barriers to asset recovery an analysis of the key barriers and recommendations for action

Barriers to Asset Recovery An Analysis of the Key Barriers and Recommendations for Action Kevin M. Stephenson Larissa Gray Ric Power Jean-Pierre Brun Gabriele Dunker Melissa Panjer Barriers to Asset Recovery Barriers to Asset Recovery Kevin M. Stephenson Larissa Gray Ric Power Jean-Pierre Brun Gabriele Dunker Melissa Panjer © 2011  e International Bank for Reconstruction and Development /  e World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org All rights reserved 1 2 3 4 14 13 12 11  is volume is a product of the sta of the International Bank for Reconstruction and Development /  e World Bank.  e  ndings, interpretations, and conclusions expressed in this volume do not necessarily re ect the views of the Executive Directors of  e World Bank or the governments they represent.  e World Bank does not guarantee the accuracy of the data included in this work.  e boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgement on the part of  e World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions  e material in this publication is copyrighted. 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ISBN: 978-0-8213-8660-6 eISBN: 978-0-8213-8661-3 DOI: 10.1596/978-0-8213-8660-6 Cover photo: Istockphoto Library of Congress Cataloging-in-Publication Data Stephenson, Kevin, 1962- Barriers to asset recovery : an analysis of the key barriers and recommendations for action / Kevin Stephenson, Larissa Gray, Ric Power. p. cm. Includes bibliographical references and index. ISBN 978-0-8213-8660-6 — ISBN 978-0-8213-8661-3 (electronic) 1. Forfeiture—Criminal provisions. 2. Searches and seizures. I. Gray, Larissa. II. Power, Ric. III. Title. K5107.S74 2011 345’.0773—dc22 2011010618 Contents Acknowledgments vii Abbreviations xi Executive Summary 1 Principal Recommendations 5 Recommendations 5 The Problem and a Path to a Solution 11 Methodology 14 The Lausanne Process 15 How to Use This Study 17 General Barriers and Institutional Issues 19 Barrier 1: Lack of Trust 19 Barrier 2: Lack of a Comprehensive Asset Recovery Policy 24 Barrier 3: Deficient Resources 31 Barrier 4: Lack of Adherence to and Enforcement of AML/CFT Measures 33 Barrier 5: Too Many Cooks in the Kitchen—Lack of Effective Coordination 37 Barrier 6: Quick Trigger on Formal MLA Submission 40 Legal Barriers and Requirements that Delay Assistance 47 Barrier 7: Differences in Legal Traditions 47 Barrier 8: Inability to Provide MLA 49 Barrier 9: Failure to Observe UNCAC and UNTOC 53 Barrier 10: No Quick Freeze or Restraint Mechanisms 54 Barrier 11: Unbalanced Notice Requirements that Allow Dissipation of Assets 56 Barrier 12: Banking Secrecy Laws 58 Barrier 13: Arduous Procedural and Evidentiary Laws 60 Barrier 14: No Provisions for Equivalent-Value Restraint and Confiscation 65 Barrier 15: Lack of a Non-Conviction Based Confiscation Mechanism 66 Barrier 16: Inability to Enter into Plea Agreements 69 Barrier 17: Immunity Laws that Prevent Prosecution and MLA 71 Barrier 18: Fleeting Statutes of Limitations 74 vi I Contents Barrier 19: Inability to Recognize and Enforce Foreign Confiscation and Restraint Orders 76 Barrier 20: Inability to Return Assets to Originating Jurisdictions 77 Operational Barriers and Communication Issues 79 Barrier 21: Absent or Ambiguous Focal Points 79 Barrier 22: Onerous Legal Requirements to MLA and Overly Broad MLA Refusal 81 Barrier 23: Lack of Information on MLA Requirements 85 Barrier 24: Lack of Problem-Solving Ingenuity 86 Barrier 25: Indistinct Channels and No Feedback 89 Barrier 26: Unreasonable Delays in MLA Responses 90 Barrier 27: Lack of Publicly Available Registries 92 Barrier 28: Identifying Foreign Bank Accounts 93 Barrier 29: Using Restrained Funds to Pay Legal Fees; Depletion of Confiscated Assets by Contingency Fee Payments; Asset Mismanagement 94 Appendix A. Table of Recommendations 99 Appendix B 113 Canada 113 Cayman Islands 117 France 122 Germany 126 Guernsey 129 Hong Kong SAR, China 135 Japan 141 Jersey 146 Liechtenstein 151 Singapore 156 Spain 161 Switzerland 165 United Kingdom 170 United States 175 Glossary 181 Acknowledgments  is study is the result of special collaborative e orts from colleagues around the world.  eir time and expertise were invaluable in identifying barriers to asset recovery and developing recommendations to overcome these barriers.  is publication was written by Mr. Kevin M. Stephenson (team leader, Financial Market Integrity Unit, World Bank), Ms. Larissa Gray (Financial Market Integrity Unit, World Bank), Mr. Ric Power (United Nations O ce on Drugs and Crime [UNODC]), Mr. Jean-Pierre Brun (Financial Market Integrity Unit, World Bank), Ms. Gabriele Dunker (project consultant), and Ms. Melissa Panjer (project consultant).  