THIRD REGIONAL SEMINAR ON GOOD GOVERNANCE

THIRD REGIONAL SEMINAR ON GOOD GOVERNANCEFOR SOUTHEAST ASIAN COUNTRIESMEASURES TO FREEZE, CONFISCATE
AND RECOVER PROCEEDS OF
CORRUPTION, INCLUDING PREVENTION
OF MONEY-LAUNDERING
Co-hosted by UNAFEI, the Department of Justice of the Republic of thePhilippines and the UNODC Regional Centre for East Asia and the Pacific9-12 December 2009, Manila, the Philippines

UNAFEI
UNITED NATIONS ASIA AND FAR EAST INSTITUTE
FOR THE PREVENTION OF CRIME
AND THE TREATMENT OF OFFENDERSUNAFEI

October 2010TOKYO, JAPANISBN 978-4-87033-288-1

THIRD REGIONAL SEMINAR ON GOOD GOVERNANCEFOR SOUTHEAST ASIAN COUNTRIESMEASURES TO FREEZE, CONFISCATE
AND RECOVER PROCEEDS OF
CORRUPTION, INCLUDING PREVENTION
OF MONEY-LAUNDERING
Co-hosted by UNAFEI, the Department of Justice of the Republic of thePhilippines and the UNODC Regional Centre for East Asia and the Pacific9-12 December 2009, Manila, the Philippines

October 2010TOKYO, JAPANThe views expressed in this publication are those of the respective presenters and authors only,and do not necessarily reflect the views or policies of UNAFEI, the Department of Justice of thePhilippines, the UNODC Regional Centre for East Asia and the Pacific, or other organizations towhich those persons belong.

INDEXMEASURES TO FREEZE, CONFISCATE AND RECOVER PROCEEDS OF
CORRUPTION, INCLUDING PREVENTION OF MONEY-LAUNDERING
Foreword………………………………………………………………………………………………
Introduction……………………………………………………………………………………………
Opening Remarks by the Honourable Agnes Devanadera,
Secretary of Justice, Republic of the Philippines… ………………………………………
Introductory Remarks by Mr. Haruhiko Ukawa, Deputy Director of UNAFEI… ……………

i
iii
v
vii

Presentation by Mr. Michel Bonnieu,
UNODC Regional Centre for East Asia and the Pacific……………………………………

xi

Papers and Contributions… …………………………………………………………………………
1
Ms. Linda Samuel, Visiting Expert, USA………………………………………………………
3
Mr. Emile van der Does de Willebois, Visiting Expert, World Bank… ……………………… 10
Philippines AMLC… ………………………………………………………………………… 34
Philippines OSG, DOJ………………………………………………………………………… 39
Philippines PCGG……………………………………………………………………………… 72
Cambodia……………………………………………………………………………………… 80
Indonesia… …………………………………………………………………………………… 87
Lao PDR… …………………………………………………………………………………… 96
Malaysia… …………………………………………………………………………………… 104
Myanmar… …………………………………………………………………………………… 110
Thailand… …………………………………………………………………………………… 117
Discussions and Recommendations… ……………………………………………………………… 129
Summary of Discussions… …………………………………………………………………… 131
Recommendations… ………………………………………………………………………… 133
List of Participants, VEs and Organizers… ………………………………………………………… 135
Seminar Schedule… ………………………………………………………………………………… 139
Appendix……………………………………………………………………………………………… 141
Commemorative Photograph… ……………………………………………………………… 142
Secretary Devandera’s Speech………………………………………………………………… 142
Discussion Session… ………………………………………………………………………… 143
Introductory Remarks… ……………………………………………………………………… 143

FOREWORD
It is my great pleasure and privilege to present this report of the Third Regional Seminar on Good
Governance for Southeast Asian Countries which was held in Manila from 9 – 12 December 2009. Thiswas our first opportunity to hold a Good Governance Seminar in Manila and we were deeply impressed andtouched by the warm hospitality afforded to us by our Philippine hosts.
The main theme of the Seminar was “Measures to Freeze, Confiscate and Recover Proceeds ofCorruption, including Prevention of Money-Laundering” and it was attended by 23 criminal justicepractitioners from Cambodia, Indonesia, the Lao PDR, Malaysia, Myanmar, the Philippines, and Thailand.
The Seminar was co-organized by UNAFEI, the Department of Justice of the Republic of the Philippines
and the UNODC Regional Centre for East Asia and the Pacific.
As widely known, the United Nations Convention against Corruption (UNCAC) provides the mostfundamental legal framework to tackle corruption. To effectively implement the measures provided by the
UNCAC, it is indispensable to develop each country’s criminal justice practitioners’ knowledge of how
identifying, tracing, freezing, confiscating and recovering the proceeds of corruption can be carried out
successfully, thus overcoming their lack of expertise and experience. Therefore, the organizers decided tohold this Seminar to provide an opportunity for practitioners from Southeast Asian countries to familiarize
themselves with the current situation of this global issue as it occurs in this region and to broaden theirknowledge of how to identify, trace, freeze, confiscate and recover the proceeds of corruption.
By the conclusion of the three-day seminar, we had gained a broader perspective from which toevaluate and analyse the current situation regarding this issue in the context of Southeast Asian countries.
We also gained information on beneficial practices employed by our international colleagues and have been
apprised of useful international methods of addressing this issue.
On the basis of the all above, the recommendations were adopted. The recommendations reflect
the very well prepared and informative presentations given by the participants and the great contributions
given by the visiting experts and honourable guests. As an organizer of this Seminar, I genuinely hope thatthese recommendations will prove to be a practical and realistic step in our common endeavour, and that the
Seminar will also contribute to the mutual understanding and friendship of the Southeast Asian nations.
Finally, on behalf of UNAFEI, I would like to express my deepest appreciation to the Departmentof Justice of the Republic of the Philippines, especially the National Prosecution Service, and the UNODC
Regional Centre for East Asia and the Pacific for their unwavering support and commitment to the realizationof this Seminar.

Masaki Sasaki
Director, UNAFEI
October 2010−i−

INTRODUCTION

Opening Remarks by
The Honourable Agnes Devanadera
Secretary of Justice of the Republic of the Philippines***

Introductory Remarks by
Mr. Haruhiko Ukawa
Deputy Director, UNAFEI***

Presentation by
Mr. Michel Bonnieu
Senior Legal Adviser,
UNODC Regional Centre for East Asia and the Pacific− iii −

OPENING REMARKSThe Honourable Agnes Devanadera
Secretary of Justice of the Republic of the Philippines
Mr. Makoto Katsura (Ambassador of Japan)
Mr. Masaki Sasaki (Director of UNAFEI)
Mr. Haruhiko Ukawa (Deputy Director of UNAFEI)
Mr. Michel Bonnieu (Senior Legal Adviser, UNODC RC)
Key Speakers and Participants from fellow Southeast Asian Nations
Good morning!
Money laundering is a particular form of corruption which remains a very serious problem in many
countries, especially here in Southeast Asia. As the “life blood” of any profit-generating criminal activity,
the laundering process allows terrorists, drug-traffickers, warlords, perpetrators of financial fraud, andevery other criminal enterprise to perpetuate and to live lavishly from illegal activity. Money laundering isa particularly damaging aspect of corruption in many of the countries around the globe.
We should note too that the problem of corruption exists in each and every nation in the world, but it
is in the developing countries that the effects are more devastating. Corruption indirectly impairs the poor
as it redirects funds intended for development, giving rise to more injustice and consequently discouraging
foreign aid and investment.
According to IMF estimates, the aggregate size of money laundering in the world is about 2-5% of
global GDP. On the other hand, The Economist has estimated that about US$500 billion to US$1.5 trillion
is laundered each year through the global banking system.
Early this year, research by Transparency International, a global coalition against corruption,
conducted a survey to determine the public’s perception about the causes of corruption and whether or notthey believe their governments are effective at curbing the said phenomenon.
Out of 73, 123 people in 69 countries and territories surveyed between October 2008 and February
2009, it was found that:
1. The private sector is perceived to be corrupt by half of those interviewed.
2. The general public is critical of the private sector’s role in their countries’ policy making processes.
More than half of respondents held the view that bribery is often used to shape policies andregulations in companies’ favour.
3. Political parties and civil service are perceived on average to be the most corrupt sectors aroundthe world.
4. Globally, respondents perceived political parties as the single most corrupt domestic institution,
followed closely by civil service.
5. Aggregate results, however, mask the important country differences. In 13 of the countries
sampled, the private sector was deemed to be the most corrupt, while in 11 countries, respondents
identified the judiciary.
6. Governments are considered to be ineffective in the fight against corruption – a view that hasremained worryingly consistent in most countries over time. Thirty one percent perceived themas effective, compared to the 56 percent that viewed government anti-corruption measures to beineffective.
7. Results indicate that respondents from low-income households are more likely to pay bribes thanthose from high-income households when dealing with the police, the judiciary, land services and−v−the education services.
The figures that were reflected from this study support the notion that the public (or at least a portionof it) believes that governments are not exerting enough anti-corruption efforts.
The U.S. State Department has also reported that some countries in Southeast Asia are deeply
involved in the illegal drug trade. The Philippines, in particular, continues to experience an increase inforeign organized criminal activity from China, Hong Kong, and Taiwan. Insurgency groups operatingin the Philippines partially fund their activities through local crime, the trafficking of drugs and arms,
money laundering through ties to organized crime and smuggling. According to the reports, the proceeds ofcorrupt activities by government officials are also a source of laundered funds. The Federation of Philippine
Industries estimates that lost government revenue from uncollected taxes on smuggled items is over $2
billion annually, including substantial losses from illegally imported fuel and automobiles. Remittance andbulk cash smuggling are also channels of money laundering.
I am happy to report however that since 2005, through the Anti-Money Laundering Council or AMLC,
the Philippines has continued to make progress enhancing and implementing its amended anti-money
laundering regime. As of December 2007, there have been 107 money laundering, civil forfeiture andrelated cases in the Philippine court system that involved AMLC investigations or prosecutions, including
37 for money laundering, 20 for civil forfeiture and the rest pertaining to freeze orders and bank inquiries.
The Philippines had its first conviction for a money laundering offence in early 2006.
AMLC’s role goes beyond traditional Finance Intelligence Unit responsibilities and includes theinvestigation and assisting of the Office of the Solicitor General in the handling of civil forfeiture cases.
Through the end of 2007, funds amounting to almost 1.4 billion pesos have been frozen by the AMLC,
including funds frozen at the request of the UN secretary Council, the United States and other foreign
governments.
But there is a lot more that needs to be done to defeat the evils of corruption on a much larger scale.
There is a growing need for more co-ordination among relevant international organizations to improveadvocacy, and dissemination of information to help foster action against the laundering of criminal proceeds.
UNODC report that indeed there are varied integral problems that hinder the recovery and return ofassets. For example, the following factors hinder the successful recovery of assets or render it impossible:
1. The absence or weakness of the political will within the victim country as well as within thosecountries to which the assets have been diverted;
2. The lack of an adequate legal framework allowing for necessary actions in an efficient andeffective manner; and3. Insufficient technical expertise within the victim country to prepare the groundwork at thenational level, such as filing charges against the offenders and at the international level to prepare
the mutual legal assistance request.
We need to push our efforts into protecting our financial institutions from the negative effects ofmoney laundering itself by conscientiously adopting anti-money-laundering policies through government
financial supervisors and regulators as well as by banks. Doing so would certainly reinforce the other goodgovernance practices that are important to the development of our countries’ economies.
These concerns are what we intend to address in the next two days and I hope that as we all becomeaware of the global threat of corruption (specifically in the guise of money-laundering) we will be able toconstruct an integrative framework to fully eradicate it.
Thank you and good morning.

− vi −

INTRODUCTORY REMARKS
Haruhiko Ukawa
Deputy Director, UNAFEI
I. INTRODUCTION
It is my pleasure to be given this opportunity to address a group of distinguished criminal justice andlaw enforcement specialists attending the Third Regional Seminar on Good Governance for Southeast AsianCountries. We have decided to organize this Seminar on the subject of “Measures to Freeze, Confiscate andRecover Proceeds of Corruption, including Prevention of Money-Laundering.”
As a mental warm-up to the seminar, I will first explain the reason why we chose this particular
topic, and then shall proceed with a general over view of the major issues relevant to the topic.
II. WHY ASSET RECOVERY?
Why Asset Recovery?
Because it is important and, at the same time, an extremely complicated area of law, with which thelaw enforcement authorities have yet to familiarize themselves.
The need to fight corruption is undebatable and it has been voiced over and over in every conceivable
forum, domestic and international. “Corruption poses serious governance challenges and threats to thestability and security of societies, undermines institutions and values of democracy, and jeopardizes
sustainable development and economic prosperity.” Corruption also constitutes a major obstacle in theinternational fight against transnational organized crime and terrorism.
Consequently, once a corruption scheme is uncovered, public officials involved should be promptly
removed and appropriate criminal sanctions need to be imposed. While these are no easy tasks, and if
successful, are worthy of highest commendation, they should not be the end of the matter. Corruption often
involves cross-border flow of assets illicitly acquired by kleptocrats over a period of years. They will keep
their ill-gotten gains unless efforts are made to recover the funds, and the international community simply
cannot blink at such injustice.
Seen from the victim country’s perspective, such transfers are outright usurpation of monies
rightfully belonging to its people; looting of monies that could have been spent for useful governmental
purposes, such as basic health or education programmes, poverty reduction, environmental protection, andinstitution-building for the country’s overall integrity. The precise scope of the problem and the amount ofassets stolen worldwide are not readily quantifiable. Several estimates have been furnished by internationalorganizations such as UNODC or the World Bank, and they place the amount in the order of billions andtrillions of dollars every year. Suffice it to say that the drain of national wealth and collateral damages interms of foregone growth is staggering.
The problem of stolen assets should be a matter of concern for the countries into which the assets
are transported as well. Such assets are often hidden in the financial centres of developed countries, and intoday’s world, where abuses of the global financial system – particularly money-laundering – are consideredserious criminal conduct, such countries need to be prepared to provide appropriate and timely responses
if they wish to continue to be seen as responsible and reputable financial centres. Developed countries, intheir capacity as donors of development assistance and foreign aid, also have legitimate interests in seeingthat the funds provided are spent in accordance with sound development policies, and for the national good− vii −

of the recipient country.
In short, preventing the theft of public assets by corrupt officials, and taking effective remedial
measures once it has been uncovered, are pressing objectives of global concern. This notion is clearly
codified in Article 51 of the United Nations Convention against Corruption which reads “The return ofassets pursuant to this chapter is a fundamental principle of this Convention, and States Parties shall afford
one another the widest measure of cooperation and assistance in this regard.”
There are several notable success stories in which millions of dollars were recovered by victim
countries. Nigeria recovered more than $500 million, Peru nearly $185 million, and the Philippines $624
million. It should be noted, however, that these occurred following a regime change, and it took a prolonged
period before the money was actually transferred back to their respective national treasuries. In the caseof Nigeria, more than seven years after the death of General Sani Abacha, in the case of Peru, three years
after the political bribery scandal broke and President Fujimori fled the country, and in the case of thePhilippines, eighteen years have passed since the “People Power Revolution,” which put an end to Marcos’s
regime. Heartening though these cases were, we know that successful repatriation of stolen assets is still
rare.
Retracing the myriad steps of asset transfers is a time-consuming enterprise, and it is not realistic
to take such actions in every single case of corruption. Naturally, they will have to be limited to where
the amount of money involved is substantial or the nature of the underlying corruption is egregious. On
the other hand, however, there is no reason why it should be limited to cases of grand corruption in which
hundreds of millions of dollars were stolen by national leaders. There is a need to systemize and streamline
the process so that cross-border asset-recovery actions are undertaken in a broader array of cases and on amore regular basis.
This is a huge challenge for the countries victimized by corruption as well as the countries thatare recipients of stolen assets. Specific issues and difficulties involved will be described in the following
section. Before proceeding, however, let me point out that the initial obstacle to overcome is the lack ofexperience and expertise on the part of criminal justice and law enforcement practitioners. This is no secretor mystery given that it is relatively recently that asset recovery has become a focus of international debate
and an urgent topic in the criminal justice field.
By now, I hope you understand why we chose “Measures to Freeze, Confiscate and Recover Proceedsof Corruption, including Prevention of Money-Laundering” as our main theme. This seminar is intended
to serve as an opportunity for learning, experience sharing, and network-building on the subject of asset
recovery.
III. ISSUES AND DIFFICULTIES
A. Prevention, Detection, Identification and Tracing
Prevention of crime has always been important, and this is especially true of corruption offences.
Unlike murders or other crimes of violence, corruption leaves no readily visible traces that alert authorities
to its occurrence, and after-the-fact prosecution and recovery of stolen assets are usually very laborious,time-consuming and costly.
Codes of conduct and financial disclosure requirements for public officials, know-your -customer
due diligence and record-keeping requirements for financial institutions, and the suspicious transaction
reporting systems are major examples of commonly employed measures to prevent, deter, and detectcorruption and money-laundering resulting from corruption. Every jurisdiction is expected to have theirlaws and regulations in compliance with 40+9 FATF recommendations and requirements of UNCAC, and− viii −whether and how that is achieved are matters of interest.
Furthermore, the measures I have just described presuppose the establishment of anti-corruption
bodies and financial intelligence units. These bodies should not only be established, but adequately
empowered, staffed and financed so that they will be able to execute their expected responsibilities.
At this point, in connection with identification and tracing of stolen assets, let me stress that jurisdictions
are expected to ensure that bank secrecy and fiscal secrecy do not stand in the way of international mutual
legal assistance of corruption offences. We need to bear in mind that proceeds of crime are geographicallymobile, and they will quickly move to jurisdictions where compliance is ineffective, enforcement is limited,
and transparency is below international standards.
B. Freezing
As I have already mentioned, asset recovery is an arduous and time-consuming process, and assuch it necessitates a procedure by which authorities can immobilize targeted assets before they disappear.
Article 31, paragraph 2 of UNCAC thus mandates States Parties to take necessary measures to freeze or
seize relevant assets for the purpose of eventual confiscation, and Article 54 paragraph 2 requires States
Parties to make available parallel measures for mutual legal assistance purposes.
In this regard, a proper balance between the rapidity and effectiveness of freezing/seizure mechanisms
and the adequacy of procedural safeguards given to legitimate property interests must be incorporated
into the legal framework. One country tries to achieve this by requiring financial institutions that have
filed suspicious transactions reports to automatically freeze relevant assets for several days, during which
the authorities will have time to consider the course of actions to be taken. There also may be instancesin which it is undesirable to notify the account holder of the freezing or seizure. This situation likewise
requires a careful balancing between the law enforcement needs and the protection of property rights.
C. Confiscation
Procedural requirements in the judicial phase of the asset–recovery process most frequently
mentioned as obstacles to the implementation of foreign confiscation orders are proof of unlawful origin of
the alleged proceeds of corruption and specification of the assets to be confiscated. An obvious solution tothese problems is to mitigate or shift the burden of proof regarding the source of criminal assets.
Another major topic in this area concerns “non-conviction-based confiscation.” Article 54 paragraph
1 (c) of UNCAC obliges States Parties to consider, in accordance with their domestic law, taking measures
as may be necessary to allow confiscation without a criminal conviction, when the offender cannot be
prosecuted. For such purposes, several countries allow forfeiture actions to be brought against the asset
itself (In Rem forfeiture), which has an obvious advantage when the offender has died or fled its jurisdiction.
The applicability of civil standards of burden of proof is also cited in its support.
The pros and cons of these solutions, however, as well as their compatibility with existing procedures
and traditional principles, such as presumption of innocence, may be still open to debate. Many would liketo know the experiences of and lessons learned in jurisdictions that already have these measures in place.
D. Repatriation
Repatriation, the final step in the international asset recovery process, can also raise quite complicatedissues such as disposal of the confiscated property – whether and to what extent victim countries can claim
ownership – and the treatment of costs incurred by the requested state in order to achieve its confiscation.
In this regard, Article 57 of UNCAC generally prefers the repatriation of confiscated proceeds to the victim
country and sets rules for disposal according to the type of underlying corruption offences. At the sametime, it allows requested states to deduct reasonable costs from the proceeds or other assets before they are
returned. Additionally, requested states may wish to impose conditions on how and when the assets will
be used. Information on arrangements made in practice in connection with these matters would be very

− ix −

helpful.
E. General Impediments
I have so far described some of the issues and difficulties that are encountered in the process ofinternational asset recovery. However, the single most pervasive impediment may be the differences andvariations in substantive laws and criminal procedures among the states and jurisdictions, which is exactly
what the kleptocrats and money-launderers try to exploit. Dialogue, sharing of information, creating
relationships and networks, and developing cumulative knowledge and experiences should be the key toovercoming this longstanding issue in international co-operation and mutual legal assistance.
IV. CONCLUSION
Confiscation of criminal proceeds and repatriation of stolen assets restores justice and repair damages
done to the victim country. They are also powerful deterrents that hit the kleptocrats where it hurts themmost. The current state of affairs, however, leaves much to be desired in terms of their real-life application.
To give sharper teeth to these important legal tools, a better understanding and expertise-building are muchcalled for. I hope this seminar will contribute to your understanding of the subject and, in the long run, helptranslate the text of the UNCAC into effective action.

−x−

UNODC REGIONAL CENTRE EFFORTS AND CHALLENGES IN
FACILITATING THE RECOVERY OF THE PROCEEDS OF
CORRUPTION AND TRANSNATIONAL ORGANIZED CRIME IN
SOUTH-EAST ASIAN COUNTRIES
Michel Bonnieu*
UNODC Regional Centre for East Asia and the Pacific

I. INTRODUCTION
The globalization process, enhanced by the ease of travel and unprecedented technologicaldevelopments in recent years, has had a dramatic impact on many aspects of life and society, most ofthem for the better. However, the related growth of transnational organized crime and the response of theinternational community to it, has created a variety of new challenges in relation to the actions of law
enforcement authorities and judiciaries, whose main role is to ensure the security of states, persons and the
public, as well as legally acquired private property in all organized societies.
Today, law enforcement and judiciaries face a new challenge: the investigation, prosecution andadjudication of corruption and TOC1 cannot be efficiently conducted within the legal framework of nationalboundaries. And ironically, sovereignty, a fundamental principle under international law which grounds therelations of states, has become a major tool in the armory of organized crime.
There can be no illusions about international co-operation in criminal matters. The criminals are far
more skilled in using national borders to protect themselves and the evidence and profits of their crimes
from detection than law enforcement is in overcoming the barriers of sovereignty, in pursuing them.
The purpose of this paper is to provide a brief overview of the vision and strategy offered under
UNODC/RC Regional Programme Framework for the Southeast Asia and Pacific region as it relates to theimplementation of international co-operation between the judiciary, prosecutors and other law enforcement
authorities with a specific focus on the recovery of the proceeds of corruption in the region. The intent is
to give a brief "comparative snapshot" of where we have been, where we are and the future challenges that
Southeast Asia and the Pacific region face.
International co-operation in criminal matters encompasses many measures including extradition,
mutual assistance, transfer of sentenced prisoners, transfer of proceedings, and co-operation in the restraint,
forfeiture and, since the entry into force of the UNCAC2 in 2005, the repatriation of proceeds of crime tothe countries they were stolen from.
This paper will focus on three of the most common aspects of international co-operation, thosewhich most directly impact on the work of prosecutors - extradition, mutual assistance and co-operation in
the restraint, forfeiture and return of proceeds of crime.
II. WHERE WE HAVE BEEN
It cannot be disputed that organized crime, which is most of the time facilitated by corruption,
began its operations across borders long ago, and that comparatively, state agencies took a long time to*

Senior Judge, Senior Legal Advisor to UNODC. The contents of this publication do not necessarily reflect the views or policies of
UNODC or contributory organizations and neither do they imply any endorsement.
1. TOC: Transnational Organized Crime
2. UNCAC: United Nations Convention against Corruption− xi −

start getting better organized to address this issue. The very first agencies to realize the importance of thephenomenon and the risks it posed to modern societies were law enforcement agencies, and more precisely,
the police forces in charge of the investigations into serious crime. Therefore it is no surprise that Interpol
was established as early as 1923 and has since then developed to become the current global network ofpolice investigators with its headquarters in Lyon, France.
However, despite its efficiency, the Interpol network needed to be supported by international
conventions containing legal provisions governing international co-operation. The first conventions tocome into force were the drug Conventions of 1961, 1971 and 1988. Article 37 of the single convention on
narcotic drugs and article 22 of the convention on psychotropic substances stipulate that:“Any drugs, psychotropic substances and equipment used in or intended for the commission of anyof the offences, referred to in article 36, shall be liable to seizure and confiscation”.
However the international community only decided in 1988, with the entry into force of the 1988
Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, to establish a mechanism
to facilitate international co-operation in criminal matters among Member States.
Fifteen more years were necessary for the entry into force of the 2003 Convention on Transnational
Organized Crime which complemented the framework by adding under article 13 provisions on international
co-operation for the purpose of confiscation and under article 14 provisions governing the disposal of
confiscated proceeds of crime or property.
Finally, the UNCAC, which came into force in 2005, completed the whole framework of international
co-operation by adding legal mechanisms, such as mechanisms for recovery of property through international
co-operation in confiscation (Art 54), and posed under article 57 the return of confiscated assets to theirprior legitimate owners in the State of origin. Article 58 of the UNCAC provides for the establishmentof Financial Intelligence Units in order to better control suspicious financial transactions and fight money
laundering.
The above described evolution clearly evidences that before 2005 there was no comprehensive
international legal framework to address organized crime and corruption in their various manifestations.
Additionally, States would categorize offences where organized criminals had long understood that criminal
activities were much more efficient when combined together: for example the passive corruption of public
servants to facilitate fraud, money laundering or any illicit traffic.
Thus, before the establishment of the international legal framework criminals would take advantageof the barriers of sovereignty to shield themselves and the evidence of their crimes from detection.
Organizations which orchestrated transnational crime and which then dispersed and concealed the proceedsof their illicit activities the world over had no regard for national borders. In fact, by structuring theirorganizations to span borders, they were better able to protect their interests and operations. They werepositioned to take advantage of the differences between legal systems, the clash of bureaucracies, the lackof ethics of some public officials, the protection of sovereignty, and, at many times, the complete incapacityof nations to work together to overcome their differences.
III. WHERE WE ARE IN THE SOUTHEAST ASIA AND PACIFIC REGION
A. Lack of Co-operation in Recovery of Stolen Public Assets
Since the mid-1990s the General Assembly of the United Nations, through multiple resolutions, has
expressed serious concern about the problems and threats posed by corruption to the stability and securityof societies. Corruption attacks the foundation of democratic institutions, corrodes government institutions
and starves the economy.
The UN Convention against Corruption (UNCAC) provides a powerful tool to strengthen anticorruption programmes in the region. However, the main challenge is thus to turn the Convention from amere legal framework into an effective tool for the rule of law.
At present, many countries in the region tend to focus only on the investigation and conviction ofcorruption.
Specific provisions of the UNCAC tackle the bribery of national public officials and the criminalization− xii −

of the obstruction of justice. The provisions on asset recovery – the first of their kind – require Member
States to return assets obtained through corruption to the country from which they were stolen. This is amajor breakthrough. Judiciaries in countries where corrupt elites have looted billions of dollars are now
empowered to implement these innovative provisions to recover the proceeds of crime. Yet they are being
called upon to act with little or no prior training. Given the magnitude of corruption and the amounts atstake, there is a serious risk of improper influence and possible misconduct, as well as bribery within the
judiciary itself.
Appropriate national legislation and institutional capacity to deal with proceeds of other forms oforganized crime is also lacking in the region.
While progress is being achieved through the establishment of national Financial Intelligence Units,
participation in regional mechanisms for the enhancement of anti-money laundering and anti-corruption
capacity still needs to be strengthened via engagement with relevant international regulatory bodies. This
is of particular importance in relation to countries in post-conflict situations.
B. Money Laundering
East Asia and the Pacific remain vulnerable to money laundering.
Given the relatively weak financial and economic monitoring and control systems present in somecountries in the region, it is often difficult to follow money trails, which are an essential element for theinvestigation of this form of crime.
While many jurisdictions are working to adopt AML3 laws, the level of effective implementation
remains very low. Countries require expertise to develop their respective AML systems and UNODC is wellplaced to deliver such assistance. There are a number of key areas that could benefit from a regional approachto capacity building of AML systems. Two such areas are: (i) training and development of investigators,
prosecutors, judges and customs officials in relation to identification, investigation and prosecution ofmoney laundering and the confiscation of criminal assets; and (ii) the development of mechanisms formore effective international co-operation in money laundering investigation and prosecution of money
laundering cases.
Therefore UNODC’s main role will be to support partner countries to meet the requirements of the
UNCAC, through providing technical support to translate the provisions of the convention into sustainableinstitutions and procedures. In other words, the idea is to shift the type of assistance and activities deliveredin the region into technical support to operational agencies in charge of fighting corruption and recover theproceeds of crime.
C. Lack of Independent and Fair Justice Systems
By its very nature, transnational organized crime actively weakens the sovereignty of the State itself.
If sovereignty is defined as a monopoly on the use of force and the ability to establish an effective legal
framework to govern this use of force, transnational organized crime groups tend to chip away at the state’s
very foundations. Not only do transnational organized crime groups use their resources to set up parallel
sources of power, they also undermine the very legitimacy of the legal regime. By co-operating witheach other to respond to the threats from organized crime, Member States both reduce the threat to theirsovereignty and strengthen the basis of legitimate international co-operation.
As a region, East Asia and the Pacific has the lowest ratification level of the international crimeand drug conventions. This is a fundamental problem in terms of addressing UNODC’s mandates at thenational and regional levels. It is part of UNODC’s normative mandate to encourage the countries of theregion to ratify the crime, drugs and terrorism conventions.
The Drug-Free ASEAN 2015 Status and Recommendations report notes that the regional mutual
legal assistance (MLA) framework established by ASEAN is impeded by a lack of national legislation.
The report specifically states that, “While some bilateral MLA agreements in the region show promise, thechallenge is to find operational solutions for wider implementation.”4 Until the use of MLA and other legal
3. AML: Anti Money Laundering
4. Drug-Free ASEAN 2015, “Achieving a Drug-Free ASEAN 2015 – Status and Recommendations”.

− xiii −tools becomes the status quo, a divided “patchwork approach” of agreements will prevent greater success.
For justice systems to be effective in countering organized crime, an evidence-based approach is
required. There is a need to raise awareness of the value of physical evidence, as well as its forensic
examination and the need to preserve its integrity, from the crime scene to the courtroom. For this reason,enhancing forensic capacity and the exchange of experiences and data in the region through improved
national and regional networking is essential.
IV. WHAT FUTURE CHALLENGE FOR UNODC REGIONAL CENTRE
IN SOUTHEAST ASIA?
If one considers where we have been and where we have come in co-operation matters in the last fifty
years, there is much reason to be optimistic. There should be no doubt, that with the continued efforts of
the world community, its effectiveness in combating transnational crime will continue to increase, as will
the security of our global village. International co-operation in criminal matters is made possible throughthe use of a series of legal specifically designed tools to overcome the barriers of sovereignty and allow theinternational community to "fight back".
A. The “Towards AsiaJust” Initiative
International co-operation in criminal matters has on a practical level come of age. Most of theregions in the world have developed formal networks of judicial institutions using secure online forums inorder to legally extend the mechanisms of international co-operation when investigative measures become
coercive.
Such is the case in North America with the establishment of the Organization of American States(OAS); in Europe with EuroJust and its affiliated judicial network (EJN); or in South America with the
Ibero-American Assistance Network (Iber-Red).
However, the Southeast Asia and Pacific region does not have any network of the kind. Given thatsituation, UNODC/RC – after discussing the needs of the States Parties with their representatives – hasendeavoured to develop a new programme called “Towards AsiaJust” which has a strong focus on therecovery of the proceeds of the crime.
Essentially, The “Towards AsiaJust” programme is developed along the idea that UNODC, becauseof its neutral status and mandate, is the most appropriate organization to support the efforts of criminal
justice systems in East Asia and the Pacific to respond to TOC and corruption with a more effective form of"transnational organized criminal justice scheme " than the one that is in place at the moment.
“The Towards AsiaJust” programme has been developed under the supervision of the UNODC
Representative for East Asia and the Pacific by senior members of the judiciary formerly in charge oftransnational serious crime who are now seconded by their respective countries to the UNODC Regional
Centre in Bangkok. Prior to that, criminal trends and needs assessments have been conducted by UNODC/
RC with the authorities in charge of criminal issues in several countries of the region.
The result is that "Towards AsiaJust" has been conceptualized as a programme meant to operate withalready existing entities such as the networks of prosecutors, special investigative teams, central authorities
in charge of mutual legal assistance, recovery and return of stolen assets and extradition procedures, as wellas other highly specialized professionals.
The main objective of the programme is to put in place an operational “modus operandi” among
the various players in charge of combating Transnational Organized Crime and corruption in the region,
starting with inter-agency co-operation both at the domestic level and cross border level, based on a clear
understanding of the differences in the different criminal systems in force in the region.
Therefore, through measurable elements, the programme aims to shift the balance of power between
criminal organized groups and institutionalized state bodies in charge of the security of the State, persons− xiv −

and property.
To reach that aim, the “Towards AsiaJust” Programme provides the logical framework and necessary
steps to transform a region lacking judicial independence, integrity and organizational capacity to address
Transnational Crime. It aims to respond to Transnational Organized Crime in a region composed of strong
independent judiciaries that have demonstrated the political will to form a transnational organized justicescheme.
While the ratification and implementation of the UN Conventions remain a vital priority, “Towards
AsiaJust” will go beyond mere ratification to utilize the provisions of the UN Conventions in a context thatperceives international co-operation as a necessary and inherently beneficial asset, instead of as a burden.
The programme is a product of empirical and practical evidence that demands the formation of anorganized justice scheme founded on the criminal provisions of the UN Conventions to realistically andintelligently respond to highly-organized, intelligence-driven international criminal groups.
It aims at making the illegal activities of criminal syndicates significantly more difficult throughenforcement of legal mechanisms by competent agencies acting in synergy in member states that are readyto waive unnecessary obstacles when security is at stake. It also aims at making technically possible theimplementation of Chapter V of the UNCAC, and more specifically, the return of the proceeds of crime totheir legitimate owners in their country of origin.
For that purpose it will be built upon, and eventually encompass, the regional capacity establishedby INTERPOL5, ASEANAPOL5, ASLOM5, ARTIP5, FIU5, HSU5, SAARC5, SOMTC5 and the central
authorities for Mutual Legal Assistance and extradition where they exist.
V. CONCLUSION
More and more successful prosecution, particularly of economic drug crime and money launderingcases, is dependent upon the assistance and co-operation of other states. The return of the proceeds of crimeto the country of origin indisputably cannot operate without international co-operation.
UNODC/RC hopes that the result will be that the rare cases where assistance from another country
is necessary to gather evidence, or locate and return an accused or the proceeds of crime to the country oforigin, will no longer be rare.

