Asset Recovery Process
The avenues used to initiate an asset recovery action may have strategic implications on the case or outcome, necessitating practitioners to develop a working case strategy. The underlying process may vary in form, but the content remains almost the same.
About the Asset Recovery Process
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 Convention 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, confiscate, and return the proceeds of corruption.
Evidence and intelligence collection is conducted by law enforcement officers under the supervision of prosecutors or judges, or by private investigators to build subject and financial profiles. In some instances, special authorization is required from a judge, prosecutor or law enforcement officer to access government agency databases or conduct electronic surveillance. In other cases, investigations can be conducted through open source intelligence (OSINT), where data is publicly available. A robust profile would include information on the assets held by targets, their families and associates, and associated businesses. The financial data may include all assets and liabilities, income and expenses of the targets and their businesses.
One of the key obstacles to tracing and recovering illicit gains from corruption is a lack of corporate transparency: during corruption investigations, investigators often must first uncover who actually benefits from the ownership of an asset – for example a company or real estate that is involved in a corrupt scheme – since the beneficial owner may be hidden behind multiple layers of shell companies or behind a nominee company director. Implementing an effective beneficial ownership disclosure poses significant challenges, and most countries are struggling to implement FATF Standards on beneficial ownership transparency.
As a case for asset recovery progresses, international cooperation acts as an essential avenue for the successful return of assets that have been transferred to or hidden in foreign jurisdictions. It supports gathering of evidence and intelligence, implementation of provisional measures, and the eventual confiscation of the proceeds of corruption, and for their return. International cooperation includes “informal assistance,” mutual legal assistance (MLA) requests, and extradition. 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.
In parallel to the investigative and legal work conducted by practitioners, and the different types of international cooperation between jurisdictions which assist in propelling the asset recovery process forward, an often-overlooked area of consideration remains domestic coordination. This relates to a clear system for domestic cooperation, ensuring there is a lead agency, and that all those with relevant information on the national level can share that with each other. Domestic coordination could take on the form of an ad-hoc task force, or a more permanent committee to support cohesion and sharing of information.
Depending on the jurisdictions involved in the asset recovery case, and the practitioners/law enforcement agencies tasked with recovering stolen assets, there are a number of legal avenues available to countries to determine how best to proceed with the case. Proceedings may involve criminal or civil actions (or both) and will achieve the recovery of assets through orders of confiscation, compensation, damages, or fines. Countries have to establish standard of proof in both cases and in the case of criminal proceedings; a link between the asset and the offense which can be difficult to prove. However, once a court orders seizure or confiscation of assets, appropriate steps need to be taken to enforce that order and facilitate the return of assets to the requesting country.
Once a confiscation order is enforced in the requested jurisdiction and no legal or political hurdles impede progress, assets are often transferred to the general treasury or confiscation fund of the requested country, and not directly to the requesting jurisdiction. As a result, another mechanism will be needed to arrange for the return of the assets. Depending on the agreements/policies between the jurisdictions involved, the assets may be shared or partially returned, whilst the remainder are kept by the requested jurisdiction to cover the costs of restraining, maintaining, and disposing of the confiscated assets. Assets can also be returned directly to victims through court orders.
A number of policy issues are likely to arise during any efforts to recover assets in corruption cases. Requested jurisdictions may be concerned that the funds will be siphoned off again through continued or renewed corruption in the requesting jurisdictions. Moreover, requesting jurisdictions may object to a requested country’s attempts to impose conditions and other views on how the confiscated 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.