TI: NCC. NCF. AR. BEST STRATEGIES

Confiscation is the “permanent deprivation of property by order of a court or other competent authority”

NCC = judicial confiscation for a criminal offence without criminal conviction 

NCF IS AN EXAMPLE OF NCC

There are many expressions used to refer to non- conviction-based NCF or NCC, such as “civil forfeiture”, “in rem forfeiture”, or “objective forfeiture”. In Spanish,  “extinción de dominio” and “decomiso sin condena” 

NCF can take place within criminal proceedings and, even though they are usually focused on specific properties (in rem), they may also target individuals.

unfortunately, ncc is still a highly controversial mechanism, in both the developed and developing worlds.

why?:   

-authoritarian misuse of ncc [by political or judicial interference]

– tensions between the AL and HRL

-encroachments on both the right to a fair trial and due process

-self-incrimination and distribution of the burden of proof,

-the proportionality of asset forfeiture measures, compensation for third parties, and infringements of property rights

AR

ar = recovery of criminal funds/assets that belong to another nation…eg from narcotics, arms trafficking , tax evasion and corruption etc

the process may sometimes take place only within a single country. For example, if the stolen funds were not sent to another country or jurisdiction, after being confiscated they may be immediately transferred to the victims

ar steps:

 (i) tracing, identifying, and locating the assets;

(ii) seizing, freezing and confiscating the assets;

(iii) recovering and returning the assets to their legitimate owners or the victims of said crime

Confiscation, which is one of the components of asset recovery, can also perform a punitive function. In some cases, the assets of a convicted person, including those lawfully obtained, may also be subject to confiscation

“each year US$ 20 to US$ 40 billion, corresponding to 20% to 40% of official development assistance, is stolen through high-level corruption from public budgets in developing countries and hidden overseas.” The OECD estimates that bribes equal more than 10 per cent of business transactions, on average, and 34.5 per cent of their profits …US$ 50 billion and likely much more are lost annually from the continent …BUT… only US$ 5 billion in stolen assets had been repatriated over the previous 15-year period 

According to Europol, only about 2 per cent of criminal proceeds are frozen and 1 per cent is confiscated in the European Union. These are staggeringly small figures considering that between 0.7 and 1.28 per cent of the annual EU GDP is involved in suspect financial activity. In the UK, only 26 pence out of every 100 pounds of criminal proceeds were recovered 

DIFF: types of orders that also do not depend on a criminal conviction:

• Confiscation=  definitive deprivation of property. eg ncf
• asset freezing. is  temporary
• seizure= taking temporary control or possession over someone or something

confiscation phases:

i. the investigative phase, when the proceeds from crime are identified and located, and evidence about their ownership is collected;

ii. the judicial phase, when the owner is put on trial to be convicted (or acquitted) or another decision is rendered by the court, leading to the confiscation of their property; and

iii. the disposal phase, when the property is actually confiscated and disposed of by the State in accordance with the law.

Confiscation can be based either on property or on value (money owed )

The property-based system requires that a link be established between the identified assets and an offence. It is most useful when assets can be linked to the proceeds or the instrumentalities of a given crime.

Confiscation can be conducted through three different types of proceedings: criminal, civil or administrative:

1. Criminal confiscation usually requires a criminal conviction by trial or a guilty plea from the defendant. The confiscation order can be part of the sentence or be adjoined in the following proceedings, designed to determine and apply the ensuing sanctions. Alternatively, confiscation can also be determined in the absence of a conviction within the context of criminal proceedings, as is discussed below.
2. Civil confiscation happens within civil proceedings, which have different evidentiary standards and rules from criminal proceedings.
3. Administrative confiscation occurs when a judicial decision is not necessary to confiscate specific assets or value- amounts. It is more commonly associated with the enforcement of customs laws, drug trafficking and cross-border transportation of currency. In all of these cases, the very possession of smuggled items, drugs or unreported cash is considered an administrative (and possibly criminal) offence,

ANTICOR TOOLS

Unexplained Wealth Orders = COCOO’S MAIN WEAPON

 (UWOs) are considered one of the tools which can lead to non- conviction-based asset confiscation. They start from a rebuttable presumption that a particular asset was illegally obtained and thus transfer the burden of proof to the defendant so that they must prove the lawful origin and use of said asset 

UWOs combine aspects of NCF regimes, with illicit enrichment regulations

UWOs result from an application by a law enforcement official who gathered preliminary evidence about the connection between an offence and a specific asset

COCOO WILL FIND the list or roster of individuals – usually public officials and Politically Exposed Persons (PEPs) – that may be subject to this kind of measure. Sometimes, only assets of a certain value may be targeted by UWOs (Martini 2015).

