By Luke Balleny
How do you stop corrupt regimes from stashing their money in your jurisdiction? That is the question a joint initiative by the World Bank and United Nations answers in a recent report .
The Barriers to Asset Recovery report, by the Stolen Asset Recovery Initiative (StAR), gives policymakers a ‘how to’ guide on implementing laws and mechanisms needed to freeze and repatriate stolen assets.
This year’s uprisings in the Arab world have shed the spotlight onto asset recovery, with Egypt and Tunisia both asking financial centres around the world to freeze assets of their former leaders, while bank accounts allegedly belonging to Libyan leader Muammar Gaddafi have also been frozen.
“There are many obstacles to asset recovery. Not only is it a specialized legal process filled with delays and uncertainty, but there are also language barriers and a lack of trust when working with other countries,” Kevin Stephenson, World Bank senior financial sector specialist and lead author of the study, says in a news release.
“In jurisdictions that do not prioritize these cases, practitioners do not develop the necessary expertise and agencies are not adequately resourced,” he says.
Between $20 and $40 billion is funnelled illegally out of developing countries every year, the World Bank estimates, but “only $5 billion in stolen assets has been repatriated over the past 15 years,” according to the report.
Following are summaries of the report’s eight recommendations on how to overcome hurdles in asset recovery:
- Give practitioners the necessary framework and tools to recover assets:
Many jurisdictions lack the financial resources, experienced practitioners and accountability to respond to an asset recovery request quickly and effectively
- Build trusting relationships:
Particularly in jurisdictions with different legal traditions, a lack of trust in areas such as intelligence-sharing can undermine asset recovery
- Think outside the box:
The report recommends reversing the burden of proof, so offenders have to prove their assets are legitimate (as opposed to prosecutors having to prove they are illegal).The report also suggests authorities be allowed to confiscate legitimate assets of the same value as the stolen assets
- Make better use of existing tools:
Existing anti-money laundering laws need to be fully implemented. Enhanced due diligence should be carried out on people with political links before they can deposit assets in financial institutions
- Where there is a political will, there is a legal way:
Mutual legal assistance requests are sometimes denied by one of the parties involved. The report recommends that the grounds for refusal are limited and that “mandatory grounds for refusal” are avoided
- Freeze before assets disperse:
Banking secrecy laws and poorly kept property registers can make it very difficult for authorities to freeze assets quickly. The report recommends allowing the provision of certain information to investigators before a formal mutual legal assistance request is made
- First step, talk to colleagues:
Informal assistance can often be quicker and more effective than formal assistance
- Lend a helping hand:
Experienced asset recovery practitioners should mentor those with less experience and knowledge. In particular, they should help colleagues draft clear and appropriate requests for assistance