5. INTERPOL:
ASEANAPOL:ASLOM:ARTIP:
FIU:		
HSU:		SAARC:SOMTC:

International Criminal Police Organization
ASEAN Chiefs of Police
ASEAN Senior Law Officials Meeting
Asia Regional Trafficking in Persons (Project)
Finance Intelligence Unit
Heads of Specialist Trafficking UnitsSouth Asian Association for Regional Cooperation
ASEAN Senior Officials Meeting on Transnational Crime− xv −

PAPERS AND CONTRIBUTIONS
Ms. Linda Samuel, Visiting Expert
Deputy Chief, Asset Forfeiture and Money Laundering Section, US Department of Justice
Mr. Emile van der Does de Willebois, Visiting Expert
Senior Financial Sector Specialist, Financial Market Integrity, World Bank
Ms. Julia C. Bacay-Abad
Deputy Director, Legal and Evaluation Group, AMLC, Philippines
Mr. Roman G. Del Rosario
Assistant Solicitor General, Office of the Solicitor General, DOJ, Philippines
Dr. Jaime S. Bautista
Vice Chairman, International Law Association, Philippine Chapter
Mr. Vathanak Sina Neang
Director, Legal Affairs Department, Ministry of Justice, Cambodia
Mr. Yanuar Utomo
Head, Subdivision Evaluation and Monitoring,International Cooperation Division, Legal Bureau, Attorney General’s Office, Indonesia
Mr. Xaysana Souliyavong
Vice Chief, Civil Department, Office of the Northern Part People’s Prosecutor, Lao PDR
Mr. Chew Tham Soon
Head, Compliance Office, Secretariat to Inspector General of Police, Royal Malaysia Police
Ms. Lwin Lwin Than
Deputy Director (Law Officer Grade 1), International Law and ASEAN Legal Affairs Division,
Office of the Attorney General, Myanmar
Mr. Panumas Achalaboon
Public Prosecutor, International Affairs Department, Office of the Attorney General of Thailand

Please note that the following papers have not been edited
for publication. The opinions expressed therein are thoseof the authors, and do not necessarily reflect theposition of the departments they represent.

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RECOVERING PROCEEDS OF CORRUPTION
Linda M. Samuel*I. INTRODUCTION
On November 7, 2009, United States Attorney General Eric H. Holder, Jr., in delivering opening
remarks at Plenary VI Ministerial Global Forum on Fighting Corruption and Safeguarding Integrity in
Doha, Qatar, said that “[C]orruption is condemned by all religions, all ethical codes, all legal systems. It
hinders all development, slows all progress, impedes all advancement -- both within our own countries andacross our borders. It strikes hardest at the poor and vulnerable, siphoning scarce resources away fromthose most in need. It advances the selfish interests of a dishonest few over the interests of the great many
who work hard and who obey the law and our common traditions. Corruption erodes trust in government
and private institutions alike; it undermines confidence in the fairness of free and open markets; and it
breeds contempt for the rule of law. Corruption is, simply put, a scourge on civil society.” All countries,
including the United States, struggle with corruption. The acknowledged amount of stolen funds byhigh ranking government officials throughout the world is mind boggling. Sadly, there have been only arelatively small amount of successful prosecutions of “grand corruption” cases1 and limited success in therecovery and return of the related illicitly acquired assets. This paper explores some of the impediments
to asset recovery that account for the dismal results in attacking a crime problem that receives worldwide
condemnation and for which there is international consensus about its debilitating impact on rule of law,development and poverty. This paper also identifies needed tools for prosecutors to pursue successful asset
recovery cases.

II. THE UNITED NATIONS CONVENTION AGAINST CORRUPTION(UNCAC)The principal international instrument for dealing with asset recovery is the United Nations
Convention against Corruption (UNCAC). It is the first globally negotiated anticorruption treaty that
contains a framework for governments to cooperate to achieve the goal of returning embezzled publicfunds and other proceeds of corruption by providing the vehicle for countries to make requests to eachother for legal assistance in the recovery of illicit assets. Chapter V of UNCAC (asset recovery) reflects amutual aspiration of developing and developed states parties for more effective cooperation to recover theproceeds of grand corruption. The Convention sets forth mutual legal assistance procedures for countries
to follow to enable them to partner in asset recovery cases. It imposes a binding legal commitment forparties to repatriate embezzled assets where the victim state has instituted proceedings and obtained aconfiscation judgment which is then enforced by the state where the property is located. The Convention
advocates the use of “mutually acceptable arrangements, on a case-by-case basis, for the final dispositionof forfeited property.
Since the time that UNCAC entered into force on December 14, 2005, the Conference of States* Deputy Chief, Asset Forfeiture and Money Laundering Section of the U.S. Department of Justice overseeing the International Unit. The
views expressed in this article are those of the author and do not necessarily reflect the views or policies of the U.S. Department of Justice.
1.	Grand Corruption, also referred to as kleptocracy, is large-scale corruption by senior officials in the executive, judicial, legislative, or otherofficial positions in government, including senior executives of government-owned corporations, military officials, and senior politiciansor senior officials from major political parties, who use their influence to steal, extort, and misappropriate large sums of money from theirgovernments and citizens. In addition, kleptocracy involves the family members and close associates of senior government officials, as wellas support networks of advisors, attorneys, and accountants.

−3−

Parties has met on an annual basis to discuss implementation issues. Most recently, the States Parties met
in Doha, Qatar during November 9-13, 2009. The resulting Doha Resolution from COSP III acknowledges“the important progress made towards implementation of chapter V of the Convention, but recognize[es]that States parties continue to face challenges in asset recovery owing, inter alia, to differences in legal
systems, the complexity of multi-jurisdictional investigations and prosecutions, lack of familiarity withmutual legal assistance procedures of other States and difficulties in identifying the flow of corruption
proceeds. . . ” The Resolution notes that there are particular challenges posed in recovering the proceeds ofcorruption in cases involving individuals who are or have been entrusted with prominent public functions
and their family members and close associates. To overcome these challenges to effective asset recovery,
States Parties must, among other things: (1) take a proactive Approach to international cooperation in asset
recovery; (2) timely respond to Mutual Legal Assistance Requests; (3) remove barriers to asset recovery; (4)study application of changes to legal frameworks including use of presumptions and illicit enrichment.

III. BARRIERS TO ASSET RECOVERY
Despite the existence of a framework to follow and a vehicle for jurisdictions to make requests to one
another in UNCAC, there are numerous obstacles that continue to thwart asset recovery. The following is
a list of many of the hurdles that jurisdictions face in undertaking asset recovery work:◦Lack of adequate legal framework (anti-corruption, anti-money laundering, and confiscation laws)◦Absence of an organizational structure, designated responsible government authorities, andimplementing procedures and policies concerning asset recovery◦Lack of political will and government support to pursue asset recovery◦Unfamiliarity with how to investigate and prosecute corruption.
◦Failure to appreciate or possess the skills required◦Scarcity of financial and human resources and inability to pay the cost of advisors◦Lack of capacity to conduct financial and money laundering investigations◦Impossibility of accurately conducting the time consuming process of tracing illicit proceeds,
particularly where they have been concealed and comingled◦Inability to identify where the proceeds of grand corruption are on deposit◦Lack of independent prosecuting and investigating authorities and anti-corruption commissions◦Overly excessively protracted legal proceedings◦Inability to successfully prosecute the underlying corrupt conduct, particularly to overcome vigorous
legal challenges raised by legal representatives for corrupt officials◦Inability of a victim state to obtain a confiscation judgments without a conviction in the victim
state, including where corrupt official is dead, a fugitive, possesses immunity, or is too influential
to prosecute◦Unfamiliarity with process of requesting mutual legal assistance and limited capacity to formulate
executable assistance requests◦Failure of victim states to provide timely and sufficient evidence in support of mutual legal assistancerequests◦Unfamiliarity with points of contact to assist in mutual legal assistance◦Incompatibility of legal procedures in proceedings in requesting and requested states, including dual
criminality requirements, statute of limitations, and requirement of a final judgment as a conditionof providing legal assistance◦Inability to secure assistance from non-responsive jurisdictions◦Inability for a jurisdiction where corruption proceeds are located to freeze and confiscate illicit
property based on their own investigation or to have the statutory basis to recognize a foreign
restraint order or forfeiture judgment◦Difficulties of states where proceeds of corruption are located to promptly execute mutual legal−4−assistance requests, including requests to enforce requesting states’ restraint orders and forfeiture
judgments◦Lack of confidence and trust between requesting and requested states◦Lack of transparent mechanisms for the use and disposition of recovered assets

IV. WHAT HAS PROVEN EFFECTIVE IN RECOVERING THE PROCEEDSOF CORRUPTION?
Rarely are corrupt officials pursued while they are still in office. Once the new government is installed
and is sufficiently organized to pursue past cases of corruption, the corrupt former official typically has
had ample time to conceal his illegal wealth, attempt to protect himself from accountability by obtaining
immunity from prosecution, or to flee. Most jurisdictions do not allow for the confiscation and returnof assets except on the basis of a criminal conviction, which of course, is unlikely where the corrupt
official cannot be prosecuted. Increasingly, jurisdictions are recognizing that many of the challenges tosuccessful asset recovery can be overcome through the adoption and use of non-conviction based (NCB)
forfeiture statutes. NCB forfeiture, called “civil forfeiture” in some countries, is an action not against an
individual, but against the property itself. Because it is against the property, an NCB forfeiture action is
not dependent on a criminal conviction and may be pursued even if the corrupt official is dead, a fugitive,
has been acquitted of a related criminal offense, is immune from criminal prosecution, or enjoys residual
political influence making criminal prosecution not possible. Most NCB forfeiture statutes require proof
by a preponderance of the evidence or balance of the probabilities whereas criminal forfeiture statutes
require a conviction of the individual, usually by the higher “beyond a reasonable doubt standard”, though
in some countries the lower preponderance of the evidence standard governs the forfeiture phase of thecriminal proceeding once guilt is proved by the higher standard. While a criminal prosecution is obviously
a desirable law enforcement objective when dealing with corrupt officials who have undermined the publictrust and stolen state funds, having the ability to strip away their illegal proceeds, particularly when asuccessful criminal prosecution is unlikely, is also an important law enforcement objective to achieve andhelps to restore confidence in government.
In addition to adopting NCB forfeiture laws, other enumerated obstacles to asset recovery can beaddressed through the enactment and implementation of effective, comprehensive, and flexible mutual
legal assistance legislation that provides for the enforcement of foreign restraining orders and final
forfeiture judgments. Corrupt officials frequently launder their illicit proceeds to places outside their own
jurisdiction. Requesting and requested jurisdictions need flexible mutual assistance laws that will enable
them to act speedily to freeze the illicit proceeds so they cannot be dissipated. In most cases, the requested
jurisdiction cannot be expected to bring its own domestic case because the underlying corrupt activities will
have occurred in the requesting state, which will posses that evidence, and it will be a rare occasion that theforeign corrupt official is located in the jurisdiction where the assets are located. Accordingly, in interestsof judicial economy and practicality, jurisdictions need the ability to enforce one another’s restraining
orders and final forfeiture judgments. This includes one another’s non conviction based judgments. In
other words, the jurisdiction pursuing the underlying corruption case needs to have the ability to enter
orders affecting property located beyond its borders, and the requested jurisdiction needs to have the ability
to give effect to such foreign orders. This is consistent with the asset return framework set out in Article
57 of UNCAC, in which the binding legal commitment to repatriate proceeds of corruption applies toembezzlement proceeds where the victim state obtains a forfeiture judgment that is then enforced by thestate where such proceeds are located.
Another improvement to the legal framework that can aid in overcoming challenges to asset recovery
is the incorporation of presumptions in the law. Often times, corrupt officials, particularly those who havebeen in power from an extended period of time, have engaged in multiple schemes and have taken bribes andkickbacks from numerous sources and have comingled funds to such an extent that law enforcement may
never be able to unravel the transactions and trace assets to particular corrupt activities. Presumptions will−5−

essentially shift the burden of proof after the government has made an initial showing (based on a probablecause standard) that the property is the proceeds or instrumentalities of foreign corruption, and accordingly
will require the corrupt official to demonstrate that his or her property has been legitimately acquired.
Tracing is time consuming and in many cases, impossible. Thus, putting the onus on the corrupt official
to establish that his or her property is lawful is not unjust or unreasonable since the official is in the best
position to know how the property was acquired. An example of a presumption is that the government isentitled to presume that the property subject to forfeiture was derived from corruption where such property
is held by or for the benefit of a foreign official and the value is inconsistent with his or her income anddeclared assets. Another presumption is that where an official has been convicted of corruption or money
laundering in one state, then another state where his or her property is located is entitled to initiate forfeitureproceedings and have a presumption in its favor that the property is derived from corruption. Typicallythese presumptions are contained in non conviction based forfeiture regimes in which the government is
not seeking to take the property owner’s liberty interest away through a criminal conviction. Consequently,
the presumption – which is rebuttable - should not run afoul of due process concerns and presumptions ofinnocence. Similarly, where such presumptions are applied in the context of a criminal prosecution, it will
be in the forfeiture phase of the case following a conviction where guilt has been is proved by the higher
standard, and therefore, should not bee considered a violation of the presumption of innocence.
Other impediments to identifying and tracing proceeds of corruption can be surmounted by adhering
to Chapter V of UNCAC, which requires the financial institutions in the member states to apply enhanced
scrutiny to accounts of politically exposed persons (PEPs) and requires states to develop effective financial
disclosure systems. Many of the barriers to asset recovery stem from a lack of knowledge, skills, procedures,and training. Through the development of specialized prosecutorial and investigative units, anti-corruptiontask forces, and anti-corruption commissions, the creation of national strategies and internal integrity
programs, and the provision of related training for relevant authorities, law enforcement authorities will bebetter able to detect, investigate and prosecute corrupt public officials and those who bribe and be better
able to confiscate the property involved in corruption crimes.

V. U.S. LEGAL AUTHORITY
The U.S. has a strong interest in encouraging effective investigation and forfeiture of proceedsof corruption and the rendering of related mutual legal assistance. As a result of successful forfeiturecases brought by the U.S. Department of Justice, millions of dollars in forfeited corruption proceeds has
been repatriated to victim states and hundreds of millions of additional funds are currently under judicial
restraint subject to pending forfeiture proceedings. The U.S. legal framework that enables it to provide
assistance in asset recovery cases stems from potent national laws, flexible mutual assistance authority, anda forceful commitment to combating grand corruption and assisting other nations in asset recovery efforts
that is embodied in a consolidated national strategy. In August 2006, the United States issued a national
Strategy to Internationalize Efforts Against Kleptocracy, which remains effective today, and in broad terms,
strives to prevent kleptocracies and deny safe haven to corrupt officials, those who corrupt them, and theirproceeds. To achieve these objectives, the United States undertakes to:
1. L aunch a coalition of International Financial Centers exploited by kleptocrats and work withprivate and public sector partners in key international financial centers where illicit funds transit
and/or are hidden and use financial and economic sanctions where necessary to stop grandcorruption;
2. Vigorously prosecute Foreign Corruption Offenses and Forfeit Illicitly Acquired Assets. The
U.S. Government will seek to expand its capacity to investigate and prosecute criminal violations
associated with high level foreign official corruption and related money laundering, as well as toforfeit the proceeds of such crimes;
3. D eny safe haven so that kleptocrats and those who corrupt are denied entry to the United−6−

States;
4. S trengthen multilateral action against the bribery of kleptocrats, foreign political parties, party
officials, and candidates for office;5. Facilitate and reinforce responsible repatriation and use when returning recovered assets so thatthey benefit of the citizens of countries victimized by grand corruption; and6. Target and internationalize enhanced capacity by providing technical assistance and focusing
international attention on building capacity to detect, prosecute, and recover the proceeds of highlevel public corruption while helping countries build strong systems to promote responsible andaccountable governments.
The mechanism for confiscating corruption proceeds in the United States is based on flexible
authority to institute legal proceedings either with or without a conviction through which title to property
is vested in the government, following proof of criminal conduct and demonstrating that the property or its
value was derived from or involved in the commission of a crime.2 See, generally, 18 U.S.C. §§ 981 and982 and 21 U.S.C. §§ 853 and 881. Critical U.S. legal authority relied on by American prosecutors in asset
recovery cases includes:◦Criminal forfeiture: The United States must first prove beyond a reasonable doubt that the corrupt
official is guilty of an offense for which forfeiture is available. Forfeiture is available for a widearray of corruption related and money laundering offenses. Following conviction, the defendant’sinterest in property constituting the proceeds of an offense or property used in the commission of
the offense is forfeited to the United States as part of the criminal sentence. Because a criminal
prosecution is an in personam action, the United States can also seek a forfeiture judgment for
the value of property involved in the commission of the crime or forfeit property the defendantlegitimately acquired in lieu of his or her tainted assets if the assets involved in the offense havebeen dissipated or hidden.
◦Non Conviction Based (NCB) forfeiture: NCB or civil (or in rem) forfeiture actions are actions
against property, rather than a criminal defendant, and do not require a conviction. In the UnitedStates, such actions are regarded to be quasi criminal because the authority is located in the penal
code and the government must establish the existence of a criminal offense and the property’s
nexus to that offense, but the procedure utilized is civil. NCB forfeiture actions depend upon
the government’s ability to demonstrate the relationship between the criminal conduct and theparticular property subject to confiscation, and, as a general rule, are limited to property somehow
traceable to the offense such that it was used or acquired illegally. As already noted, NCB
forfeiture actions are particularly useful in grand corruption cases where a criminal conviction
is not possible, such as when the property is owned or controlled by a corrupt official who is afugitive, has immunity from prosecution, or has died.
◦Restraint/Seizure for U.S. Forfeiture: In both criminal and NCB forfeiture actions, United States
courts have broad authority to order the seizure or restraint of property prior to trial to ensurethat it remains available for forfeiture, provided there is probable cause to believe the property is
traceable to the offense. See, e.g. 18 U.S.C. §§ 981(b), 983(j); 21 U.S.C. § 853(e).
◦Restraint Based Upon Foreign Arrest or Charge: Where a U.S. civil forfeiture action would

2.	Relevant foreign crimes giving rise to forfeiture in the United States are enumerated in 18 U.S.C. § 1956(c)(7(B) as predicates for U.S. money
laundering violations and include foreign extortion, bribery of a public official, or the misappropriation, theft, or embezzlement of publicfunds by or for the benefit of a public official. In addition, the United States may be able to reach corruption-related property if the conducttranscends national boundaries so as to violate United States law or if it occurred, in part, in the United States in violation of other U.S. laws,
such as those prohibiting wire fraud, mail fraud, or transportation of property taken by theft or fraud. Forfeiture may also be possible forviolations of U.S. statutes that provide for extraterritorial jurisdiction over United States nationals and residents, such as the Foreign Corrupt
Practices Act.

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be based upon evidence of a foreign crime, such as a corruption offense, the United States
may seek preliminary restraint of assets based solely on a foreign arrest or criminal charge
in order to allow foreign authorities time to provide sufficient probable cause evidence toenable the United States to file its own NCB forfeiture action. Such a preliminary restraint
does not require a showing of probable cause and is of temporary duration that can beextended by the court upon a showing of good cause. 18 U.S.C. § 981(b)(4).
◦Enforcement of Foreign Forfeiture Judgments: In addition to authority to initiate its own
forfeiture actions, the United States has authority to enforce foreign forfeiture or confiscation
judgments against property located in the United States. This provision covers assets that
could be covered under a U.S. forfeiture judgment had the crime been committed in the
United States, and therefore includes property involved in foreign corruption. In addition,
the order must be issued by a court in a foreign nation that is party to a treaty or other formalinternational agreement with the United States providing for mutual forfeiture assistanceand the foreign order must be certified for enforcement by the U.S. Attorney General. In
enforcement proceedings, claimants cannot re-litigate substantive issues that have been
adjudicated in the foreign court, such as guilt or forfeitability of the property. However,claimants can challenge the enforcement of a foreign forfeiture judgment in the UnitedStates based upon violation of procedural due process guarantees (such as failure to receive
notice, lack of opportunity to participate, judgment procured by fraud etc.). See 28 U.S.C.
§ 2467 Enforcement of a foreign judgment would result in the forfeiture of the property to
the United States, which would then control disposition of the assets.
◦Extraterritorial Reach of U.S. Forfeiture: United States forfeiture authority extends not only tocriminal proceeds and instrumentalities located in the United States, but also to property locatedoutside the United States that is traceable to a criminal defendant prosecuted in the United Statesor criminal conduct occurring, in part, in the United States. See 21 U.S.C. §§ 853(l) (criminal
forfeiture) and 28 U.S.C. § 1355(b)(2) (civil forfeiture). U.S. money laundering laws contain agrant of extraterritorial authority and numerous predicate offenses cover acts that occur outside theUnited States. Additionally, foreign corruption offenses are specifically designated as a predicate
offense to money laundering. Where United States’ treaty arrangements are insufficient to reach
assets located abroad, the USA PATRIOT Act provides authority to restrain, seize and later forfeit
funds from the U.S. correspondent bank account of the foreign institution(s) holding the forfeitable
funds/assets located abroad in lieu of property located abroad. See 18 U.S.C. § 981(k).
◦Asset Return Provisions: The United States is committed to the principles of disposition and returnset forth in Article 57 and has ample authority through its asset sharing and remission statutes to
execute the obligations under UNCAC. Where the United States successfully forfeits corruption
proceeds, it is the policy and practice of the United States to repatriate the funds to the victim state
and to encourage its use in effective programs to combat corruption and to dedicate recovered
corruption proceeds to programs and institution building that will benefit the people who havesuffered as a result of the corrupt activities. Pursuant to 18 U.S.C. §981(i), the United States
can share the net forfeited proceeds with jurisdictions that cooperate to facilitate the successful
forfeiture effort. This authority can be used in grand corruption cases where the victim country
typically provides evidence to help establish the underlying corrupt activities. Under U.S. asset
sharing laws, the United States is not limited to transferring any particular percentage of theassets, and for example, in the case of embezzlement and theft, the United States has the discretion
to share all of the forfeited proceeds with the victim state. In addition to its broad asset sharing
authority, the U.S. Attorney General has discretionary authority to restore forfeited property toinnocent crime victims under the Department of Justice remission authority. Such authority is
generally governed by regulations set out in 28 C.F.R. Part 9 (2008). The regulations define a“victim” as an individual, partnership, corporation, joint business enterprise, estate, or other legal
entity capable of owning property, “who has incurred a pecuniary loss as a direct result of the−8−commission of the offense underlying a forfeiture.” 28 C.F.R. § 9.2(v).3 Thus, a victim can be aforeign state.

VI. CONCLUSION
We should all be striving for a world where there is no safe haven for stolen assets. Through vigorous
enforcement of asset forfeiture laws, and in close cooperation with law enforcement partners in othercountries, we can all do our part to ensure that corrupt officials do not retain the illicit proceeds of theircorruption. However, prosecutors need to have an arsenal of weapons at their disposal in the form of legal
authorities to prosecute domestic and foreign grand corruption and related money laundering offenses, andto confiscate the property involved in such crimes. Experience has shown that the linchpin to making thepromise of asset recovery in UNCAC a reality is employing critical tools, such as non-conviction-based
forfeiture or enforcement of foreign restraint orders or confiscation judgments. These powers, as part ofa comprehensive domestic and international forfeiture regime, will enable effective implementation of thespirit of Chapter V of UNCAC and will increase the ability of nations to detect, investigate, and confiscateproceeds of grand corruption, as well as to provide mutual legal assistance to member states on asset
recovery and return.

3.	A victim does not include one who acquires a right to sue the perpetrator of the criminal offense for any loss by assignment, subrogation,
inheritance, or otherwise from the actual victim, unless that person has acquired an actual ownership interest in the forfeited property. Id.
Pursuant to 28 C.F.R. § 9.8(a), in order for a victim to receive remission, they must generally establish that: (1) they suffered a pecuniary lossof a specific amount directly caused by the offense underlying the forfeiture or a related offense, and the loss is supported by documentary
evidence including invoices and receipts; (2) the loss is the direct result of the illegal acts and not otherwise lawful acts committed in thecourse of a criminal offense; (3) they did not knowingly contribute to, participate in, benefit from, or act in a willfully blind manner toward
the offense; (4) they have not been compensated for the loss; and (5) they do not have recourse reasonably available to other assets fromwhich to obtain compensation for the loss.

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STOLEN ASSET RECOVERY:POLICY DEVELOPMENT AND PRACTICAL TOOLS(SUMMARY)
Emile van der Does de Willebois*

An intimate connection exists between corruption and development, and development organizations,
including the World Bank, must be very conscious that they do not sponsor or fund the private activities ofcorrupt officials; not only is the aid lent thus rendered less effective, but it also perpetuates corruption.
Until recently, the World Bank advocated a non-law enforcement approach to corruption, but there
has been a policy change: a shift from this developmental view of the matter to a more “law and order” view.
While good governance and transparent and effective public financial systems are vital, they need to becomplimented by law enforcement efforts. Realizing this, in 2007 the World Bank and the UN launched the
StAR Initiative, which receives strong support from World Bank management as well as external support;
for example, the explicit call of the G20 leaders in Pittsburgh on the StAR Initiative to continue its efforts
to mitigate the effects of corruption. With this support comes the responsibility to make a real contribution
to combating corruption.
The StAR Initiative’s objectives are to reduce barriers to asset recovery, and thereby to encourageand facilitate systematic and timely return of stolen assets. StAR emphasizes the joint responsibilityof developed and developing countries in this endeavour. Specifically, these objectives take the formof technical assistance and financing training courses; advisory services to support the preparation andanalysis of mutual legal assistance requests (not their execution); and knowledge and advocacy, on which
this presentation focused.
Many jurisdictions already have asset recovery legislation in place, and while it is largely focusedon proceeds from drugs and organized crime, it can also be used for corruption. The Financial Market
Integrity Unit can give advice in this regard, as well as supporting multi-agency teams, encouraging coordination and communication between investigators, prosecutors, AMLUs and FIUs, etc. The Financial
Market Integrity Unit also contributes to the development of asset recovery programmes and has produced
a paper on the management of assets after return. With regard to mutual legal assistance, while the WorldBank cannot take control of specific cases, it can give advice in hypothetical terms. Details of these projects
are outlined in the accompanying slides 7 to 10.
Of great importance is the integration of the anti-money-laundering (AML) and anticorruption
agendas. This is illustrated with the example of James Ibori of Nigeria, a state governor, who, althoughimmune from prosecution under the Nigerian Constitution, had his assets frozen under AML legislation in
the UK, the jurisdiction to which he had moved his assets, following advice from the Nigerian Economic
and Financial Crimes Commission (EFCC).
The FATF Recommendations overlap with certain provisions of the UNCAC (listed in slide 11) andof particular importance is the issue of politically exposed persons (PEPs), specifically scrutiny of bankaccounts held by such persons, which is addressed by Article 52 of the UNCAC and Recommendation 6 of
the FATF40+9 Recommendations. However, there is a low level of compliance with FATF Recommendation
6 (only three of 124 surveyed jurisdictions were deemed to be fully compliant), and other provisions
relating to PEPs generally.
The issue of PEPs is an important one for the StAR Initiative, and it has written a policy paper,
entitled “Politically Exposed Persons – A Policy Paper on Strengthening Preventive Measures”, which*  Senior Financial Sector Specialist, Financial Market Integrity Unit, World Bank.

− 10 −

aims to give policy recommendations to states on how they should deal with PEPs and then is divided into
principle recommendations and good practices. Some of the principle recommendations are: enhanced due
diligence, (which all countries which have ratified the UNCAC should apply to both domestic and foreign
PEPs, regardless of FATF status); requiring a declaration of beneficial ownership at the point of opening
an account; requiring an asset and income declaration; periodic review of PEPs customers; and avoiding
setting time limits on the time a PEP remains a PEP (this should be considered on a case-by-case basis).
See slides 14 to 18.
On the basis of UNCAC Article 54 and FATF Recommendation 3, the StAR Initiative has produced
a knowledge product entitled the Non-Conviction Based Guide to Asset Recovery, co-authored by a VE tothe Seminar, Ms. Linda Samuel. The guide draws upon the experience and expertise of practitioners fromthe common law and civil law traditions, as well as from the developing and the developed world. Some of
the key concepts addressed in this guide are outlined in slides 23 to 28, including the differences between
conviction based or criminal forfeiture and non-conviction based or civil forfeiture. FATF is working
on reviewing some of the 40 Recommendations, including forming a Working Group on the issue ofconfiscation, and possibly strengthening the Recommendation on civil forfeiture, although NCB forfeiture
ought never to be a substitute for criminal prosecution. Furthermore, fundamental principles relating to
NCB forfeiture, such as the standard of proof to be employed and the use of a rebuttable presumption that
unexplained wealth accumulated during a period of public service is attributable to corruption, should bedelineated in statutory law.
A further policy product of the StAR Initiative is the publication entitled “Barriers to Asset Recovery”,
which will be published in the second half of 2010. (See slides 29 to 38). This publication reflects one of
the UNCACs most fundamental principles: the return of assets (Article 51). This principle is also reflected
in Recommendation 38 of the FATF 40+9 Recommendations. The publication’s objective is to identify
and analyse operational and practical barriers to asset recovery. It also lists recommendations as to howdeveloping countries can deal with the barriers thus identified. Its most important conclusion is that “where
there is a political will, there is a legal way”. Lack of political will is the greatest barrier to asset recovery.
Legal barriers affecting requesting and requested states, as well as operational, institutional and practicalbarriers are listed in slides 31 to 35. The publication also recommends that countries utilize the assistanceand training offered by the StAR Initiative and other international organizations in the process of asset
recovery.
Another of the StAR Initiative’s policy products is a publication on the “Misuse of Corporate
Vehicles”, which means using legal entities, including corporations, trusts, foundations and partnerships
with limited liability, for illicit purposes, for example, money-laundering. The publication is based on
UNCAC Article 12 and FATF Recommendation 33. The Leaders’ Statement at the Pittsburgh Summit
requests FATF to strengthen standards on customer due diligence, beneficial ownership and transparency.
Details of the contents are available in slides 41 to 43.
Finally, another StAR knowledge product, the Asset Recovery Handbook, the ultimate “how to”
guide in asset recovery, will be published in October 2010.

− 11 −

Stolen Asset Recovery
Policy development and practical tools
Third Seminar on Good Governance forSoutheast Asian Countries, UNAFEI
Manila, December 9-11, 2009

Emile van der Does de Willebois
Financial Market Integrity
World Bank
evanderdoes@worldbank.org
1

Corruption – why we care
• The cross-border flow of the global proceeds from criminal activities,
corruption, and tax evasion is estimated at between $1 trillion and$1.6 trillion per year.
• Many developing nations are hemorrhaging money desperately
needed to alleviate poverty. By one estimate, corrupt money flowing
abroad from the developing and transition countries is estimated at$40 billion per year.
• This represents 40% of annual official development assistance funds(ODA).
• Twenty-five percent of the GDP of African states is lost to corruption
every year, amounting to $148 billion, but the problem exists in every
continent.
2− 12 −

Corruption-why we care
Assets stolen by corrupt leaders at the individual country-level are
frequently of staggering magnitude (estimates by TI):
• Suharto• Marcos• Abacha(1967-98)(1972-86)(1993-98)$15 - $35 billion$ 5 - $10 billion$ 2 - $ 5 billion

Even a portion of recovered assets could provide much-needed funding
for social programs or badly needed infrastructure. Every $100 million
recovered:• could fund full immunizations for 4 million children,• provide water connections for some 250,000 households, or• fund treatment for over 600,000 people with HIV/AIDS for a full year;or• fund 50–100 million drug treatments for malaria.
3

Stolen Asset Recovery (StAR) Initiative Was
Launched by the World Bank and UNODC on
September 17, 2007
“There should be no safe haven for those who steal from thepoor,”“Helping developing countries recover the stolen money will
be key to fund social programs and put corrupt leaders on
notice that they will not escape the law.”
World Bank President, Robert B. Zoellick“This Initiative will foster much needed cooperation between
developed and developing countries and between the public
and private sectors to ensure that looted assets are returnedto their rightful owners,”
Secretary General of the United Nations, Ban Ki-moon− 13 −

4

High Level Political Support“As we increase the flow of capital to developing
countries, we also need to prevent its illicit outflow.
We will work with the World Bank’s Stolen Assets
Recovery (StAR) program to secure the return ofstolen assets to developing countries, and support
other efforts to stem illicit outflows..“
Leaders’ Statement, The Pittsburgh Summit, September 24-25,
2009
5Objective of StAR
“To reduce barriers to asset recovery and thereby
encourage and facilitate more systematic andtimely return of stolen assets. StAR emphasizes
that developed and developing countries sharea joint responsibility in tackling corruption andthat international collaboration and collective
action are needed to facilitate asset recovery
and prevent asset theft.”6− 14 −

Objective of StAR
• Development of national capacity through technical assistance andfinancing training courses for practitioners at both the national andregional levels.
• Assistance in the Recovery of Stolen Assets in preparatory stages of asset
recovery proceedings. This may include advisory services to support the
preparation and analysis of mutual legal assistance requests• Knowledge and advocacy
I. “how to” guides for practitioners
II. tools and supporting information systems for practitioners; andIII. analytical work to inform the design and implementationof policies aimed at lowering the barriers to asset recovery infinancial centers

7Country assistance• Twenty country requests for StAR assistance• Key areas for assistance•

Awareness raising•

Gap analysis•

Integrating the AML and anti-corruption agendas•

Legal reform and development•

Support to multi-agency teams•

Development of asset recovery programs•

Support on specific cases8− 15 −

Knowledge and advocacy
NETWORKS• Interpol Focal Point Database (Launched February 2009)
HANDBOOKS FOR PRACTITIONERS• Non-Conviction Based Asset Forfeiture Guide (April 2009)• Proceeds of Corruption: Managing Asset Return (July 2009)• Asset Recovery Handbook (October 2010)• Good Practice Guide on Income and Asset Declaration (September 2009).
TOOLS FOR PRACTITIONERS• Legal Library on Asset Recovery (October 2009 and then continuous)• Reporting on UNCAC Implementation (October 2009 and then continuous)• Mutual Legal Assistance (MLA) Request Writer Tool (October 2009)• Knowledge Consortium (October 2009 and then continuous)
9

Knowledge and advocacy
POLICY ANALYSIS••••Managing Politically Exposed Persons (PEPs) : enhanced due-diligence (October
2009)
International Architecture : gaps in the institutional framework (October 2009)
Lowering the Barriers : innovation and policy options in financial centers (second
half 2010)
Corporate Vehicles : identifying beneficial ownership (second half 2010)10− 16 −

Overlap AML and Anti Corruption agenda• UNCAC and FATF 40 recommendations cover someof the same ground– Chapter II Preventive Measures covers FATF Recs
5,10,13, 19, 20, 23, 31, 33-34, 40, SR VI, VII, SR IX– Chapter III Criminalization and Law Enforcement
covers FATF Recs 1-4 and 14 a
– Chapter IV International Cooperation covers FATF
Recs 27, 31 36, 37, 39– Chapter V Asset recovery covers FATF Recs
5,6,7,10,18,26,38
11

StAR policy development: PEPs
• UNCAC, Article 52:– “to conduct enhanced scrutiny of accounts sought ormaintained by or on behalf of individuals who are, or havebeen, entrusted with prominent public functions and theirfamily members and close associates.”• FATF 40+9 Recommendations: Rec. 6– Risk management systems to identify PEPs
– Senior management approval– Establish source of funds and source of wealth– Conduct enhanced ongoing monitoring12− 17 −

PEPs- low compliance• More than 80% ofjurisdictions have not
implemented effective
measures. Only 3
jurisdictions compliant• Compliance lower in FATF
jurisdictions

13

PEPs- Principle Recommendation 1
Apply EDD to All PEPs, Foreign and Domestic• UNCAC - domestic and foreign PEPs; FATF – foreign only
• Why?
– Legal and reputation risks remain same – domestic
politicians are subject to same pressures and perverse
incentives.
– Increase credibility of commitment to fighting corruption
and money laundering– Reality: Many banks are already covering both14

− 18 −

PEPs- Principle Recommendation 2
Require a Declaration of Beneficial
Ownership•Provides background to assist withidentification and verification•Assist regulatory authorities in
evaluating BO practices•Requirement to sign under criminal
penalty, where existing, serves as
deterrent•One tool – not only tool—to identify andverify BO. Not sufficient to let banks “offthe hook”

15

PEPs- Principle Recommendation 3
Request Asset and Income Declarations• Required in more than 110 countries• Provides a “snapshot in time” that bank can use tocompare with profile or account activity• Addressing refusals• Issues: Verification is uneven• Other uses: PEP identification if public list of filers,
analysis of STRs by FIUs
16

− 19 −

PEPs- Principle Recommendation 4
Periodic Review of PEP Customers• Review of the “big picture” on risk-based approach,at least yearly• Helps to overcome silo approach• Should include consideration by at least one senior
manager• Good Practice: PEPs Committee

17

PEPs- Principle Recommendation 5
Avoid Setting Limits on the Time a PEP Remains a PEP• UNCAC and FATF – “once a PEP always a PEP”
• Problems with time limits• Consider on case-by-case basis using risk-based
approach18− 20 −

StAR knowledge products: NCB guide• UNCAC, Article 54 (1)(c) (entered into force Dec 2005):“Consider taking such measures as may be necessary to allow

confiscation of such property without a criminal conviction incases in which the offender cannot be prosecuted by reasonof death, flight or absence or in other cases.”• FATF 40+9 Recommendations: Rec. 3 (June 2003)“Countries may consider adopting measures that allow suchproceeds or instrumentalities to be confiscated without
requiring a criminal conviction.”

