Workshop on Law Enforcement by monkey6

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									Workshop on Sub-thematic areas
Sub-theme 4: Law Enforcement
Topic: Illicit Proceeds

Chairperson: Mr Gangloff, the Deputy Director of the United States Office of
Government Ethics, who had served in the Department of Justice for almost 30
years, stated that: there is broad agreement that effective tools and processes for
the recovery of illicit proceeds and the denial of safe havens for these proceeds and
the corrupt actors who obtain them must be implemented in order to meaningfully
fight corruption.

Mr Hofmeyer of South Africa dealt with the issue of illicit proceeds of crime. He
stated at the outset that trying to trace hidden money is both difficult and
frustrating. He went on to say that the UN Convention Against Corruption recognises
asset recovery as a key component in dealing effectively with corruption. To date
most asset recovery is undertaken through private litigation because state
mechanisms are ineffective.

South Africa has two models of asset forfeiture. The first is based on the UK model of
conviction-based forfeiture. This requires conviction within a civil process. The
advantages of this model are that the value of that forfeited property is a gross value
with no deductions. Should the criminal have further assets, any attachment order
can be applicable to those as well. The state can recover “gifts” made by a corrupt
official within the last seven years. Forced disclosure of assets is possible coupled
with immunity against use in criminal procedures and, as with normal civil litigation,
there is no compelling need to prove that the forfeited assets are a product of crime.

The second model is based on the US model, which has two central features: firstly,
forfeiture through civil action evidence based on a balance of probabilities and
secondly the ability to “freeze” property. In civil forfeiture although a criminal
conviction is not a necessity, proof must be produced that the property is tainted by
criminal activity. Additionally, action can be instituted directly against property, not
against the person.

The advantages of civil forfeiture in corruption cases are that:

      It is only necessary to prove facts on the balance of probabilities, which is
       useful, where convictions are difficult to obtain and where the evidence is not
       strong enough to support a conviction.
      Perpetrators have often not contested civil forfeiture as it involves making
       statements under oath, which can be used against them.
      Proceedings are civil; the law can be made retrospective to recover “old”
       proceeds.

Concerning corruption involving heads of state civil forfeiture may be the answer to
difficult issues in dealing with those persons who are politically exposed. This begs
the question: what is to be done when illicit proceeds of a serving head of state are
uncovered through the new enhanced due diligence duties incumbent on financial
institutions? Furthermore, with civil forfeiture the host state can freeze property on
behalf of a victim state even if that state has not requested such action despite the
perpetrator still being head of state. Finally, evidence and diplomatic consideration




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still play a role in these instances and finding the correct institutional form to carry
out mechanisms to mitigate against corruption are still a challenge.

He went on to say that with regard to international co-operation, it was imperative to
acquire mutual legal assistance (MLA) and co-operation through inter-governmental
bodies. There are three main mechanisms that can facilitate this:

   1. Bilateral MLA treaties providing for such co-operation.
   2. Multilateral agreements and conventions
   3. Domestic legislation allowing for easier, more direct MLA.

In conclusion Mr Hofmeyer stated that asset forfeiture is a vital part of the war
against corruption as it hits where it hurts most – in the pocket. Asset forfeiture is a
weapon, which reduces the profits of corruption, and this is especially important in
economically motivated crimes where deterrence is low. Finally, to deal effectively
with crime - “crime does not pay” must become a truism.

I Pam of ICC (Nigeria) gave an outline of the scope of the problem of corruption
and some of the legal and policy responses which have been put in place. He stated
that in Nigeria billions of dollars crosses its borders every year for western banks.
China alone loses approximately US$50 billion and Nigeria US$100 billion.

Nigeria has adopted some main policy instruments based on the principles of
effective banking supervision. These include supervisory guidelines and a general
framework for effective banking systems. It has also established the Financial Action
Task Force on Money Laundering (FATF). Recommendations were made relating to
the financing of terrorism and the regulation of money laundering.

The main legal instrument used to enforce legislation is the freezing of assets, asset
seizure and repatriation, where possible. The recovery of assets was initially based
on the premise “he who confiscates, disposes” (Article 14(1) UN TOC). Now,
however, consensus has been achieved based on a “balance of mutual frustration”.
Article 51 makes the return of assets a fundamental principle. Embezzled funds must
be returned to the state of origin and assets to their primary owners.

The major constraints to the recovery of assets are:

      A lack of political will.
      An inadequate legal framework.
      Legal and technical difficulties.
      Technological challenges.

These efforts are further hampered by the difficulties experienced in tracing assets,
money laundering, and “fuzzy” financial systems aided by competing claims in
multiple jurisdictions.

Law enforcement beings with the prevention of corruption and this can be achieved
by creating a climate in which criminals find it difficult to operate. This climate can be
achieved by increasing the odds of criminals being convicted; reducing the rewards
of crime and rewarding the efforts of the law enforcement agencies.

Mr Pam concluded his presentation by recommending that national integrity systems
be strengthened and a system of best practices be established and shared among



Global Forum V          Illicit Proceeds - Tuesday 3 April AM Session                   2
states. The provisions of legal instruments must be vigorously applied, both
internationally and on the domestic front. The resources of UNCAC must be used,
along with more sophisticated technical assistance.

Ms Earl of the United Kingdom opened her presentation with an overview of the
UK Criminal Act of 2002 which brought together a number of legislative powers in an
effort to boost anti-crime tactics. The Act allows action to be taken against those
convicted in the UK in respect of confiscation orders. It also significantly strengthens
the role of regulated bodies in reporting suspicious activities.

An individual suspected of holding cash in excess of Euro 1 000 can be stopped and
questioned as to where the money came from. If no satisfactory explanation is
forthcoming, the money can be confiscated pending further enquiries. This tool has
been particularly effective at border posts and other points of entry in the UK.

In criminal cases, a judge has the power to order an investigation into the financial
assets of any person convicted of a crime. Since 2003 the legal system has been
improved to allow for criminal convictions and subsequent confiscations which were
not possible prior to 2003. The Act takes cognisance of human rights issues and has
a 12-year limitation period applicable. Furthermore, the law enforcement agencies
have the power to apply taxation considerations to confiscated assets and these
powers are used extensively with regard to those involved in drug dealing and
money laundering. The UK has an efficient intelligence service which is widely used
by many law enforcement agencies and for civil recovery actions; the first port of call
is the Assets Recovery Agency.

The results of the improvements in both the systems and applications of the law
have been significant with inroads being made into criminal activities within the UK.
Thus, UK law enforcement agencies are keen to share their experiences and assist
other states in their war against corruption.

Ends




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