Global Forum V: Fighting Corruption and Safeguarding Integrity Fulfilling our commitment: Effective action against corruption Sandton Convention Centre, South Africa: 2 nd - 5 th April 2007 Law Enforcement: Illicit Proceeds Ibrahim Pam

Global Forum V2 TOR Scope of the problem Some policy and legal responses Identify constraints Recommendations

Global Forum V3 George Bernard Shaws Pygmalion Colonel Pickering to Mr Doolittle: Have you no morals, man? To which Mr Doolittle replies: Cant afford them, Governor.

Global Forum V4 Definition: UNCAC Article 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)

Global Forum V5 Overview US$1 trillion illicit money crosses borders every year globally US$500 billion comes out of developing and transitional economies

Global Forum V6 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

Global Forum V7 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

Global Forum V8 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

Global Forum V9 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.

Global Forum V10 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

Global Forum V11 Main legal instruments UN 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

Global Forum V12 Main legal instruments UN 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

Global Forum V13 Main legal instruments Regional anti-corruption instruments: - Inter-American Convention Against Corruption - AU Convention on Preventing and Combating Corruption

Global Forum V14 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)

Global Forum V15 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.

Global Forum V16 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

Global Forum V17 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

Global Forum V18 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

Global Forum V19 Recovery of assets: major constraints Difficulties in tracing Money-laundering Opaque financial systems - private banking Conviction-based recovery Competing claims and multiple jurisdictions

Global Forum V20 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

Global Forum V21 Prevention Based on concept of situational crime prevention Opportunity makes the thief Applying opportunity-reduction strategies - increase risks - increase effort - reduce rewards

Global Forum V22 Recommendations Prioritise prevention: institutionalize situational crime prevention strategies adapted to national systems/peculiarities International/regional cooperation – increase cooperation and networking

Global Forum V23 Recommendations Strengthen national integrity systems Apply provisions of legal instruments, domestic and international Strengthen financial regulations/practices

Global Forum V24 Recommendations Use UNODCs resources Create and strengthen FIUs Share best practices Increase technical assistance

Global Forum V25 Thank you Discussions