19

StAR knowledge products: NCB guide• Limitation of Criminal Forfeiture:
Cannot always forfeit property that was derived
from crime or was used to commit a crime in acriminal prosecution. Defendant may be:• Dead• A fugitive• Immune from criminal prosecution• Too powerful• [Acquitted for lack of admissible evidence]20− 21 −

StAR knowledge products: NCB guide• Criminal and NCB Forfeiture:
Conviction Based or Criminal Forfeiture (Common
law jurisdictions)
Against the person (in personam)

Non-Conviction Based or Civil Forfeiture

ActionAgainst the thing (in rem)

Æ Part of the criminal charge against a person

Æ Judicial action filed by a government against the thing
as the wrongdoer

Imposed as part of sentence in criminal case

When

Filed before, during, or after criminal conviction, or even
if there is no criminal charge against a person

Criminal conviction Æ beyond a reasonable doubt

Proof required

Unlawful conduct Æ balance of probabilities. Criminal
conviction not required

Forfeit defendant’s interest in property

Forfeiture

Forfeit the thing itself, subject to innocent owners

21

StAR knowledge products: NCB guide•Based on experience of experts in the field of NCB asset
forfeiture, both from civil and common law and fromdeveloped and developing countries- investigating
magistrates, prosecutors, law enforcement officials and asset
managers.
•36 key concepts- recommendations critical for designingand building an effective NCB forfeiture regime•Designed as a practical tool for policy makes, legislative
drafting groups and pracitioners

22− 22 −NCB guide, selected key concepts•NCB asset forfeiture should never be a substitute forcriminal prosecution•Undermines the effectiveness of criminal law and confidence in law enforcement•Should be viewed as complementary to criminal prosecutions and convictions•Relationship between NCB asset forfeiture and criminal proceedings
should be defined•NCB procedure may collide with criminal investigation and prosecution•Jurisdictions need to decide whether NCB are permitted only when criminal proceeds
impossible or whether the two can proceed simultaneously (preferred)•Applicable evidentiary and procedural rules should be as specific as
possible•Promotes uniformity in the application of the law, reduces opportunity for judicially
imposed rules- particularly important in regimes with a judiciary inexperienced inforfeiture23

NCB guide, selected key concepts•Tainted assets acquired prior to the enactment of an NCB
asset forfeiture law should be subject to forfeiture•If not criminal defendants would be given the opportunity to profit
from acts illegal at the time- particularly important for recovering
proceeds of corruption against official who are in power for long
periods of time
•Not in conflict with the “nulla poena sine previa lege” rule:•NCB asset forfeiture does not amount to a criminal prosecution or
penalty•ECHR: NCB asset forfeiture “comparable to a civil law restitution ofunjustified enrichment and therefore not a “penalty within the meaningof the ECHR”. In addition NCB law “aimed at guaranteeing crime did notpay”•Cf UK POCA 2002, section 340(4) “It is immaterial (…) whether the
conduct occurred before or after the passing of this Act.”24− 23 −NCB guide, selected key concepts•The government should have discretion to set appropriate
thresholds and policy guidelines for forfeiture•Relevant for assets that are depreciating in value or burdensome tomaintain (eg house with substantial mortgage, live animalsracehorses) or items that are unsellable (counterfeit products)•To avoid the asset forfeiture system from becoming overburdened•Preservation and investigative measures taken ex parteshould be authorized when notice could prejudice the ability
to prosecute the forfeiture case
•Where dissipation of assets is possible if notice is given

25

NCB guide, selected key concepts•Fundamental concept such as the standard of proof and useof rebuttable presumptions should be delineated by statute•Eg rebuttable presumption that unexplained wealth accumulated
during a period of service as a public official is attributable tocorruption•Thailand rebuttable presumption to invalidate transfers to family
members (section 51/52 AMLA)•Switzerland: assets belonging to a person who has participated in or
supported a criminal organisation are presumed to be at the disposalof the organisation (used to forfeit 7 million Swiss Francs in the caseagainst Duvalier)26− 24 −NCB guide, selected key concepts•Rebuttable presumptions cont’d•UK any property acquired 6 years before conviction was
criminally derived•Philippines, section 31 of rules of Procedure in Civil
forfeiture cases•ECHR confirmed in case that, provided the presumption
is worded strictly, rebuttable and reasonable there is no a
violation of the principle of presumption of innocence27

NCB guide, selected key concepts•The government should be authorized to voidtransfers if property has been transferred toinsiders or to anyone with knowledge of theunderlying illegal conduct.
•To void transfers to insiders/relatives as a way to avoid
detection/forfeiture•Consider assignment of judges and prosecutors
with special expertise or training in forfeiture tohandle NCB asset forfeiture28− 25 −

StAR policy products: Barriers to Asset
Recovery (2nd half 2010)• UNCAC, Article 51 and Article 54 (1)(c):“The return of assets (…)is a fundamental principle of thisConvention.”“Each State Party shall take such measures as may benecessary to permit its competent authorities to give effect toan order of confiscation issued by a court of another State
Party.”• FATF 40+9 Recommendations: Rec. 38 (June 2003)“There should be authority to take expeditious action in
response to requests by foreign countries to identify, freeze,
seize and confiscate property laundered, proceeds frommoney laundering or predicate offences (…) or property of29
corresponding value.”

StAR policy products: Barriers to Asset
Recovery• The overall objective is to identify and analyze the barriers—operational
and practical—that impede the recovery of stolen assets located within
financial centers to:– Provide analytical work to inform the design and implementation of policies
and action plans by financial centers aimed at lowering the barriers to asset
recovery; and– Assist practitioners in requesting jurisdictions• The financial centers on which the study will focus are Canada, France,
Germany, Italy, Japan, United Kingdom, United States of America,
Switzerland, Liechtenstein, Singapore, Hong Kong, Spain, Cayman Islands,
Channel Islands (Guernsey), and the United Arab Emirates

30− 26 −

Barriers to Asset Recovery, tentative
conclusions• Most important: lack of political will- “where there is political
will there is a legal way”•

Legal Barriers– Dual criminality requirements ( eg no assistance for cases involving unlawfulenrichment), strict application of dual criminality– Reciprocity requirement – requesting countries would allow requested
countries to do much more than they themselves would allow.
– Requirement of final judgment– Bank secrecy laws make it difficult to trace assets– Statute of limitations – length is too limited– Laws and procedure do not incorporate principles of UNCAC or otherinternational conventions, despite signature or ratification– Additional requirements: in some countries (eg Switzerland), notice is given
to defendant before MLA is sent and defendant is allowed to challenge.
– Requirement to link asset and offence (no money value judgment)
31

Barriers to Asset Recovery, tentative
conclusions• Legal, in requesting states– NCB asset forfeiture is limited.
– Immunity laws – perhaps these extend too far– No internal legislation on MLA– Not a signatory to UNCAC, UNTOC, or other regional orinternational convention involving cooperation; notmember of Egmont– Time requirements on investigation and trial proceedings
is insufficient to allow for MLA request to be completed

32− 27 −

Barriers to Asset Recovery, tentative
conclusions cont’d• Operational/Institutional Barriers:– Request is channeled through too many departments or agencies.
– Limited resources (managing assets, available expertise, time) to commit torequest and assist foreign jurisdictions. Priority will go to big cases– Agencies (Law enforcement / FIU) are not connected to key databases (eg.,direct link to bank accounts, real estate database) which limits amount ofassistance that can be provided through informal channels– Jurisdictions that require submission through diplomatic channels, rather than
accepting informal requests.
– Translation requirements– Jurisdictions / agencies not proactive, eg they provide MLA assistance only on
accounts requested –not on accounts traceable to – nor do they instigate
their own investigations into possible money laundering

33

Barriers to Asset Recovery, tentative
conclusions cont’d• Operational/Institutional Barriers in requestingstates:– Individuals in power are perpetrators and beneficiaries of corruption– Asset management process is new and very difficult to manage.
– Prosecutors hesitant to put cases before courts or move cases with
MLA requests to low priority because likelihood of obtaining sufficientevidence for trial is low– Strict formalities set by central authority– More than one central authority in some jurisdictions – cases may get
shuffled between authorities or agencies– Changing governments– Difficulty in proving link between assets and offense, money trailrelative inexperience in conducting financial investigations
34− 28 −

Barriers to Asset Recovery, tentative
conclusions cont’d• Practical Barriers– Identifying the proper authority/agency to contact– Certain procedural laws are ineffective (e.g., direct enforcement of foreign
order can be slower than asking foreign jurisdiction to obtain order on
country’s own behalf)– Poor communication (eg., unclear requests/response, no information on
status of request, translation), lack of trust, geographical distance– Difficulty to link asset and offence– Time delays (for MLA, for freeze, for return)– Time delays differ from jurisdiction to jurisdiction depending on information
request• Freeze order quicker in some civil law jurisdictions (eg Switzerland); but
slower in common law• Breaching bank secrecy can take a lengthy time in some countries, lesstime in others.
35– Lack of guidance on MLA process

Barriers to Asset Recovery, tentative
recommendations• Communicate Æ builds trust, avoids misunderstandings– In multi-jurisdictional cases, bring countries together in a joint task
force atmosphere (pressure element to other jurisdictions; sharing of
information)– Build communication institution-institution, rather than individualindividual– Establish networks, regional workshops– Travel for case conferences, communicate receipt of request,– Elaborate mechanisms to eliminate barriers to communications:email not common, networks difficult to develop, hesitant to call
• Maximize informal channels for assistance (FIUs, law enforcement)36− 29 −

Barriers to Asset Recovery, tentative
recommendations cont’d• Commit resources– In requested jurisdictions to proactive efforts (eg dedicated police
units)– In requesting jurisdictions to assisting them with investigations, filingproper requests, going through proper channels, trainings, legal
support through foreign experts or foreign practitioners that would
work on ad hoc basis• Initiative in South Africa focused on confiscation. They have POC
units and place them in a developed country for 3 months.
Undertaking from individual and agency that they will stay in placeand do confiscation for 2 years• Use international conventions to push other jurisdictions to comply

37

Barriers to Asset Recovery, tentative
recommendations cont’d
•
•

•

•

•

Use good offices, training of StAR and other international organizations to assist
with process
Gather more information about recovery from financial centers– examples of Procedural Documents with MLA Requests or application ofmodel documentation;– available on-line– list of focal points available on-line
Incorporate in national legislations the legal provisions providing for accountability
and terms for carrying out MLA Requests; regionally have a peer review
mechanism to ensure compliance;
Swiftly take the matters before courts, understanding the time frame that somecountries are working under [perhaps countries should also consider amending
legislation to allow for extensions in cases of MLA]
Provide for statutory provision for execution of conviction and sentence awarded
by foreign country38− 30 −

StAR policy work, Misuse of Corporate
Vehicles (2nd half 2010)• UNCAC Article 12 (1) and (2):“Each State party shall take measures to prevent corruption
involing the private sector [which] may include (…) Promoting
transparency among private entities”.
• FATF Rec 33:“Countries should ensure that there is adequate, accurate
and timely information on the beneficial ownership andcontrol of legal persons that can be obtained or accessed in atimely fashion by competent authorities.

39

StAR policy work, Misuse of Corporate
Vehicles“We ask the FATF to help detect and deter the proceeds ofcorruption by prioritizing work to strengthen standards oncustomer due diligence, beneficial ownership and transparency.”
Leaders’ Statement, The Pittsburgh Summit, September 24-25,
2009

40

− 31 −

StAR policy work, Misuse of Corporate
Vehicles• The overall objective of this study is both to inform thedebate on this topic and to assist those involved in theinvestigation thereof.
• At the policy level the project aims to collect and systematize
available data on the use of corporate vehicles in grandcorruption cases and test implementation of BO identification
obligations and possibly how the policy responses could be
refined.
• At the operational level the project aims to gather
information on the practical difficulties encountered ininvestigating corporate vehicles and put forward goodpractices on how these may be overcome.
41

StAR policy work, Misuse of Corporate
Vehicles3 components:• Database on grand corruption cases involving the abuse of
corporate vehicles verifying/debunking commonly held
beliefs on this (eg Is “the classic corrupt PEP” dead?)• Field work on Due Diligence obligations of TCSPs andidentification of Beneficial Ownership by financial institutions• Round tables with investigators to discuss obstacles in
obtaining BO information and good practices in trying to deal
with those obstacles

42− 32 −

StAR knowledge products: Asset Recovery
Handbook (Oct 2010)• UNCAC, Articles 31, 43, 46, 48, 49, 50, 52, 53, 54, 55,
58• FATF 40+9 Recommendations: Rec. 3, 26, 27, 28,
36,38• Covers– Strategy for asset recovery– Identifying and securing evidence– Tracing and securing of assets– Obtaining assistance from Foreign Jurisdiction- informal
channels and mutual legal assistance– Asset forfeiture mechanisms

43

Thank You
Emile van der Does de Willebois
Financial Market Integrity
World Bank
evanderdoes@worldbank.org

44− 33 −

THE ROLE OF THE ANTI-MONEY LAUNDERING COUNCIL (AMLC)
IN “IDENTIFYING, FREEZING, CONFISCATING, AND
RECOVERING PROCEEDS OF CORRUPTION”
Julia C. Bacay-Abad*

I. THE ANTI-MONEY LAUNDERING ACT OF 2001;
CREATION OF PHILIPPINES’ FIU
On 29 September 2001, the Congress enacted Republic Act (R.A.) 9160, otherwise known as theAnti-Money Laundering Act of 2001. The law took effect on 17 October 2001. On 5 March 2003, theCongress enacted R.A. 9194, amending R.A. 9160. The amendatory Act became effective on 23 March
2003.
R.A. 9160 criminalized money laundering in the Philippines and, at the same time, introduced civil
forfeiture as an appropriate remedy for the seizure and forfeiture in favor of the State, without the necessityof conviction or prosecution in a criminal case, of monetary instrument, property or proceeds involved inor related to an unlawful activity or money laundering offense as defined in the law.
R.A. 9160 likewise created the Philippines’ Financial Intelligence Unit (FIU) -- the Anti-Money
Laundering Council (AMLC). The AMLC is composed of:
(i)
(ii)
(iii)

the Governor of the Bangko Sentral ng Pilipinas (BSP), as Chairman
the Commissioner of the Insurance Commission (IC); andthe Chairman of the Securities and Exchange Commission (SEC), as Members.

The AMLC is assisted by a Secretariat which is headed by an Executive Director and consists of four(4) units:
(i)
(ii)
(iii)
(iv)

Compliance and Investigation Group;
Legal and Evaluation Group;
Information Management and Analysis Group;
Administrative and Financial Services Division.

The Philippines is a founding member of the Asia Pacific Group on Money Laundering (APG) andattends its meetings regularly. Also, the AMLC is a member of the Egmont Group (association of FIUs
around the world) since 2005.
Under R.A. 9160, as amended, the AMLC has the following functions:
1.	Require and receive covered or suspicious transaction reports from covered institutions;
2.	Issue orders addressed to the appropriate Supervising Authority or the covered institution todetermine the true identity of the owner of any monetary instrument or property subject of acovered transaction or suspicious transaction report or request for assistance from a foreign
State, or believed by the Council, on the basis of substantial evidence, to be, in whole or inpart, wherever located, representing, involving, or related to, directly or indirectly, in any
manner or by any means, the proceeds of an unlawful activity.

* Deputy Director, Head, Legal Evaluation Group, AMLC Secretariat, Philippines.

− 34 −

3.	Institute civil forfeiture proceedings and all other remedial proceedings through the Office of
the Solicitor General.
4.	Cause the filing of complaints with the Department of Justice or the Office of the Ombudsman
for the prosecution of money laundering offenses.
5.	Investigate suspicious transactions and covered transactions deemed suspicious after aninvestigation, money laundering activities, and other violations of the Act.
6.	Apply before the Court of Appeals, ex parte, for the freezing of any monetary instrument orproperty alleged to be the proceeds of any unlawful activity as defined in Section 3(i) of R.A.
9160, as amended.
7.	Implement such measures as may be necessary and justified under the law to counteract money
laundering.
8.	Receive and take action in respect of any request from foreign states or jurisdictions forassistance in their own anti- money laundering operations provided in the law.
9.	Develop educational programs on the pernicious effects of money laundering, the methods
and techniques used in money laundering, the viable means of preventing money launderingand the effective ways of prosecuting and punishing offenders.
10.	Enlist the assistance of any branch, department, bureau, office, agency or instrumentality of
the government, including government-owned-and-controlled corporations, in undertaking
any and all anti-money laundering operations, which may include the use of its personnel,
facilities and resources for the more resolute prevention, detection and investigation of money
laundering offenses and prosecution of offenders.
11.	Impose administrative sanctions for the violation of laws, rules, regulations and orders andresolutions issued pursuant thereto.
12.	Examine or inquire into bank deposits/investments upon order of any competent court incases of violation of the AMLA, when it has been established that there is probable causethat the deposits/investments are related to an unlawful activity or money laundering offense.
No court order, however, is necessary in cases involving kidnapping for ransom; narcotics
offenses; and “acts of terrorism”.
Money laundering, as defined in the law, is a crime whereby the proceeds of an unlawful activity aretransacted thereby making them appear to have originated from legitimate sources (Section 4, R.A. 9160,
as amended). For purposes of money laundering, the term “unlawful activity” refers to any act or omission
or series or combination thereof involving or having direct relation to the following:
1. Kidnapping for ransom
2. Drug Trafficking and other violations of the Comprehensive Dangerous Drugs Act of
2002
3. Graft and Corruption under R.A. No. 3019, as amended
4. Plunder (R.A. No. 7080 as amended)
5. Robbery and extortion
6. Jueteng and Masiao (Presidential Decree [PD]1602)
7. Piracy on the high seas (Revised Penal Code [RPC] & PD 532)
8. Qualified Theft under Art. 310, RPC
9. Swindling under Art. 315, RPC
10. Smuggling under R.A. 455 & 1937
11. Violations of Electronic Commerce Act of 2000
12. Hijacking, destructive arson and murder, including those perpetrated by terrorists against
non-combatant persons and similar targets
13. Fraudulent practices and other violations under the Securities Regulation Code of 2000
(RA 8799)
14. Felonies or offenses of a similar nature punishable under the penal laws of othercountries.

− 35 −

II. HOW ARE CASES LITIGATED?
The process basically begins with the submission of the covered transaction and suspicious transaction
reports by the covered institutions to the AMLC. The reports are being filed within five (5) working days
from the occurrence of the transactions. In addition to the covered and suspicious transaction reports
submitted by covered institutions, the AMLC may also initiate an investigation based on referrals of law
enforcement and other government agencies, media reports and sworn complaints of private individuals.
The AMLC is also empowered to act directly on requests from foreign jurisdictions for legal assistance inrelation to their own anti-money laundering operations.
When, after its investigation, the AMLC finds that money laundering has been committed, it
causes the filing of a criminal complaint with the Department of Justice (DOJ), or with the Office of the
Ombudsman in cases involving public officers or employees, which conducts the preliminary investigationof the case. If the DOJ or the Ombudsman finds probable cause to indict the offenders, criminal cases are
filed with the Regional Trial Courts which have the jurisdiction to try all cases of money laundering, orwith the Sandiganbayan if the offender is a high ranking public officer or a private person in conspiracy
with the public officer.
Under the Revised Implementing Rules and Regulations (RIRRs) of the AMLA, as amended, all
the elements of money laundering must be proved beyond reasonable doubt, including “the element ofknowledge that the monetary instrument or property represents, involves or relates to the proceeds of any
unlawful activity.”
If, in the course of its investigation, the AMLC finds it necessary, it may file an ex-parte petition
with the Court of Appeals for the issuance of a freeze order against any monetary instrument, property orproceeds that are deemed related to an unlawful activity or a money laundering offense.
A freeze order issued by the Court of Appeals is effective, initially, for a period of twenty (20) days.
Upon motion filed by the AMLC, the effectivity of the freeze order may, for good cause, be extended for aperiod not exceeding six months.
After due investigation on a particular monetary instrument, property or proceeds, if the AMLC finds
sufficient evidence that would support a conclusion that the said monetary instrument, property or proceeds
are related to an unlawful activity or a money laundering offense, it shall file, through the Office of the
Solicitor General, a petition for civil forfeiture against the said monetary instrument, property or proceeds.
The petition for civil forfeiture is being filed with the Regional Trial Court, a court of general jurisdiction.
In relation to its power to investigate money laundering, the AMLC, upon order of a competent court,
is authorized to inquire into or examine any particular bank deposits or investments that are deemed related
to an unlawful activity or a money laundering offense. No court order, however, is necessary in cases
involving kidnapping for ransom; narcotics offenses; and “acts of terrorism”. Such authority of the AMLC
to inquire into bank deposits or investments is an express exception to the provisions of the Bank Deposit
Secrecy Law which prohibits any person from examining, inquiring or looking into any bank deposit.
On 15 November 2005, the Supreme Court of the Philippines, upon request of the AMLC, promulgated
the so-called “Rules on Civil Forfeiture” which governs court proceedings relating to petitions for freeze
order before the Court of Appeals and petitions for civil forfeiture before the Regional Trial Courts. The
Rules of Civil Forfeiture took effect on 15 December 2005.
Under the “Rule on Civil Forfeiture”, the Court of Appeals, upon filing by the AMLC of a petition
for freeze order, is mandated to act thereon within twenty-four (24) hours. If, based on the allegations of
the ex-parte petition and the supporting documents, it finds probable cause that the property or asset subjectof the petition is related to an unlawful activity or a money laundering offense, it shall issue a freeze orderwhich shall be immediately effective for a period of twenty (20) days. Thereafter, the Court of Appeals
shall conduct a summary hearing for purposes of determining whether the freeze order should be modified,lifted, or otherwise extended. Should the Court of Appeals find good cause to extend the effectivity of thefreeze order, it shall do so for a period not exceeding six (6) months. Once a freeze order is issued, theproperty subject thereof may not be transacted, withdrawn, transferred, removed, converted or otherwise
disposed of by any person during the effectivity of the freeze order.
Likewise, under the “Rule on Civil Forfeiture”, once a petition for civil for forfeiture is filed by the− 36 −

AMLC, within twenty-four hours, the Executive Judge of the Regional Trial Court shall, upon findingof probable cause that the property subject of the petition is related to an unlawful activity or a money
laundering offense, issue a Provisional Asset Preservation Order (PAPO). Just like a freeze order, a PAPO
is effective initially for a period of twenty (20) days. During the 20-day effectivity of the PAPO, the court
shall conduct summary hearing to determine whether or not the PAPO should be modified or lifted, orwhether an Asset Preservation Order (APO) should be issued. An APO is more permanent in character, inthat it remains effective until the termination of the case.
All monetary instruments, property or proceeds forfeited by the AMLC in favor of the State are being
turned over to the National Treasury, unless a third party claimant is able to prove in a “post-forfeiture”
proceedings that the monetary instrument or property legitimately belongs to him.

III. STATISTICS
The following tables show the number of cases filed involving the issuance of freeze order, civil
forfeiture and the amounts involved, including those relating to corruption-related cases, as of 30 September
2009.
A. Petitions for Freeze Order filed as of 30 September 2009
Total No. of Petitions filed with the Court of Appeals

33

Terminated/Granted

24

Pending

9Corruption Related Petitions for Freeze Order8

B. Total Amount Frozen as of 30 September 2009
TOTAL AMOUNTPhP 2.556 billion

Returned to Victims

1.250 billion

Corruption-Related Frozen Amount

PhP146.6 million− 37 −

C. Civil Forfeiture Cases filed as of 30 September 2009

Pending Petitions

No. ofCases

Amount26

PhP371,942,346.68
PhP 43,401,714.60

Decided Petitions◦Proceeds turned over to the National Treasury◦Claimed by Third-Parties◦Pending execution

12(PhP19,630,062.20)(PhP2,401,568.50)(PhP21,370,083.90)

Corruption-Related Petitions for Civil Forfeiture5

PhP 62,593,806.27

In conclusion, since 2001, the AMLC has been a partner of the Government in fighting corruption
and recovering proceeds thereof. Legal framework and procedural measures for the recovery of stolen
assets are in place in the Philippines. They may not be perfect, but are working.

− 38 −

MEASURES TO FREEZE, CONFISCATE AND RECOVER PROCEEDSOF CORRUPTION INCLUDING PREVENTION OF MONEY
LAUNDERING IN THE PHILIPPINES
Roman G. Del Rosario*

I. INTRODUCTION
Money is the barometer of a society's virtue. When you see that trading isdone, not by consent, but by compulsion—when you see that in order to produce,
you need to obtain permission from men who produce nothing—when you seethat money is flowing to those who deal, not in goods, but in favors—when you
see that men get richer by graft and by pull than by work, and your laws don't
protect you against them, but protect them against you—when you see corruption
being rewarded and honesty becoming a self-sacrifice—you may know that yoursociety is doomed.
- Ayn Rand
A. Defining Graft and Corruption
The term “graft” means the “acquisition of gain or advantage by dishonest, unfair or sordid means,
especially through the abuse of his position or influence in politics, business, etc.,”1 while the term
“corruption” generally means “the misuse of entrusted power for private benefit.”2 In a bigger sense, bothterms are synonymous and interchangeable.3
In the Philippine setting, the term “graft” lacks an exact legal definition. The Anti-Graft and Corrupt
Practices Act,4 merely enumerates a number of punishable corrupt practices of public officers, while theCode of Conduct and Ethical Standards for Public Officials5 declares as unlawful certain prohibited acts
and transactions.
Generally, courts and laws do not give a clear-cut definition of the terms graft and corruption,
considering the extreme difficulty to “contain all the elements of the different types of ‘graft’ or ‘corruption’in one sweeping generalization.”6 Each case must be evaluated on the basis of its own facts.7
1.
(i)

Forms
Corruption takes a number of different forms and is found at different levels of government.
Corruption has been classified in various manners, according to:Place where corruption occurs8-a. Public-sector corruption is that which happens in the government offices.9b. On the other hand, private-sector corruption involves businesses and other non-state sectors --*	Assistant Solicitor General; Head of the Anti-Money Laundering Council Task Force of the Office of the Solicitor General; Executive
Director of the Special Committee on Naturalization. The author would like to acknowledge the major contributions of Atty. Melanie R.A.
Quimbo, Atty. Aristotle E.R. Mejia and Leah Theresa L. Labadan.
1.	Resolution No. 559, Amending the Existing Board Policy on Conferment of CES Eligibility to Applicants with Pending Cases.
2.	J.J. Senturia, Encyclopedia of Social Sciences, Vol. VI (1993).
3.	L.V. Carino. Ed., Bureaucratic Corruption in Asia: Causes, Consequences and Controls (Quezon City: CPA, University of the Philippines).
4.	Republic Act No. 3019 (1960).
5.	Republic Act No. 6713 (1989).
6.	Sofronio B. Urusal, Anti-Graft Guidebook 6, 2006, [hereinafter Urusal].
7. Ibid.
8. Investigating Corruption, A Do-It Yourself 10-12, 2002 [hereinafter Investigating Corruption].
9. Ibid.

− 39 −

churches, NGOs, foundations, and professional associations.10
c. B ureaucratic corruption occurs in the civil service, especially among state officials and employees
who run the day-to-day affairs of the government. It may involve low-level government
employees and/or higher-level officials. It happens when low-level government employees are
given small amounts as “grease” to speed up transactions for licenses, permits or other processes
in their offices. On the other hand, higher-level officials, such as district or provincial highways
engineers, or members of bid committees who get considerable amount of commissions forawarding government contracts to favored firms, commit this form of corruption.11
d. P
 olitical corruption, as the name implies, takes place among elected officials. It involves votebuying, corruption of the electoral system, the political harassment of opponents, and thepreferential treatment of friends and cronies. It also refers to the use of influence to obtain positions,
appointments, tax incentives, behest loans, and other special considerations from the government.
Illustrative examples include: 1) approval of hundred-million peso worth of preferential loans
from state banks to Former President Ferdinand Marcos’ cronies; and 2) acquisition of shares ofstock from favored companies using state pension funds upon instruction of Former President
Joseph Estrada.12(ii)“Scale and intensity”13a. R etail, petty or street-level corruption is what the general public encounters in their daily
activities. This form of corruption involves those who are providing frontline services14 or lowerlevel administrative bureaucrats who transact with the public on matters involving taxes, traffic
regulations, licensing requirements or the discretionary allocation of government benefits such as
subsidized food and fertilizer, disaster relief, or low-level jobs in state-funded projects. A motorist
paying a policeman to escape from a traffic violation; or a person availing the services of a fixer
to hasten the processing of a driver’s license or an NBI clearance, are illustrative examples of thistype. Petty corruption involves lower-level administrative bureaucrats, while grand corruption
involves big amounts.15
b. Isolated corruption occurs in bureaucracies or sectors that are normally honest. These corrupt acts
do not normally happen in such sectors.16
c. Systematic corruption is prevalent in almost all levels of a government agency. This is perceived tobe the case with the Department of Public Works and Highways (“DPWH”). Studies have shownthat corruption permeates the entire life of most DPWH projects --from bidding to completion.
Collusion among bidders for a project is a practice that cannot be discounted, resulting in the
rigging of bids.17(iii)“Types of corrupt action or behaviour”18
a. Bribery is the act of the “public officer who receives a gift, present, offer or promise by reason orin connection with the performance of his official duties.”19 It is probably the most common andvisible type of corruptionb. P atronage is also considered a form of corruption. It is a way of acquiring, maintaining, and

10. Ibid.
11. Ibid.
12. Ibid.
13. Id. at 12-14.
14.	"Frontline Service" refers to the process or transaction between clients and government offices or agencies involving applications for any
privilege, right, permit, reward, license, concession, or for any modification, renewal or extension of the enumerated applications and/or requests which are acted upon in the ordinary course of business of the agency or office concerned. (An Act to Improve Efficiency in
the Delivery of Government Service to the Public by Reducing Bureaucratic Red Tape, Preventing Graft and Corruption, and Providing
Penalties therefore [R.A. 9485], June 2, 2007).
15.	Investigating Corruption, supra 8 at 12.
16. Id. at 13.
17. Id. at 14.
18. Id. at 14-16.
19. Leonor D. Boado, Notes and Cases on the Revised Penal Code 535, 2004.

− 40 −

expanding political power by distributing economic benefits from the state and dispensing themto political allies, and cronies in exchange of the latter’s political support.20
c. Cronyism is present when personal relationships become a consideration in state policy-making
and the allocation of public resources.21(iv)“General Modes of Committing Graft”22a. Administrative grafts are those occurring in government agencies. It includes anomalies concerning
the receipt, custody, and expenditure of public funds, and in the “acquisition, procurement,utilization, and disposal of government property.”23
b. Policy-related grafts refer to irregularities committed by senior public officials who are vested withextensive discretionary authorities to determine public policies entailing financial implications.24
c. Grafts in arbitrations include “abuses committed by authorities imbued with judicial, quasijudicial, or prosecutory powers” regarding cases pending before them.25
d. Political grafts have two forms. “One form includes bribery and inducement of election officials
to alter election results, as well as vote-buying of the electorate by candidates during periods ofelections. The other form of political graft involves politicians who undertake to sponsor or toblock requests needing executive approval or requiring legislative authorization” with regard to
any past or political favors of the requesting party.26(v)“Based on rank and service of public officer committing the act”27
a. Graft in the career service may be committed by: “(i) clerical and custodial service personnel
involved in non-professional or sub-professional work; (ii) personnel involved in professionalor technical work, up to Division Chief level; (iii) Career Executive Service Officers; (iv) career
service heads of government agencies; and (v) members of the judiciary.”28b. Graft in the Non-career Service may be committed by: “(i) impeachable officials, such as
the President, the Vice President, the Members of the Supreme Court, the Members of theConstitutional Commission, and the Ombudsman; (ii) elective national and local officials, suchas members of Congress, Provincial Governors, and City and Municipal Mayors; (iii) Department
Secretaries and other officials of Cabinet rank; (iv) and the personal or confidential staff of theenumerated officials.”29

B. Root Causes
1.
Individual Causes
Individual causes are “attributed to weak moral fiber and distorted values among bureaucrats, suchas materialism, lack of integrity and nationalism.”30
2.

Organizational Causes
One of the major causes of corruption in many offices and organizations is office politics. In
particular, these causes refer to deficiencies in the bureaucratic apparatus such as low salary or inadequate
compensation levels of public servants, poor recruitment and selection procedures as well as red tape in

20. Supra 8 at 15.
21. Id. at 16.
22. Urusal, supra 6 at 93.
23. Ibid.
24. Ibid.
25. Ibid.
26. Ibid.
27. Id. at 94-95.
28. Ibid.
29. Ibid.
30.	Nelson Nogot Moratalla, Graft and Corruption: The Philippine Experience, available at
http://unpan1.un.org/intradoc/groups/public/documents/APCITY/UNPAN019122.pdf (last accessed 28 October 2009).

− 41 −

the government. It also includes poor working conditions and facilities in public offices and dependence of
employees on patronage with superiors and colleagues.31
It is not uncommon in government agencies for a superior to employ his or her own confidants andteam of advisers. The persons employed may be relatives, friends, classmates or associates. The appointee
expectedly becomes a loyal follower of the appointing official. The "padrino system" likewise occurs ingovernment offices. Instances abound where promotions are based on right connections rather than onseniority or merit. Equally rampant is the "compadre system" whereby a subordinate takes his superior tobe the godfather of his son expecting to reap benefits such as promotion or salary increase as a result of therelationship.32
3.

Societal Causes
Society may itself contribute to corruption as a norm in the workplace. These may include thedifficulty of proving cases of corruption in court and lack of political will to pursue a fight against graft
and corruption.33
C. Effects
Corruption has intense consequences on individuals, firms, social sectors, and the progress and safetyof the society. Experts find corruption to be damaging in various manners, such as the following:
1.

“Corruption impedes Economic Growth”34
The most significant impact of corruption on growth is the reduction of investments. Economists
have shown that improvements in the corruption index play a vital role in affecting the result of growth
rates.35
In the Philippines, the devastation brought by corruption on economic development is evident.
Exaction from corrupt officials is a major cause in raising the costs of business.36 As a result, businesses
lower the standards of production or increase the price of goods and services in order to compensate for theamount of money wasted on bribes.
2.

