
process for, 128–31, 130–31f
International Covenant on Civil and Political
Rights (UN), 45
“international public policy,” 167
Internet and websites
access, 123
disclosure orders, 57
public information sources, 28n38, 48, 241–47
interviews, 52–53, 52–53nn69–70. See also
face-to-face meetings
“intimate conviction” standard of proof, 33, 106
invalidity of contract actions, 165–68
inventories and reporting, 40, 49, 94–95
investigations
noncoercive measures, 128, 128n181, 131
teams, task forces, and joint, 22–25, 23n33
Italy
asset con scation funds, 120
NCB con scation, 157n219
J
J
Jerez, Bryon, 157n220
Jersey, NCB con scation in, 157n219
jewels, seizure of, 98, 98n
joint and several liability, 113
joint investigations, 22–25, 122
judgments, enforcement of, 174b
jurisdictional issues, 29–30, 29n40, 79n102,
177–78, 179–81b. See also domestic
con scation in foreign jurisdictions;
foreign jurisdictions
K
K
Kazakhstan
bribery in, 30n45
corruption in, 8n17
Kenya, corruption in, 167b
know-your-customer (KYC) information,
61–62, 65, 204
L
L
land. See real property
larceny, 188
Latin America, NCB con scation in, 157n219.
See also speci c countries
Lazarenko, Pavlo, 157n220, 181b
legal expenses, 100
legal issues and obstacles in case
management, 29–33
legal powers of asset managers, 93
legal reforms, 28–29, 32
liability and liable parties, 34, 113, 162
licensing boards, 50
Liechtenstein
disclosure obligations for MLA requests, 127b
NCB con scation, 29n39
liens on property, 82, 82n106, 88, 95
lifestyle, presumptions based on, 116, 116n160
limited restraint of assets, 82, 84t
liquidated damages, 168
liquidation of assets, 100, 101. See also
insolvency processes
livestock, seizure of, 98
living expenses, 100
London High Court, 18, 160b
London Metropolitan Police, 17, 185b
Luxembourg
asset con scation funds, 120
disclosure obligations for MLA requests, 127b
M
M
Macao SAR, Ao Man Long case in, 173b
mail covers, 52
mail fraud, 192
management of assets. See asset managers
and management
“Mareva by Letter,” 172
Mareva Compania Naviera S.A. v. International
Bulk Carriers S.A. (1980), 171n260
Mareva injunctions, 76n95, 171n260, 172
Marseille (France) workshop on asset
recovery, 3, 3n11
media
inquiries, 40
reports, 22, 182b
Meer Care & Desai case (2007), 16–17, 174b
Mexico
forfeiture in, 3n12
integrity pacts, 168
“mirror image” of data, 55
misappropriation of funds, 188
misrepresentation, 188. See also fraud
MLA. See mutual legal assistance requests
Model Law on Cross-Border Insolvency, 175
Moi, Daniel arap, 167b
money laundering
anti-money laundering legislation, 89
as criminal o ense, 35–36, 36n55
elements of, 37b
international cooperation and, 121
jurisdictional issues, 178, 181b
under UNCAC, 190–91
Montesinos, Vladimiro, 14–16, 28, 28b, 32n51,
124b, 157n220
motor vehicles, seizure of, 50, 96–97, 97f. See also
corporate vehicles
260 I Index
MT 103 messages, 67, 205, 209–10
MT 202 COV standards, 205, 209–12
mutual legal assistance (MLA) requests. See also
informal assistance
asset recovery and, 9
barriers to, 26–27, 126, 127b
criminal investigations and, 11
disclosure obligations, 127b
fact gathering and, 20
foreign jurisdictions, 99, 182b
informal assistance vs., 124, 127–31, 129t, 131f
in international cooperation, 6–7, 74, 122,
138–56, 158b. See also international
cooperation
in Montesinos case, 124b
template and dra ing tips, 237–40, 240b
timing and coordination, 39
N
N
Namibia, asset con scation funds in, 120