e authors are especially grateful to Mr. Adrian Fozzard (Coordinator, Stolen Asset Recovery [StAR] Initiative), Mr. Dimitri Vlassis (Chief of the Corruption and Eco- nomic Crime Section - UNODC) and Mr. Jean Pesme (Manager, Financial Market Integrity Unit, Financial and Private Sector Development Network) for their ongoing support and guidance on the project. As part of the dra ing and consultation process, practitioners’ workshops were held in Vienna, Austria (May 2009), Casablanca, Morocco (August 2009), Buenos Aires, Argen- tina (August 2009), and Lausanne, Switzerland (May 2010). Also, country visits were conducted in Cayman Islands, Italy, Japan, and Singapore with some practitioners that were unable to attend the aforementioned workshops. 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 developing countries.  e following list is by name followed by the country or organization with which that person is a liated.  is does not mean that this person’s participation nec- essarily represented the views of the countries mentioned.  e people participating in one or more of these workshops or country visits were Yves Aeschlimann (Switzer- land), Oscar Alberto Del Rio (Colombia), Jorge Alberto Lara Rivera (Mexico), Georgis Taylor Alexander (Saint Lucia), Simon Alexis (Trinidad), Jose Amarilla (Paraguay), Maria Araujo (Brazil), Luis Arocena (Argentina), William Bailhache (Jersey), Gary Balch (United Kingdom), Jaime S. Bautista (Philippines), Kennedy Bosire (Kenya), Robert Broekhuijsen (Netherlands), Katia Bucaino (Italy), Rachmat Budiman (Indone- sia), Ian Bulmer (Canada), Lindsey Cacho (Cayman Islands), Ricardo Cespedes (República Bolivariana de Venezuela), Zephyerine A.T. Charles (Grenada), Leong Kok viii I Acknowledgments Cheong (Singapore), Jean-Sebastien Conty (France), Mohammed Dauda (Nigeria), Maxence Delorme (France), Jean-Pierre Mvondo Evezo’o (Cameroon), Mario Gara (Italy), Pascal Gossin (Switzerland), Adrian Fajardo (Mexico), Ahmed Yassine Foukara (Morocco), Vernon Francois (Saint Lucia), Clara Garrido (Colombia), Rudolph Gor- don (Cayman Islands), Yoshinobu Goto (Japan), Soh Kee Hean (Singapore), Hay Hung Chun (Singapore), Koji Hayashi (Japan), Edward Hoseah (Tanzania), Henderson Hunte (Cayman Islands), Takeshi Hiramatsu (Japan), Karen Hughes (St. Kitts and Nevis), Giovanni Ilacqua (Italy),Toshifumi Ishida (Japan), Lawrence Iwodi (Nigeria), Shoichi Izawa (Japan), Elena Jacob (Cayman Islands), Stephanie Jeavons (United Kingdom), Mathew Joseph (Singapore), Miguel Jurado Fabara (Ecuador), Vitaliy Kasko (Ukraine), Jumpei Kawahara (Japan), Shuhei Kojima (Japan), Yoshiyuki Komiya (Japan), Bibiana Lee (Singapore), Chua Jia Leng (Singapore), Fernanda Lima (Brazil), Raymond Lockiby (Grenada), Marko Magdic (Chile), Nahid Mahtab (Bangladesh), Jennifer Marie (Singa- pore), Claudio Mascotto (Switzerland), John Masters (Cayman Islands), Takashi Miura (Japan), Winston Cheng Howe Ming (Singapore), Abdul Mobin (Bangladesh), Ruth Molina (Guatemala), Yoshinori Momonoi (Japan), Enrico Monfrini (Switzerland), Shoko Moriya (Japan), Holly Morton (United Kingdom), Charles Moynot (France), Elnur Musayev (Azerbaijan), Cahyo Rahadian Muzhar (Indonesia), Maxwell Nkole (Zambia), Jean Fils Kleber Ntamack (Cameroon), Mirza Nurhidayat (Indonesia), Arif Havas Oegroseno (Indonesia), Patricia O’Reilly (Argentina), Juan Pavia Cardell (Spain), Dr. Ricardo Perez Blanco (Uruguay), Justice Jean Permanand (Trinidad), Pedro Pereira (Basel Institute on Governance), Amelia Julia Principe Trujillo (Peru), Frederic Ra ray (Guernsey), Renato Righetti (Italy), Nuhu Ribadu (Nigeria), Indra Rosandry (Indone- sia), LaTeisha Sandy (St. Vincent and the Grenadines), Jean-Bernard Schmid (Switzer- land), Maria Schnebli (Switzerland), Michael Scully (Singapore), Shunsuke Shirakawa (Japan), Gavin Shiu (Hong Kong SAR, China), Salim Succar (Haiti), Romina Tello Cor- tez (Argentina), Takahiro “Taka” Tsuda (Japan), Akinori Tsuruya (Japan), Ronald Viquez Solis (Costa Rica), Naotsugu Umeda (Japan), Valerie Tay Mei Ing (Singapore), Carmen Visuetti (Panama), Masaki Wada (Japan), Gerhard Wahle (Germany), Dr. Robert Wallner (Liechtenstein), Gary Walters (United Kingdom), Wayne Patrick Walsh (Hong Kong SAR, China), Paul Whatmore (United Kingdom), Marilyn Williams (Belize), Simon Williams (Canada), Valentin Zellweger (Switzerland), and Dr. Fausto Zuccarelli (Italy).  e team bene ted from many insightful comments during the peer review process, which was co-chaired by Mr. Jean Pesme and Mr. Adrian Fozzard.  e peer reviewers were Mr. Luis Urrutia Corral (Head of FIU, Ministry of Finance and Public Credit, Mexico), Mr. Agustin Flah (Legal Department, World Bank), Mr. Giovanni Gallo (UNODC), Ms. Jeanne Hauch (Integrity Operations, World Bank), Mr. Mutembo Nchito (MNB Legal Practitioners, Zambia), Ms. Heba Shams (Special Assistant, O ce of the Managing Director, World Bank), and Mr. Simon Whit eld (Anti-Corruption Team, United Kingdom Department for International Development).  