Corruption worsens Poverty37
To reiterate, the costs of corruption are borne by the less fortunate sectors of society. “Corruption in
textbook procurements means that poor students don’t have books; kickbacks from public works contracts
mean poor farmers will not have roads for transporting their produce; and under-the-table commissions
from the purchase of vaccines mean poor children becoming prone to disease.”38
Even if the less fortunate receive inadequate services, they remain obliged to contribute to government
funds thru indirect taxes. On the other hand, the rich who bribe revenue officials are able to evade income
taxes.39 When the budget for procuring goods and services is inflated by graft, and tax revenues are low
because of widespread corruption in the tax-collection system, the government has no choice but to raise
more taxes and cut spending.40
Social spending on services that benefit the poor is unduly lessened, so the poor are caught up deeper
in despair. Money that should be spent on more important projects, i.e. clinics or schools, are diverted to31.	Alan R. Cañares, CORRUPTION : THE PHILIPPINE EXPERIENCE, Office of the Deputy Ombudsman for the Military and Other Law
Enforcement Offices.
32.	Prevention of Graft and Corruption, available at
http://www.livinginthephilippines.com/prevention_of_graft_and_corruption.html (last accessed 28 October 2009).
33. Supra 31.
34. Investigating Corruption, supra 8 at 17.
35. Ibid.
36. Id. at 18.
37. Ibid.
38. Ibid.
39. Ibid.
40. Id. at 19.

− 42 −

insignificant infrastructure projects where kickbacks are prevalent. Corruption undeniably drains resources
available for advancement, distorts access to services for poor communities, and weakens public confidence
in the government capacity to serve the poor.41
3.

“Corruption damages Political Legitimacy and stunts Democracy”42
Government officials may neglect their public duties to promote general welfare as they busy
themselves to their corrupt activities. Manifestations of prevalent corrupt practices in the bureaucracy are:“(1) below standard public infrastructures; (2) decreased business investments; (3) rising unemployment;(4) increased incidence of criminality; and (5) low morale of the civil service and the military.”43
As a result, corruption shatters the faith of citizens to their political leaders, government and even to
democracy. Citizens begin to be too inquisitive and mistrust the intentions of those in authority.44
4.

“Corruption endangers Public Order and Safety”
Corruption results in disregard of rules and subversion of formal processes For instance, corruption
in the judiciary suspends the rule of law, so that criminals and lawbreakers are free to operate with impunity.
Corruption in the police force facilitates the activities of syndicates involved in drugs, theft, gambling,
smuggling, prostitution and kidnapping, making cities and communities unsafe.45 Some police officers
have been providing “protection” to syndicates, thus making themselves part of these syndicates.46
Thai scholar Pasuk Phongpaichat’s description of the “syndication” of police corruption in Thailand
also applies in the Philippine setting, to wit:
Corruption within the police force is held to be sustained by regular redistribution ofrevenues from corruption widely through the police force itself and through other related
institutions. It is sustained also by a subculture which strengthens the group loyalty of those
involved, legitimizes the acceptance of revenues from corruption as supplementary income andbinds together vertical networks of bosses and subordinates who share the tasks of collecting
and redistributing revenue. The values of group loyalty and hierarchy which underlie thissubculture are first nurtured in the police cadet school. They are further reinforced at work by
the examples of other police officers and the pressure from superiors and peers involved in
the corruption networks. Not all policemen are involved in these networks. But the proportion
which is corrupt is large enough to maintain the syndicate.47
5.

“Corruption causes Bureaucratic Inefficiency and Demoralization”48
Corruption results in awful services. When government officials and personnel employ unreasonable
impediments in the completion of transactions for “grease” money, the delivery of services is delayed.
Bureaucratic red tape results and public service is gravely affected.49

D. Statistics
Aware of its duty to the public, the Philippine government continues to play an active role incombating the proliferation of corrupt practices.

41.	Ibid.
42. Ibid.
43. Urusal, supra 6 at 10.
44. Investigating Corruption supra 8 at 18.
45. Ibid.
46. Ibid.
47.	Id,(citing Phongpaichit, Pasuk and Sungsidh Piriyarangsan. 1994. Corruption and Democracy in Thailand. Chiang Mai: Silk-worm
Books).
48. Id. at 22.
49. Ibid.

− 43 −

The presentation below illustrates the number of responses from the government on corrupt
practices.
Table 1 50
Target (2006)

Actual (March 2009)

Ombudsman Conviction Rates

40%

73.42%

Ombudsman Cases Successfully Mediated

450

688

Revenue Integrity Protection Service or ‘Lifestyle
Checks” Cases Filed

116

140

Suspended by Ombudsman thru Revenue Integrity
Protection Service

35

38

Run After the Tax Evaders cases filed with Departmentof Justice (DOJ)

116

117

Run After The Smugglers cases filed with DOJ

61

95

Run After The Smugglers cases filed with the Court ofTax Appeals (CTA)

28

33

Table 2 51
Number of Complaints Received by the OMB, 2006 to 2008
No. of complaints received per calendar year

2008

2007

2006

Complaints received annually

13,225

10,824

13,602Monthly Average(annual no. of complaints divided by 12 months)

1,102

902

1,134

50

41

52

Daily Average(monthly ave. no. of complaints divided by 22 working days)

50.	Philippine-US Partnership in Fighting Corruption: Indicators from the Millennium Challenge Account- Philippine Threshold Program, 1June 2009, available at
http://www.philippineembassy-usa.org/UPDATE43.pdf (last accessed 27 October 2009).
51.	Marking Milestones, the 2008 Annual Report of the Office of the Ombudsman, available at
http://www.ombudsman.gov.ph/docs/statistics/Annual%20Report%202008.pdf (last accessed 29 October 2009).

− 44 −

Table 3 52
List of high ranking officials dismissed, suspended and prosecuted by
the OMB (as of March 2009) 53
Preventive
Suspension◦DPWH Asst.
Secretary◦Municipal Mayors◦City and Municipal
Treasurers◦BIR Regional
Director◦BIR Chief Revenue
Officer◦BOC Deputy
District Collector◦Register of Deeds◦Commanding
General, Infantry
Division,
Philippine Army
◦Army Brigadier
General◦Presidents ofState Colleges andUniversities

Suspendedwithout Pay◦Agriculture
Undersecretary/
Presidential
Assistant◦Municipal Mayor◦Navy Lt.
Commodore◦Presidents ofState Collegesand Universities◦DepEd District
Supervisor◦DPWH District
Engineers◦BOC Intelligence
Officers◦BIR Revenue
District Officers◦BIR Examiners◦State College
Administrator

Dismissed from
Public Service

Under
Prosecution◦Municipal Mayor◦DENR-LMB Asst.
Director◦Register of Deeds◦DA-Fisheries andAquatic
Resources
Bureau Regional
Director◦BIR Regional
Director◦BIR Revenue
District Officers◦DPWH Regional
Directors◦State College
President◦DepEd School
Principals◦DOJ Secretary◦DOTC Secretary◦DOF
Undersecretary◦Governors◦City and
Municipal
Mayors◦NHA Manager◦NEDA Regional
Director◦PNP Provincial
Directors◦DOJ
Prosecutors◦Philippine Navy
Flag Officers

E. Philippine Constitution and Laws
The Philippine legal system is replete with constitutional provisions and pertinent laws combating
graft and corruption. For easier reference, they shall be discussed in the following sequence:
1.
Pertinent provisions in the 1987 Philippine Constitution;2.
Provisions in the Revised Penal Code relating to crimes committed by public officers;
3.	Specific Anti-Graft Laws, namely: (i) the Anti-Graft and Corrupt Practices Act;54 (ii) the Codeof Conduct and Ethical Standards for Public Officials and Employees;55 (iii) the Civil Service
Law;56 (iv) the Forfeiture of Unlawfully Acquired Property;57 (v) the Anti-Money Laundering
Act;58 and, (vi) the Plunder Law.59

52.	Id.
53. Id.
54. Republic Act No. 3019 (1960).
55. Republic Act No. 6713 (1989).
56. Presidential Decree 807.
57. Republic Act 1379 (1955).
58. Republic Act 9160 (2001), as amended by Republic Act 9194 (2003).
59. Republic Act 7080 (1991).

− 45 −

1.

The 1987 Philippine Constitution
Significant constitutional provisions strengthening the government’s power to combat corruption arefound in Article XI “Accountability of Public Officials” vis-à-vis Article II “State Policies”. These include
the following:a. I t is a state policy to maintain honesty and integrity in the public service and to take positive andeffective measures against graft and corruption;60
b. I t is a state policy to adopt and implement a policy of full public disclosure of all its transactions
involving public interest, subject to reasonable conditions prescribed by law;61c. D
 eclaring that the anti-graft court, the Sandiganbayan, shall continue to function and exercise its
jurisdiction62 over civil and criminal cases involving graft and corruption;d. C reating the independent Office of the Ombudsman63 to investigate any public official or
government agency for acts or omissions which are illegal, unjust, improper or inefficient; todetermine the causes of such acts; to recommend the elimination; and to observe high standardsof ethics and efficiency;e. The State has the authority to recover unlawfully acquired properties;64f. The State requires public officers to declare under oath their assets, liabilities and net worth uponassumption of office, and as may be required by law;65
g. P
 rohibiting the President from appointing his/her spouse or relatives within the 4th civil
degree as members of the Constitutional Commissions, Ombudsman, Secretaries or underSecretaries, Chairmen or heads of bureaus or offices, including government corporation andtheir subsidiaries;66h. R
 equiring public officers and employees to lead modest lives and act with patriotism andjustice;67i. M
 aking “bribery,” “graft and corruption” and “betrayal of public trust” as grounds to impeach
the President, Vice-President, members of the Supreme Court, members of the Constitutional
Commissions and the Ombudsman;68
j. P
 rohibiting government-owned or controlled bank or financial institution from extending loans orother financial accommodations for any business purpose to the President, Vice-President, membersof the Supreme Court, members of the Constitutional Commissions, and the Ombudsman;69k. P
 rohibiting the enactment of a law that exempts any entity of government or its subsidiary, or any
investment of public funds, from the audit of the Commission on Audit.70 The COA examines
government income and expenditures.
l. C reating the Civil Service Commission that promotes responsive public service as a career. Its
anti-corruption function involves promoting public accountability, enforcing ethical standards
and behavior, and conducting values orientation workshops.
2.

The Revised Penal Code71 on Crimes Committed by Public Officers
The Revised Penal Code enumerates certain crimes that a public officer may commit.

60.	Sec. 27, Art. II, 1987 Constitution.
61. Sec. 28, ibid.
62. Sec. 4, Art. XI, 1987 Constitution.
63. Sec. 5, ibid.
64. Sec. 15, ibid.
65. Sec. 17, ibid.
66. Sec. 13, Art. VII, 1987 Constitution.
67. Sec. 1, supra 62.
68. Sec. 2, ibid.
69. Sec. 16, ibid.
70. Sec. 3, Art. IX-D, ibid.
71. The Revised Penal Code of the Philippines (Act No. 3815, as amended). It took effect on January 1, 1932.

− 46 −

a. Malfeasance and Misfeasance in Office are classified into:(i)	Dereliction of duty,72 which includes: knowingly rendering unjust judgment; judgment
rendered through negligence; unjust interlocutory order; malicious delay in theadministration of justice; negligence in prosecution of offenses; betrayal of trust by anattorney; and(ii)	Bribery,73 which includes direct bribery; indirect bribery; qualified bribery; and corruptionof public officials.
b. Frauds and Illegal Exactions and Transactions74 including frauds against the public treasury;
other frauds; prohibited transactions; and possession of prohibited interest by a public officer.
c. M
 alversation of Public Funds or Property75 including failure of accountable officer to renderaccounts; failure of a responsible public officer to render accounts before leaving the country;
illegal use of public funds or property; and failure to make delivery of public funds or property.
d. Infidelity of Public Officers is classified into:(i)	Infidelity of public officers76 including the crimes of conniving with or consenting toevasion; and evasion through negligence;(ii)	Infidelity in the custody of documents77 including the crimes of removal, concealment ordestruction of documents; officer breaking seal and opening of closed documents; and(iii)	Revelation of secrets78 including the crimes of revelation of secrets by an officer; andpublic officer revealing secrets of private individual.
e. Other Offenses or Irregularities by Public Officers are classified as follows:(i)	Disobedience, refusal of assistance and maltreatment of prisoners79 including the crimesof open disobedience; disobedience to order of superior officer when said officer wassuspended by inferior officer; refusal of assistance; refusal to discharge elective office; andmaltreatment of prisoners;(ii)	Anticipation, prolongation and abandonment of the duties and powers of public office80
including the crimes of anticipation of duties of a public office; prolonging performance of
duties and powers, and abandonment of office or position;(iii)	Usurpation of powers and unlawful appointment,81 including the crimes of usurpation oflegislative powers; usurpation of executive functions; usurpation of judicial functions;disobeying request for disqualification; orders or requests by executive officers to any
judicial authority; and unlawful appointments, and;(iv) Abuses against chastity.82

72. Arts. 204-209, Title Seven, ibid73 Arts 210-212, ibid.
74. Arts. 213-216, ibid.
75. Arts. 217-222, ibid.
76. Arts. 223-225, ibid.
77. Arts. 226-228, ibid.
78. Arts. 229-230, ibid.
79. Arts. 231-236, ibid.
80. Arts. 236-238, ibid.
81. Arts. 239-244, ibid.
82. Art. 245, ibid.

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3.

Other Laws on Graft and Corruption(a) R epublic Act 3019 or the Anti-Graft and Corrupt Practices Act83 has the most comprehensive
enumeration of corrupt practices of public officers. These include the following:(i)	Persuading, inducing or influencing another public officer to perform an act constituting a
violation of rules and regulations duly promulgated by competent authority or an offense
in connection with the official duties of the latter, or allowing himself to be persuaded,induced, or influenced to commit such violation or offense;(ii)	Directly or indirectly requesting or receiving any gift, present, share, percentage, or benefit,
for himself or for any other person, in connection with any contract or transaction between
the Government and any other part, wherein the public officer in his official capacity has
to intervene under the law;(iii)	Directly or indirectly requesting or receiving any gift, present or other pecuniary or material
benefit, for himself or for another, from any person for whom the public officer, in any
manner or capacity, has secured or obtained, or will secure or obtain, any Government
permit or license, in consideration for the help given or to be given, without prejudice toSection thirteen of this Act;(iv)	Accepting or having any member of his family accept employment in a private enterprise
which has pending official business with him during the pendency thereof or within one
year after its termination;(v)	Causing any undue injury to any party, including the Government, or giving any private
party any unwarranted benefits, advantage or preference in the discharge of his official
administrative or judicial functions through manifest partiality, evident bad faith orgross inexcusable negligence. This provision shall apply to officers and employees ofoffices or government corporations charged with the grant of licenses or permits or otherconcessions;(vi)	Neglecting or refusing, after due demand or request, without sufficient justification, to act
within a reasonable time on any matter pending before him for the purpose of obtaining,
directly or indirectly, from any person interested in the matter some pecuniary or material
benefit or advantage, or for the purpose of favoring his own interest or giving undue
advantage in favor of or discriminating against any other interested party;(vii)	Entering, on behalf of the Government, into any contract or transaction manifestly andgrossly disadvantageous to the same, whether or not the public officer profited or willprofit thereby;(viii)	Directly or indirectly having financial or pecuniary interest in any business, contract ortransaction in connection with which he intervenes or takes part in his official capacity, orin which he is prohibited by the Constitution or by any law from having any interest;(ix)	Directly or indirectly becoming interested, for personal gain, or having a material interest
in any transaction or act requiring the approval of a board, panel or group of which he is amember, and which exercises discretion in such approval, even if he votes against the sameor does not participate in the action of the board, committee, panel or group;(x)	Knowingly approving or granting any license, permit, privilege or benefit in favor ofany person not qualified for or not legally entitled to such license, permit, privilege oradvantage, or of a mere representative or dummy of one who is not so qualified or entitled;and,(xi)	Divulging valuable information of a confidential character, acquired by his office or by him
on account of his official position to unauthorized persons, or releasing such informationin advance of its authorized release date.

83. Sec. 3, Republic Act No. 3019 (1960).

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R.A. 3019 also contains provisions in reference to private individuals. The said law prohibits
persons who have family or close personal relations with a public official to take advantage thereofby requesting or receiving gifts or pecuniary advantage from persons who have business transactions
with such public official.84 It also prohibits the spouse or any relative within the 3rd civil degree of the
President, Vice-President, the Senate President and the Speaker of the House of Representatives tointervene in any business or transaction with the Government, subject to certain exceptions.85(b) Republic Act 6713 or the Code of Conduct and Ethical Standards for Public Officials andEmployees86 also declares the following as prohibited acts and transactions:(i)	Financial and material interest. — Public officials and employees shall not, directly or
indirectly, have any financial or material interest in any transaction requiring the approvalof their office.
(ii)	Outside employment and other activities related thereto. — Public officials and employees
during their incumbency shall not:1. Own, control, manage or accept employment as officer, employee, consultant, counsel,
broker, agent, trustee or nominee in any private enterprise regulated, supervised or
licensed by their office unless expressly allowed by law;
2. Engage in the private practice of their profession unless authorized by the Constitution
or law, provided, that such practice will not conflict or tend to conflict with theirofficial functions; or
3. Recommend any person to any position in a private enterprise which has a regular or
pending official transaction with their office.
(iii) D isclosure and/or misuse of confidential information. — Public officials and employees
shall not use or divulge, confidential or classified information officially known to them byreason of their office and not made available to the public, either:
1. To further their private interests, or give undue advantage to anyone; or
2. To prejudice the public interest.
(iv)	Solicitation or acceptance of gifts. — Public officials and employees shall not solicit oraccept, directly or indirectly, any gift, gratuity, favor, entertainment, loan or anything ofmonetary value from any person in the course of their official duties or in connection
with any operation being regulated by, or any transaction which may be affected by thefunctions of their office.
As to gifts or grants from foreign governments, the Congress consents to:
1. T he acceptance and retention by a public official or employee of a gift of nominal
value tendered and received as a souvenir or mark of courtesy;
2. The acceptance by a public official or employee of a gift in the nature of a scholarshipor fellowship grant or medical treatment; or
3. The acceptance by a public official or employee of travel grants/expenses for travel
taking place entirely outside the Philippines of more than nominal value if suchacceptance is appropriate or consistent with the interests of the Philippines andpermitted by the head office, branch or agency to which he belongs.
84. Sec. 4, ibid.
85. Sec. 5, ibid.
86. Became effective in 1989.

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(c) T he Civil Service Law87 enumerates the grounds for disciplinary action of government personnel,
to wit:(i)	Dishonesty; Oppression; Neglect of duty; Misconduct; Disgraceful and immoral conduct;
Being notoriously undesirable; Discourtesy in the course of official duties; and Inefficiency
and incompetence in the performance of official duties;(ii)	Receiving for personal use of a fee, gift or other valuable thing in the course of official
duties or in connection therewith, when such are given in the hope or expectation offavorable or better treatment88; Conviction of a crime involving moral turpitude; Improperor unauthorized solicitation of contributions from subordinates and by teachers or school
officials from school children;(iii)	Violation of existing Civil Service Law or rules, or reasonable office regulations;
Falsification of official document; Frequent unauthorized absences or tardiness in reportingfor duty, loafing or frequently unauthorized absence during regular office hours; Habitual
drunkenness; and Gambling;(iv)	Refusal to perform official duty or render overtime service; Disgraceful, immoral or
dishonest conduct prior to entering service; Physical or mental incapacity or disability due
to immoral or vicious habits; Borrowing money by superior officers from subordinates or
lending by subordinates to superior officers; Lending money at usurious rates of interest;
Willful failure to pay just debts or willful failure to pay taxes due to the government;(v)	Contracting loans of money or other property from persons with whom the office ofthe employee concerned has business relations; Pursuit of private business, vocationor profession without the permission required by Civil Service rules; Insubordination;
Engaging directly or indirectly in partisan political activities by one holding a non-political
office;(vi)	Conduct prejudicial to the best interest of the service; Lobbying for personal interest or
gain in legislative halls and offices without authority; Promoting the sale of tickets inbehalf of private enterprises that are not intended for charitable or public welfare purposesand even in the latter cases if there is no prior authority; Nepotism.
(d) R epublic Act 1379 or the law on Forfeiture of Illegally Acquired Wealth89 declares as forfeitedany property found to have been unlawfully acquired by any public officer or employee after
appropriate judicial proceedings. The Ombudsman has the authority to investigate and initiate
the proper action for the recovery of ill-gotten and /or unexplained wealth of public officials or
employees.90(e) R epublic Act 9160, as amended, or the Anti-Money Laundering Act of 200191 (“AMLA”)
defines the term “money laundering” as a crime whereby the proceeds of an unlawful activity
are transacted, to make them appear as originating from legitimate sources. A crime under thislaw is committed by any person who knowingly transacts monetary instrument or property
from the proceeds of unlawful activities. Among the unlawful activities under the AMLA, as

87. Title I-A, Book V, Executive Order No. 292, Administrative Code of 1987.
88.	“Moral turpitude includes everything which is done contrary to justice, honesty, modesty, or good morals.” (In Re: Basa, 41 Phil 275, 7
December 1920).
89. Became effective in 1955.
90. Section 15, Republic Act 6770 or the Ombudsman Act.
91. Became effective in 2001.

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amended, are the commission of the acts under Section 3, paragraphs b,92 c,93 e,94 g,95 h96 andi97 of Republic Act 3019 or the Anti-Graft and Corrupt Practices Act as well as Plunder underRepublic Act 7080, as amended.
(f) Republic Act 7080, as amended, or the Plunder Law98 punishes any public officer who, byhimself or in connivance with members of his family, relatives by affinity or consanguinity,
business associates, subordinates or other persons, amasses, accumulates or acquires ill-gotten
wealth through a combination or series of overt criminal acts as described in Sec. 1(d) of the law
in the aggregate amount of at least Seventy-Five Million Pesos (P75,000,000.00).
F. Remedies
There are a number of remedies available against abuses of public officials including the forfeitureof their unlawfully acquired property. These are: (a) impeachment; (b) recall; (c) civil action for damages;(d) administrative disciplinary action; (e) criminal complaint; (f) special civil action; (g) general election;99(h) forfeiture under RA 1379; and (i) civil forfeiture under RA 9160, as amended.
a. Impeachment
It is a procedure provided by the Constitution100 for removing the following government officials:
President, the Vice-President, the members of the Supreme Court, the members of the Constitutional
Commissions, and the Ombudsman. The grounds for impeachment are: culpable violation of theConstitution, treason, bribery, graft and corruption, other high crimes, and betrayal of public trust.
b. Recall of Local Elective Officials
Recall is a process whereby a registered voter removes an elective local official on the basis of lossof confidence.101
c. Civil Action to Claim Damages
Philippine laws incorporate provisions that make public officials liable for damages in instances
when they commit bad faith, malice or gross negligence. The Administrative Code of 1987 explicitly
provides that “a public officer shall not be civilly liable for acts done in the performance of his official
duties, unless there is a clear showing of bad faith, malice or gross negligence.”102 Also, “any public officer,
who, without just cause, neglects to perform a duty within a period fixed by law or regulation, or within92.	“Directly or indirectly requesting or receiving any gift, present, share, percentage, or benefit, for himself or for any other person, in
connection with any contract or transaction between the Government and any other party, wherein the public officer in his official capacity
has to intervene under the law.”93.	“Directly or indirectly requesting or receiving any gift, present or other pecuniary or material benefit for himself or for another, from any
person for whom the public officer, in any manner or capacity, has secured or obtained, or will secure or obtain, any Government permit orlicense, in consideration for the help given or to be given, without prejudice to Section thirteen of this Act.”94.	“Causing any undue injury to any party, including the Government, or giving any private party any unwarranted benefits, advantage
or preference in the discharge of his official, administrative or judicial functions through manifest partiality, evident bad faith or grossinexcusable negligence. This provision shall apply to officers and employees of offices or government corporation charged with the grantof licenses or permits or other concessions.”
95.	“Entering, on behalf of the Government, into any contract or transaction manifestly and grossly disadvantageous to the same, whether or
not the public officer profited or will profit thereby.”96.	“Directly or indirectly having financial or pecuniary interest in any business, contract or transaction in connection with which he intervenes
or takes part in his official capacity, or in which he is prohibited by the Constitution or by any law from having any interest.”
97.	“Directly or indirectly becoming interest, for personal gain, or having a material interest in any transaction or act requiring the approval ofa board, panel or group of which he is a member, and which exercises discretion in such approval, even if he votes against the same or does
not participate in the action of the board; committee, panel or group.
	 Interest for personal gain shall be presumed against those public officers responsible for the approval of manifestly unlawful, inequitable,or irregular transactions or acts by the board, panel or group to which they belong.”
98. As amended by Republic Act 7659.
99. Ursal supra note 6 at 235.
100. Art. XI, 1987 Philippine Constitution.
101. Secs. 69-75, R.A. No. 7160 (1991)
102. Sec. 38, Book I, Chapter 9.

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a reasonable period if none is fixed, shall be liable for damages to the private party concerned without
prejudice to such other liability as may be prescribed by law.”103
Heads of departments or superior public officers, however, shall not be civilly liable for the wrongful
acts, omissions of duty, negligence, or misfeasance of their subordinates, unless they have actuallyauthorized by written order the specific act or misconduct complained of.104
On the other hand, subordinate public officers or employees shall be civilly liable for acts done bythem in good faith in the performance of their duties. But they shall be liable for willful or negligent acts
done by them which are contrary to law, morals, public policy and good customs even if they acted underorders or instructions of their superiors.
The Civil Code of the Philippines also provides recourse against abuses or neglect of duty of public
officials or employees. Under the Civil Code, any person suffering material or moral loss because a public
servant or employee refuses or neglects, without just cause, to perform his official duty may file an action
for damages and other relief against the latter, without prejudice to any disciplinary administrative actionthat may be taken.105 Moreover, a violation by any public officer or employee of the constitutional rights
and liberties of another person, shall entitle the latter to damages.106
d. Administrative Disciplinary Action
An administrative action against a public officer or employee is the common and most frequently
used remedy resorted to by an aggrieved party.107
To avail of this remedy, a complaint may be initiated with the Civil Service Commission or with
the Department Secretaries and heads of agencies, instrumentalities, provinces, cities and municipalities
which have jurisdiction to investigate and decide on the disciplinary action against the subject officers andemployees.108
With regard to elective and appointive government officials, except those removable only by
impeachment, an administrative complaint may also be filed against them with the Ombudsman.
Another remedy is to file a complaint with the Presidential Anti-Graft Commission. The latter has
the authority to investigate administrative complaints against presidential appointees in the government
occupying the positions of assistant regional director, or equivalent rank and higher, as well as thoseclassified as Salary Grade “26” and higher109
e. Criminal Complaint
A criminal complaint may be brought for an offense in violation of R.A. 3019 (Anti-Graft and Corrupt
Practices Act), as amended; R.A. 6713 (Code of Conduct and Ethical Standards for Public Officials andEmployees); Title VII Chapter II, Section 2110 of the Revised Penal Code (Act No. 3815 [1932]); R.A. 7080
(Plunder), as amended, and for other offenses committed by public officers and employees in relation totheir office.111
f. Special Civil Action
Special Civil Actions like certiorari, prohibition and mandamus may be invoked by victims of grave
abuse of discretion amounting to lack or in excess of jurisdiction; and unlawful neglect to perform a duty
by any government official or body exercising judicial, quasi-judicial or ministerial function.112

103. Ibid.
104. Ibid.
105. Section 27, Civil Code.
106. Section 32, Ibid.
107. Id. at 253.
08. Ibid.
109. Sec. 4, Executive Order No. 12 (2001), as amended.
110. Bribery.
111. Ursal supra note 6 at 260.
112. Id. at 262.

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g. Election
Citizens may not be aware that during elections, the fate of the elective officials is in their hands. The
citizenry has the capacity to evict from power abusive politicians whom they perceive can no longer serve
the common good.113
h. Forfeiture under RA 1379
Ill-gotten, unexplained and unlawfully acquired wealth of public officers and employees shall be
forfeited in favor of the State after appropriate judicial proceedings. The proper action for the recovery
of such ill-gotten, unexplained or unlawfully acquired wealth shall be initiated by the Office of the
Ombudsman.114
i. Civil Forfeiture under RA 9160, as amended
Property, monetary instrument and or proceeds representing, involving, or relating to an unlawful
activity or a money laundering offense under RA 9160, as amended, shall be forfeited in favor of the Stateafter appropriate judicial proceedings. Among the unlawful activities provided in the law are RA 3019
(Anti-Graft and Corrupt Practices Act) and RA 7080 (Plunder Law). The petition for civil forfeiture shallbe initiated by the Anti-Money Laundering Council through the Office of the Solicitor General.
G. Challenges115
Despite the passage of numerous anti-graft laws in the Philippines and ratification of the UN
Convention Against Corruption,116 the perception that cases filed against corrupt officials and employees do
not succeed still persists.117 There are also numerous reports that graft and corruption are highly pervasivein this country.
The Philippine government must maintain both long-term and short-term resolutions on the issue of
corruption. Values formation is the key to a long-term victory. It develops citizens and public officials to
become honest and trustworthy individuals. The government must also seek short term solutions to lessen,
if not to eradicate, the effects of graft and corruption.118“Short Term: Demonstrate Crime Doesn’t Pay”119
Anti-graft and corruption laws must be strictly implemented and task force and agencies madeto defeat graft and corruption must efficiently function in order to win the battle against theft in thegovernment.120“Strict Accountability and Oversight”121
The Commission on Audit, being the entity in charge of financial accountability and legality of
government operations, must expose graft and corruption by all means. Individuals composing the said
commission must be able to reveal the cause and the persons behind the diminishing funds of the government.
Notably, it is their duty to endure pressure from individuals or syndicates protecting or conducting activities
detrimental to the government.122

1113. Id. at 264.
114. Supra 90.
115. Gary W. Elliott, Antidote for Philippine Corruption, Philippine Anti-Graft Institution, But Integrity is Lacking, available at
http://philippines.suite101.com/article.cfm/antidote_for_philippine_corruption, (last accessed 28 October 2009).
116. Convention Against Corruption, December 14, 2005.
117. Llanesca T. Panti, Ira Karen Apanay, Crisis, elections feed graft: Corruption’ brutal’ to poor - UN, available at
http://www.undp.org.ph/?link=news&news_id=171&fa=2 (last accessed 29 October 2009).
118. Ibid.
119. Ibid.
120. Ibid.
121. Ibid.
122. Ibid.

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“Prosecution and Punishment”123
The Ombudsman must work hand in hand with the Commission on Audit in investigating officials
and employees. Furthermore, the Sandiganbayan124 should grant clemency under very strict guidelines.
The government must sustain its zeal in prosecuting offenders.125
While “asset forfeiture can be an effective tool to recover assets connected to crime, it should not be
used as an alternative to criminal prosecution when a jurisdiction has the ability to prosecute the violator.
In other words, criminals should not be allowed to avoid prosecution by pointing to the asset forfeiture
regime as the mechanism for seeking redress for crimes that have been committed. Forgoing a criminal
prosecution, when available, in return for asset forfeiture has the appearance of a violator buying his or
her way out of prosecutions, convictions, and forfeiture. Thus, criminal prosecutions should be pursued
whenever possible to avoid the risk that prosecutors, courts and the public would view disgorgement ofassets as a sufficient sanction when criminal laws have been violated.”126“Restoring Stolen Assets”127
One of the biggest challenges in fighting corruption is the recovery of public properties or moneys
unlawfully acquired. As reported by the Philippine National Police, authorities are having a difficult time
retrieving properties or moneys which were obtained thru corruption.
In relation to this concern, it is important to note that the anti-graft law provides for confiscationof unexplained wealth. Now, to resolve the issue, the Philippine government must aggressively pursue
recovery of public funds, whether within the country or not.128“Long Term: Values Formation”129
The most effective means of defeating corruption is probably the values formation. However, themetamorphosis does not happen in a short period of time. This long-term solution works by changing
socio-cultural norms thru instilling new values. The problem with this though is that there “exists a conflict
between traditional values relating to ‘obligation toward kinship, friendship, and primary groups,’ common
in the rural and tribal contexts, and values necessary for nation building.” Values formation, or reformation,must engender a view of government posts as positions to serve the public, and not as a means for personal
profit.130
After all, “public office is a public trust;” and public officers -- who are not at all times accountable to thepeople -- are called upon to “serve them with utmost responsibility, integrity, loyalty, and efficiency.”131

123. Ibid.
124.	A special court in the Philippines created under Presidential Decree 1606. Its jurisdiction covers cases involving public officials occupying
positions classified as salary grade “27” and higher. It is presently composed of a Presiding Justice and fourteen (14) Associate Justices who sit
in five (5) Divisions of three (3) Justices each in the trial and determination of cases. Its rank is equivalent to the Court of Appeals.
125. Ibid.
126.	Greenberg, et al., Stolen Asset Recovery: A Good Practices Guide for Non-Conviction Based Asset Forfeiture, The International Bank for
Reconstruction and Development/The World Bank 2009, p. 29.
127. Ibid.
128. Ibid
129. Ibid.
130. Ibid.
131. Section 1, Article XI, 1987 Philippine Constitution..

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II. CIVIL FORFEITURE AS A REMEDY
A. Defining Civil Forfeiture under the AMLA132
Forfeiture is defined as the “divestiture of property without compensation. It is the loss of a right,
privilege, or property because of a crime, breach of obligation, or neglect of duty. In contrast to seizure
which is merely an act or an instance of taking possession of a person or property by legal right or process,forfeiture entails the instantaneous transfer of title to another, such as the government, a corporation, or a
private person.133
Civil forfeiture, in the context of the AMLA, may be defined as the divestiture in favor of the State ofmonetary instrument, property and/or proceeds representing, involving, or relating to an unlawful activity
or a money laundering offense under the said Act.
In enacting the AMLA, the Philippine Congress declared money laundering as a criminal offense andprovided for civil forfeiture as an “appropriate remedy for the seizure and forfeiture to the State, without thenecessity of conviction or prosecution in a criminal offense, of monetary instrument, property or proceeds
involved in or related to unlawful activity or money laundering offense as defined in the law.”134
B. Philippine Constitution and Other Laws
There are constitutional and other legal provisions relating to seizure and forfeiture of property:
1.

The 1987 Philippine Constitution
The Philippine Constitution provides that “no person shall be deprived of life, liberty or property
without due process of law.”135 “Due process has both a procedural and a substantive aspect. As asubstantive requirement, it is a prohibition of arbitrary laws; because if all that the due process clauserequired were proper procedure, then life, liberty or property could be destroyed arbitrarily provided
proper formalities are observed. As a procedural requirement, it relates chiefly to the mode of procedure
which government agencies must follow in the enforcement and application of laws. It is a guarantee ofprocedural fairness.”136
2.

The Revised Penal Code137
The Revised Penal Code (“RPC”) provides that “every penalty imposed for the commission of afelony shall carry with it the forfeiture of the proceeds of the crime and the instruments or tools with which
it was committed. Such proceeds and instruments or tools shall be confiscated and forfeited in favor of theGovernment, unless they be the property of a third person not liable for the offense, but those articles which
are not subject of lawful commerce shall be destroyed.”138
3.