natural persons, 43
NCB con scation. See non-conviction based
(NCB) con scation
net pro ts of contract, 109
networks, practitioner, 126b
net worth analyses, 73
New York Stock Exchange, 179b
Nigeria
Alamieyeseigha case, 17–18, 160b, 169, 170b
Dariye investigation, 46–47b
Economic and Financial Crimes
Commission, 17
Metropolitan Police, 18, 18n26, 169
Nigeria, Federal Republic of v. Santolina
Investment Corp., Solomon & Peters,
and Alamieyeseigha (2007), 17–18,
160b, 169, 170b
noncoercive investigative measures, 128,
128n181, 131
non-conviction based (NCB) con scation
court proceedings and, 7
domestic con scation in foreign jurisdictions
and, 177
international cooperation and, 156–57
retroactivity of, 29n39
use of, 5, 9, 11–12, 106–7
no-say (gag) orders, 12, 170–71
O
O
Oakland County v. Vista Disposal, Inc. (1995),
165n244
objective con scation. See non-conviction based
(NCB) con scation
obstruction of justice, 192
o cials, immunity from prosecution of, 30
Oil-for-Food Program (UN), 185b
Okonjo-Iweala, Ngozi N., xi–xii
“ongoing proceedings,” 126
orders, enforcement of, 7. See also speci c types
of orders (e.g., no-say (gag) orders)
“ordre public international,” 167
originator information, 211b
Oyebanjo, Joyce, 46–47b
P
P
Pakistan, integrity pacts in, 168
Panama
civil damages, 162n229
restraint orders, 171b
“paper cases,” 41, 45
partial control or interests in assets, 81, 82, 84t
PEPs. See politically exposed persons
periods of prescription, 31–32
perishable assets, 93, 98–99
personal connections, development
of, 123–24, 124–26b
personal jurisdiction, 29
Pertamina (Indonesian state-owned
enterprise), 161–62b
Peru
E cient Collaboration Act
(Law 27.378), 15, 15n
Montesinos case, 14–16, 32n51, 124b, 157n220
plea agreements, 28, 28b
physical possession of assets, 82, 84–85
physical surveillance, 51
piercing the corporate veil, 80
plea agreements, 28, 28b, 185n
political activities, illicit nancing of, 190
politically exposed persons (PEPs), 43n63, 62, 66
political will, 27
practitioner networks, 126b
precious metals, seizure of, 98
“preponderance of the evidence” standard of
proof, 11, 13, 33, 106, 156
pre-restraint or pre-seizure planning, 79–85, 97
preservation of evidence, 56–57
presumptions of innocence, 115. See also
rebuttable presumptions
pretrial discovery, 106n139
privacy rights, 52, 52n68
private law. See civil proceedings
privileged information, 207–8
“probable cause” standard of proof, 54, 77
procedural requirements for securing
assets, 77–78
proceeds of crime, 42, 108–11,
108n142, 110b, 190–91
Index I 261
procurement regulations, 191
production of documents, 57–59, 58–59b, 203–8
originals required, 208
property-based con scation systems
court proceedings, 7
criminal proceeds in, 108–11
multiple orders in, 105
NCB con scation, 106
provisional measures and, 79
requirements for, 26, 76, 107–8
proprietary actions, 160–61b, 160–62
prosecutorial teams, 23–24
provisional measures
alternatives to, 89
assets subject to, 79–81
order requirements, 76–79
timing of, 85–86
public information sources, 48–51
“public outcry” concept, 22n31
purchase documents, 71
R
R
Racketeer In uenced and Corrupt Organizations
Act (RICO), 163b, 165n244
real property
registries, 50, 71
seizure of, 95–96
“reasonable grounds to believe” standard
of proof, 54, 77
rebuttable presumptions, 34n53, 37–38,
103–4, 113, 114–16
red- ag indicators, 68, 69–70b, 73
Reid; Attorney General of Hong Kong v.