If the application is accepted, the court issues an order requiring the individual to present evidence that the assets in question were obtained through legitimate means. If they are not able to prove this, proceedings may lead to the confiscation of said assets and the evidence gathered can be forwarded for criminal prosecution.

lifestyle audits [LA]

assessment of an individual’s [income, assets, and investments], to determine if they match that person’s legitimate income.

Extended Confiscation [EC]

to seize assets not proven to refer to a specific offence, but are assumed illicit

This assumption arise:

-when the assets’ owner is convicted of serious economic crimes

-when there is no legitimate explanation for the origins of the assets. In these cases, confiscation can extend beyond the proceeds of the offence

This presumption allows for the confiscation of assets that may be derived from other offences, for which the offender was not charged or convicted. It is a rebuttable presumption ( ‘reverse onus’), because the offender can prove that they acquired said assets legitimately.

‘Confiscation enhancements’ CE

permitting the confiscation of assets not connected to the crime. They are especially useful whenever the crime assets cannot be located or are unavailable 

<> COCOO will pap/foc v offender (res iudicata) , to seek the confiscation of non-crime assets of already prosecuted large firms/banks/govs/, for an equivalent value (to the crime assets)…and/or ask court to order disgorgement etc.

Civil remedies

Different legal systems allow for some civil remedies to be employed by private and public entities in order to recover stolen assets. These remedies present some advantages when compared to criminal procedures:

two types of civil actions/remedies [to recover assets stolen as a result of corruption].

Property claims:

The UNCAC recognises that States Parties must permit other governments to initiate civil action in their courts, to establish ownership of property acquired through the commission of a corruption offence (art53)

Personal claims:

may be presented against a person or an entity for damages caused by a breach of contract, tort, or unjust enrichment. damages seeks to place the victim in a position to where they would have been if not for the commission of the corrupt act. All expenses and lost profits caused by the corrupt act must be compensated 

Disgorgement

is a type of civil remedy in common law jurisdictions, derived from the court’s equitable power to correct unjust inequality, by ordering the surrender of all illegal profits

Non-conviction-based forfeiture (NCF)

The United Nations Convention against Corruption (UNCAC) determines that States Parties should (but no o. to) pass laws/reg to allow confiscation of criminal property without a criminal conviction, where the offender cannot be prosecuted by reason of death, flight or absence or in other appropriate cases”-eg. serious crimes; tainted property- (art. 54, 1 (c).

The Implementation Review Mechanism (IRM) for UNCAC, monitors how countries have implemented this recommendation to institute NCF…most countries have adopted this recommendation , thus becoming obliged to allow ncf.

In the latest G20 Anti-Corruption Action Plan for 2022-2024, Member States agreed to “promote the use of various methods for asset recovery, such as procedurally fair NCC or NCF , where consistent with fundamental principles of domestic laws and international obligations

the FATF (2012:  NCC is most useful:

– When a conviction cannot be obtained for procedural or technical reasons (e.g. the statute of limitations is exceeded);

<< >> COCOO:  LOOK AT OLD CASES, TO SEEK FIRMS CONDEMENED IN PRESENT , OR PAST,

– When there is substantial (enough) evidence to establish that the proceeds were generated from criminal activity, but there is insufficient evidence to meet the criminal burden of proof;

– If a criminal investigation or prosecution is unrealistic or impossible;

– When the perpetrator was acquitted of the predicate offence due to insufficient admissible evidence of failure to meet the burden of proof;

– If the defendant is immune from prosecution.

the FATF recommends that states should respond to relevant requests by other countries, even if those requests are on NCC proceedings. … “(unless=caveat) this is inconsistent with fundamental principles of domestic law”.

states should recognise NCC orders of other countries

Countries without NCC laws, should introduce them.