Republic Act 3019 or the Anti-Graft and Corrupt Practices Act
RA 3019 provides that any public officer or private person committing any of the unlawful acts
or omissions enumerated in Sections 3 (Corrupt Practices of Public Officers), 4 (Prohibition on Private
Individuals), 5 (Prohibition on Certain Relatives) and 6 (Prohibition on Members of Congress) thereof shall132. Supra 92.
133. Black’s Law Dictionary, West Publishing Company, 8th Ed., 1999.
134.	Justice Jose C. Vitug, et al., A Summary of Notes and Views on the Rule of Procedure in Cases of Civil Forfeiture, Asset Preservation
and Freezing of Monetary Instrument, Property, or Proceeds Representing, Involving, or Relating to an Unlawful Activity or Money
Laundering Offense under Republic Act no. 9160, as amended, Central Book Supply, Inc., Quezon City, Philippines, 2006, [hereinafter“Rule of Procedure, etc.”).
135. Section 1, Article III.
136. Joaquin G. Bernas, S.J., The 1987 Philippine Constitution A Reviewer-Primer, 4th Edition, 2002
137. Supra 70.
138. Revised Penal Code, Article 45, Section III, Chapter III..

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be “punished with imprisonment for not less than one year nor more than ten years, perpetual disqualificationfrom public office, and confiscation or forfeiture in favor of the Government of any prohibited interest andunexplained wealth manifestly out of proportion to his salary and other lawful income.”139
4.

Republic Act 1379 or the Law on Forfeiture of Illegally Acquired Wealth
Under this law, “whenever any public officer or employee has acquired during his incumbency anamount of property which is manifestly out of proportion to his salary as such public officer or employee
and to his other lawful income and the income from legitimately acquired property, said property shall be
presumed prima facie to have been unlawfully acquired.140“If the respondent is unable to show to the satisfaction of the court that he has lawfully acquired theproperty in question, then the court shall declare such property, forfeited in favor of the State, and by virtueof such judgment the property aforesaid shall become property of the State.”141
5.

Republic Act 7080 or the Plunder Law
As discussed, this involves “any public officer who, by himself or in connivance with membersof his family, relatives by affinity or consanguinity, business associates, subordinates or other persons,amasses, accumulates or acquires ill-gotten wealth through a combination or series of overt or criminal
acts as described in the law, in the aggregate amount or total value of at least Seventy-five million pesos(P75,000,000.00).”142“The court shall declare any and all ill-gotten wealth and their interests and other incomes and assets
including the properties and shares of stock derived from the deposit or investment thereof forfeited infavor of the State.”143
6.

The Civil Code of the Philippines144
a. Unjust Enrichment
Article 22 of the Civil Code provides that “every person who through an act of performance byanother, or any other means, acquires or comes into possession of something at the expense of the latterwithout just or legal ground, shall return the same to him.” This is the principle of unjust enrichment which
requires two conditions: (i) that a person is benefited without a valid basis or justification, and (ii) that such
benefit is derived at another’s expense or damage.145
The principle of unjust enrichment, which involves the acquisition of any material possession or
benefit by a person who is not entitled thereto, differs from the concept of civil forfeiture under the AMLA
as the latter involves the forfeiture of monetary instrument, property or proceeds representing, involving,or relating to an unlawful activity or a money laundering offense.
b. Implied Trust“Trusts are either express or implied. While express trusts are created by the intention of the trustor
or of the parties, implied trusts come into being by operation of law. Implied trusts are those which,without being expressed, are deducible from the nature of the transaction as matters of intent or which aresuperinduced on the transaction by operation of law as matters of equity, independently of the particularintention of the parties.”146“Implied trusts may either be resulting or constructive trusts, both coming into being by operation

139. RA 3019, Section 9; Emphasis supplied.
140. RA 1379, Section 2.
141. Id, Section 6.
142. RA 7080, Section 2, as amended.
143. Ibid.
144. Republic Act 386 (1949).
145.	Privatization and Management Office v. Legaspi Towers 300, Inc., G.R. No. 147957, 22 July 2009, citing Car Cool Philippines, Inc. v.
Ushio Realty and Development Corporation, G.R. No. 138088, January 23, 2006.
146. Philippine National Bank v. Court of Appeals, G.R. No. 97995, 21 January 1993.

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of law. xxx Resulting trusts are based on the equitable doctrine that valuable consideration and not legal
title determines the equitable title or interest and are presumed always to have been contemplated by theparties. They arise from the nature or circumstances of the consideration involved in a transaction whereby
one person thereby becomes invested with legal title but is obligated in equity to hold his legal title for the
benefit of another. On the other hand, constructive trusts are created by the construction of equity in orderto satisfy the demands of justice and prevent unjust enrichment. They arise contrary to intention against
one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which heought not, in equity and good conscience, to hold.”147
Title V, Chapter III of the Civil Code enumerates instances when an implied trust is created, viz:(i)	There is an implied trust when property is sold, and the legal estate is granted to one
party but the price is paid by another for the purpose of having the beneficial interestof the property. The former is the trustee, while the latter is the beneficiary. However,if the person to whom the title is conveyed is a child, legitimate or illegitimate, ofthe one paying the price of the sale, no trust is implied by law, it being disputably
presumed that there is a gift in favor of the child.148(ii)	There is also an implied trust when a donation is made to a person but it appears that
although the legal estate is transmitted to the donee, he nevertheless is either to haveno beneficial interest or only a part thereof.149(iii)	If the price of a sale of property is loaned or paid by one person for the benefit ofanother and the conveyance is made to the lender or payor to secure the payment of
the debt, a trust arises by operation of law in favor of the person to whom the money
is loaned or for whom its is paid. The latter may redeem the property and compel a
conveyance thereof to him.150(iv)	When land passes by succession to any person and he causes the legal title to be put inthe name of another, a trust is established by implication of law for the benefit of thetrue owner.151(v)	If two or more persons agree to purchase property and by common consent the legal
title is taken in the name of one of them for the benefit of all, a trust is created by forceof law in favor of the others in proportion to the interest of each.152(vi)	When property is conveyed to a person in reliance upon his declared intention to holdit for, or transfer it to another or the grantor, there is an implied trust in favor of theperson whose benefit is contemplated.153(vii)	If an absolute conveyance of property is made in order to secure the performance ofan obligation of the grantor toward the grantee, a trust by virtue of law is established.
If the fulfillment of the obligation is offered by the grantor when it becomes due, hemay demand the reconveyance of the property to him.154(viii)	When any trustee, guardian or other person holding a fiduciary relationship uses trust
funds for the purchase of property and causes the conveyance to be made to him or toa third person, a trust is established by operation of law in favor of the person to whom
the funds belong.155

147. O’Laco v. Co Cho Chit, G.R. No. 58010, 31 March 1993; emphasis supplied.
148. Article 1448.
149. Article 1449.
150. Article 1450.
151. Article 1451.
152. Article 1452.
153. Article 1453.
154. Article 1454.
155. Article 1455.

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(ix)	If property is acquired through mistake or fraud, the person obtaining it is, by force oflaw, considered a trustee of an implied trust for the benefit of the person from whom
the property comes.156
The powers of public officers occupying a position akin to corporate directors are power in trust.
“He who is in such fiduciary position cannot serve himself first and his cestuis second. xxx He cannot
manipulate the affairs of his corporation to their detriment and in disregard of the standards of common
decency. He cannot, by the intervention of a corporate entity violate ancient precept against serving two
masters. xxx He cannot utilize his inside information and strategic position for his own preferment. He
cannot violate rules of fair play by doing indirectly through the corporation what he could not do so
directly. He cannot use his power for his personal advantage and to the detriment of the stockholders
and the creditors no matter how absolute in terms that power may be and no matter how meticulous he is
to satisfy technical requirements. For that power is at all times subject to the equitable limitation that it
may not be exercised for the aggrandizement, preference, or advantage of the fiduciary to the exclusion or
detriment of the cestuis.”157
7.

Uniform Rules on Administrative Cases in the Civil Service158
The rules shall be applicable to all cases brought before the Civil Service Commission and othergovernment agencies, except where a special law provides otherwise.159
The penalty of forfeiture of retirement benefits is provided as an accessory to administrative
penalties.160 For example, the penalty of dismissal shall carry with it that of cancellation of eligibility,
forfeiture of retirement benefits, and the perpetual disqualification from reemployment in the government
service, unless otherwise provided in the decision.161
C. Ancillary Remedies
The AMLA provides for other remedies ancillary to a civil forfeiture. These are the remedies of: (i)Freeze Order; and, (ii) Bank Inquiry.
1.

Freeze Order
Under Section 10 of the AMLA, as amended, the Court of Appeals, upon application ex parte by
the Anti-Money Laundering Council (“AMLC”) through the Office of the Solicitor General, and after
determination that probable cause exists that any monetary instrument or property is in any way related
to an unlawful activity, may issue a freeze order which shall be effective for twenty (20) days. The freeze
order may be extended for a maximum period of six (6) months.162

2.

Bank Inquiry
Section 11 of the AMLA authorizes the AMLC to inquire into or examine any particular deposit
or investment with any banking institution or non-bank financial institution upon order of any competentcourt in cases of violation of the AMLA, when it has been established that there is probable cause that thedeposits or investments are related to an unlawful activity or a money laundering offense. No court orderis required in cases involving the unlawful activities of Kidnapping for Ransom under Article 267 of the
Revised Penal Code, as amended, Violations under Republic Act 9165 or the Comprehensive Drugs Act
of 2002, and Hijacking and other violations under Republic Act 6235, destructive arson and murder as156. Article 1456.
157. Gokongwei v. Securities and Exchange Commission, G.R. No. L-45911, 11 April 1979.
158. Resolution 99-1936, published in The Manila Standard, 11 September 1999.
159. Id, Section 2.
160. Id, Section 57.
161. Id, Section 58.
162. Supra 133, Section 53 (b).

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defined under the Revised Penal Code, as amended, including those perpetrated by terrorists against noncombatant persons and similar targets.
An application for bank inquiry is filed with the regional trial court which has jurisdiction over thecase. In Republic of the Philippines v. Eugenio, et al,163 the Supreme Court declared that bank inquiry
proceedings may not be done ex parte; hence, prior notice and hearing are required.
D. Procedure
1.
Venue
An action for civil forfeiture may be instituted by the Republic of the Philippines, through the AMLC,
represented by the Office of the Solicitor General (“OSG”), by filing a petition164 in any regional trial courtof the judicial region where the monetary instrument, property, or proceeds representing, involving, or
relating to an unlawful activity or to a money laundering are located. If, however, all or any portion of themonetary instrument, property, or proceeds is located outside the Philippines, the petition may be filed in
the regional trial court in Manila or of the judicial region where any portion of the monetary instrument,
property, or proceeds is located, at the option of the petitioner.165
The petition shall be filed directly with the executive judge of the regional trial court, or, in his
absence, the vice-executive judge or, in their absence, any judge of the regional trial court of the same
station. He shall act on the petition within twenty-four (24) hours after its filing.166
2.

Contents of the Petition, Notice and Service
The petition for civil forfeiture shall be verified and shall contain: (a) the name and address of
the respondent; (b) a description with reasonable particularity of the monetary instrument, property, or
proceeds, and their location; (c) the acts or omissions prohibited by and the specific provisions of theAMLA, as amended, which are alleged to be the grounds relied upon for the forfeiture of the monetary
instrument, property, or proceeds; and, (d) the reliefs prayed for167 including the issuance of a provisional
asset preservation order and an asset preservation order.
Notice of the petition shall be given to respondents in the same manner as service of summons under
the Rules of Court.168 Where the respondent is an unknown owner or his whereabouts are unknown andcannot be ascertained by diligent inquiry, service may, by leave of court, be effected by publication of thenotice of the petition in a newspaper of general circulation in such places and for such time as the court mayorder. Should the cost of publication exceed the value or amount of the property to be forfeited by ten (10)percent, publication shall not be required.169
3.

Confidentiality
The logbook where the petition is entered shall be kept strictly confidential and maintained under
the responsibility of the executive judge. Contempt of court shall be imposed on any person, including
court personnel, who discloses, divulges or communicates to anyone, directly or indirectly, in any manneror by any means, the fact of the filing of the petition, its contents and its entry in the logbook except thoseauthorized by the court.170
4.

Comment or Opposition
The respondent shall file a verified comment or opposition, not a motion to dismiss the petition,

163. G.R. No. 174629, 14 February 2008.
164. Rule of Procedure, etc., Section 2, Title II.
165. Id, Section 3, Title II.
166. Id, Section 5, Title II.
167. Id, Section 4, Title II.
168. Id, Section 8, Title II.
169. Ibid.
170. Id, Section 7, Title II.

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within fifteen (15) days from service of notice or within thirty days from publication.171 Failure to do soshall authorize the court to hear the case ex parte and render such judgment as may be warranted by thefacts alleged in the petition and its supporting evidence.172
5.

Provisional Asset Preservation Order (“PAPO”)
Where the judge executive judge of the regional trial court, or, in his absence, the vice-executive
judge or, in their absence, any judge of the regional trial court of the same station has determined thatprobable cause exists on the basis of the allegations of a verified petition sufficient in form and substance,with a prayer for the issuance of an asset preservation order, the court may issue ex parte a PAPO effective
immediately and for a period of twenty (20) days from service to the concerned parties, forbidding any
transaction, withdrawal, deposit, transfer, removal, conversion, concealment or other disposition of thesubject monetary instrument, property, or proceeds.173
6.

Asset Preservation Order (“APO”)
Within the twenty-day period of effectivity of the PAPO, the court shall conduct a summary hearing
at which the respondent may for good cause show why the PAPO should be lifted. The court shall determine
within the same period whether the PAPO should be modified or lifted or an APO should issue, and act
accordingly.174
The APO shall: (a) issue in the name of the Republic of the Philippines represented by the AMLC;(b) state the name of the court, the case number and title, and the subject order; and (c) require the sheriff
or any proper officer to serve a copy thereof upon the respondent or any person acting on his behalf, andupon the covered institution or government agency.175
The asset preservation order shall be served personally by the sheriff or other proper officer designatedby the court in the manner set forth in the rules. If personal service is not practicable, the order shall beserved in any other manner which the court may deem expedient.176
When authorized by the court, service may be effected upon the respondent or any person acting in
his behalf and upon the treasurer or other responsible officer of the covered institution or the head of thecovered government agency, by facsimile transmission (fax) or electronic mail (e-mail). In such cases, thedate of transmission shall be deemed to be prima facie the date of service. The asset preservation ordershall be enforceable anywhere in the Philippines.177
Should the court issue an APO, the respondent may raise in a motion or in the comment or opposition
grounds for its discharge. The following grounds for discharge of the APO may be raised: (a) the order was
improperly or irregularly issued or enforced; (b) any of the material allegations in the petition, or any of thecontents of any attachment to the petition thereto, or its verification, is false; and (c) the specific personalor real property ordered preserved is not in any manner connected with the alleged unlawful activity.178(i)Guidelines in Serving the APO
For perishable property, the petitioner may file a verified motion praying for the sale at public auctionof said perishable property. If the court grants the motion, the sale shall be conducted in the manner as
property sold under execution.179 Written notice must be given, before the sale, by posting of the time andplace of the sale in three (3) public places, preferably in conspicuous areas of the municipal or city hall,post office and public market in the municipality or city where the perishable property is located and where

171. Id, Section 9, Title II.
172. Id, Section 10, Title II.
173. Id, Section 11, Title III.
174. Id, Section 12, Title III.
175. Id, Section 13, Title III.
176. Id, Section 14, Title III.
177. Ibid.
178. Id, Section 17, Title III
179. Id, Section 19, Title IV..

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the sale is to take place, for such time as may be reasonable, considering the character and condition of theproperty. The proceeds shall be deposited with the Clerk of Court to be disposed of according to the final
judgment of the court.180
For real property, there shall be: (a) no physical seizure thereof; (b) no eviction of the owner thereof
and/or occupants therein; (c) notice of the APO to the owner/s thereof, if known, and the occupant/s therein;and (d) posting of a copy of the APO in a conspicuous place on the real property.181
Upon verified motion, a receiver may be appointed by the court under such terms and conditions as
the court may deem proper in the following instances:(a) W hen it appears that the party applying for the appointment of a receiver has an interest in theproperty or fund and that such property or fund is in danger of being lost, removed or materiallyinjured;(b) When it appears that the property is in danger of being wasted or dissipated or materiallyinjured;(c) After judgment, to preserve the property during the pendency of an appeal, or to dispose of it
according to the judgment or to aid execution when the execution has been returned unsatisfied
or the judgment obligor refuses to apply his property in satisfaction of the judgment, or otherwise
to carry the judgment into effect; and(d) Whenever in other cases it appears that the appointment of a receiver is the most convenient andfeasible means of administering or disposing of the property in litigation.182
7.

Pre-trial and Trial
Pre-trial is mandatory.183 It is a procedural device intended to clarify and limit the basic issues
between the parties. Failure of the petitioner or counsel to appear at the pre-trial conference shall be cause
for dismissal of the petition. The dismissal shall be with prejudice, unless otherwise ordered by the court.
A similar failure on the part of the respondent or counsel shall be cause to allow the petitioner to present its
evidence ex parte and the court to render judgment on the basis thereof.184
The rules on amicable settlement, mediation and other alternative mode of dispute resolution shallnot apply.185
No prior criminal charge, pendency of or conviction for an unlawful activity or money laundering
offense is necessary for the commencement or the resolution of a petition for civil forfeiture.186
Any criminal case relating to an unlawful activity shall be given precedence over the prosecution of
any offense or violation under the AMLA, as amended, without prejudice to the filing of a separate petition
for civil forfeiture or the issuance of an asset preservation order or a freeze order. Such civil action shallproceed independently of the criminal prosecution.187
The trial shall proceed in accordance with the applicable provisions of the Rules of Court.188
8.

Factors in determining Preponderance of Evidence
In rendering judgment, the court may consider the following factors to determine where lies the
preponderance of evidence:(a) T hat the monetary instrument, property, or proceeds are represented, involved, or related to an
unlawful activity or a money laundering offense:

180. Ibid.
181. Id, Section 20, Title IV.
182. Id, Section 21, Title IV.
183. Id, Section 22, Title V.
184. Id, Section 24, Title V.
185. Id, Section 26, Title V.
186. Id, Section 27, Title VI.
187. Id, Section 28, Title VI.
188. Id, Section 29, Title VI.

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(1) I f the value or amount involved is not commensurate with the business, financial or earning
capacity of the person;(2) I f any transaction indicates a clear deviation from the profile or previous transactions of
the person;(3) I f a person opens, maintains or controls an account with a covered institution not in his own
name or registered business name unless authorized under existing law;(4) I f a person has structured transactions in order to avoid being the subject of reporting
requirements under Republic Act No. 9160, as amended; or(5) I f any transaction exists that has no apparent underlying legal or trade obligation, purpose
or economic justification;or(b) T hat the monetary instrument, property, or proceeds, the sources of which originated from or
are materially linked to monetary instruments, properties, or proceeds used in the commissionof an unlawful activity or money laundering offense, are related to the said unlawful activity or
money laundering offense.189
9.

Judgment and Appeal
The court shall render judgment within thirty (30) days from submission of the case for resolution.
It shall grant the petition if there is preponderance of evidence in favor of the petitioner and declarethe monetary instrument, property, or proceeds forfeited to the State or, in appropriate cases, order the
respondent to pay an amount equal to the value of the monetary instrument or property and adjudge suchother reliefs as may be warranted.190
An aggrieved party may appeal the judgment to the Court of Appeals by filing within fifteen (15)days from its receipt a notice of appeal with the court which rendered the judgment and serving a copy
upon the adverse party.191
10.

Claims against Forfeited Assets
Where the court has issued an order of forfeiture of the monetary instrument or property in a civil
forfeiture petition for any money laundering offense defined under the AMLA, as amended, any person
who has not been impleaded nor intervened claiming an interest therein may apply, by verified petition, fora declaration that the same legitimately belongs to him and for segregation or exclusion of the monetary
instrument or property corresponding thereto. The verified petition shall be filed with the court which
rendered the order of forfeiture within fifteen (15) days from the date of finality of the order of forfeiture,
in default of which the said order shall be executory and bar all other claims.192
Within fifteen (15) days after notice, petitioner shall file a comment admitting or denying the claim
specifically, and setting forth the substance of the matters which are relied upon to support the admission ordenial. If the petitioner has no knowledge sufficient to enable it to admit or deny specifically, it shall statesuch want of knowledge. The petitioner in its comment shall allege in offset any fees, charges, taxes andexpenses due to it. A copy of the comment shall be served on the claimant.193
The court may, without hearing, issue an appropriate order approving any claim admitted or notcontested by the petitioner.194
Upon the filing of a comment contesting the claim, the court shall set the claim for hearing within
thirty (30) days with notice to all parties.195

189. Id, Section 31, Title VI.
190. Id, Section 32, Title VI.
191. Id, Section 34, Title VI.
192. Id, Section 34, Title VII b.
193. Id, Section 38, Title VII.
194. Id, Section 39, Title VII.
195. Id, Section 40, Title VII.

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The court shall issue a final order on the contested claim within thirty (30) days from submission.196
An appeal to the Court of Appeals may be taken by filing within fifteen (15) days from receipt of the ordera notice of appeal with the court which rendered the order and serving a copy upon the adverse party.197
E. Statistics
The following shows the number of civil forfeiture cases filed in court relative to the unlawful
activities involving graft and corruption as well as the amount of money or property subject of forfeiture:
Table 4198
List of Civil Forfeiture Cases filed based on Unlawful Activity related to Graft and Corruption
As of October 2009
Unlawful Activity or Violation under the AMLA

Number of Civil Forfeiture
Cases filed in Court

Violation of Republic Act 3019 or the Anti-Graft and Corrupt Practices
Act

8

Violation of Republic Act 6713 or Conduct and Ethical Standard for
Public Officials and Employees

3

Violation of Republic Act 7080 or the Plunder Law

1

F. Strengths and Challenges
In Jeffrey Simser’s article on Civil Forfeiture Practices in Other Common Law Jurisdictions,199
citing an article by Anthony Kennedy, he posed this question: Is the legislative response of civil forfeitureproportional to an existing societal problem? To this protean question, the response was: Civil forfeitureis a proportional and necessary response to a societal problem. Much is true in the Philippine anti-money
laundering regime. The non-conviction based forfeiture is a response to a compelling state interest --- thatof removing illicit assets from circulation and taking away from the criminal the benefits of his crime.
Section 12 of the AMLA contains provisions for the recovery of proceeds of crime. This can occur
as a result of the conviction of a person for a criminal offense or as a result of a civil forfeiture order. In
relation to civil forfeiture, paragraph 12(a) of the AMLA states:
Civil forfeiture. – When there is a covered transaction report made, and the court
has, in a petition filed for the purpose ordered seizure of any monetary instrument,or property, in whole or in part, directly or indirectly, related to said report, theRevised Rules of Court on civil forfeiture shall apply.
The procedure in the prosecution of civil forfeiture made reference to the Revised Rules of Courton civil forfeiture. At the time of the enactment of AMLA in 2003, however, there was no specific rule on
civil forfeiture. The Office of the Solicitor General was then constrained to utilized relevant provisions

196. Id, Section 41, Title VII.
197. Id, Section 42, Title VII.
198. Case Records, Lorenzo Tanada Division, Office of the Solicitor General.
199.	Paper presented as background to a Best Practices Roundtable discussion at the Court Procedures in Money Laundering and Civil
Forfeiture Conference in Manila on April 28, 2005.

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and remedies to ensure that civil forfeiture cases may nonetheless be prosecuted. Temporary restraining
orders and writs of preliminary injunction were resorted to in order that property or monetary instruments
may not be disposed, removed or dissipated during the pendency of the proceedings. Eventually, theAMLC, the OSG and representatives of the Supreme Court Committee on Revision of Rules drafted rules
for consideration by the Supreme Court. The draft rules became the working draft for the Rules of Civil
Procedure in Cases of Civil Forfeiture, Asset Preservation and Freezing of Monetary Instrument, Property,
or Proceeds Representing, Involving, or Relating to an Unlawful Activity or Money Laundering Offense
Under Republic Act No. 9160, as Amended, which was adopted by the Supreme Court as A.M. No. 05-1104-SC. The Rules on Civil Procedure, etc. took effect on 15 December 2006.
The salient features of the rules are:(a) The proceeding for civil forfeiture is sui generis200
Explaining the nature of civil forfeiture in the Philippines, the Committee on the Revisionof the Rules of Court adopted the best aspects of actions in personam, in rem and quasi in rem,and integrated them into the rule to ensure compliance with the Constitutional provision that no
person shall be deprived of property without due process of law in both substantive and procedural
aspects.201
As an action in personam, the rules require that notice shall be served on respondent personally.
But, where the respondent is designated as an unknown owner or his whereabouts are unknown,
service of notice may be by publication (action in rem). While at the first instance, it appears that theaction is directed against specific persons (by personal service of notice to them), it actually seeks
judgment against the thing or property (petition can proceed against the property of an unknown
owner).
For practical purposes, however, publication is not required when “the cost of publication
exceeds the value or amount of the property to be forfeited by ten percent (10%).”202(b) Petition for civil forfeiture is filed directly with the executive judge of the Regional
Trial Court to ensure confidentiality of the proceeding in the meantime that a PAPO has not been
issued.203
The petition may be filed in any regional trial court of the judicial region where the monetary
instrument, property, or proceeds representing, involving, or relating to an unlawful activity or to amoney laundering offense are located. In the event that all or any portion of the monetary instrument,
property, or proceeds is located outside the Philippines, the petition may be filed in the regional trial
court in Manila or of the judicial region where any portion of the monetary instrument, property, or
proceeds is located, at the option of the petitioner.204(c) PAPO is issued ex-parte upon determination that probable cause exists that the monetary
instrument, property, or proceeds are in any way related to an unlawful activity under the AMLA.205(d) The PAPO, which is effective immediately, forbids the property owner or any covered
institution or government agency from making any transaction, withdrawal, deposit, transfer, removal,
conversion, concealment or other disposition of the monetary instrument, property or proceeds
subject of the petition. This also insures that the monetary instrument, property or proceeds will not
be concealed, altered, destroyed or will not diminish in value or rendered worthless by persons incontrol of such monetary instrument, property or proceeds.206

200. Vitug, supra 124.
201. Id. at pp. 6-7.
202. Rules on Civil Forfeiture, etc., Section 8.
203. Id, Sections 5, 6 and 7.
204. Id, Section 3.
205. Id, Section 11.
206. Vitug, Supra 124 at 39.

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(e) Respondent has the burden to show cause why the PAPO should be lifted; otherwise, an
APO is issued.207(f) A PAPO is valid only for twenty (20) days. Within the twenty-day period, the court shallconduct summary hearing. At this point since the court has issued a PAPO ex parte on the findingof the existence of probable cause, the burden of evidence is shifted to the respondent to show why
it should be modified or lifted.208(g) No prior charge, pendency or conviction for an unlawful activity or money laundering
offense is necessary for civil forfeiture.209 Section 27 of the Rules explicitly provides that there isno need of a prior charge or conviction for any predicate crime or money laundering offense under
AMLA. The monetary instrument, property or proceeds shall be forfeited in favor of the State if
there is preponderance of evidence showing that these are involved in or related to an unlawful
activity or a money laundering offense as defined in the law.210(h) Specific factors have been enumerated which the court may consider in determining
where lies preponderance of evidence.211(i) Procedure on claims against forfeited assets has been incorporated.212
The provisions on claims against forfeited assets are designed to give an opportunity to a bonafide claimant, not a party to nor an intervenor in the case, to claim an interest in the forfeited asset or
property if the same “legitimately belongs” to him. Section 35 of the Rules provide that such claim
can be filed only after an order of forfeiture has already been issued.
The Rules provide:
Sec. 35. Notice to file claims. – Where the court has issued an order of
forfeiture of the monetary instrument or property in a civil forfeiture petition forany money laundering offense defined under Section 4 of Republic Act No. 9160,
as amended, any person who has not been impleaded nor intervened claiming aninterest therein may apply, by verified petition, for a declaration that the same
legitimately belongs to him and for segregation or exclusion of the monetary
instrument or property corresponding thereto. The verified petition shall be filedwith the court which rendered the order of forfeiture within fifteen days from thedate of finality of the order of forfeiture, in default of which the said order shallbe executory and bar all other claims.
That indeed, an order of forfeiture is a condition sine qua non before a claim can be made has been
confirmed in Bedayo, et al. v. Court of Appeals:213
Intervention before Order of Forfeiture, Improper:
To begin with, RTC, Manila, Branch 32, in its assailed April 20, 2004
Order, granted petitioners’ Petition and Motion for the Release of Funds by

207. Id, Section 12.
208. Supra 40 at p. 40-41.
209. Id, Section 27.
210. Vitug, Supra 124 at 63.
211. Id, Section 31; As discussed under D (vii) herein.
212. Id, Sections 35-42, Title VII.
213. G.R. 169031-32, 26 September 2005.

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treating the same as a “third party claim that should be categorized under Rule
60 of the Revised Rules of Court on Replevin,” specifically Section 7 thereof.
The rules on replevin, however, require the posting of a bond to answer
for whatever damage that may be incurred by the adverse party in the event theorder of release or delivery is adjudged erroneous. Issuing an order of replevindespite absence of a bond is perilous as it might render nugatory the judgment in
the civil forfeiture proceeding.
On a more crucial point, Civil Case No. 03-107306 of RTC, Manila,
Branch 32, from whence the assailed orders sprung, is an action for “Forfeitureof Assets” filed by the Republic of the Philippines, through the Anti-Money
Laundering Council. The complaint was anchored on the civil forfeitureprovision of Republic Act 9160, as amended, which makes no categorical, muchless a fleeting reference to the rules on replevin. On this score alone, the Orders
assailed in the consolidated petitions for certiorari in CA-G.R. SP. Nos. 87159
and 87406 must be struck down.
Section 12 (b) of RA 9160 provides the proper procedure for claims on
forfeited assets:“Sec.12. Forfeiture Provisions. –(b) Claim on Forfeited Assets .- Where the court has issued
an order of forfeiture of the monetary instrument or property ina criminal prosecution for any money laundering offense defined
under Section 4 of this Act, the offender or any other person claiming
an interest therein may apply, by verified petition, for a declarationthat the same legitimately belongs to him and for segregation or
exclusion of the monetary instrument or property corresponding
there to . The verified petition shall be filed with the court which
rendered the judgment of conviction and order of forfeiture, within
fifteen (15) days from the date of the order of forfeiture, in defaultof which the said order shall become final and executory. This
provision shall apply in both civil and criminal forfeiture.”
The quoted provision recites in detail what must be followed by any
person who may have a legitimate claim over monetary instrument or property
forfeited. The procedure applies to criminal, as well as civil forfeiture. As it is,petitioners did not even attempt to comply with Sec. 12 (b), supra, of Ra 9160.
Worse, and as borne by the records, there is not even an order of forfeiture
yet, which is a condition sine qua non before a petition for segregation offunds may be filed. To say the least, it is beyond the court’s comprehension why
the Manila RTC failed to appreciate the clear and unmistakable mandate of Sec.
12 (b) of Ra 9160. In fine, the appellate court correctly nullified the Order dated
20 April 2004 and all other subsequent challenged Orders issued by the Manila
RTC, Branch 32, in its Civil Case No. 03-107306.
(j) The ancillary remedy of Freeze Order is made effective for a maximum period of six (6)months. The said period is intended to provide the AMLC the opportunity to finish its investigation
and when evidence so warrant, file the necessary forfeiture proceedings. Experience, however,teaches that in complex and intricate cases, the six (6) month period is insufficient to conclude
an extensive investigation more so, as instances abound where the related order of bank inquiry is
obtained by AMLC only a few days before or even beyond the effectivity of a freeze order.
(k) Relatedly, the notice and hearing requirement in the ancillary remedy of bank inquiry pose

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a difficulty in the expeditious completion of financial investigations. In cases where there are several
respondents, the bank inquiry proceedings become protracted thereby setting a drawback in terms of
the sufficiency of evidence for the filing of a civil forfeiture case.
(l) A freeze order granted by the Court of Appeals may be appealed. Such an appeal, however,does not stay the enforcement of a decision or ruling on the freeze order.214
G. Recent Supreme Court Doctrines involving the AMLA
1.
Republic v. Glasgow, et al., (G.R. No. 170281, January 18, 2008)
Venue for Complaint of Civil Forfeiture:
On November 15, 2005, this Court issued A.M. No. 05-11-04-SC, the Ruleof Procedure in Cases of Civil Forfeiture, Asset Preservation, and Freezing ofMonetary Instrument, Property, or Proceeds Representing, Involving, or Relating
to an Unlawful Activity or Money Laundering Offense under RA 9160, as
amended (Rule of Procedure in Cases of Civil Forfeiture). The order dismissing
the Republic's complaint for civil forfeiture of Glasgow's account in CSBI has
not yet attained finality on account of the pendency of this appeal. Thus, the Ruleof Procedure in Cases of Civil Forfeiture applies to the Republic's complaint.
Moreover, Glasgow itself judicially admitted that the Rule of Procedure in Casesof Civil Forfeiture is "applicable to the instant case." ection 3, Title II (Civil Forfeiture in the Regional Trial Court) of the Rule ofS
Procedure in Cases of Civil Forfeiture provides:
Sec. 3. Venue of cases cognizable by the regional trial court. — A
petition for civil forfeiture shall be filed in any regional trial courtof the judicial region where the monetary instrument, property orproceeds representing, involving, or relating to an unlawful activity
or to a money laundering offense are located; provided, however,that where all or any portion of the monetary instrument, property
or proceeds is located outside the Philippines, the petition may be
filed in the regional trial court in Manila or of the judicial region
where any portion of the monetary instrument, property, or proceeds
is located, at the option of the petitioner. (emphasis supplied)
Under Section 3, Title II of the Rule of Procedure in Cases of Civil
Forfeiture, therefore, the venue of civil forfeiture cases is any RTC of the judicial
region where the monetary instrument, property or proceeds representing,involving, or relating to an unlawful activity or to a money laundering offense
are located. Pasig City, where the account sought to be forfeited in this case issituated, is within the National Capital Judicial Region (NCJR). Clearly, thecomplaint for civil forfeiture of the account may be filed in any RTC of the NCJR.
Since the RTC Manila is one of the RTCs of the NCJR, it was a proper venue of
the Republic's complaint for civil forfeiture of Glasgow's account.

214. Supra 186, Section 57.

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Summons by Publication Proper in Civil Forfeiture case:
In Republic v. Sandiganbayan, this Court declared that the rule is settled
that forfeiture proceedings are actions in rem. While that case involved forfeitureproceedings under RA 1379, the same principle applies in cases for civil forfeiture
under RA 9160, as amended, since both cases do not terminate in the impositionof a penalty but merely in the forfeiture of the properties either acquired illegallyor related to unlawful activities in favor of the State.
As an action in rem, it is a proceeding against the thing itself insteadof against the person. In actions in rem or quasi in rem, jurisdiction over the
person of the defendant is not a prerequisite to conferring jurisdiction on the
court, provided that the court acquires jurisdiction over the res. Nonetheless,summons must be served upon the defendant in order to satisfy the requirementsof due process. For this purpose, service may be made by publication as suchmode of service is allowed in actions in rem and quasi in rem.
In this connection, Section 8, Title II of the Rule of Procedure in Cases of Civil
Forfeiture provides:
Sec. 8. Notice and manner of service. — (a) The respondent shallbe given notice of the petition in the same manner as service ofsummons under Rule 14 of the Rules of Court and the following
rules:
1.
The notice shall be served on respondent personally, or by
any other means prescribed in Rule 14 of the Rules of Court;
2.
The notice shall contain: (i) the title of the case; (ii) the
docket number; (iii) the cause of action; and (iv) the relief prayed
for; and3.
The notice shall likewise contain a proviso that, if nocomment or opposition is filed within the regulatory period, thecourt shall hear the case ex parte and render such judgment as may
be warranted by the facts alleged in the petition and its supporting
evidence.
(b) Where the respondent is designated as an unknown owner orwhenever his whereabouts are unknown and cannot be ascertainedby diligent inquiry, service may, by leave of court, be effected upon
him by publication of the notice of the petition in a newspaper ofgeneral circulation in such places and for such time as the court
may order. In the event that the cost of publication exceeds the value
or amount of the property to be forfeited by ten percent, publication
shall not be required. (emphasis supplied)2.

