Confiscation measures is a matter for FATF Recommendation 4.
The Non-Conviction Based Confiscation (“NCB”) discussed in Chapter 2.12, First Edition, Money Laundering, A Handbook for CDD Compliance with a reference made to the triumphant story of NBC application enforced by the Economic and Financial Commission, Lagos, Nigeria for asset forfeiture is an NCB approach.
Does this mean NCB violated fundamental rights? Criminal law requires evidence to prove the defendant committed the crime. However, in NCB, it focuses on the proceeds or profits derived from the offence instead of the individual who committed the crime.
Articles 52 to 55 and Article 57 of the UNCAC provide the prevention, detection, direct recovery of property, return and disposal of assets: see Chapter 5.4, First Edition, Money Laundering, A Handbook for CDD Compliance. The United Nations also passed and adopted various measures stipulated in the Vienna Convention and the Palermo Convention. Arguably, the implementation of the NCB is the fast track for proceeds or assets recovery following an increasing spate of corruption and money laundering, today.
NCB recognises the practical side of it, the difficulties in a criminal case for law enforcement agencies to identify, freeze and confiscate the proceeds of crime. The burden of proof is on the prosecution. The prosecutor has to prove the proceeds is from the crime. Besides time, there are other problems such as:
- Real offender is unknown
- Property used in the unlawful act or conduct does not belong to the offender
- Proceeds of the crime may have transferred to another person
- Permanent hinderance to criminal proceedings exists, the offender may be no longer liable for prosection
- By public order, security of individuals, property or other general interest, the sentence cannot be imposed
Further, confiscation systems vary from country to country. Higher risk countries earning a Non-Complaint (“NC”) rating is unlikely to have an effective confiscation system in their legal regime.
For these reasons, FATF members could adopt the NCB approach to promptly recover the proceeds (whether primary or secondary proceeds) of the crime even the corrupt individual (politician or official) died, running away (flight law) or having immunity the corrupt individual enjoyed.
NCB approach is challenging but may encounter difficulty to achieve due to the imbalance establishment between the legislation relating to confiscation without a criminal conviction and a particular confiscation system. The plain meaning here means the order for confiscation of property whether by civil courts or criminal courts, regardless of the outcome of criminal proceedings. When a civil court orders a confiscation, it means there is an indirect link to a crime: FATF Best Practices on Confiscation (Recommendations 4 and 38) and A Framework for Ongoing Work on Asset Recovery, Part VI – Non-Conviction Based Confiscation, items 15 and 19, October 2012.
FATF urged FATF members to ensure their domestic law permits the forfeiture of property without a criminal conviction. NCB is a powerful tool for recovering of proceeds of the crime.
NCB is common among the European Union members and is an action under the European Union Directive 2014/42/EU of 3 April 2014. NCB is a tool to fight crime.
See the Case of G.I.E.M.S.R.L. and Others v Italy, The European Court of Human Rights, Strasbourg, 28 June 2018 on breached of Convention’s right. Article 6 (right to a fair trial), Article 7 (no punishment without law) and Article 1 of Protocol no. 1 to ECHR (right to property).
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Categories: UNODC, UNCAC, FATF, Money Laundering, Corruption, Organised Crime, Non-Conviction Based Confiscation, Asset Recovery, ECHR, EU