Directive 2014/42/EU on the Freezing and Confiscation:  when traditional criminal confiscation is not possible as a result of illness or absconding of the suspected or accused person, Member States must take measures to enable NCC confiscation of instrumentalities and proceeds of crimes (art. 4 (2)).

why NCF has become such a widely recommended tool for confiscation of stolen assets?:

In civil cases, however, civil law standards of proof diverge from common law ones. While civil law countries maintain high standards of proof in civil cases, common law countries only require civil claims to be proved by a preponderance of the evidence =‘balance of probabilities’, requires the party with the burden of proof to convince the decision-maker (usually the judge) that there is a greater than 50 per cent chance that the claim presented is true.

In common law countries, where NCF relies on a civil standard of proof, based on a ‘balance of probabilities’, it can thus be more straightforward to confiscate

property-based NCF claims can be directed at assets owned by people in positions of power within criminal organisations

NCF claims are more likely to succeed where:

a.corrupt officials are legally or practically immune from prosecution, civil action against specific assets may prove more likely to succeed. 

b. organised crime is more significant

LIMITATION CLOCK

Corruption, by its very definition, is a secretive affair and often involves individuals in positions of power that allow them to stop or slow down investigations…so that TL ends.

<> TL ONLY COUNTS FROM DATE WHICH THE CRIME IS KNOWN

In Italy, for example, NCF is allowed, even when the crime is statute-barred…..HOW??:after the NCF,  comes the conviction….and then higher courts can void the conviction, due to the statute of limitation, but still seize the proceeds of crime (keep the NCF)

NCF itself may also have a TL set by each country

1. Proceeds: “any economic advantage derived directly or indirectly from a criminal offence, consisting of any form of property and including any subsequent reinvestment or transformation of direct proceeds and any valuable benefits”
2. Instrumentalities: “any property used or intended to be used, in any manner, wholly or partially, to commit a criminal offence”.
3. noncrime assets: in systems that focus on unexplained wealth

International initiatives supporting implementation of NCF

Stolen Asset Recovery Initiative: STAR

“StAR’s ultimate objective is to deny safe havens for corrupt funds, and facilitate more systematic and timely return of proceeds”….t aims to achieve this by:

i. working directly with jurisdictions,

ii. contributing to the international debate on anti-corruption and asset recovery, 

iii. drafting reports and conducting research.

not only has StAR been able to assist “over 35 countries in drafting legal frameworks, setting up the institutional structure, and building the skills necessary to trace and return stolen assets”, but it also “provide[s] the platform for dialogue and collaboration and facilitate contact among different jurisdictions involved in asset recovery and financial centres”.

STAR was founded in 2007, is coordinated by the World Bank Group and the UNODC, with the support of the Conference of States Parties to the UNCAC, the G7, the G20, the FAFT, the OECD the Egmont Group, the Camden Asset Recovery Interagency Network (CARIN), the International Bar Association and Transparency International.

Within StAR, there is also the Global Forum on Asset Recovery (GFAR), which is a platform designed to empower investigators and prosecutors. Through GFAR, best practices are shared and technical training is provided to asset recovery practitioners [cocoo]. It also provides a venue for meetings…Since its founding in 2017, the GFAR has focused on AR in – Nigeria, Sri Lanka, Tunisia and Ukraine – 

UNCAC  ARWG Asset Recovery Working Group

Created in 2006, assisting and advising the Conference of the States Parties in the implementation of its AR mandate…meets annually with the goal of facilitating the exchange of information, providing good practices and ideas to states and encouraging cooperation between states. It also helps compile the cumulative knowledge of States Parties in this area. It has, thus, become a forum where officials from different countries share their experiences using ar tools, like ncf 

The Egmont Group

The Egmont Group was founded in 1995 and it convenes 167 Financial Intelligence Units (FIU) from around the world. Although it is not focused on AR per se, it provides a platform for member FIUs to securely exchange their operational financial intelligence and expertise on combating money laundering and terrorism financing

FIUs are instrumental in tracing assets that may be later confiscated through NCF proceedings 

INTERPOL

INTERPOL identified corruption as a key priority in 2007 and it has since emerged as a central point of contact for information on AR

In 2009, INTERPOL launched the Global Focal Points platform, which is a network of anti- corruption practitioners that can respond to emergency requests for assistance in AR cases.

