The recently adopted Directive on the freezing and confiscation of proceeds of crime (PE-COΝS 121/13) started numerous debates over its legality, mainly because it gave the authorities extended powers in the fight against national and trans-national organised crime. For example, the European Criminal Bar Association considered that the new law could affect the fundamental rights of the European citizens by giving a judge the possibility to issue a confiscating order without previous sentence by the court.
On this occasion, of particular use would be to analyse the common law example of practice - whether that of the United Kingdom and Northern Ireland or that of the United States - given its efficiency and evolution in time.
On the other side of the Atlantic Ocean, a division of the U.S. Department of Justice, called the Assets Forfeiture and Money Laundering Section, launched The Initiative for Assets Recovery- Kleptocracy in 2010. The U.S. declared war to all those that tried to hide their illicit wealth in the American financial institutions or businesses. Prior to this, between 2004 and 2010, it had already recovered and returned to the victims over $168 million obtained through criminal activities in Latin America, Africa, and Asia.
With this initiative, the U.S. offers assistance to all states or individuals that were victims of organised crime by inter-state cooperation and freezing of accounts used or obtained during these activities. For example, the U.S. confiscated and repatriated to Peru $20 million associated with acts of political corruption and in Italy $117 million with the same illicit origins.
For a better understanding of the U.S. legal system’s efficiency in assets recovery, a brief analysis of its instruments is essential, while keeping in mind its Anglo-Saxon heritage.
In the U.S., asset forfeiture is either administrative or judicial. The first one refers to personal property valued $500,000 or less or any amount of cash, while the second one is connected to real property of any value, and personal property valued at more than $500,000. On the other hand, judicial confiscation can be either civil or criminal. While civil forfeiture does not always require a conviction, criminal forfeiture requires a prior trial and the preponderance of the level of proof.
Civil forfeiture does not offer the possibility of taking the equivalent if the assets or goods aren’t in the possession of the person implicated in illicit activities. If the defendant is already in prison, other assets can be confiscated if one can’t demonstrate that he/she obtained them in licit ways (the so-called ’Civil Innocent Ownership Defences’).
Given the fact that the greatest part of assets transfer activities needs financial institutions, the most important legal instrument is the Bank Secrecy Act/1970. After its amendment with the adoption of the Money Laundering Control Act in 1986, money laundering became a federal crime, with one of the most severe punishments. On this occasion, the definition of ’money laundering’ was clearly stated and all crimes from this category were classified. The list includes: consciously helping someone to launder the money obtained from illicit activities, offering criminals the possibility to use the institution for financial transactions in which more than $10,000 are used, and deliberately avoiding to dennounce such transactions. Bank secrecy also states that financial institutions must keep a record of all operations from the last five years and must report any suspicious transactions or exchanges.
Another instrument is the Comprehensive Drug Abuse Prevention and Control Act/1970, also known as the Forfeiture Act, which gives prosecutors the possibility to introduce civil forfeiture actions of properties owned by persons accused of detaining drugs or drug trafficking. In 1978, an amendment was adopted: all real or personal property can be confiscated if it was already used for criminal activities or it will be used. The Comprehensive Crime Control Act/1984 amends the Comprehensive Drug Abuse Prevention and Control Act to allow the Attorney General to transfer drug-related forfeited property to other Federal, State or local agencies, and also establishes general criminal forfeiture provisions for felony violations under federal law. It also establishes the amount of $150,000 as award of compensation given to informers for information leading to forfeiture.
When cash is forfeited, it is transferred to the appropriate asset forfeiture fund. Personal and real property is sold at auction, and, once sales costs are deducted, remaining proceeds are deposited into the fund. One study found that the states with the most generous forfeiture laws, those that return the greatest percentage of forfeiture proceeds to police, saw the greatest arrest activity. Section 982 of the U.S. Code represents the main legal source for assets forfeiture associated with criminal acts. According to Section 982 of the United States Code, the court can take any necessary measures to conserve the property that is connected to the criminal acts. This includes temporary restricting orders to sell without notice or opportunity for a hearing when an information or indictment has not yet been filled with respect to the property, if the Court can demonstrate that in the event of conviction the property would be subject of forfeiture, and this measure is justified by efficiency.
An order of confiscation or seizure can be issued in case of a conviction or accusation of money laundering, corruption, fraud, or monetary transactions with properties obtained from criminal activities. It can regard foreign citizens in the U.S., whether individual or judicial persons, such as financial institutions, authorised under the law of a foreign state.
Contrarily to the United Kingdom, the United States do not have a specialized agency in assets forfeiture or account seizure, but a complex mechanism where several Department of Justice components and other financial institutions, specialized implementing authorities and financial intelligence institutions.
The bank system is controlled by several institutions, such as the Federal Deposit Insurance Corporation, the Federal Reserve Board, the Office of the Controller of the Currency, and the Office of Thrift Supervision.
The main actors from the Department of Justice are the Assets Forfeiture and Money Laundering Section, the Office of International Affairs, and the Federal Bureau of Investigation. Another actor is the Homeland Security Investigations section. The Financial Crimes Enforcement Network is the main financial intelligence institution, while the Office of Terrorism and Financial Intelligence and the Bureau for International Narcotics and Law Enforcement Affairs, both parts of the Department of State, are the main implementing authorities.
The European directive encountered vivid opposition in the United Kingdom because the Anglo- Saxon law had already had the legislation for freezing and confiscation of the instrumentalities and proceeds of crime. More than that, many elements present in the Directive are very similar to the elements from the U.K. or U.S. confiscating and freezing procedures. Take the following for instance: the possibility of conviction and confiscation in absentia the possibility to issue a freezing order, the use of the balance of probabilities by courts when establishing the issue of an extended confiscation order over a property that could have connection with other criminal activities. The possibility to issue third party confiscation orders (property transferred to or acquired by a third person in order to avoid the confiscating order) is included in Section 982 of the U.S. Code provision. This means any person must forfeit all property which represents or is traceable to the proceeds obtained by specific violations. Meanwhile, new elements are introduced, such as the possibility of choosing between confiscating the instrumentalities and proceeds of crime or their value.