(1994), 161, 161b
Reid, Warwick, 161b
“related activities,” 117, 118b
“relation back doctrine,” 117n167
remedies in civil proceedings, 160–68
“repair item” messages, 66
reporting. See inventories and reporting
“reports on transactions above a speci ed
amount,” 49
repositories. See speci c repositories (e.g., court
records repositories)
rescission of contracts, 166, 166n248
resource persons, 124b
restitution, 119–20. See also disgorgement
of pro ts
restraint. See pre-restraint or pre-seizure
planning; restraint orders; seizure and
restraint
restraint orders
in civil proceedings, 107n140, 171–72
exceptions to, 86
ex parte, 97, 172
Mareva injunctions and, 76n95
requirements for, 171b
for securing assets, 75–76, 76n97
timing of, 77n99
retention orders, 57, 59b
RICO (Racketeer In uenced and Corrupt
Organizations Act), 163b, 165n244
rights of accused persons, 45
rights to counsel, 86
rights to privacy, 52, 52n68
Ross River Ltd. v. Cambridge City Football Club
Ltd. (2007), 166n248
S
S
sale documents, 71
sale of assets, 101
sanction screening of nancial records, 211b
search and seizure warrants, 52, 54–57,
55–56b, 85, 201–2
secured loans, 96
securing assets, 4, 6, 75–89. See also evidence and
tracing assets
ancillary orders, 87
in civil proceedings, 169–73
pre-restraint or pre-seizure planning, 79–85, 97
asset management, 81–82, 83b
assets subject to provisional measures, 79–81
partial control or limited restraint, 82, 84t
partial interests in assets, 81
physical possession, 82, 84–85
provisional measures
alternatives to, 89
timing of, 85–86
provisional order requirements, 76–79
evidentiary requirements, 76–77
procedural requirements, 77–78
restraint or seizure of assets in foreign
jurisdictions, 79
restraint orders, exceptions to, 86
seizure and restraint, 75–76
third-party interests, 87–88
seizure and restraint. See also search and seizure
warrants; speci c instances (e.g.,
businesses, seizure of)
in foreign jurisdictions, 79
pre-restraint or pre-seizure planning, 79–85, 97
securing assets, 75–76
third-party interests, 87–88
self-incrimination, 87, 94n122, 175n266
serial payment methods, 209–12, 210f
Seychelles, corruption scheme in, 18, 160b
sharing agreements, 158, 186, 186nn277–78
shell companies, 62n, 63
262 I Index
Siemens; United States v. (2008), 36b
Singapore, Pertamina case and, 161b
smuggling, 192
Society for Worldwide Interbank Financial
Telecommunications (SWIFT), 64,
66, 67, 68f, 205, 209, 212
South Africa
Alamieyeseigha corruption scheme, 17, 18
asset con scation funds, 120
Asset Forfeiture Unit, 18
Prevention of Organised Crime Act, 3n12,
92n119, 109n145
sovereignty, principle of, 121
Spain, asset con scation funds in, 120
Special Recommendation VII on Wire Transfers
(Financial Action Task Force),
63n85, 210
spontaneous disclosures, 20
S.T. Grand, Inc. v. City of New York (1973),
166n247
standards of proof
account monitoring orders, 53n73
“balance of probabilities,” 9, 11, 13, 33, 106,
156, 159
“beyond a reasonable doubt,” 9, 33, 106
in case management, 32–33, 33b
conviction, inability to obtain, 38
evidentiary challenges, 37
“intimate conviction,” 33, 106
“preponderance of the evidence,” 11,
13, 33, 106, 156
“probable cause,” 77
“reasonable grounds to believe,” 54, 77
search and seizure warrants, 54
StAR Initiative. See Stolen Asset
Recovery (StAR) Initiative
state responsibility, principle of, 167
statutes of limitations, 31–32, 32n49
statutory authorities, asset recovery
pursuant to, 185–86
Stolen Asset Recovery (StAR) Initiative,
2, 19n28, 42n62, 102,
109n143, 126n
storage facilities, 82
strategic planning in case management, 39