Asset Recovery Interagency Networks ARINs

(ARINs) facilitates asset identification and recovery through cooperation

ARINs are usually made up of experts and practitioners (law enforcement officials, diplomats, judges, etc.) from the different government institutions ….are forums for these practitioners and experts to exchange opinions and info on NCFs

AR/NCC/NCF WORLD INITIATIVES

Global: the Camden Asset Recovery Initiative

America: the Red de Recuperación de Activos de GAFILAT, the Asset Recovery Inter-Agency Network for the Caribbean.

Europe: the Balkan Asset Management Interagency Network.

Africa: the Asset Recovery Inter-Agency Network for Eastern Africa, the Asset Recovery Inter- Agency Network of Southern Africa, the Asset Recovery Inter-Agency Network for West Africa.

Asia: the Asset Recovery Interagency – Asia Pacific, the Asset Recovery Inter-Agency Network in West and Central Asia.

Inter-American Drug Abuse Control Commission

The Inter-American Drug Abuse Control Commission (CICAD, in the Spanish acronym) is a consultative and advisory board of the Organisation of American States. It was established in 1986 and one of its goals is to provide technical assistance to increase states’ capacities to counter the drug problem in the Americas.

The CICAD

has developed a Model Law on In Rem forfeiture, which provides guidance for countries that want to implement NCF

 the alsf, African Legal Support Facility

should supporting ar and repatriation efforts in the region …Embedded in the African Development Bank, the African Legal Support Facility works to support African governments in the negotiation of complex business transactions since 2010. It seeks to provide more weight to African interests in asymmetric negotiations with international investors 

<> cocoo can also offer contract advice to african govs and to alsf

Human Rights concerns wrt NCFs

Protocol no. 1 to the ECPHR : European Convention for the Protection of Human Rights:

“no one shall be deprived of his possessions, except in the WPI, and subject to the conditions provided for by law and by the GPIL general principles of international law” (art. 1).

ECHR:  “States have a wide margin in implementing policies to fight crime, including confiscation

NCF is considered an “arbitrary interference with property rights”, because it is enforced against whoever holds or owns the (criminal or not) proceeds + instrumentalities…..so…it may impact innocent third parties, without compensation or replacement

The lower evidentiary threshold for NCF – particularly in common law countries – encourage COCOO/prosecutors, to initiate proceedings, even without sufficient proof of guilt, increasing the risks of reckless prosecutions.

the public and the press donot understand that receiving an NCF is not due to a criminal conviction…..but they take it as if it was a criminal conviction…thus, the perpetrator losses most reputation

NCF confers overbearing powers on the state,  and some leaders use NCF to target political opponents 

NCF allows for excessive judicial discretion. It may also provide tools for abuse and bias by the police without judicial oversight 

NCF safeguards: 

• –  Lawfulness and proportionality as a means to protect property rights. The interference with property rights must be authorised by law and a proportionality test may be deployed to ensure NCB forfeiture does not interfere with individual rights and the punishment imposed is not overly harsh.
• –  Compensation. Bona fide third parties should not be unfairly or unreasonably affected by NCB forfeiture, and they should be compensated when that happens.
• –  Mitigating the risk of ‘reverse onus’ provisions. Requiring defendants to prove that their assets were lawfully acquired may constitute an overly heavy burden that affects the procedural right to theTransparency International Anti-Corruption HelpdeskNon-conviction-based forfeiture presumption of innocence and the right to a defence. Applying a proportionality test or shifting these ‘reverse onus’ provisions according to the different stages or types of proceedings may mitigate said risks.
• – Protections against self-incrimination. Rules should clarify whether evidence produced in civil proceedings can be used in criminal ones, where the fundamental right of the accused not to be compelled to produce evidence against themselves should be respected.
• – Challenging forfeiture orders and the right to appeal. Defendants must have the right to appeal in NCB forfeiture proceedings.
• – The right to legal aid.
• – Restricting the value of forfeited assets. In some countries, such as the US, certain pieces of legislation have placed a threshold beyond which the seizure of assets can only happen through criminal proceedings.
• prosecutors should also be required to clearly define the property that is targeted by NCB forfeiture claims. Moreover, legislation should also ensure that restraints on one’s property rights do not threaten their ability to afford living expenses and legal representation.

In most countries, challenges to the constitutionality of NCF have failed and confirmed that ncf does not violate human rights.

NCF has been endorsed by most international organisations , and is in the toolbox that countries are encouraged to adopt to improve AR