Republic v. Eugenio, et al., (G.R. No. 174629, February 14, 2008)
Bank inquiry proceedings not ex-parte:That the AMLA does not contemplate ex parte proceedings in applications− 68 −

for bank inquiry orders is confirmed by the present implementing rules andregulations of the AMLA, promulgated upon the passage of R.A. No. 9194. With
respect to freeze orders under Section 10, the implementing rules do expressly
provide that the applications for freeze orders be filed ex parte, but no similar
clearance is granted in the case of inquiry orders under Section 11. These
implementing rules were promulgated by the Bangko Sentral ng Pilipinas, theInsurance Commission and the Securities and Exchange Commission, and if it
was the true belief of these institutions that inquiry orders could be issued ex partesimilar to freeze orders, language to that effect would have been incorporated in
the said Rules. This is stressed not because the implementing rules could
authorize ex parte applications for inquiry orders despite the absence ofstatutory basis, but rather because the framers of the law had no intention
to allow such ex parte applications.
xxx
Without doubt, a requirement that the application for a bank inquiry order
be done with notice to the account holder will alert the latter that there is a plan
to inspect his bank account on the belief that the funds therein are involvedin an unlawful activity or money laundering offense. Still, the account holder
so alerted will in fact be unable to do anything to conceal or cleanse his bankaccount records of suspicious or anomalous transactions, at least not without thewhole-hearted cooperation of the bank, which inherently has no vested interest
to aid the account holder in such manner.
Accounts prior to AMLA, Open for Inquiry:
Prior to the enactment of the AMLA, the fact that bank accounts or deposits
were involved in activities later on enumerated in Section 3 of the law did not, byitself, remove such accounts from the shelter of absolute confidentiality. Prior to theAMLA, in order that bank accounts could be examined, there was need to secure
either the written permission of the depositor or a court order authorizing suchexamination, assuming that they were involved in cases of bribery or derelictionof duty of public officials, or in a case where the money deposited or invested
was itself the subject matter of the litigation. The passage of the AMLA stripped
another layer off the rule on absolute confidentiality that provided a measureof lawful protection to the account holder. For that reason, the application of
the bank inquiry order as a means of inquiring into records of transactions
entered into prior to the passage of the AMLA would be constitutionallyinfirm, offensive as it is to the ex post facto clause.
Still, we must note that the position submitted by Lilia Cheng is muchbroader than what we are willing to affirm. She argues that the proscription
against ex post facto laws goes as far as to prohibit any inquiry into deposits
or investments included in bank accounts opened prior to the effectivity of the
AMLA even if the suspect transactions were entered into when the law had alreadytaken effect. The Court recognizes that if this argument were to be affirmed, itwould create a horrible loophole in the AMLA that would in turn supply themeans to fearlessly engage in money laundering in the Philippines; all that thecriminal has to do is to make sure that the money laundering activity is facilitated− 69 −

through a bank account opened prior to 2001. Lilia Cheng admits that "actual
money launderers could utilize the ex post facto provision of the Constitution asa shield" but that the remedy lay with Congress to amend the law. We can hardly
presume that Congress intended to enact a self-defeating law in the first place,and the courts are inhibited from such a construction by the cardinal rule that "alaw should be interpreted with a view to upholding rather than destroying it.
H. Case Studies
Several cases have been filed against erring public officials and employees seeking to forfeit theirbank deposits and other real and personal properties which are believed to be materially linked to thepredicate offenses of violation of RA 3019, RA 7080 and RA 1379.
1.

The Airport Controversy
Respondents are government officials and other individuals who facilitated the awarding of a
US$350M government contract involving the construction of an international airport. The contract
was eventually nullified by the Supreme Court for being anomalous.
Finding probable cause that there was a violation of R.A. 3019, the AMLC filed an application
to inquire into or examine the bank deposits of the respondents.
The RTC initially granted the application for inquiry, but later ordered its suspension when oneof the respondents appeared and questioned the inquiry on several constitutional grounds. Hearings
were thereafter conducted.
In particular, said respondent averred that before an inquiry may be allowed, the person/s
subject of the inquiry must be convicted of the predicate crime alleged. Also, respondent invoked
the right to privacy and due process.
The Supreme Court ruled that Notice and Hearing are pre-requisites in a Petition for Bank
Inquiry.

2.

The Stealing Soldiers
Respondents are military officials charged under R.A. 3019 and R.A. 1379.
The assets of respondents were garnished pursuant to R.A. 1379. The AMLC proceeded with
its own investigation and acquired a Bank Inquiry Order. Thereafter, the AMLC proceeded with thefiling of a Petition for Freeze Order which was subsequently granted by the Court of Appeals.
The respondents questioned before the Supreme Court the Republic’s motion for an extensionof the freeze order, arguing, among others, that there is no necessity for a freeze order consideringthat an Order of garnishment was already issued by the Sandiganbayan.
The Supreme Court denied the petition.
The AMLC, through the OSG, proceeded with the filing of a civil forfeiture case before theappropriate regional trial court which eventually issued a PAPO and APO.
The bottom line is that remedies under RA 1379 are mutually exclusive to the remedies
provided under the AMLA.

3.

The Embattled Prosecutor
Respondent is a State Prosecutor charged with violation of Section 5, in relation to Sections
3(ee) and 92 of R.A. 9165,215 as well as, Section 3(b) and (e) of R.A. 3019.
Finding probable cause that violations under R.A. 9165 and R.A. 9160, as amended, werecommitted, the AMLC filed a petition for the issuance of a freeze order which was granted by the
Court of Appeals.
On the basis of Section 11 of R.A. 9160, as amended, the AMLC conducted a bank inquiry

215. Comprehensive Drugs Act of 2002.

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sans a court authority.
Accordingly, a petition for civil forfeiture was filed with R.A. 3019 as the predicate offense.
The same is pending before the regional trial court. A PAPO and APO were eventually issued.
The bottom line is that no court order for bank inquiry is required in cases involving theunlawful activities of Violations under Republic Act 9165 or the Comprehensive Drugs Act of
2002.
4.

The Syndicated Schemes
During the last quarter of 2008, a group of companies composed of, among others, ruralbanks, pre-need companies and real estate companies abruptly closed down and ceased operations.
In the aftermath, allegations abounded that illicit activities and fraudulent transactions -- ranging
from misappropriation of funds, misrepresentation, and falsification of documents -- amounting to
syndicated estafa and violations of the Securities Regulation Code (“SRC”), had been egregiously
carried out by respondents (the aforesaid group of companies and their officers and directors) against
unsuspecting depositors, investors, policy holders and other credulous individuals.
The AMLC conducted an independent investigation and discovered that respondents
committed: (i) the crime of syndicated estafa by employing various fraudulent and devious schemes(Double-Your-Money Scheme, Motor Cycle Loan and Investment Loan Program); (ii) violations ofSections 8 and 26 of the SRC; and (iii) violation of Section 16 of the SRC in relation to Pre-Need
Rules 34.1 and 35.5 of the New Rules on the Registration and Sale of Pre-Need Plans.
Four (4) Ex-Parte Petitions for the Issuance of a Freeze Order covering numerous bankaccounts, insurance policies and vehicles were filed before the Court of Appeals. Accordingly, theCourt of Appeals issued several freeze orders over the aforementioned bank accounts, assets andproperties, which all expired on 13 October 2009.
Before the expiration of the freeze orders or on 20 April 2009, an Application for Bank Inquiry
and/or Examination was filed before the appropriate regional trial court. It was only on 10 November
2009 that the RTC released an Order allowing the inquiry and/or examination of the bank accounts.
Meanwhile, on 26 October 2009, a petition for civil forfeiture was filed before the appropriate
regional trial court and a Provisional Asset Preservation Order was subsequently issued. No Asset
Preservation Order has yet been issued.
Notably, the application for bank inquiry was granted and issued after the expiration of thefreeze orders. Hence, the petitioner was constrained to file a petition for civil forfeiture based on
available evidence and before the bank inquiry could be completed.

I. Conclusion
The Philippines has put forward anti-money laundering provisions which, though still imperfect, show
great potential for success. The law may have been enacted with idealism as stimulant, the implementation
thereof puts into proper perspective the positive direction being taken by the Philippines in the global fightagainst money laundering. Indeed, the challenges are enormous yet the hurdles are met with enthusiasm
and ingenuity. The subsequent issuance of the Rules on Civil Forfeiture, etc., while demanding, is likewise
motivating. The bottom line therefore is that the issues are diverse as they are sometimes complicated.
The cases pending before the trial courts will be the source of emerging jurisprudence on thePhilippine anti-money laundering regime and non-conviction based civil forfeiture. Although developing
jurisprudence may take time, the Philippines can learn from the experiences of other non-conviction based
civil forfeiture regimes.

− 71 −

RECOVERY OF THE MARCOS ASSETS
Dr. Jaime S. Bautista*

This paper tells of the Philippines’ recent experience abroad in its efforts to recover the ill-gotten
wealth of former President Ferdinand E. Marcos, his family, and his close business associates and thechallenges which the Philippines continues to face despite the judgments obtained in Switzerland, theUnited States, and the Philippines as bases for the forfeiture of the Marcos ill-gotten wealth.

I. MARCOS CASE IS CLASSIC CASE IN ASSET RECOVERY
You may recall that in 1986, the Philippines requested mutual legal assistance from Switzerland to
recover the alleged Marcos ill-gotten wealth at a time when there was no case law in Switzerland to guide
this effort. The Marcos case has, therefore, been described as the classic case in asset recovery.
Here, I wish to stress that the right to asset recovery is a fundamental principle of the UN Convention
against Corruption (UNCAC) because the right to asset recovery is the major deterrent to high level
corruption.
The relative success of the Philippines in recovering some of the Marcos ill-gotten wealth can becredited to a number of factors:
Firstly, President Corazon C. Aquino in the first law that she passed (Executive Order No.1) createdthe Presidential Commission on Good Government (PCGG), giving it the special mandate to recover all
ill-gotten wealth of the Marcoses and his close associates whether located in the Philippines or abroad. Thiswas followed by Executive Order No. 2 which empowered the PCGG to freeze said assets and to appeal
to foreign governments wherein such assets are located to take similar measures. Executive Order No. 14
authorized the PCGG to file civil and criminal cases with the anti-graft court, the Sandiganbayan, which
was given the exclusive original jurisdiction over these cases.
Secondly, there was in place a number of government institutions to assist the PCGG. Thus, Executive
Order No. 14 provides that the PCGG shall be assisted by the Office of the Solicitor General and othergovernment agencies in filing and prosecuting all cases investigated by it. The other agencies included the
Office of the Special Prosecutor in the Ombudsman assisting in criminal cases and the Central Bank of thePhilippines which assisted in freezing bank accounts.
Thirdly, there were laws to prosecute corruption such as Republic Act No. 1379, “An Act Declaring
Forfeiture In Favor of the State Any Property Found To Have Been Unlawfully Acquired By Any Public
Officer or Employee and Providing For the Proceedings Therefore”, which was enacted as early as 1955,
and Republic Act No. 3019, the “Anti-Graft and Corrupt Practices Act”, passed in 1960 before Mr. Marcos
became president. There was also the existence of the Sandiganbayan.
Moreover, the Philippines had the good fortune of recovering Marcos diaries and documents left
behind in Malacanang, the presidential palace, when the Marcos family fled Manila. These documents
revealed the existence of secret bank deposits in Switzerland and other financial centers. In addition, thePhilippine government recovered Marcos documents confiscated by the US Customs in Hawaii when Mr.
Marcos arrived in Honolulu. These documents included reports of business transactions received by Mr.
Marcos from his close associates.
The PCGG’s strategy in recovering Marcos ill-gotten wealth was to give priority to recovery of assets* V ice Chairman, International Law Association, Philippine Chapter. Dr. Jaime S. Bautista was called to fulfill official duties in the U.S.A on
9 December; therefore, Mr. Levy V. Mendoza, Director of Presidential Commission on Good Government, delivered the following paperon his behalf.

− 72 −

abroad because these are easier to dispose of and dissipate. PCGG’s first action was to file civil actionsin the United States to recover several buildings in New York City. In Switzerland, the PCGG requested
mutual legal assistance to recover bank deposits and securities.

II. MARCOS DEPOSITS IN SWITZERLAND OF CRIMINALPROVENANCE
After a long and tedious process, the Swiss Federal Supreme Court ruled there was little doubt about
the criminal provenance of the secret Marcos accounts and securities hidden in the Swiss banks. It orderedthat they be transferred to the Republic of the Philippines, subject to certain conditions and that theirdisposition be determined by a final enforceable judgment of the competent Philippine court.1
Among the conditions was that these accounts and securities be placed under escrow with thePhilippine National Bank and that they could be reinvested only in banks with Standard & Poor’s “AA”
rating.2
In 1998, Switzerland turned over to the Republic of the Philippines, as the requesting state, the bankdeposits worth some US$ 627 million, in accordance with the decisions of the Swiss Federal Supreme
Court, acting as an administrative court.
In 2000, Switzerland turned over two stock certificates of Arelma S.A., representing the entire
ownership of Arelma. This is a Panamanian entity created by Mr. Marcos which had opened a deposit with
Merrill Lynch in New York. The transfer by Switzerland of the stock certificates to the Republic of thePhilippines was made under the same conditions as the bank deposits.
The Swiss Federal Supreme Court dismissed the appeals of the Marcos foundations to prevent thetransfer of the bank deposits to the Republic of the Philippines, ruling that these foundations were merecreations of Marcos and under his control, that they had participated in his bad faith, and that they had notcontested this finding and could not show an acquisition in good faith independent of Marcos.3
The Swiss Federal Supreme Court also dismissed the petition of the Pimentel class of human rights
claimants to be admitted to the proceedings and enforce their judgment against Mr. Marcos on the groundthat they are creditors without proprietary rights and that, as human rights victims their remedy was topresent their claims before the probate proceedings for Mr. Marcos’ personal liability or file a claim fordamages against the Republic for the wrong committed by its organs.4

III. HAWAII JUDGMENT AGAINST MARCOS ESTATEThe Pimentel class of human rights claimants had obtained from the U.S. district court for Hawaii
an award of some US$ 2 billion for compensatory damages and exemplary damages against Mr. Marcos
for his personal liability for human rights violations, plus attorneys’ fees. The awardees consisted of 134
named claimants and some 10,000 unnamed claimants.5
The Philippine Government had intervened in this suit in Hawaii by waiving former President
Ferdinand E. Marcos’ personal immunity as a former head of state but it did not thereby waive its rights
to the Marcos ill-gotten wealth. The Hawaii court’s award was against the estate of Mr. Marcos, and notagainst the Philippine Government.
Worthy of note is the compromise agreement between the Marcoses and the Pimentel class, whereby

1. Federal Office for Police Affairs vs Aquamina Corporation, Panama (regarding request for mutual Assistance for the Republic of thePhilippines), 10 December 1997.
2.	Id.
3.	Id.
4. Id.
5. Multi-District Litigation (“MDL”) Case No. 840 (D. Hawaii).

− 73 −

the Marcoses were released from all criminal and civil liability in exchange for the payment of US$150
million to be taken from the Swiss bank deposits under litigation in the forfeiture case in the Philippines.
The compromise was to be in full settlement of the Hawaii judgment. It was approved by Judge ManuelReal of the US District Court of Hawaii.
The Sandiganbayan, however, rejected the compromise agreement as having no statutory or
constitutional justification. Among the reasons, the Sandiganbayan noted that the law provides that theill-gotten wealth of the Marcoses are to be used for funding the Comprehensive Agrarian Reform Program,and that it would be illegal to use these assets for the payment of a judgment debt against the Marcoses.
In the words of the Sandiganbayan, “the Republic cannot compensate its own citizens for the grave injury
done to them and then release from any liability the one or the ones responsible for that grave injury.” The
Sandiganbayan also noted that the attorney’s fees claimed was more than US $41 million or more than one
quarter of the compromise award, plus other expenses.6
Also worthy of note is that there are pending bills in both the Philippine Senate and the Houseof Representatives to pass the human rights compensation bills which would amend the Comprehensive
Agrarian Reform law.7

IV. SWISS FEDERAL SUPREME COURT DISMISSED PIMENTEL
CLASS PETITIONThe Swiss Federal Supreme Court ruled against the claim of the human rights claimants, noting thatcivil attachments cannot in general prevent a restitution in proceedings for mutual assistance, and that,in this particular case, the civil attachments were obtained after the blocking of the accounts in the legal
assistance proceedings and after it had already granted in principle the return of the assets to the Republicof the Philippines.8
The Court further ruled that the human rights claimants could not proceed against the blocked bankaccounts on the basis of human rights violations because there is no connection between the graft offenses
which probably generated the assets in Switzerland and the claims of the creditors (Pimentel c1ass).9
Neither from the UN Pact II nor from the UN Agreement against Torture is it possible to derive any
right of the victims to attach certain assets for previous compensation. Therefore, the victims of the Marcos
regime as a matter principle are obliged to either present their claim in the probate proceedings if they wantto assert Ferdinand Marcos’ personal liability for the human rights violations committed during his tenure,or they have to claim damages from the Republic for the wrongs committed by its organs.10

V. US DISTRICT COURT’S ORDER TO SWISS BANKS TO TRANSFERASSETS TO PIMENTEL CLASS VIOLATES SWITZERLAND’S
SOVEREIGNTYThe Swiss banks also opposed the return of the bank deposits to the Republic of the Philippines on
the ground that they could be held in contempt by the US District Court for disobeying its order to transfer
the assets to the Pimentel class.11

6. Republic of the Philippines vs. Ferdinand E. Marcos, et al. Civil Case No. 0141.
7. Cf. House Bill 3756 and S.B. 1532.
8.	Supra, note 1.
9.	Id. and Josepito C. Segui and other petitioners vs. Estate of Ferdinand Marcos, Decision of the Swiss Federal Supreme Court 1A.81/1998/
kls.
10. Id11. Supra, note 1. .

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The Swiss Federal Court noted that the US Court of Appeals for the Ninth Circuit in the case of In
Re Credit Suisse12 dated 3 December 1997 had already decided that the Order was at variance with thedecision of Switzerland to block the accounts upon the request of the Republic of the Philippines and that
it, therefore, violated the Act of State of Doctrine, and that the US District Court had been further directed
to refrain from taking any further action with respect to these assets.13
Furthermore, the Swiss Federal Supreme Court noted that even if the US Ninth Circuit had not
ruled in this sense, a refusal of the Philippine request because of the injunctions issued in the United States
would have been impossible for fundamental reasons. The Court noted that the injunctions seek to defeat
a legal assistance measure which had been validly ordered by the Swiss authorities and that Switzerland
has repeatedly intervened with the United States authorities and courts, pointing out that Swiss mutual
measures must take priority and that unilateral measures of American courts to force Swiss companies
within Switzerland to deliver the blocked accounts to the United states constituted a breach of Swisssovereignty.14

VI. PHILIPPINE JUDGMENT IS AN IN REM JUDGMENT
In compliance with the conditions of the Swiss Federal Supreme Court, the PCGG representing theRepublic of the Philippines filed a petition for forfeiture against Marcos assets, under the Forfeiture Law
in relation to Executive Orders Nos 1, 2, 14, 14-A for violations of the Anti-Graft Law in Civil Case No.
0141. The petition covered, among others, the bank deposits and the Arelma shares. On 15 July 2003, thePhilippine Supreme Court, after long delays due in great part to delaying tactics by the Marcoses, granted
the forfeiture of the bank deposits.15 On 18 November 2003, the Supreme Court en banc denied the Marcos’
motion for reconsideration and ruled that the forfeiture judgment was a judgment in rem.16 This judgment
was limited to the bank deposits and did not include the Arelma shares. Switzerland has acknowledged thevalidity of the Philippine judgment.

VII. US NINTH CIRCUIT HAS RULED THAT PHILIPPINE JUDGMENTWAS PROTECTED BY ACT OF STATE DOCTRINEThe Pimentel class human rights claimants then sought to pursue contempt and discovery proceedingsin the US District Court for Hawaii against the Philippine National Bank to prevent it from enforcing thePhilippine judgment. PNB thus filed for mandamus with the US Ninth Circuit to restrain the district court.
In issuing the mandamus, the US Ninth Circuit held in the case of In Re Philippine National Bank:17“There is no question that the judgment of the Philippine Supreme Court gave
effect to the public interest of the Philippine government. The forfeiture action
was not a mere dispute between private parties; It was an action initiated by thePhilippine government pursuant to its “statutory mandate to recover property
allegedly stolen from the treasury.” In re Estate of Ferdinand Marcos Human
Rights Litig., 94 F.3d at 546. We have earlier characterized the collection effortsof the Republic to be governmental. Id. The subject matter of the forfeiture action
thus qualifies for treatment as an act of state.”

12. Credit Suisse vs. United State District Court for the Central District of California, 130 F.3d 1342.
13. Id.
14. Supra, note 1.
15.	Republic v. Sandiganbayan, G.R. No. 152154, July 15, 2003.
16. Republic v. Sandiganbayan, G.R. No. 152154, November 18, 2003.
17. In re Philippines National Bank vs. United States District Court for the District of Hawaii Respondent, Maximo Hilao; Estate of Fernand
Marcos; Imelda Marcos; Fernand R. Marcos Jr. Real Parties in Interest, 397 F.3d 768.

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The mandamus vacated the district court’s order and directed it from refraining from any further
action against PNB in this action or any other action involving any of the funds that were the subject of thedecision of the Philippine Supreme court dated July 15, 2003.

VIII. REPUBLIC PLEADS SOVEREIGN IMMUNITY IN
INTERPLEADER PROCEEDINGSIn 2000, Merrill Lynch filed for interpleader before the US District Court presided by Judge ManuelReal because of the conflicting claims of the Pimentel class, among others.
In Singapore, the Pimentel class also filed a claim with WestLB, one of the banks in Singapore where
PNB deposited all the accounts it held in escrow, in compliance with Switzerland’s condition that it could
re-invest these funds only in banks with Standard & Poors “AA” rating. All the other banks had compliedwith title Philippine judgment forfeiting the accounts in favor of the Republic. WestLB also complied,
except for the accounts that had not matured.
WestLB filed for interpleader but did not implead the Republic of the Philippines. The Republic filed
motion to intervene but only to invoke its sovereign immunity. The Republic of the Philippines/PCGG also
pleaded sovereign immunity in the interpleader for the Arelma assets filed by Merrill Lynch.

IX. US SUPREME COURT DECISION UPHOLDS SOVEREIGNIMMUNITYIn the United States, the US District Court presided by Judge Manuel Real recognized the Republic’s/
PCGG’s sovereign immunity but proceeded to dismiss them from the case. In the absence of the Republic/
PCGG, he proceeded with the case and awarded the Arelma assets to the Pimentel class of human rights
claimants.
The Ninth Circuit reversed the decision, holding that the Republic/PCGG are entitled to sovereign
immunity and are required parties, and entered a stay pending the Sandiganbayan’s decision.
Judge Real, however vacated the stay, holding that the litigation in the Sandiganbayan could not
determine entitlement to the Arelma assets. The Ninth Circuit affirmed. The Republic/PCGG filed for
certiorari. Recognizing the importance of the issue of sovereign immunity, the US Supreme Court granted
the Certiorari and ordered the US Government to present its views.
The US Government represented by the State Department and the US Solicitor General duly
supported the Philippines’ position that the interpleader be dismissed and that the issue of the ownershipof the assets should be determined by the Philippine courts. The US Supreme Court after oral arguments
dismissed the interpleader, ruling that the lower courts erred in not giving sufficient weight to sovereign
immunity when they awarded the assets to the human rights claimants.
The Court stated that it is clear that an analysis of joinder cases “instruct us that, where sovereign
immunity is asserted, and the claims of the sovereign are not frivolous, dismissal of the action must beordered where there is potential to injury to the interests of the absent sovereign.” The US Supreme Court
noted that: “The entities’ (Republic of the Philippines and its agency, the Presidential Commission on
Good Government) claims arise from historically and politically significant events for the Republic and its
people, and the entities’ have a unique interest in resolving matters related to Arelma’s assets.”18
The Philippines’ case was greatly assisted by the authoritative replies of the US Deputy Solicitor
General in answer to a number of issues raised by the Justices of the US Supreme Court:

18. Republic of the Philippines et al vs. Pimentel, Temporary administrator of Estate of Pimentel. Deceased et al. 12 June 2008.

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◦With respect to the requirement of due process and the right to intervene in the Sandiganbayan,
the claimants are unsecured judgment creditors. In the reverse situation, if they were suing as
creditors of a criminal defendant in forfeiture proceedings brought by the United States in US
courts, they would typically have no standing to intervene. But if they do intervene, they would
have no rights superior to the US because they would not be bona fide purchasers and they would
not be without knowledge of the illegal conduct.
◦As to whether the Republic was inconsistent in supporting the litigation in Hawaii against former
President Ferdinand E. Marcos, and then preventing the class claimants from enforcing judgment
against the Arelma assets, the Republic was in exactly the same position as the US would be if
the US filed a brief in this Court saying that a former Government official did not have qualified
immunity and could be sued in his personal capacity, or that the Westfall Act did not protect him,
but that would in no way be a representation by the US that the judgment against that officer could
be satisfied out of assets of the United States including assets that the United Slates might beseeking to recover from the defendant.

X. REPUBLIC EXPECTED COMITY FROM SINGAPORE COURTS
In the interpleader case filed by WestLB bank, the Republic of the Philippines did not immediatelyintervene and it asked to be impleaded after two years, when the lower court did not approve PNB’s
application for forum non conveniens.
The Republic did not immediately intervene because it expected comity from the Singapore courts.
The Philippine Supreme Court had rendered an in rem judgment forfeiting the funds to the Republic. The
Swiss Government had recognized the validity of the Philippine judgment and emphasized the importanceof giving validity to the legal assistance that Switzerland had provided to the Republic of the Philippines.
The US Ninth Circuit Court had recognized the forfeiture judgment as an act of state and ordered the
district court to stop from interfering.
Singapore’s Foreign Sovereign Immunity Act provides that its courts can recognize the sovereign
immunity of a foreign state even though the foreign state does not appear in the proceeding in question.

XI. SINGAPORE PROCEEDINGS APPEAR TO RUN COUNTER TO
CURRENT TRENDS ILL MULTI-LATERAL CO-OPERATIONThe High Court stated it was satisfied that the Republic of the Philippines had established sufficient
standing to apply to stay the proceedings, citing the test applied in Juan Ysmael & Co. Inc vs Governmentof the Republic of Indonesia. This is similar to the rationale of the decision of the US Supreme Court in
the Arelma case. But the High Court further ruled that the Philippines had submitted to the jurisdiction of
the court through implied waiver even though the Republic had expressly declared that it was intervening
solely to plead its sovereign immunity and was not submitting to the jurisdiction of the forum.
Pending appeal of this judgment to Singapore’s Court of Appeal, Switzerland forwarded an Aide
Memoire to Singapore’s Ministry of Foreign Affairs, upon the request of the Philippine Government.
The Aide Memoire informed the Ministry of the legal assistance provided by Switzerland to thePhilippines, and emphasized the importance of close cooperation between governments in dealing with therecovery of illicit assets. The Aide Memoire concluded:“..... The proceedings before the Court of Appeals of Singapore appear to run
counter to the current trends in multilateral cooperation represented by the− 77 −

Convention and by Switzerland’s own prior actions in assisting the Philippinesand could make future inter-governmental cooperation in such matters more
complicated.
Switzerland trusts upon the willingness of other countries to acknowledge
the legal property of the Republic of the Philippines in accordance with thedecisions of the Swiss Federal Supreme Court to hand over these assets to the
Republic of the Philippines.”
It is apparent that the Singapore Court of Appeal was unaware of the concerns conveyed by
Switzerland in this Aide Memoire when it issued its decision establishing a new doctrine that sovereign
immunity cannot cover intangibles such as choses in action.
Thus, the court did not have the benefit of considering the new dimension of international cooperationin recovery of ill-gotten assets due to corruption and the full legal implications of mutual legal proceedings
as sovereign acts of both the requested state and the requesting state. This explains, in my view, the treatmentby the Court of Appeal of the Marcos ill-gotten assets as a proceeding between private litigants and failed
to give cognizance to the Philippines’ sovereign interests and recognize the legal effects of the transfer ofpossession of the bank accounts from the requested state to the requesting state.
The High Court now has all the information before it to have a fuller appreciation of the sovereign
claim of the Republic of the Philippines. Hopefully, the court will now be able to consider an early dismissalof the claims of the Pimentel class and the Marcos foundations, based on a number of grounds, including
the Act of State or Comity, estoppel and forum shopping, prescription, and lack of legal personality.
A different decision would be incomprehensible. The Singapore courts would have to invalidate
the judgment of the Philippine Supreme Court, defeat the legal assistance provided by Switzerland to thePhilippines and ignore the judgments of the US Courts of Appeal and the US Supreme Court for thesecourts to decide to hand over the Marcos ill-gotten assets to the Pimentel class.
With respect to the Marcos foundations, practitioners familiar with the Marcos case are surprisedthat the foundations are still in the picture especially because the return of the assets to the foundations
would partake of money-laundering.

XII. UNCAC RESOLUTION TO REMOVE BARRIERS TO ASSETRECOVERY: SIMPLIFY AND PREVENT ABUSE OF LEGALPROCEEDINGSThe Conference of the States Parties to the United Nations Convention, bearing in mind that thereturn of assets is one of the main objectives and a fundamental principle of the United Nations Convention
against Corruption and that States parties to the Convention are obligated to afford one another the widest
measure of cooperation and assistance in that regard, issued a far-reaching Resolution on Asset Recovery
at its third session recently held at Doha on 9-13 November 2009.
This UNCAC Resolution, sponsored by many countries including the Philippines, encourages States
parties to eliminate or reduce the barriers to asset recovery by, among others, taking measures to simplify
and prevent the abuse of legal proceedings.19

19. Doha Resolution on Asset Recovery, paragraph 10.

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XIII. CONCLUSION
The litigation to recover the Marcos ill-gotten assets hidden in Switzerland begun in 1986, more than
two decades ago and should not be prolonged any longer by third party claims.
It is respectfully submitted that, as suggested by the abovementioned Swiss Aide Memoire, thepending interpleader in Singapore is an abuse and misuse of judicial proceedings by the Pimentel class,which want to have another bite at the cherry, after failing in the Swiss proceedings and the US proceedings,
as well as by the Marcos foundations which have no legal or beneficial interest in the assets.
As the financial center in Southeast Asia, Singapore’s long awaited ratification of the United Nations
Convention against Corruption will show its commitment to UNCAC and display its goodwill to its
neighbors and its partners in the region− 79 −

CORRUPTION: THE CASE IN CAMBODIA
Vathanak Sina Neang*

I. DEFINING CORRUPTION
Corruption may be defined as the abuse of public position for personal gain or for the benefit of
an individual or group to whom one owes allegiance. Corruption occurs when a public official accepts,
solicits, or extorts a payment, or when private agents offer a payment to circumvent the law for competitiveor personal interest (CSD, 2002:72). Corruption is a two-way process, involving members of both the
public and private sector, or a “giver” and a “taker” who are engaged in illegal, illegitimate and unethicalaction.

II. FORMS OF CORRUPTION
Corruption takes a variety of forms: bribery, nepotism, patronage, theft of state assets, evasion oftaxes, diversion of revenue and electoral fraud. The theft of state assets by officials in charged of the
stewardship, and manipulation or violation of electoral laws regarding campaign finance and voting is also
considered as corruption.
Distinction should be made between “greased” corruption which is payment made to or sought by
public official for performing their legal duties, or sought for illegal action. Distinctions are officials and“grand” corruption, which is practiced by senior officials obtaining large benefit for themselves.
Corruption should be “individual” or “collective” according to the number of people involved. Further,it should be classified as “systematic” and “non-systematic” according to the degree whether the corruption
was planned and purposely organized. In Cambodia, usually promoting someone to a high government
position is connected to his/her contribution in own party’s interest, so sometimes the corruption is seen tohave a chain and cyclical character.

III. FACTORS AFFECTING CORRUPTION
In general, it can be said that corruption flourishes where the institutions of government are weak,where a government’s policy and regulatory regime provide scope for, where oversight institutions(parliament, judiciary, civil society) are marginalized or corrupted themselves. It must be stressed that thecauses of corruption are highly contextual, rooted in a country's political development, legal development,social history, bureaucratic traditions, economic conditions and policies. Therefore, efforts needed tocombat corruption tend to vary from one country to another.
(a) Political Factors: Corruption levels are linked to the strength of civil society, freedom and independentof the press. Furthermore, for Cambodian
context, due to the fact that the government is formed and influenced by political parties, so the objectives
and political strategies play a dominant role in getting and spending their resources. Sometime, thecorruption cycle seems to be appeared from time to time and becomes systematic.

* Director, Legal Affairs Department, Ministry of Justice, Cambodia.

− 80 −

(b) Legal and Ethical factors: A major factor that linked to corruption is the quality of the country legal
system, to the existence of effective anti-corruption laws and to the capacity to enforce laws. The corruption
also takes place where the ethical value was neglected by the people, for instance, people who commit
corruption neglect their dignity and follow their egoism.
(c) Bureaucratic factors: In setting with higher regulatory and bureaucratic interventions in the economy,
the incidence of corruption tends to be higher. Where government imposes a large number of rules andregulations, there is greater opportunity for public officials to exploit or subvert them. As discretion
increases and accountability declines, the potential for corruption grows.
(d) Salary factors: Where the wages of public servants are low or there exists a large disparity between
public and private sector wages, public servant are more tempted to engage in corrupt practices.
(e) Economic factors: Corruption is more likely to proliferate where government creates monopolistic
economic setting.

IV. CONSEQUENCES OF CORRUPTION
The endemic corruption has severe consequences for the quality of governance and efforts to attainsustainable development. Corruption is a form of public theft. In stead of acting “grease”, corruption serves
as a kind of “sand” in the gears of public policy decision-making.
A. Political Consequences
Corruption is insidious, attacking the quality of governance and national stability by undermining
the legitimacy of the political process. It fosters contempt for the public service and leads to cynicism
about politics. It distorts decision-making, resulting in the wrong projects, prices and contractors,
substandard delivery, and promoting of corruption at lower levels. Corruption in the election has also
serious consequences. Because of the election campaigns are expensive, candidates and parties rely on
funding from wealthy individuals or corporations.
B. Economic Consequences
Corruption compromises the achievement of sustainable development objectives. Bribery results inadditional business costs, a burden to small entrepreneurs, and the allocation of the country’s human capitaland talent. The continuous attention demanded of business by corrupt officials also threatens economic
productivity.
Corruption distorts the fair rules of competition. A majority of firms doing business in Cambodia
identified unfair or informal competition as at least a moderate problem. Of a variety of potential practicesof competitors evaluated that the competitors conspiring to make them in unfair and difficult situation incompetitions, such as limit of their access to market and suppliers, competitors, some perceived that the
government does not treat firms equally.
Corruption becomes focused on the highest bribe, thereby denying the public advantage of acompetitive marketplace.
The poor bear the heaviest burden in such situation, reinforcing gaps between rich and poor.
Corruption results in tax evasion and significant losses of revenue for the State. It slows direct foreign anddomestic investment because it is perceived as a form of taxation. Corruption causes major misallocationof scarce resources. Instead of meeting basis needs such as food, health and education, resources are
sometimes used to finance purely prestige projects with no economic value. In short, the corruption is atroot of under-development and poverty.

