Download - Law Enforcement: Illicit Proceeds
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Global Forum V:Fighting Corruption and Safeguarding
Integrity“Fulfilling our commitment: Effective action against corruption”
Sandton Convention Centre, South Africa: 2nd - 5th April 2007
Law Enforcement:
Illicit Proceeds
Ibrahim Pam
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Global Forum V 2
TOR Scope of the problem Some policy and legal responses Identify constraints Recommendations
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Global Forum V 3
George Bernard Shaw’s Pygmalion
Colonel Pickering to Mr Doolittle: “Have you no morals, man?”
To which Mr Doolittle replies:“Can’t afford them, Governor.”
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Global Forum V 4
Definition:
UNCACArticle 2
(e) “Proceeds of crime” shall mean any property derived from or obtained, directly or indirectly, through the commission of an offence;
(same as Article 2 (e) UNTOC)
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Global Forum V 5
Overview
US$1 trillion illicit money crosses borders every year globally
US$500 billion comes out of developing and transitional economies
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Global Forum V 6
Overview
“Corruption” accounts for about 3% US$20 – 40 billion annually from
transition and developing countries into Western banks
China: US$50 billion Nigeria: US$100 billion
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Global Forum V 7
Main policy instruments:Basel Core Principles of Effective Banking
Supervision
Issued by Basel Committee on Bank Supervision, 1997
The most important global standard for bank supervision
Benchmark for assessing quality of bank supervision
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Global Forum V 8
Basel Core Principles of Effective Banking Supervision
Supervisory guidelines and general framework for effective banking supervision
CP 15 sets out rules for prevention of fraud and money laundering
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Financial Action Task Force on Money Laundering (FATF)
FATF Forty Recommendations
Original Recommendations were drawn up in 1990 as an initiative to combat the misuse of financial systems by persons laundering drug money.
Revised in 1996 to reflect evolving money laundering typologies.
The 1996 Forty Recommendations have been endorsed by more than 130 countries and are the international anti-money laundering standard.
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Financial Action Task Force on Money Laundering (FATF)
FATF 9 Special Recommendations
Essentially relate to terrorist financing Also regulate money transfers:
- (vi) Alternative Remittance- (vii) Wire Transfers- (ix) Cash Couriers
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Global Forum V 11
Main legal instrumentsUN Convention Against Corruption, 2003
Asset identification, freezing, seizure, confiscation and repatriation (Art 46 & Cap V, UNCAC)
Art 52 (i) provides for basic “Know Your Customer” policies in financial institutions
Art 58 recommends establishment of Financial Intelligence Units (FIUs)
Art 53(a) provides for civil claims to establish ownership of illegally acquired property
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Main legal instrumentsUN Convention Against Transnational Organised
Crime, 2001 Article 6: criminalization of the laundering of
proceeds of crime Article 7: measures to combat money laundering Article 13: international cooperation for purposes
of confiscation Article 14: Disposal of confiscated proceeds of
crime
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Main legal instruments
Regional anti-corruption instruments:- Inter-American Convention
Against Corruption- AU Convention on Preventing and
Combating Corruption
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Some AML/CFT bodies EGMONT Group of Financial Intelligence
Units Eastern and Southern Africa Anti-Money
Laundering Group (ESAAMLG) Inter-Governmental Action Group Against
Money Laundering in West Africa (GIABA)
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Global Forum V 15
Recovery of Assets Previous position: “He who confiscates,
disposes” Article 14(1), UN TOC:
“1. Proceeds of crime or property confiscated by a State Party… shall be disposed of by that State Party in accordance with its domestic law and administrative procedures.”
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Recovery of Assets Probably the most contested provisions
in UNCAC Clear division between North and South Consensus achieved on the basis of
“balance of mutual frustration” Nevertheless, provisions provide a
comprehensive regime for asset recovery
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Global Forum V 17
Recovery of assets Art 51 makes return of assets a “fundamental principle”
based on three considerations:- embezzled funds returned to requesting SP- proceeds of other UNCAC offences returned to requesting SP only with prior ownership or where requested SP recognises compensation for damage as basis of return-all other cases, can also be returned to another prior legitimate owner, or used to compensate victims
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Recovery of assets:major constraints
Lack of political will Lack or inadequacy of legal framework Practical legal and technical difficulties Technical competence and capacities Costs Prevention of future victimization
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Recovery of assets:major constraints
Difficulties in tracing Money-laundering Opaque financial systems
- private banking Conviction-based recovery Competing claims and multiple
jurisdictions
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Global Forum V 20
Prevention Law enforcement begins with prevention Conceptual approach that defines the
fight against corruption in terms of crime prevention properly contextualises the role of law enforcement
Prevention is low-risk, low-cost, but is potentially high-impact
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Global Forum V 21
Prevention Based on concept of situational crime
prevention “Opportunity makes the thief” Applying opportunity-reduction strategies
- increase risks- increase effort- reduce rewards
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Recommendations
Prioritise prevention: institutionalize situational crime prevention strategies adapted to national systems/peculiarities
International/regional cooperation – increase cooperation and networking
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Recommendations
Strengthen national integrity systems
Apply provisions of legal instruments, domestic and international
Strengthen financial regulations/practices
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Global Forum V 24
Recommendations
Use UNODC’s resources Create and strengthen FIUs Share best practices Increase technical assistance
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Thank youDiscussions