“straw men,” 42, 52
STRs. See suspicious transaction reports
subject pro les, creation of, 43, 44b
substitute asset provisions, 116–17
summary judgments, 173–74
summary testimony, 114
surveillance
electronic, 59–60
physical, 51
suspicious transaction reports (STRs), 13,
20, 21b, 48–49, 61, 66, 89, 182b
SWIFT. See Society for Worldwide
Interbank Financial
Telecommunications
Switzerland
asset return, 186, 186b
disclosure obligations for MLA
requests, 127b
informal assistance, 128n180
Montesinos case and, 14–15, 124b
NCB con scation, 157n218
Swiss Bankers Association, 95n125
Swiss Federal Tribunal, 30n45
T
T
tainted property systems. See property-based
con scation systems
task forces, 22–25, 122
taxation
criminal violations, 192
of illicit pro ts, 14, 15b
real property seizure and, 96
tax authorities, 50
team investigations, 22–25, 122
territorial jurisdiction, 29
ahir, Haji Achmad, 161–62b
ahir, Kartika Ratna, 161–62b
ahir v. Pertamina (1992–94), 161, 161–62b
ailand, NCB con scation in, 29n39
third-party interests
con scation mechanisms, 118–19
disclosure, 170–71
in securing assets, 87–88
timing issues
MLA requests, 39
of provisional measures, 85–86
tort actions, 162–65
tort damages, 12, 163
tracing assets. See evidence and
tracing assets
trading in in uence, 37b, 188–89
transfers of assets, 116, 117
Transparency International, 167
trash runs, 51–52
treaties, asset recovery pursuant to, 185–86
trusts, constructive, 161b
U
U
Ukraine
corruption in, 181b
jurisdiction issues, 179b
UNCAC. See United Nations Convention
against Corruption
Index I 263
undercover operations, 60
United Kingdom
accounting, records, and internal control
provisions, 36, 36b
Alamieyeseigha corruption scheme, 17–18
Bribery Act, 180b
Chiluba and associates (Meer Care & Desai
case, 2007), 16–17, 174b
Civil Liability (Contributions)
Act of 1978., 162n230
direct recovery of assets, 185b
disclosure orders, 94n121
discovery principle, 31n48
money laundering, 181b
NCB con scation, 19n29, 156n217
Proceeds of Crime Act, 16–17
resource persons, 124b
restraint orders, 171b
self-incrimination, 175n266
tort actions, 162n230
tracing and recovering assets, 46–47b
United Nations Commission on International
Trade Law, 175
United Nations Convention against
Corruption (UNCAC)
asset and income declarations, 22n32
asset return and, 8, 8n, 32, 32n50,
158, 185–86n276
bribery, 188–89
civil proceedings, 21n, 157–58n221, 159n225
direct recovery, 13n
foreign orders, 11n
framework of, 1
illicit enrichment, 189
international cooperation, 128n179, 158n223
joint investigations, 24n36
jurisdictional issues, 29n40, 177–78
misappropriation or diversion
of funds, 188
money laundering, 190–91
NCB con scation, 103, 156n216
noncoercive assistance, 128n181
obstruction of justice, 192
proceeds of crime, 108n142
tort actions, 162
transferring cases, 182b
United Nations Convention against Narcotic
Drugs and Psychotropic Substances,
4, 11n, 128n179
United Nations Convention against
Transnational Organized Crime
(UNTOC), 4, 11n, 24n36,
29n40, 128n179
United Nations O ce of Drugs and Crime, 2
United States
accounting, records, and internal control
provisions, 36, 36b
administrative con scation, 107n141
Alien Tort Claims Act, 163b
asset con scation funds, 120
Asset Forfeiture Program, 92n117
consensual monitoring of
communications, 59n80
“continuing o ense doctrine,” 31n47
disgorgement of pro ts, 168b
Foreign Corrupt Practices Act (FCPA),
163b, 168b, 180b
Internal Revenue Service, 166b
jurisdiction issues, 178n271, 179b
Justice Department, 8n17
liens on property, 82n106
money laundering, 181b
Montesinos case and, 14, 16, 157n220