e team also appreciated the advice of the Honorable Barry O’Keefe (retired Chief Judge of the Com- mercial Division and an Additional Judge of Appeal of the Supreme Court of New South Wales, Australia) and Mr. Stephen Zimmermann (Director, Integrity Operations, World Bank) during the concept note phase of the project. [...]... solutions to return the assets to their countries of origin Given the absence of any forum at the international level dedicated to discussing the legal and political aspects of asset recovery, Switzerland started the process of the Lausanne seminars In January 2001, the Swiss government invited officials and experts from different financial centers to the first Lausanne seminar to discuss issues related to. .. impediment to the recovery of the proceeds of corruption The project team defined this phrase to mean a lack of a comprehensive, sustained, and concerted policy or strategy to identify asset recovery as a priority and to ensure alignment of objectives, tools, and resources to this end The general barriers also include the lack of adherence to and enforcement of anti-money laundering (AML) measures as a means... to asset recovery By initiating this process, Switzerland’s objectives were to start a discussion on the international level, to provide a platform to informally share experiences, and to develop trust and networking opportunities among practitioners and experts Over time, a certain “Spirit of Lausanne” developed that stands for candid exchanges and the clear political will to develop and promote the. .. specificity, the purpose of this study was to draw on the expertise and knowledge of practitioners all over the world, not to single out any particular jurisdiction The team thanks all practitioners who participated in the study for their willingness to share their knowledge and expertise and to devote time and energy to this project In general, there is consensus on almost all of the barriers and recommendations. .. repatriated demonstrates the importance of forcefully addressing the barriers to asset recovery International cooperation is essential Barriers to asset recovery have been discussed in previous works, and the United Nations Convention against Corruption (UNCAC) was to be the solution to many of these barriers. 7 Yet the lengthy process for asset recovery, the low level of activity, and the difficulties reported... access to gatekeepers, such as financial institutions, services, and other professionals, that help them to disguise the sources of the stolen assets and the identities of those who benefit from them Ineffective anti-money laundering regimes and weak enforcement of preventive measures allows corrupt PEPs and their gatekeepers to launder proceeds of corruption and move them from victim jurisdictions to. .. Taylor for administrative support, in particular arranging the logistics of the workshops in Vienna, Casablanca, and Lausanne; and to Miguel Nicolas de la Riva for his support in the administration of the project Also, special thanks to Mr Valentin Zellweger (Switzerland), Mr Pierre-Yves Morier (Switzerland), and Ms Meret Adam (Switzerland) for their cooperation and collaboration while incorporating the. .. status of international asset recovery and as a tool to evaluate asset recovery within their jurisdiction, including efforts (or a lack of effort) at reducing the barriers identified by the study Although the number of barriers and recommendations may seem overwhelming, many changes are relatively straightforward and, once implemented, will have a significant positive effect on improving stolen asset recovery. .. 16 I Barriers to Asset Recovery cases, they decided to join forces to co-organize the final workshop in the preparation of this StAR study, which was aimed at identifying and analyzing barriers that impede the recovery of stolen assets That workshop became Lausanne V (April 29–30, 2010) in the Lausanne process Almost 10 years ago, the first Lausanne seminar provided one of the first global forums to. .. by political leaders and other high-ranking officials in developing jurisdictions, the World Bank and the United Nations Office on Drugs and Crime (UNODC) initiated the Stolen Asset Recovery (StAR) Initiative in 2007 to assist countries with recovering and returning these stolen assets to victim jurisdictions StAR is focused on instances where corrupt leaders, other officials, and their close associates . means to prevent and detect the proceeds of corruption in the  rst place.  e cornerstone of any country’s successful and lasting policy and practice on the recovery of stolen assets is the. Barriers to Asset Recovery An Analysis of the Key Barriers and Recommendations for Action Kevin M. Stephenson Larissa Gray Ric Power Jean-Pierre Brun Gabriele Dunker Melissa Panjer Barriers. before a formal MLA request is made—both to streamline the exchange of information and to improve the quality of the assistance. 4 I Barriers to Asset Recovery International asset recovery