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C. Social Consequences
The political and economic consequences have significant social impact. The corruption demoralizes
the population and leads to a lack of confidence on the State Institutions. If it is allowed to expand,corruption erodes political legitimacy. Corruption also causes unequal distribution of public assets andfunds to different social class. Very often the poor are the victim of the corruption. Unfortunately, many
Cambodian (84%) treat bribery as the normal way of life in their country (CSD, 1998:38).
In brief, uncontrolled corruption also undermines the credibility of democratic institutions and works
against good governance. It is the most visible consequences are poor public services, increased social
polarization, disinvestments and exclusion.
Corruption on its most basic level is the diversion of public finance and material resources awayfrom the public use for which they are intended. Corruption is simply the private benefit of a few powerful
officials at the expense of the people. Money that should go to the treasury in order to provide for thepeople, through corruption is instead going into the pockets of the senior officials.
In a speech at the conference on Corruption and its impact on National Reconstruction andReconciliation, Finance Minister estimated that the state as losing up to USD 100 million a year tocorruption, primarily because of illegal logging, rubber exportation and fishing (CSD, 1995). Other sources
are skeptical that the above assessment was quite low and put the cost at $ 300 million (CSD, 2002:58).
Corrupt practices are responsible for a catalogue of environmental disasters, in particular thedestruction of Cambodia’s forests – natural resources which the country can, but ill afford to lose. In 1997,
the International Monetary Fund canceled $ 60 million in loans to Cambodia because of corruption tin thetimber industry. Taking its lead from the IMF, The World Bank declined to renew its budgetary support.
Over three years, that support had amounted to roughly $ 85 million (Reuters, 9/23/97).
After discovering that large quantity of rice reportedly worth more than a million dollars was stolen,
the WFP alerted the government of the scandal. Many people, including its staffs and government officials
involved in this fraud. The WFP has halted new Food for work activities until it can implement safeguards
against corruption. Prime Minister Hun Sen agreed to reimburse the WFP for it losses (Cambodia Daily,
9/08/2004).
Recently, the World Bank’s report revealed that the pervasive corruption, a suffocating bureaucracy
and weak law enforcement are crippling the growth of private business, rending them uncompetitive globally
economy. Roughly, 80 percent of 800 firms surveyed in the report acknowledged that “the necessity of
paying bribes,” which eats up an averages of 5.2 percent of total sales revenue –more than double theamount paid by their counterparts in Bangladesh, Pakistan and China. The report is also mentioning “Tradefacilitation practices in Cambodia stand out in having high official and unofficial costs, delays, uncertainty
and discretion – a critical problem for a country that must rely on exports for growth. In addition tocorruption fees, the report found, firms also pay in time wasted through bureaucratic delays. The complaintsof businesses regarding overlapping and time-consuming governmental procedure need to be thoroughly
examined, and when these complaints must be justified and corrected.

V. CORRUPTION CASE
In order to start a business in Cambodia, business owner needs to have licenses from different
governmental organizations and local authority. Every place where they ask for the services usually takes
long time to process the request. The total cost of this process is carried out by an entrepreneur acting
alone is about US$ 1500, and the total time required is around 94 days. The cost which include unofficial
fees is very high. Unfortunately, registered firms in urban areas paid three times more informal fees thanunregistered firms. Formal registered firms spend more time dealing with public official.
Import and export processing, involving a multiplicity of steps, introduce substantial delays,
uncertainty, and discretion into the process of trading goods. If they purchases machines, tools or raw
materials from abroad, they need or don’t need to pay tax according to the conditions that they export theirproducts or not. To get their imported machines, raw materials from the port warehouses, business firms− 82 −

need to fill and present many documents. The port authority, Customs official, and Camcontrol have tocheck the goods imported. In each request these government officials to verify the bills, the transaction isformed. Garment factories, responsible for more than 90 percent of the country’s exports, typically hire
brokers to clear goods from Camcontrol, trade preference and Customs. To bring a 40-foot container fromthe seaport of Sihanouk Ville to Phnom Penh, a factory has to pay around US$800, half of which is hidden
cost whereas in Vietnam it costs $US 200, in China it cost $US 350, in Indonesia it costs $US 320, in
Malaysia it costs $US 300, in Sri Lanka it costs $US 484, in Madagascar it costs $US380 (Materials fromthe 6th private sector forum).
Trading firms reported that border police and veterinary and phyto-sanitary office also carry out theirown inspections. So each step involves delays, formal costs and informal payments. Customs clearance
by itself imposes substantial delays and great variation, and hence, unpredictability. On average, firms
report that import take 6.5 days and great variation, exports take 4.5 days. However, this timing is variable.
Clearance at the port of Sihanouk Ville involves, for Customs purpose only, twelve steps, which mainly
consist in visiting, sometimes repeatedly, key officials. Importer must see during the clearance (i) Customs
headquarters, (ii) twice the chief of Customs at Sihanouk ville, (iii) twice the chief of port Customs, and(iv) twice his deputy; two different positions are responsible for affixing stamps on the declarations. Eachstep may involve long waits and negotiations. All cargo that is neither sealed nor pre-inspected by SGS
is submitted to a routine X-ray scan (with very limited rates of detection of irregularities), after which a
decision is made whether or not to inspect the shipment. All goods taken out of the port can be re-examinedat the gate (World Bank report, 2004: 18-19)
After the production, the garment factories additionally need to have Certificate of Origin from thetrade preference department of Ministry of Commerce. Department needs to inspect goods before issuing
the above certificate. During the inspections money regularly exchanges hands. It cost them from $150 to$170 and half of which is hidden costs. Then they have to transport container full of finished garment backto the seaport. The outbound cost is about 880 $US, as they need to accommodate additional inspection(Materials from the 6th Government – private sector Forum).
Cambodian firms are subject to an unusually high number of inspections, averaging 16 per year.
Officials usually do not see something wrong with their practices. “It’s not bribery, it’s more like
sympathy. Some small thing to sustain the life of the inspectors.” But the cost of doing business in Cambodia
is not similar for all. Companies with links to “senior officials” pay less for inspections. Paying at least 5.5
percent of business annual revenues in unofficial fees could be just too high for many (Phnom Penh Post,
June 4-17, 2004).

VI. MEASURES TAKEN BY THE ROYAL GOVERNMENT OF CAMBODIAThe Royal Government completed some other activities to cope with corruption:
In 1996, three customs officials were suspended for a document-forging scheme in which they
undervalued imported vehicles so they pockets the difference in import duties, which amounted to hundredsof thousands of dollars. Later, Second Prime Minster Hun Sen warned 1,000 to 2,000 customs officials thatthey risked losing their jobs if they continued cheating the country out of badly of needed tax revenues(Associated Press, 10/17/1997).
In 1999, Prime Minister Hun Sen told a forum that Customs officials who demand bribes would
be fired. He added, “Mr. Customs has to stop disturbing investors. Customs is the king of corruption”(Cambodia Daily, 3/27-28/04).
Recently, Prime Minister Hun Sen said in a strongly worded speech at CDC: “If we don’t ban
corruption, we will lose investment and we will die”. The premier also announced several “concretemeasures” to streamline the import-export documentation process in an effort to reduce corruption andmake the garment industry more competitive. From 1 September 2004, the Customs and Excise Department
and Camcontrol will conduct joint inspections. Also, the cost of registering a business at Commerce
Ministry will drop from $615 to $177 and the time spent on paperwork will be cut from 30 days to 10 days

− 83 −

(Cambodia Daily, 8/21-22/2004).
◦Facing the invasive corruption, the government agreed that it must do more to improve theinvestment climate by tackling the high cost of business, bureaucratic red tape and corruption.
During pre-CG meeting, Prime Mister Hun Sen responded to the donors’ concerns, declaring“war” on corruption, legal and judicial reform and public administration reform. He announced
that he would force his ministers to answer questions from the National Assembly once a week.
He threatened to bring to court any official who do not change their corrupt activities (Cambodia
Daily, 9/11-12/2004).
◦At the National Conference on Strengthening Good Governance Poverty Alleviation andDevelopment on 14 December 2004, Prime Minister said that the tax revenue amounts to mere
7.5 percent o the government’s budget compared to 8.6 percent in Laos. He announced that in aneffort to generate greater tax revenue and impose stricter rule in the bureau he would remove the
Finance Ministry’s tax department director from his post. In addition, the premier announced tooffer incentives to those who apprehend smugglers (Cambodia Daily, 15/12/2004).
◦Addressing at the National Health Congress on 03 March 2005, Prime Minister announced an
emergency campaign by using “iron fist” of judicial reform, vowing to re-arrest hundreds ofarmed robbers who bribes their way out of jail and to arrest of corrupt judges and prosecutors(Cambodia Daily, 04/03/2005).
Report on corruption in Cambodia Page 6 of ▪The Commerce Minister Cham Prasidh, 14 March
2005, vowed to resign at the end of the year if by that time corruption still plagues the taxation and regulationof the garment industry. He added, “in order to help the garment sector to survive, we must cut all the underthe-table costs,” “How can I still be a commerce minister if the garment industry dissolves?” Last month on
February, Prime Minister Hun Sen laid out a 12-step plan aimed primarily at ending corruption affecting
export industries. The plan focused on simplifying customs procedures and eliminating opportunities forbribe-taking (Cambodia Daily, 14/03/2005).
Speech at the close of the Ministry of Interior's annual conference on 17 March 2005, Prime Minster
Hun Sen warned that police, military, court, and government officials will be punished if they are caught
conspiring with those who run the sex trade. He said, "Regardless if you are wearing star ranks, even moon,
you will be remove". (Cambodia Daily, 18/03/05)
Besides warning, blaming and promising made by the Prime Minister, the government has achieved
many concrete measures such as:◦Establishment of National Assembly-Senate Relations and Inspection◦Set up the National Auditing Authority, an independent public institution shall report directly to the
National Assembly, Senate and the Royal Government for information purpose.
◦Establishment of "Priority Mission Group" (PMG) with technical assistant of ADB◦Acceleration of legal and judicial reform program◦Completion of the Governance Action Plan (GAP): the eight priority areas such as the Legal and Judicial
Reform, Administrative Reform, Decentralization and Local Governance, Public Finance Reform, AntiCorruption, Gender equity, Demobilization and Reform of the Armed Force, and the Reform of Natural
Resources Management.
◦The government subsequently drafted its own legislation concerning anti-corruption◦Set up regular forum between investors and government officials
The government launched the Rectangular Strategy acknowledging good governance and fighting
corruption are quite important.

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VII. ACTION TAKEN BY STAKEHOLDERS TO FIGHT CORRUPTION
A. The National Assembly and Senate
The National Assembly had adopted Law on Audit and Civil Servant Statute Law.
B. Political Parties
In Cambodia, during the 1998 and the 2003 election campaign, anti-corruption measures werefeatured in every major party’s political platform.
C. International Organizations and Donor Countries
They asked the Government to submit the Anti-corruption draft law to the National Assembly byJune 2003, and urged the Government to endorse the Anti-corruption Action Plan for the Asia and Pacific,
which already been adopted by seventeen other Asian and Pacific government in Tokyo in 2001.
1. Civil Society
Many non-profit organizations play a crucial role n combating corruption. Among them, Center forSocial Development (CSD) actively organizes conferences, seminars, publishes and distributes journals
and brochures educated how to deter corruption.
2. Citizenship
From time to time the people complaint about the local authority, police or soldiers who ask the bribe
when the people transport their farm product to the markets.
3. The Press
The press from time to time publish stories on corrupt cases.

VIII. CONDITIONS FOR A SUCCESSFUL ANTI-CORRUPTION CAMPAIGN
Now it is recognized that in order to fight corruption successfully, there are seven crucial factors, as
follows:(i) Will
It must have strong a political will to deal with this problem.
(ii) Law
It must be a strict law defining clear offenses, showing the value of community, power for effective
investigation, and rules of evidence for a fair prosecution for those who accused of corruption.
(iii) Strategy
To fight corruption it must have a clear, full and consistent strategy which consists of three significant
components:◦Effective law enforcement,◦Deterring corruption by elimination of loopholes which may cause both grand and greased corruption,◦Deterring corruption by educating and encouraging the public people to contribute and fightcorruption.
(iv) Facilitating Activities
In order to make the above components effective, it must have the facilitating activities.
(v) Resources
Leaders have to recognize that to fight corruption successfully it depends upon both human and− 85 −

financial resources.
(vi) Public Support
The authorities are not able to fight corruption without contribution of people, so all the communities
should join from the start.
(vii) Patience
Everyone should be aware that to gain success in fighting corruption it takes times and may cause hurt.
Furthermore, when the measures are taken, they shall be under a continuous supervision. As a result, thecommitment needs a long period of times and resources for anti-corruption in which permanent expenditureof annual national budget is required.

− 86 −ANTI-MONEY LAUNDERING MEASURES TO FREEZE,CONFISCATE AND RECOVER PROCEEDS OF CORRUPTION
IN THE INDONESIAN PERSPECTIVE
Yanuar Utomo*

I. INTRODUCTION
Combating money laundering has been a primary concern for Government of Indonesia (GOI) since
the economic and political crises erupted in 1997. The GOI paid more attention in eradicating such criminal
activities, both because of our domestic needs and to meet our international commitments. It is deemednecessary to eradicate those criminal acts because the domestic crises occurred mainly due to corruption,collusion and nepotism -- fundamental weaknesses that are basically homegrown problems.
Moreover, money laundering is not only a national crime but also a transnational crime, therefore
it has to be eradicated, among other things by engaging in regional or international cooperation throughbilateral or multilateral forums. Internationally, the prevention of the criminal offenses of money launderinghas been promoted by the establishment of a task force known as The Financial Action Task Force (FATF)
on Money Laundering by the G-7 Summit held in Paris on July 1989. Indonesia is yet a member of FATF,
but has been a member of the Asia Pacific Group on Money Laundering (APG), an international cooperation
organization established in 1997 to cooperate with FATF in the Asia Pacific regions.
With regards to the links between corruption and money laundering issues as mentioned above,
many initiatives have been developed. Several initiatives and products of the United Nations in generaland of United Nation Office on Drugs and Crime (UNODC) in particular are relevant to the links between
corruption and money laundering. As it may be aware that the UNODC has developed the United Nations
Convention against Corruption (UNCAC), which has been signed by 106 countries.
The UNCAC obliges Member States in its Article 14 to institute a comprehensive domestic regulatory
and supervisory regime for banks, non-bank financial institutions, and other bodies particularly susceptible
to money laundering to deter and detect all forms of money laundering. Moreover, UNCAC obliges Member
States to establish as criminal offences the laundering of the proceeds of corruption, as well as to consider
the establishment of the offence of concealment or continued retention of property, which is the result of
any of the offences established in accordance with UNCAC.
This paper will present the nature of the crime of money laundering, the anti-money laundering
measures, the Indonesia’s perspective on anti money laundering measures, and the links between corruption
and money laundering.

II. THE CRIME OF MONEY LAUNDERINGIn plain words, money laundering is a process where cash or property that has been obtained orderived from illegal or criminal activities is converted into a seemingly legitimate source.
Money Laundering is then a process used by people (usually criminals) to conceal the illegal origin ofmoney derived from criminal activities, like corruption, drug trafficking, smuggling, fraud, embezzlement,
and so on. Money launderers attempt to conceal or disguise the source or origin of their illegal moneywith the gainful and commercial intent of legalising them so that these proceeds can be seen as legitimate
sources.
Why do people launder money then?

*Head, Sub Division Monitoring and Evaluation, International Legal Cooperation Division, AGO, Indonesia.

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The money launderer wants to distance or separate himself from the criminal activity that generates
illegal profits that it will be hard to prosecute the key organizers who are involved in the illegal activities.
A. Money Laundering Processes
Money laundering involves three stages:
1. Placement
This process involves the physical disposal of the illegally obtained cash or property proceeds. The
physical entry of bulk cash or illegally obtained funds is achieved via placement into the financial or trading
systems.
2. Layering This process separates the illegal proceeds from their illegitimate source through a series oftransactions (banking or payment transaction), where such transactions create the appearance of anonymity,and obscure the audit trail.
3. Integration
Integration is last stage of cleaning the “dirty” money. In this process, the illegal proceeds are placedor ‘mixed’ with the other normal, legitimate transactions or deposits. Such transactions now become normal
business or legitimate funds/proceeds circulating and in use in the actual economy

III. THE ANTI-MONEY LAUNDERING MEASURES
A. Reporting Parties
1. Revised FATF Recommendation 13 & 16:
If a financial institution suspects or has reasonable grounds to suspect that funds are the proceeds ofa criminal activity, or are related to terrorist financing, it should be required, directly by law or regulation,
to report promptly its suspicions to the financial intelligence unit (FIU).
The report requirements also apply to all designated non-financial businesses and professions, subject
to the following qualifications:(i)	Lawyers, notaries, other independent legal professionals and accountants should be required
to report suspicious transactions when, on behalf of or for a client, they engage in a financialtransaction in relation to the activities described in Recommendation 12(d).
	Countries are strongly encouraged to extend the reporting requirement to the rest of theprofessional activities of accountants, including auditing.
(ii) 	Dealers in precious metals and dealers in precious stones should be required to report suspicioustransactions when they engage in any cash transaction with a customer equal to or above theapplicable designated threshold.
(iii)	Trust and company service providers should be required to report suspicious transactions for aclient when, on behalf of or for a client, they engage in a transaction in relation to the activities
referred to Recommendation 12(e). Lawyers, notaries, other independent legal professionals,
and accountants acting as independent legal professionals, are not required to report theirsuspicions if the relevant information was obtained in circumstances where they are subject toprofessional secrecy or legal professional privilege.
2. Indonesian Context
Law No.15 year 2002 concerning the Crimes of Money Laundering as amended by Law No.25 year
2003 (AML Law) says Reporting Parties shall be Financial Service Providers (FSP), which are any person
providing services in the financial field or other services in relation to finance, including but not limited
to banks, financial institutions, securities companies, mutual fund managers, custodians, trust agents,− 88 −

depository and settlement agencies, foreign exchange traders, pension funds, insurance companies and thepost office.
In the near future, they will be expanded to include DNFBPs, such as lawyers, notaries, accountants,
real estate agents, and so on.
B. Exception of Bank Secrecy
1. Revised FATF Recommendation 4Countries should ensure that financial institution secrecy laws do not inhibit implementation of the
FATF Recommendations
2. Indonesia Context
Article 14 AML Law clearly stipulates that the reporting obligations of Providers of Financial
Services which are banks shall be exempted from bank secrecy provisions as contained in laws regulatingbank secrecy.
C. Safe Harbour
1. Revised FATF Recommendation 14
Financial institutions, their directors, officers and employees should be:(i)	Protected by legal provisions from criminal and civil liability for breach of any restriction on disclosureof information imposed by contract or by any legislative, regulatory or administrative provision, if theyreport their suspicions in good faith to the FIU, even if they did not know precisely what the underlying
criminal activity was, and regardless of whether illegal activity actually occurred.
(ii)	Prohibited by law from disclosing the fact that a suspicious transaction report (STR) or related
information is being reported to the FIU.
2. Indonesian Context
Article 15 AML Law stipulates that no civil or criminal action can be brought against Providers ofFinancial Services, their officials and their employees for carrying out of reporting obligations as requiredby Law
D. Special Protection for Witnesses and Reporting Parties
Article 40 Indonesian AML Law stipulates that any person reporting a suspicion that the crime ofmoney laundering may have occurred shall be provided with special protection by the state against possible
threats endangering the person, their life, their family and/or their assets.
The Government Regulation No.57 Year 2003 and Chief of Indonesia National Police Decree No.17
Year 2005 shall be implementing regulations.
E. Financial Intelligence Unit (FIU)
1. Revised FATF Recommendation 26 & UNCAC Art.58
Countries should establish an FIU that serves as a national centre for the receiving (and, as permitted,
requesting), analysis and dissemination of STR and other information regarding potential money launderingor terrorist financing. The FIU should have access, directly or indirectly, on a timely basis to the financial,administrative and law enforcement information that it requires to properly undertake its functions,
including the analysis of STR.
2. The Egmont Group definition of FIUs
A central, national agency responsible for receiving, (and as permitted, requesting), analyzing anddisseminating to the competent authorities, disclosures of financial information concerning suspected− 89 −

proceeds of crime and potential financing of terrorism or required by national legislation or regulation, inorder to combat money laundering and terrorism financing.
F. Financial Analysis
Financial analysis is the second element of the core functions of an FIU after receiving report.
The main purpose of analysis is to establish whether the data contained in the reports, substantiatedas necessary by the FIU, provide a sufficient basis to warrant transmitting the file for further investigationor for prosecution (as the case may be).
The analytical process starts with the receipt of a report, continues with the collection of additional
related information, goes through different forms of analysis, and ends with either a detailed file concerninga money-laundering case that is forwarded to the law enforcement authorities or prosecutors or the reachingof a conclusion that no suspicious activity was found.
G. Investigation
Investigation is obtaining of information that has relevance in criminal proceedings.
1. Revised FATF Recommendation 27
Countries should ensure that designated law enforcement authorities have responsibility for money
laundering and terrorist financing investigations. Countries are encouraged to support and develop, as far
as possible, special investigative techniques suitable for the investigation of money laundering, such as
controlled delivery, undercover operations and other relevant techniques.
2. Indonesia Context(i) Proactive Data Gathering (Pre-Investigation)
With its initiative, INTRAC would gather the financial information involving the suspected persons
in particular cases. The provided information may lead to the Proactive Investigation.
(ii) Proactive Investigation
The police investigators or the prosecutors would then conduct the investigation based on the
PPATK’s referrals.
H. Access to Customers’ Information
1. Revised FATF Recommendation 28
When conducting investigations of money laundering and underlying predicate offences, competentauthorities should be able to obtain documents and information for use in those investigations, and inprosecutions and related actions. This should include powers to use compulsory measures for the productionof records held by financial institutions and other persons, for the search of persons and premises, and forthe seizure and obtaining of evidence.
2. Indonesia Context
When conducting investigation, prosecution and examination before the courts of money laundering
crimes, Article 33 Indonesian AML Law authorizes investigators, public prosecutors or judges request
information from Providers of Financial Services regarding Assets of any persons reported by the PPATK,
a suspect, or a defendant for the purpose of the court proceedings.
I. Asset Tracing
Asset tracing is an essential part of financial investigation. The objectives of this activity are:
◦To trace the proceeds of crime, Analysis of legal sources of wealth compared to the assets;◦To secure the order of value based confiscation;− 90 −

◦To determine what the suspected person has to prove that has been legally obtained (when reversed
burden of proof);◦To calculate the size of the proceeds;◦To determine the level of the fine
J. Asset Recovery
1. Revised FATF Recommendation 38
There should be authority to take expeditious action in response to requests by foreign countries
to identify, freeze, seize and confiscate property laundered, proceeds from money laundering or predicate
offences, instrumentalities used in or intended for use in the commission of these offences, or property
of corresponding value. There should also be arrangements for coordinating seizure and confiscation
proceedings, which may include the sharing of confiscated assets.
2. UNCAC Art. 51, 55 & 57
The return of assets is a fundamental principle of anti-money laundering regime, and States Parties
shall afford one another the widest measure of cooperation and assistance in this regard.
3. Special Cooperation
UNCAC Art.56 allows State Party to forward information on proceeds of offences without priorrequest (spontaneous), which might assist the receiving State Party in initiating or carrying out investigations,prosecutions or judicial proceedings.
4. Forfeited Asset Sharing
UNCAC Art.57 stipulates that States Parties may also give special consideration to concluding agreements ormutually acceptable arrangements, on a case-by-case basis, for the final disposal of confiscated property.
5. Indonesian Context
Law No.1 year 2006 concerning Mutual Legal Assistance art. 57 clearly stipulates the arrangementof forfeited asset sharing with other State Party on bilateral basis.
In line with UNCAC art.58, INTRAC/PPATK was established at 2002 as Indonesian FIU. The
PPATK became the Egmont FIU since June 2004 and has been conducting the international cooperation on
the basis of either MoU or reciprocity.
The well-known case of Hendra Rahardja gives us an example of facilitating a MLA. In the caseof the exhaustion of legal remedies in Australia with regard to the Extradition request and the fact that
Hendra Rahardja died in Sydney on 26 January 2003, Indonesia and Australia agreed to develop othercooperation under the Treaty of Mutual Legal Assistance in Criminal Matter between the two countries
and to create a Joint Task Force to identify and recover proceeds of the money laundering crimes of Hendra
Rahardja and his associates in Australia. The recovered asset brought back to Indonesia was in amount of+/- AUD600,000.

IV. MUTUAL LEGAL ASSISTANCE
A. Revised FATF Recommendation 36-37
Countries should rapidly, constructively and effectively provide the widest possible range of mutual
legal assistance in relation to money laundering and terrorist financing investigations, prosecutions, andrelated proceedings.
Countries should, to the greatest extent possible, render mutual legal assistance notwithstanding theabsence of dual criminality. Where dual criminality is required for mutual legal assistance or extradition,that requirement should be deemed to be satisfied regardless of whether both countries place the offence
within the same category of offence or denominate the offence by the same terminology, provided that bothcountries criminalise the conduct underlying the offence.

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B. Article 14 & 46 UNCAC
Administrative, regulatory, law enforcement and other authorities dedicated to combating moneylaundering have the ability to cooperate and exchange information at the national and international levels.
Mutual legal assistance shall be afforded to the fullest extent possible under relevant laws, treaties,
agreements and arrangements of the requested State Party with respect to investigations, prosecutions andjudicial proceedings.
C. Indonesia Context
Article 44 & 44A Indonesia AML Law:
For the purpose of preventing and eradicating money laundering, MLA can be undertaken with othercountries through bilateral or multilateral forums in accordance with prevailing laws and regulations.
MLA Agreement/Treaty with Government of the Republic of Indonesia or under principles ofreciprocity.
MLA includes, among other things, collecting evidence and statements from person, providing
evidence in the form of documents, searching for and freezing the proceeds of crime, and others.
Indonesia MLA Law:
Law No.1 Year 2006 concerning Mutual Legal Assistance enacted by 3 March 2006:◦Legal basis for MLA request◦Central authority : Dept. of Law & HR
◦Technical Procedure for MLA request◦Forfeited asset sharing arrangement

V. LINKS BETWEEN CORRUPTION AND MONEY LAUNDERING
In general, three principle areas of cross-over between corruption and money laundering have been
identified:◦Corruption generates enormous profits to be laundered;◦Corruption facilitates many money laundering and terrorist financing methods and supports
predicate criminal activities; and◦Systemic corruption undermines the effectiveness of legislative, regulatory and enforcement anti
money laundering measures.
Given the condition above-mentioned, several initiatives and products of the United Nations ingeneral and of United Nation Office on Drugs and Crime (UNODC) in particular are relevant to the links
between corruption and money laundering. As it may be aware that the UNODC has developed the United
Nations Convention Against Corruption (UNCAC), which has been signed by 106 countries.
The UNCAC obliges Member States in its Article 14 to institute a comprehensive domestic regulatory
and supervisory regime for banks, non-bank financial institutions, and other bodies particularly susceptible
to money laundering to deter and detect all forms of money laundering. Moreover, UNCAC obliges Member
States to establish as criminal offences the laundering of the proceeds of corruption, as well as to consider
the establishment of the offence of concealment or continued retention of property, which is the result of
any of the offences established in accordance with UNCAC.
A. Indonesia Context◦Corruption and money laundering are criminalized under Indonesian Law.

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◦AML Law clearly stipulates that corruption is one (and the first) of predicate crimes, which its
proceeds of crime to be laundered.
◦Anti corruption agency (KPK) and Financial Intelligence Unit (PPATK/INTRAC) have been
established and have very close cooperation.
◦The INTRAC/PPATK and the KPK have signed the Memorandum of Understanding (MoU) in
29 April 2004. The coverage of MoU includes, among other things, sharing information, Liaison
Officer assignment, and joint training.
◦Most of the essential investigating cases by KPK rely on the financial information provided by
PPATK. Some of those cases have been charged by the court.

VI. FINAL WORDS
The anti money laundering measures should be established and strengthened to reduce the degree ofcrimes in general and corruption in particular.
For country that corruption is a serious problem, anti corruption law as well as anti money laundering
law must be available. The nation shall criminalize both corruption and money laundering offence. In
addition, in AML Law, corruption shall be one of predicate crimes, which its proceeds of crime to belaundered. In addition, to effectively eradicate the crime of corruption and money laundering, country shallhave anti corruption agency and financial intelligence unit, in which both agencies shall have very close
cooperation.

VII. THE INDONESIAN FINANCIAL TRANSACTION REPORTS
AND ANALYSIS CENTRE (“PPATK”)
The PPATK (Indonesian Financial Transactions Reporting and Analysis Centre) is an independent
body that reports directly to the President and became fully operational on 20 October 2003. The PPATK
is Indonesia’s Financial Intelligence Unit (FIU) and as such will be the pivotal agency in the anti-money
laundering regime. PPATK is lead by a Head appointed under the authority of the Act. The Head is assisted
by four Deputy Heads comprising Deputy Head of Analysis, Research and Inter Agency Cooperation,
Deputy Head of Legal and Compliance, Deputy Head of Technology and Information, and Deputy Headof Administration. The responsibilities of the Head and Deputy Heads have been set out at a high level in
Presidential Decree No. 81 Year 2003 concerning the Organizational Structure and Working Procedure of
the PPATK.
A. Duties and Powers
Article 26 of Law No. 15 Year 2002 concerning the Crime of Money Laundering as amended by Law
No. 25 Year 2003 states that in implementing its functions, the PPATK shall have the following duties:
1)	To collect, maintain, analyse and evaluate information obtained by the PPATK in accordance with thisLaw;2) To monitor records in the exempt registry prepared by Providers of Financial Services;
3) To prepare guidelines of procedures for reporting of suspicious financial transactions;4)	To provide advice and assistance to relevant authorities concerning information obtained by the PPATKin accordance with the provisions of this Law;
5)	To issue guidelines and publications to Providers of Financial Services concerning their obligations as
set forth in this Law or in other prevailing laws and regulations, and to assist in detecting suspicious
customer behavior;− 93 −

6)	To provide recommendations to the Government concerning measures for the prevention and eradicationof money laundering;7)	To report to the Police and the Public Prosecutor's Office the results of analyses of financial transactions
which indicate money laundering;8)	To prepare and provide reports regarding the results of analyses of financial transactions and otheractivities once every 6 (six) months to the President, the House of Representatives (DPR) and toagencies authorized to supervise Providers of Financial Services.
9)	To provide information to the public concerning its institutional performance, to the extent that suchdisclosure is not contrary to the provisions of this Law.
Article 27 of Law No. 15 Year 2002 concerning the Crime of Money Laundering, as amended by
Law No. 25 Year 2003, states that in executing its duties, the PPATK shall have the following powers:
1) To request and receive reports from Providers of Financial Services;2)	To request information concerning the progress of investigations or prosecutions of money launderingthat have been reported to investigators or public prosecutors;3)	To audit Providers of Financial Services for compliance with the provisions of this Law and guidelines
for reporting financial transactions;4)	To grant exemptions from the reporting obligation for Cash Financial Transactions referred to in Article
13(1)(b).
To implement its duties and powers, Presidential Decree No. 81 Year 2003 concerning theOrganizational Structure and Operational Procedures of the PPATK and the Presidential Decree No. 82
Year 2003 concerning the PPATK’s Authorities were enacted, both of which were issued on 3 November
2003.
B. Attribution
It is commonly acknowledged that FIU may range from units conducting a sort of intelligence tasks(such as tapping phone calls) to units that just do some paper work (documentation review). In this regards,
as mandated by the money laundering Law and the Presidential Decree No. 82 Year 2003 concerning
the PPATK’s Authorities, PPATK is attributed by administrative power only, among other things are as
follows:◦To request and receive reports, Suspicious Transaction Reports and Cash Transaction Reports,from Financial Service Providers;◦To request additional information from Financial Service Providers, in case reports provided by
Financial Service Providers are not reliable enough;◦To request assistance and information from domestic and foreign agencies for its purposes inanalyzing any suspicious financial transaction in preventing and eradicating the crimes of money
laundering;and many other administrative powers.
Therefore, in term of conducting its function as FIU, PPATK is not attributed by investigative powers
and other intelligence duties, such as tapping phone calls, doing under cover, on-site investigative, andothers.
C. Type of Reports Filed to INTRAC/PPATK (Indonesian FIU)
1. Suspicious Transaction Reports (STRs)
Suspicious Financial Transactions shall be financial transactions:− 94 −

◦deviating from the profile, characteristics or the usual transaction patterns of the customer
concerned;◦by customers that can be reasonably suspected to be conducted for the purpose of avoiding
reporting of the transactions; or◦whether or not completed using assets that are reasonably suspected to constitute the proceeds ofcrime.
2. Cash Transaction Reports (CTRs)
Cash Financial Transactions shall be withdrawals, deposits or entrustments on a cash basis orusing other monetary instruments, utilizing Providers of Financial Services, to a cumulative total of
Rp.500,000,000.00 (five hundred million rupiah) or more or an equivalent amount in another Currency(approx.USD55,000), made either in one transaction or in several transactions within 1 (one) businessday.
D. Cross Border Cash Carrying Reports (CBRs)
Any person taking cash into or out of the territory of the Republic of Indonesia in the amount of
Rp 100 million or more, or the equivalent in another currency (approx.USD11,000), must report to the
Directorate General of Customs and Excise.
The Directorate General of Customs and Excise must report the information received within 5 (five)days to the PPATK/INTRAC.

− 95 −

MEASURES TO FREEZE, CONFISCATE AND RECOVER PROCEEDS OF
CORRUPTION, INCLUDING PREVENTION OF MONEY-LAUNDERING
Xaysana Souliyavong*I. COUNTER-CORRUPTION ORGANISATION
A. Status and RoleThe counter-corruption organisation is a State organisation that has the role to prevent and counter
corruption within the country by assigning to the State Inspection Authority at central level and state
inspection authorities at provincial level to implement [this task]. The counter-corruption organisation isan investigation organisation and performs its duties independently.
B. Organisational Structure
The organisational structure of the counter-corruption organisation consists of:
1. [Counter-corruption organisation] at central level;
2. [Counter-corruption organisation] at provincial level.
The counter-corruption organisation at the central level has a status equal to a ministry. The head ofsuch organisation is appointed and removed by the same procedure as a member of the government.
The counter-corruption organisation at the provincial level has a status equal a provincial division.
The head of the counter-corruption organisation at the provincial level is appointed or removed by the headof the counter-corruption organisation at the central level, after coordination with the provincial governor,
city mayor, or chief of special zone.
The supporting mechanism of such organisation shall comply with general regulations on public
administration.
C. Rights and Duties of the Counter-Corruption Organisation at Central Level
The counter-corruption organisation at the central level has the following main rights and duties:
policies, directives, plans, laws, regulations, and measures
1. T
 o studyrelating to the prevention and countering of corruption, and thereafter to submit to thegovernment for consideration;
2. To direct and inspect the implementation of activities relating to the prevention and countering ofcorruption within the entire country;
3. To conduct activities to prevent and counter corruption among government staff within the entire
country, especially government staff under the supervision and management of the central level andother government staff of organisations at the central level;
4. To conduct investigations into corruption by using measures that are defined in the law on criminal
procedure;
5. [During the period] when the inspection has yet to be completed, to propose the temporary suspension[of a person under inspection] from his position or duty or [to propose that a person under inspection]
not be removed, appointed, or have his job swapped;* Public Prosecutor, Office of the Northern Part People’s Prosecutor of the Lao P.D.R.

