Illicit enrichment

This Working Paper explores the wide variety of non-conviction based (NCB) forfeiture laws in Latin America, with a special focus on the region’s predominant model, Extinción de dominio.

It argues that NCB forfeiture legislation, which allows for the recovery of stolen assets outside of criminal proceedings, can contribute significantly to a state’s criminal policy response to rampant economic and organised crime.

The paper emphasises the importance of critically reviewing and harmonising domestic practices of NCB forfeiture around emerging standards, so that they can reach their large potential in asset recovery. Ensuring their alignment with international human rights and other recognised norms and procedural rules ultimately builds trust, lends legitimacy and fosters judicial cooperation in international NCB forfeiture cases.

About this report

Asset recovery tools are integral to combating corruption, organised crime, sanctions evasion and other profit-motivated crimes. However, in many participating States of the OSCE, the range of asset recovery tools available to law enforcement and criminal justice agencies is limited.

This Working Paper identifies legislative mechanisms in OSCE participating States that empower the state to confiscate suspected or proven proceeds of crime. The overall objective is to ascertain:

• Established good practices with regard to the design of these legislative mechanisms.
• Any unique approaches that particular countries have taken in this context that could be replicated and tested in other jurisdictions.

It covers:

• Conviction-based asset recovery mechanisms.
• Non-conviction based mechanisms including civil recovery.
• Additional mechanisms such as illicit enrichment laws and other laws that reverse the burden of proof regarding the legitimacy of assets.
• Considerations regarding the adoption of broader asset recovery laws.
• Approaches to the disposal of confiscated assets.
• Common challenges in the implementation of asset recovery mechanisms.

About this report

This comparative study was conducted and drafted by the International Centre for Asset Recovery at the Basel Institute on Governance for the Organization for Security and Co-operation in Europe (OSCE). The paper was commissioned under the extra-budgetary project ‘Strengthening asset recovery efforts in the OSCE region’ implemented by the OSCE Secretariat’s Transnational Threats Department and the Office of the Co-ordinator of OSCE Economic and Environmental Activities.

It is published as part of the Basel Institute on Governance Working Paper series, ISSN: 2624-9650. You may share or republish it under a Creative Commons CC BY-NC-ND 4.0 licence.

This paper will be released on 21 February 2023.

Written in the light of Russia’s war of aggression in Ukraine, the Working Paper explores whether it is justifiable to confiscate assets frozen under financial sanctions in order to redirect them to the victims of state aggression.

The paper first explores the concept of sanctions and financial sanctions (asset freezes) and what they mean in practice.

Using the example of Canada, which has introduced a legislative mechanism for this purpose, the paper analyses whether states should be able to confiscate sanctioned assets purely on the basis that they have been sanctioned.

It then looks at more established measures that states could adopt and apply to target sanctioned assets, including:

• Traditional conviction based confiscation measures, including ‘extended confiscation’ mechanisms
• Non-conviction based confiscation (forfeiture) measures
• Unexplained wealth laws

The paper recommends ways to maximise the effectiveness of these alternative avenues for recovering assets, which are much less controversial and can arguably be applied without infringing on legal rights.

Opting for mechanisms that abide by established legal rights will not only significantly increase the chance of recovering assets without subsequent legal challenges. It will also ensure that the very reason for targeting the assets in the first place – namely to seek justice and compensation for acts of aggression – is not undermined through the erosion of the rule of law.

About this Paper

This Working Paper was prepared by the Basel Institute on Governance.

The final recommendation of the Commission of Inquiry into Money Laundering in British Columbia (‘the Commission’) urged the government to legislate an unexplained wealth order (‘UWO’) as part of a wider approach to counter the prevalence of money laundering and proceeds of crime in the province.

This document analyses the feasibility of this recommendation. It:

• briefly explains the concept of unexplained wealth and how it can be targeted through legislative instruments;
• outlines the reasons for which the Commissioner proposed a UWO for British Columbia;
• explains how a UK-style UWO works and assess the probability that a mechanism of this kind would successfully recover unexplained wealth in British Columbia;
• addresses the constitutional issues that may arise if a UK-style UWO was introduced, as outlined by former Supreme Court Justice, the Honourable Thomas A. Cromwell C.C., in his annexed opinion to the report;
• explains other legislative options that target unexplained wealth (including those in Western Australia and Ireland) and assess their constitutional compatibility and potential effectiveness as compared to a UK-style UWO;
• explores the legal rights issues that may arise if either a UK-style UWO or a traditional UWO was introduced; and
• outlines the legislative safeguards that could be put in place to reduce the risk that any such mechanisms would negatively impact on established legal rights.

About and acknowledgements

This document has been prepared by experts working with the Basel Institute on Governance, an independent not-for-profit organisation dedicated to countering corruption and other financial crimes, and the Vancouver Anti-Corruption Institute, an organisation devoted to anti-corruption efforts and legislative change. The collaboration was facilitated by the International Academy of Financial Crime Litigators, an independent, non-partisan global centre that shapes and advances financial crime litigation practices for the future.

Open-access licence and citation