NCB con scation, 29n39, 32n49, 105n133,
156–57nn217–218
privacy rights, 52n68
Racketeer In uenced and Corrupt
Organizations Act (RICO),
163b, 165n244
“relation back doctrine,” 117n167
resource persons, 124b
sharing agreements, 186n278
substitute assets, 117n164
Travel Act, 180b
United States v. See name of opposing party
Universal Declaration of Human Rights, 45
unjust enrichment actions, 168. See also
illicit enrichment
unpaid fees, 166, 166n247
UNTOC. See United Nations Convention against
Transnational Organized Crime
utility bills, 51
V
V
value-based con scation systems
bene ts in, 111–14
multiple orders in, 105
provisional measures and, 79
requirements for, 26, 76, 107–8
substitute asset provisions, 117
vehicle registries, 50. See also motor
vehicles, seizure of
victims of crime. See crime victims
vive voce evidence, 78b
W
W
warrants. See search and seizure warrants
websites. See Internet and websites
264 I Index
whistle-blowers, 22, 22n31
wire fraud, 192
wire transfers, 63–67, 63f, 63n85, 65b,
205, 209–12, 210f, 211b
World Bank, asset return and, 2, 8, 8n17
World Duty Free Company Limited v. Republic of
Kenya (2006), 167b
Z
Z
Zambia
Lusaka High Court, 174b
Meer Care & Desai case (2007), 16–17, 174b
NCB con scation, 16n
Zambia National Commercial Bank, 17
“Zamtrop account,” 17
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D
eveloping countries lose an estimated US$20-40 billion each year through bribery, misap-
propriation of funds, and other corrupt practices. Much of the proceeds of this corruption
fi nd “safe haven” in the world’s fi nancial centers. These criminal fl ows are a drain on social
services and economic development programs, contributing to the impoverishment of the world’s
poorest countries. Many developing countries have already sought to recover stolen assets. A
number of successful high-profi le cases with creative international cooperation have demon-
strated that asset recovery is possible. However, it is highly complex, involving coordination and
collaboration with domestic agencies and ministries in multiple jurisdictions, as well as the ca-
pacity to trace and secure assets and pursue various legal options—whether criminal confi sca-
tion, non-conviction based confi scation, civil actions, or other alternatives.
This process can be overwhelming for even the most experienced practitioners. It is exception-
ally diffi cult for those working in the context of failed states, widespread corruption, or limited
resources. With this in mind, the Stolen Asset Recovery (StAR) Initiative has developed the Asset
Recovery Handbook: A Guide for Practitioners to assist those grappling with the strategic, orga-
nizational, investigative, and legal challenges of recovering stolen assets. A practitioner-led proj-
ect, the handbook provides common approaches to recovering stolen assets located in foreign
jurisdictions, identifi es the challenges that practitioners are likely to encounter, and introduces
good practices. Included are examples of tools that can be used by practitioners, such as sample
intelligence reports, applications for court orders, and mutual legal assistance requests.
StAR—the Stolen Asset Recovery Initiative—is a partnership between the World Bank Group and the United
Nations Offi ce on Drugs and Crime that supports international efforts to end safe havens for corrupt funds. StAR
works with developing countries and fi nancial centers to prevent the laundering of the proceeds of corruption
and to facilitate more systematic and timely return of stolen assets.
ISBN 978-0-8213-8634-7
SKU 18634