− 96 −

6. T
 o liaise, coordinate, and cooperate with concerned sectors at the central and local level to perform its
rights and duties;
7. To consider, decide, and use measures against the inspected person as provided in the laws;
8. To summarise the results of activities for the prevention and countering of corruption, and then toperiodically report to the Prime Minister and the National Assembly Standing Committee;
9. To exercise such other rights and perform such other duties as provided by laws and regulations.
D. Rights and Duties of Counter-Corruption Organisations at Provincial Level
Counter-corruption organisations at the provincial level [each] have the following main rights andduties:1. T
 o implement policies, directives, plans, laws, regulations, and measures relating to the prevention andcountering of corruption;
2. To conduct activities to prevent and counter corruption among government staff who are within thescope of its responsibility and are not under the supervision of the [counter-corruption organisation atthe] central level;
3. To conduct investigations into corruption by using measures that are defined in the law on criminal
procedure;
4. [ During the period] when the inspection has yet to be completed, to propose the temporary suspension[of a person under inspection] from his position or duty or [to propose that a person under inspection]
not or have his job swapped; be removed, appointed,
5. To liaise, coordinate, and cooperate with concerned sectors to perform its rights and duties;
6. To consider, decide, and use measures against the inspected person as provided in the laws;
7. To summarise the results of activities for the prevention and countering of corruption, and then toperiodically report to the head of the counter-corruption organisation at the central level, the provincial
governor, the city mayor, the chief of special zone, and the chairman of the members of the National
Assembly in such constituency ;8. To exercise such other rights and perform such other duties as provided by laws and regulations

II. OVERALL ANTI-CORRUPTION STRATEGY OF LAO PDR
Over recent years the implementation of new policies has achieved great results; the economy has
developed; foreign relations have greatly improved; there has been an increase in domestic and foreign
investment; and the GDP has increased by 7%. Under Lao PDR’s comprehensive reform, the society has
stabilized and striving to reach the national goals of: “rich people, a strong nation, and an equal andcivilized society”. We are now in a position where we can reduce unnecessary public expenditure, improvegovernment service delivery to citizens and improve the living conditions of the population. However,achieving our national goals remains difficult. There are still many obstacles to overcome. Laos has justentered the free market economy, from a traditional centrally planned economy (which is characterized bya severe lack of laws). Because of the previous economic model and simultaneous lack of regulations, thecountry has become a breeding ground for corruption. The government understands that corruption posesa major threat to Lao PDR’s poverty reduction plan and the nation’s development. Corruption has caused
major losses of state properties and created a general disrespect from the public towards the government.
A. National Strategy
Recognizing the damage caused by corruption, the government has issued various degrees, orders,regulations, instructions and law in order to prevent and eliminate malpractice within government offices.

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1. Legal Instruments
At the national level, three of the priority key measures taken are: issuing rules and orders (i.e.
the law on anti-corruption in 2005), establishing anti-corruption authorities and the public administration
reform.
Important legal instruments have been adopted:❖ Law on anti-corruption in 2005
	This law has been applied as a basic legal instrument for combating and preventing fraud andcorruption.
	The Law on Anti Corruption clearly regulated measures for prevention of corruption. However,
the implementation of this law is not effective. The coordination between the prosecutor offices
and the state inspection authority at the central and local level is very poor. Only few and small
cases of corruption reach the court. Many cases are solved by using the disciplinary measures.
❖ Law on State Inspection in 2007
	Law on State Inspection (2007) is newly adopted by the National Assembly and is an instrument
for the implementation of the activities of State Inspection Authority to successfully carry out theinspection and investigation of corruption, including the creating rule on asset re-declaration.
❖	Party resolution on 14 prohibitions for high ranking officials- outlining activities that they mustnot be involved in corruptions; defining their responsibilities; and, specifying the accountability
that falls under their political leadership.
❖	Set of civil service regulations clearly defined certain practices to combat corruption.
	For the rest of civil service a set of civil service regulations, clearly defined certain practices
to combat corruption. For example, Article 32 states that civil servants can not partake in any
business activities that represent a conflict of interest (i.e. a civil servant’s member running abusiness in the sector under the civil servants management).
❖	The Prime Minister’s Instruction No 016/PM (31 August 1998) on more thrifty and cost effective
practices.
	The Prime Minister’s Instruction No 016/PM(31 August 1998) informed the Ministers, theGovernors of the Province and Mayor of the Vientiane Municipality, that they must educate
public servants and Lao citizens on more thrifty and cost effective practices. The instruction
included but was not exclusive to: saving time, saving money and material.
❖	The Decree No 95/PM (5th December, 1995) and the instruction from Minister of Finance has tobe followed by civil servant’s when procuring items or services (i.e. construction maintenance orrepairing services).
B. Institutions Involved in Fighting Corruption
The main aim of the institutions involved in preventing and combating corruption is to increasingly
strengthen the effectiveness of financial law and regulation; and improve State management throughmonitoring and controlling process. In the long run the government believes these organizations will help
increase government revenue and improve internal auditing processes.
The government has indicated its commitment to strengthen its policies, regulations and practices
in order to improve integrity within the government, this includes: ensuring the rule of law, improving
the efficiency, effectiveness, accountability of the public service; and ensuring accountability of the
management of foreign aid.
In order to achieve the above–mentioned goals the party and the government decided to establish thefollowing organizations.
Today the main organizations in charge of auditing, inspection, monitoring, investigating andprosecuting corruption activities in Laos are: The Party Control Committee (PCC), The State Inspection
Authority (SIA), the State Audit Office (SAO), the Department of Finance Inspection, the ministry of
Finance and the Offices of the People’s Prosecutor at the central and local level and National Assembly.
The Department of Inspection exists in various ministries and the departments understate and party control,− 98 −

at the provincial and district levels. In the central level the National Assembly supervises and monitors theexecutive and judiciary organization. The Office for Business Promotion supervises state owned enterprises
and joint ventures.
1. Party Control Committee (PCC)As Lao PDR is a one party system, all organizations are under the leadership of the Lao People’s
Revolutionary Party. The PCC was formerly the main inspection agency in Laos. It operates across all levels
and branches of government, often with assistance of the State Inspection Authority. After the creation of
the State Inspection Authority (SIA), and State Audit Office (SAO) the role of PCC changed its focus onto
the party’s activities. However, some legal and regulatory provisions still provide this organization with adominant role.
2. State Inspection Authority (SIA)
The State Inspection Authority was established on May 30, 2001 by the decree of the Prime Minister
No. 98/PM but was replaced by the new decree No 10/PM.
The State Inspection Authority (Anti-Corruption Authority) is attached to the Prime Minister Office
and report directly to the Prime Minister and responsible for:❖	fighting corruption in the bureaucracy;❖	ensuring transparency and fairness in the management of public resources and;❖	prevention and investigation of the corruption.
So far, The State Inspection Authority and other involved organizations have recorded great successin their duties and responsibility to combat corruption. Many serious cases of corruption have been
discovered and sanctioned, primarily in the area of tax collection, wood extraction and import of vehicles.
Those public servant’s involved have been sanctioned/prosecuted accordingly.
In 2007-08 investigations in the fields of forestry, procurement, immigration, Business Bank and soon were undertaken and found that some organization and officials have misused the power and function
more then the law is allowed and issued illegal permission for cutting trees 61, 184.92 m3 without thepermission from the government, issued permission on exporting woods 5,263.381 m3 and violated sowith the order and the pre-regulation. There was an implementation of an invalid permission for last year
in coming year. There were also found that woods of totally 21,973.664 m3 were illegal cut and smuggled.
And there were 19,087.393 m3 were confiscated. Some officials have corruption behaviors, swindle andembezzle State revenues. There were found that illegal Identification Card (ID) for the Foreigners were
issued and renewed the Labor ID without the consultation with the State Employment Agency. At the
Ministry of Public Security there were officials with accomplices violated the procurement regulation andcaused harm for the State revenues. After conducting investigations of the targets mentioned above at thecentral and local level corruptions were found, corruptors were arrested and prosecuted. 25 persons wereaccused of corruption and sentenced; and 10 persons are standing under investigation.
3. State Audit Office (SAO)
SAO was set up by the Prime Minister’s Decree No 174/PM (dated 5 August 1998). This wasconsidered a major step towards strengthening the supreme audit function in Lao PDR. The SAO is
responsible for auditing the accounts and certifying the appropriateness of the accounts of the organizations
under State administration, in addition to, state owned enterprises, joint ventures and projects funded by
the state budget or international grants and loans. It also inspects the implementation of State Budget that
the National Assembly has adopted. This organization is also attached to the Prime Minister’s Office andreport directly to the Prime Minister.
4. Organ of the People’s Prosecutors of the Lao PDR
The Organ of the People’s Prosecutors of the Lao PDR is a Supervisory State Organ and responsible formonitoring and inspecting the proper und uniform adherence to laws by all ministries, ministry-equivalent− 99 −

organizations, government organizations, Lao Front For National Construction, mass organizations, socialorganizations, local administrations enterprises, and citizens and for exercising the rights of prosecution.1
5. National Assembly
The National Assembly is theoretically a legislative body, and oversees the executive and judiciaryorganizations. The Commission on Economic and Financial Affairs oversees the preparation andimplementation of the State budget. The National Assembly adopts, revises and oversees the implementationof the national annual budget.
C. Administrative Reform
The government, with the support of various international organizations, has undertaken manyreform initiatives aimed at restructuring the state apparatus; improving government mechanisms, working
conditions and administrative procedures; and minimizing the steps involved in granting licenses. The
introduction of new reform initiatives are helping to minimize administrative paper work. The reduction of
the extensive paperwork trail or number of “doors that people have to go through” is helping to minimize
and eventually, eliminate conditions in which corruption can exist. Another major area of reform is theintroduction of new mechanisms, such as auditing and inspection, which demand more open and accountable
work practices.
The aim of the fore mentioned measures is to combat and eliminate corruption in across thebureaucracy efficiently. During the process reform, the government intends to build a bureaucracy of goodand honest civil servants. New civil service recruits will be selected fairly through open examinations. Civil
service managers will be elected and appointed through more open, equitable and democratic processes.
A major issue that currently exists is the poor salary, compensation and benefits for civil servants.
To improve the overall administrative reform, the government intends to reform salaries and othercompensations of civil servants to ensure that civil servants can maintain a decent standard of living.

III. INTERNATIONAL STRATEGY
A. International Legal Instruments
At the Intentional level, relevant legal instruments have been ratified or signed:❖	The convention on anti-corruption has been signed in 2003.
	The Lao government has undertaken major efforts to improve the country’s situation. The
document compiled after the convention has been translated and disseminated amongst civil
servants to create awareness and understanding of the convention. In conjunction with this,The Lao government has amended the domestic legal system to enable more international andregional integration. In the near future, the government will submit the convention to the National
Assembly for ratification and disseminate the proposal to the donor community to gain support
for ratification and implementation of this important convention.
❖ Convention on transnational organized crime and the three related protocols have been ratified.
❖	Follow up the implementation of the TOC, extraditions with neighboring countries such as
Vietnam, Cambodia, Thailand and Myanmar have been signed.
❖	The mutual legal assistance in criminal and civil matter between Laos and The North Korea has
been also signed.
❖	The Lao government has ratified the ASEAN convention on the mutual legal assistance in

1 Public Prosecutor, Office of the Northern Part People’s Prosecutor of the Lao P.D.R.

− 100 −

criminal matters.
❖	There are also none legally binding declarations of The China-ASEAN Prosecutors General
Conference that has been agreed among other things on the international cooperation to fighttransnational crimes.

IV. ANTI-CORRUPTION COOPERATIVE MECHANISMS
A. Overview
The Lao government takes important the international and domestic cooperation to fight corruption.
Fighting corruption is still very complex, challenging and difficult to detect, and it is not only the workof single anti-corruption or of the public prosecutors alone, and it requires, first of all, determinationand persistence of the political leadership and participation from citizens, including the cooperation andcoordination with of relevant organizations involved in the anti-corruption. Although the Law is a major
step forward, there is still a poor implementation of the law.
By strengthening the institutions the improving coordination amongst those organizations involved
in monitoring corruption (i.e. the Audit Office, The State Inspection Authority for investigation and thePeople’s Prosecutor’s Offices for prosecution) we will be in a better position to discover and sanction
corrupt people, and return public assets back to the state and Lao PDR citizens.
The service that public prosecutors deliver is standing in a chain with the work of investigation
agencies, including anti-corruption agency. Investigation agencies and the public prosecutors need eachother to exercise the right of investigation and prosecution. Without the cooperation from the investigation
agencies our work can not effective be done.
The Organ of the People’s Prosecutor of Lao PDR, compared to other organization such as ofthe police, it is a young organization and it is only 18 years old (9 January 1990-9 January 2008). In
practices many investigating officers of the investigating agencies in the local level don’t accept the roleof prosecutors as supervisory state organ and exercising the rights of prosecution and make so with thecooperation between them difficult.
In the past after establishment of the Organ of the People’s Prosecutor of Lao PDR in 1990 thecoordination and cooperation between prosecutor and the police have been very poor. The reason is becauseof the lack of understanding on the role of the prosecutors at a whole and also because of the lack of law
books. If they really have the laws there are only laws in old version.
B. Cooperative Mechanisms
Recognizing this situation, and with the support of the international organizations, a work to tighten
the cooperation and coordination between prosecutors and the investigating Agencies has been started.
1. Mechanisms among Relevant Anti-Corruption Institutions
There are following cooperative mechanisms among the relevant anticorruption institutions:1)	The important cooperative mechanism is a so called, “Annual Justice Conference or meeting”
of the relevant institutions organized at the central, provincial and district level. There arerepresentatives from the National Assembly, office of the supreme people’s prosecutor of Lao
PDR, people’s supreme court, the justice ministry, the public security ministry and senior
officials from these organizations. The meeting provides and creates opportunities or all to raiseissues and comments on how the law can be effectively implemented and their relations be
improved. There is a place to discuss issues regarding the prevention, investigations, court trial
and implementation of the judgments or sentence in civil and criminal matter. Importantly it isalso that concerned ministries and institutions have to explain and to answer the questions and− 101 −

critics of the public and of the members of the National Assembly about the implementation oflaw and they have to explain how they will and plan to do it better. This kind of the conference
will be organized annually in the future and we will invite the state inspections authority toattend in order to strengthen the coordination and cooperation in combating corruption in the
country.
2)	Importantly it is a Joint training or seminar of the all relevant parties. A Joint training or seminarof the all relevant parties from prosecutors, investigating agencies, justice department, court andnational assembly is organized to create an opportunity that they lean to know and to understandthe role of each others, and at the same time build personal contact with each other. This kindof training is helping very well to strengthen the cooperation between public prosecutor and theinvestigating agencies.
3)	Joint Agreements or Joint Statements are sometime needed to facilitate or to tighten our
cooperation.
There are for examples:❖	A Joint Agreement between the Supreme People’s Prosecutors, the Minister of Public Security,and the Minister of the Public Health on the Medical Treatment for the sick Prisoners.
❖	A Joint Agreement between the Supreme People’s Prosecutors and the Minister of Public
Security on the Amnesty for Prisoners.
❖	A Joint Agreement between the Supreme People’s Prosecutors and the Minister of Public
Security on Juvenile Justice.
4)	Printing and disseminating the laws books for the prosecutors and the investigating agencies
have been started.
5)	Awareness raising activities on the role of the prosecutors is part of all seminars and meeting
when the prosecutors are invited to attend or when we organized such a seminar or workshop.
2. Participation of the Citizens
There are:❖	Hot line during the ongoing session of the National Assembly is set up to create an opportunity
for all to say their political opinion and issues regarding the implementation of the duties ofgovernments and the government has to answer it officially;❖	Opinion box of all state institutions has been created for the people that they can say and claim
about the work of the government or of a specific official of a state institution.
The result of the implementation of the cooperative measures by the Lao government set above, thecooperation between prosecutors and the investigating agencies and with the public are improved and it
make our easier and more effective.
3. International Cooperation Mechanisms
For international cooperation, there are following mechanisms:
The Lao government has attended:❖ International conferences and meetings and a lot of seminars organized by the Association on
Anti Corruption of International Corruption Authorities (IAACA)❖ Five China-ASEAN Prosecutors General Conferences❖	conferences organized by the Asia Crime Prevention Foundation (ACPF) and by Association ofInternational Prosecutors (AIP)❖	And other important international conferences in the field of crimes prevention and criminal
justice.
The main objective of such mentioned above conferences and meetings and also the conference what

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we do at UNAFEI today are not only to share our opinions on good governance and anti-corruptions, but
importantly it aims at developing and strengthening the relations and cooperation between them to combat
transnational crimes and of course, including international anti-corruption.
The five China-ASEAN Prosecutors General Conferences have been a great success. On the basisof the Joint Declaration signed in Kunming, People’s Republic of China on 9 June 2004 the basicallycooperation mechanism between Prosecutorial Organs of China and ASEAN Countries in cracking downtransnational crimes have been established and effectively developed step by step.
Since the first conference, the judicial and prosecutorial cooperation, Bilateral meeting mechanism
and The Cooperation on training has been broadly developed. On the basis of respecting state sovereignty andjudicial independence, according to the principle of equality and reciprocity, the prosecutorial organizationsof Lao PDR at the Central and Local Levels have initiated judicial cooperation with Central Prosecutorial
Organization and some Prosecutorial organizations in the border to Socialist Republic of Vietnam, People’s
Republic of China (the People’s Procuratorate of Yunan Province), and in the border to Thailand and haveassisted neighbouring prosecutorial organizations to investigate crimes and to arrest suspects escaping
into the border of Lao PDR. Many Lao Prosecutors have received a short term prosecutorial training in
the Socialist Republic of Vietnam and in Yunan Province, People’s Republic of China. The training of ourprosecutors is very important to learn the legal system of foreign countries. It is not only helpful to deepen
the friendship, but also helpful for our cooperation.
The multi-channelled communication, study and exchange of delegation with prosecutorialorganizations of other countries was enhanced and developed. The delegations exchange has furthered theunderstanding, enhanced the friendship, so as to lay the good foundations for establishing the cooperation
mechanism.
Based on the declarations of the conferences which it is aimed among other thing to facilitate thedirect cooperation between prosecution services of the China and ASEAN prosecutorial organizations at
the provincial levels that shared the border with each other and also according to the judicial cooperation
conventions between the Lao government and the government of P.R of China and Vietnam a direct
cooperation between them are established. There are exchange of the delegations and training of theprosecutors all country and also the joint training of the prosecutors at the orders of Laos and Vietnam isplanning and we have discussing this issue with the Attorney General of the Kingdom of Thailand while ahigh ranking delegations of Thailand visited Laos in September this year.
C. Case Proceedings
If, after the inspection and investigation, there appears to be solid information and evidence , thecounter-corruption organisation shall make a summary of the inspection result, complete the file of the caseand then send it to the public prosecutor to consider bringing a prosecution in court.
In the event that the public prosecutor fails[,] without reason[,] to prosecute the case in court within
30 days from the date of receiving the case file, the counter-corruption organisation has the right to submit
to the higher level of public prosecutor to consider and deal with the issue.

V. CONCLUSION
Lao government conducts relations and cooperates with foreign countries and internationalorganisations on the prevention and countering of corruption[,] based on the laws and regulations of the
Lao PDR in compliance with international conventions and agreements that the Lao PDR has signed andis a party to.
The use of measures to counter the corruption of any government staff who commits an offence[relating to corruption] is based on the severity of the offence. If it is a minor offence, there will be
education measures and imposition of disciplinary [measures]; if it is a serious offence, it will be subject tolegal proceedings as provided under the laws.

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MEASURES TO FREEZE, CONFISCATE AND RECOVER PROCEEDS OF
CORRUPTION, INCLUDING PREVENTION OF MONEY-LAUNDERING
Chew Tham Soon*

I. INTRODUCTION
The development of a financial approach to investigations into criminal organizations has become
one of the major concerns of investigative police departments and judicial authorities as well as internationalorganizations such as the United Nations, the European Community and the ICPO-Interpol.
Financial measures could have an important role to play in taking powerful economic instruments
out of the hands of dangerous people, preventing them from undertaking further similar activities andreturning the proceeds of their illicit parasitic activities to society.
Imprisonment and fines have been found inadequate in deterring capital organizations, whilst seizureof assets curtails the financial ability of such groups to continue criminal operations. Assets may include
money, property, businesses, cars, boats, or any item which have been involved in, or the products of, acriminal enterprise.
Assets seizure has emerged as one of the most powerful tools to break the back of criminal enterprise.
Forfeiture, the ancient legal practice of government seizure of property used in criminal activity, may provea particularly useful weapon against organized economic crime.
The consciousness of the fight against corruption as a result of its attendant ills on socioeconomic
development of nations have risen in recent times. To minimize its incidence, respective countries have put
in place anti-corruption agencies, backed by laws which are now being tailored to meet recommendationsof the United Nation’s Convention against Corruption (UNCAC), in terms of prevention, criminalization,international cooperation and assets recovery.

II. HOW IS MONEY LAUNDERING CONNECTED WITH SOCIETY?
Organized criminals who are involved in supplying goods and services to a co-operating public, andwho utilize extortion, corruption and other techniques of intimidation, accumulate their profits through thecommission of a series of criminal acts carried out by a number of different individuals over a substantial
period of time, and involved in numerous territorial jurisdictions.
Corruption will play a central part in an organized criminal enterprise when it is required to allow theillegal market to operate smoothly. Corruption is more likely to occur in markets where the public regards
provision of goods or services, such as prostitution, illegal gambling or drugs, and counterfeit products,
as a mere misdemeanour. These are markets which traditionally been lucrative ones for organized crime,
and the cash resources available to organized criminals allow them to corrupt others in order to protect andfurther their activities.
Organized crime can infiltrate financial institutions, acquire control of large sectors of the economy
through investment, or offer bribes to public officials and, indeed, governments. The economic and politicalinfluence of criminal organizations can weaken the social fabric, collective ethical standards, and, ultimately,
the democratic institutions of society. The criminal influence can undermine countries undergoing thetransition to democratic systems. Most fundamentally, money laundering is inextricably linked to theunderlying criminal activity that generated it. Laundering enables criminal activity to continue.

*

Head, Compliance Office, Secretariat to Inspector General of Police, Royal Malaysia Police.

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III. HOW DOES FIGHTING MONEY LAUNDERING HELP TO FIGHT
CRIME OR CORRUPTION?
Many governments have already established comprehensive anti-money laundering regimes. These
regimes aim to increase awareness of the phenomenon both within the government and the private businesssector, and then to provide the necessary legal or regulatory tools to the authorities charged with combating
the problem.
Some of these tools include making the act of money laundering a crime; giving investigative
agencies the authority to trace, seize and ultimately to confiscate criminally derived assets; and building
the necessary framework for permitting the agencies involved to exchange information among themselves
and with counterparts in other countries.
Money laundering is a threat to good functioning of a financial system. However, it can also be the
Achilles heel of criminal activity. In law enforcement investigations into organized criminal activity, it isoften the connections made through financial transaction records that allow hidden assets to be located andthat establish the identity of the criminal and the organization responsible.
When criminal funds are derived from robbery, extortion, embezzlement or fraud, a money laundering
investigation is frequently the only way to locate the stolen funds and restore them to the victims.
Most importantly, however, targeting the money laundering aspect of criminal activity and depriving
the criminal his ill-gotten gains means hitting him where he is vulnerable. Without a usable profit, thecriminal activity will not continue.

IV. THE DANGEROUS DRUGS (FORFEITURE OF PROPERTY) ACT 1988
The Dangerous Drugs (Forfeiture of Property) Act 1988, which was effective from 10 June 1988,
empowers the court to forfeit property upon conviction for an offence of trafficking drugs or planting andcultivation of drugs. Where it is proved to the satisfaction of the court that the above offence has beencommitted, the court shall make an order for the forfeiture of all property which is the subject matter ofthat offence or which has been used for the commission of that offence, notwithstanding that no person may
have been convicted of the offence. (Section 3 and Section 4 of the Act)
The public prosecutor, if he has reason to believe that any person is a liable person, he may apply in
ex parte to the high court for an order of forfeiture of all the property of which such person is a holder andwhich the Public Prosecutor has reason to believe are illegal properties. The forfeiture of property shall beproceeded against:(a) every person(i)	who has been convicted for an offence of using property for promoting, managing, establishing,or carrying on any act, activity or conduct or facility, assisting in the promotion, management,
establishment or carrying on of the act, activities or conduct of trafficking, planting or cultivationof drugs.
(ii)	who is or was detained after the commencement of this Act pursuant to an order of detention or
restriction made under any law in respect of any activities relating to or involving the trafficking
in any dangerous drug.
(iii)	who holds, conceals, receives, or uses or causes or allows to be used, any illegal property
knowing of having reason to believe the same to be illegal property.
(b) every relative of such person ;(c) every associate of such person ;(d) any holder whether or not a relative ;(e) where a person referred to in para (a) is deceased, his personal representatives.

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A. Powers of Freezing and Seizure
Section 16 of the Dangerous Drugs (Forfeiture of Property) Act 1988 provides power to any seniorpolice officer to enter any premises and there search for, to search and arrest any person who is in or onsuch premises in whose possession any property liable to seizure or forfeiture, seize and detain any bookor document found in or on such premises or on such person.
Sections 25 & 26 deals with the seizure of movable property by senior police officer, while section
28 deals with the seizure of immovable property by senior police officer.
There is also a special provision relating to seizure of a business by an order in writing issued by thedesignated police officer under section 27 of the Act.
B. Forfeiture of Property Seized
Section 32 of the Act deals with the forfeiture of property seized under this act where there is noprosecution for any offence under this law is instituted with regard to such property; and no claim in writing
is made by any person that he is lawfully entitled to such property, the property shall become forfeitedimmediately upon the expiration of the said period of three months.

V. THE ANTI-MONEY LAUNDERING AND ANTI-TERRORISM
FINANCING ACT 2001
The Anti-Money Laundering and Anti-Terrorism Financing Act 2001 was introduced in Malaysia
on 15 January 2002 (Royal Assented on 25 June 2001) to provide for the offence of money laundering,the measures to be taken for the prevention of money laundering and terrorism financing offences and toprovide for the forfeiture of terrorist property and property involved in, or derived from, money launderingand terrorism financing offences, and for matters incidental thereto and connected therewith.
Malaysia adopts a non-integrated approach for its anti-money laundering regime under the AntiMoney Laundering and Anti-Terrorism Financing Act 2001. The legal framework under the Act provides
for multi-agency implementation by the Financial Intelligence Unit (FIU) in Bank Negara Malaysia (thecentral bank), the regulatory and supervisory authorities of reporting institutions, as well as the relevant
law enforcement agencies.
It is the strategic objective of the government to disrupt and dismantle criminal organizations bydepriving them of the use of the economic proceeds of their crime and of properties used to facilitate theircrime.
The Anti-Money Laundering and Anti-Terrorism Financing Act 2001 shall apply to any serious
offence, foreign serious offence or unlawful activity whether committed before or after the commencement
date. The Act shall apply to any property, whether it is situated in or outside Malaysia.
Money Laundering means the act of a person who:(a). engages, directly or indirectly, in a transaction that involves proceeds of any unlawful activity;(b).	acquires, receives, possesses, disguises, transfers, converts, exchanges, carries, disposes, uses,
removes from or brings into Malaysia proceeds of any unlawful activity ; or(c).	conceals, disguises or impedes the establishment of the true nature, origin, location. Movement,
disposition, title of, rights with respect to, or ownership of, proceeds of any unlawful activity.
Where –(aa) 	as may be inferred from objective factual circumstances, the person knows or has reason
to believe, that the property is proceeds from any unlawful activity; or(bb)	in respect of the conduct of a natural person, the person without reasonable excuse fails
to take reasonable steps to ascertain whether or not the property is proceeds from any
unlawful activity.

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Serious offence has been defined as:(a) any of the offences specified in the Second Schedule; or(b) an attempt to commit any of those offences;(c) the abetment of any of those offences.
A. Powers of Freezing and Seizure
Section 44 of the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 provides power toan enforcement agency to issue an order freezing any property where he has reasonable grounds to suspectthat an offence under section 4(1) has been committed, for duration of not more than ninety days.
Sections 45 & 46 deals with the seizure of movable property, while section 50 of the Act provides
power to the Public Prosecutor, after the expiry of the order issued by the enforcement agency, to issue
an order directing the financial institution not to part with, deal in, or otherwise dispose of such movable
property or any part of it until the order is revoked or varied.
Section 51 of the Act deals with seizure of immovable property by issuing a Notice of Seizure by the
Public Prosecutor. There is also a special provision relating to seizure of a business by an order in writing
issued by the enforcement agency under section 52 of the Act.
B. Forfeiture of Property Seized
Section 55 of the Act provides power to the Court to make an order for the forfeiture of any property
which is proved to the subject matter of the offence or to have been used in the commission of the offence
or which is proved to be terrorist property where:(a) the offence is proved against the accused; or(b) that no other person is entitled to the property as a purchaser in good faith for valuable
consideration.
Section 56 of the Act, where there is no prosecution or conviction for an offence under section 4(1)of the Act, it provides power to the Court, upon application by the Public Prosecutor before the expirationof twelve months from the date of the freeze or seizure, to make an order for the forfeiture of the property
if he is satisfied –(a)	that the property is the subject matter of or was used in the commission of an offence under
Section 4(1) or a terrorism financing offence or is terrorist property ; and(b) that there is no purchase in good faith for valuable consideration in respect to the property.

VI. THE MALAYSIAN ANTI-CORRUPTION ACT 2009
The Malaysian Anti-Corruption Act 2009 provides power to seize both movable and immovable
property for which there are reasonable grounds to suspect to be the subject matter of an offence or evidence
relating to the offence shall be liable to seizure.
A. Forfeiture of Property upon Prosecution for an Offence
In any prosecution for an offence under the Malaysian Anti-Corruption Act 2009, the court shallmake an order for the forfeiture of any property which is proved to be the subject matter of the offence or
to have been used in the commission of the offence where –(a) the offence is proved against the accused ; or

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(b) the offence is not proved against accused but the court is satisfied (i) that the accused is not the true and lawful owner of such property; and(ii)	that no other person is entitled to the property as a purchaser in good faith for valuable
consideration.
B. Forfeiture of Property where there is no Prosecution for an Offence
Where in respect of any property seized under this Act there is no prosecution or conviction for an
offence under this Act, the Public Prosecutor may, before the expiration of eighteen months from the dateof the seizure, apply to a Sessions Court Judge for an order of forfeiture of that property if he is satisfied
that such property had been obtained as a result of or in connection with an offence under this Act.
Where the Judge to whom an application is made under Subsection (1) is satisfied –(c)	that the property is the subject matter of or was used in the commission of an offence under thisAct; and(d)	there is no purchase in good faith for valuable consideration in respect to the property,
he shall make an order for the forfeiture of the property.

VII. INTERNATIONAL COOPERATION ON EXTRADITION AND MUTUALLEGAL ASSISTANCE
A. Extradition Act 1992
Malaysia has entered into treaties with many other countries to allow extradition. These are:(i) Extradition Treaty between Great Britain and Siam, done at Bangkok on 4 March 1911.
(ii)	Treaty between the Government of the Republic of Indonesia and the Government of Malaysia
relating to Extradition, done at Jakarta on 7 June 1974.
(iii)	Extradition Treaty between the Government of Malaysia and the Government of the UnitedStates of America, done at Kuala Lumpur on 3 August 1995.
(iv)	Agreement between the Government of Hong Kong and the Government of Malaysia for thesurrender of fugitive offenders, done at Hong Kong on 11 January 1995. Protocol supplementary
to the agreement done on 1 November 2007.
(v)	Treaty between the Government of Malaysia and the Government of Australia on Extradition
done at Putrajaya, Malaysia on 15 December 2005.
B. Mutual Legal Assistance in Criminal Matters Act 2002
The object of this Act is for Malaysia to provide and obtain international assistance in criminal
matters, including:(a)	the recovery, forfeiture or confiscation of property in respect of a serious offence or a foreign
serious offence;(b)	the restraining of dealings in property, or the freezing of property, that may be recovered in
respect of a serious offence or a foreign serious offence;(c) the execution of requests for search and seizure;(d)	the identification or tracing of proceeds of crime and property and instrumentalities derived
from or used in the commission of a serious offence or foreign serious offence.

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Malaysia has entered into treaties with many other countries to provide and obtain mutual legal
assistance for freezing, seizure, confiscation and forfeiture. There are:(i)	Treaty on mutual legal assistance in criminal matters (among like-minded ASEAN Member
Countries), done at Kuala Lumpur on 29 November 2004, on 17 January 2006 (Myanmar andThailand)(ii)	Treaty between the Government of Malaysia and the Government of Australia on mutual legal
assistance in criminal matters, done at Putrajaya, Malaysia on 15 November 2005.
(iii)	Treaty between the Government of Malaysia and the Government of the United States ofAmerica on mutual legal assistance in criminal matters, done at Kuala Lumpur on 28 July
2006.
(iv)	Agreement between the Government of Malaysia and the Government of the Hong Kong Special
Administrative Region of the People’s Republic of China concerning mutual legal assistance incriminal matters done at Hong Kong on 17 October 2006.

VIII. CONCLUSION
It is important to provide powers for the enforcement agency to seize and freeze the property ofcriminals for any confiscation order after conviction. A concerted attack on the economic structure of acriminal organization has the most chance of permanently disabling that organization. By undertaking
an in-depth assessment of economics of a criminal organization, we will permit the courts to evaluate thecriminal activities from the economic and financial vantage point of the criminals. The courts will then bein the position to reduce those criminals to the economic level that they occupied before they embarked on
their criminal enterprise.

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MEASURES TO FREEZE, CONFISCATE AND RECOVER
PROCEEDS OF CORRUPTION, INCLUDING PREVENTION
OF MONEY-LAUNDERING IN MYANMAR
Lwin Lwin Than*I. INTRODUCTION
Corruption poses a serious problem and affects each and every one of us. It is a fact that there arelinks between corruption and other forms of crime, including money-laundering. Corruption is no longer
a local matter. It is a transnational phenomenon. To prevent, to control and to eradicate corruption is a
responsibility of all of us. This is the reason why we meet here with hope of exploring ways and means ofstrengthening our legislation and criminal justice systems in the area of measures to freeze, confiscate andrecover proceeds of corruption, including prevention of money-laundering.

II. MYANMAR LEGAL SYSTEM
The Myanmar legal system is closely akin to Indian legal system of the Common Law Legal Family.
However, it is not a replica of the Common Law System since we have embodied in laws of Myanmar our
national characteristics, especially in the area of Myanmar Customary Law. We have been developing our
own Legal System for nearly one and a half centuries.

III. OFFICE OF THE ATTORNEY GENERAL (OAG)The Office of the Attorney General (OAG) of the Union of Myanmar has been constituted underthe Attorney General Law, 2001.Its predecessor was the Attorney General Law,1988.The present Attorney
General Law grants the Attorney General wide –ranging powers including legislative drafting, legaltranslation, updating laws and amendments. Moreover, the OAG is responsible for giving legal advice
on matters relating to international conventions and regional agreements, and also on matters of bilateralor multilateral treaties, memorandums of understanding, memorandums of agreement, local and foreign
investments and other instruments that are to be ratified by the Union of Myanmar. The Attorney Generalis the Chief Prosecutor and appears in criminal cases and also litigates or defends claims of civil nature
where the government is involved.

IV. THE LAW OFFICERS
The Law Officers who are appointed under the Attorney General Law, 2001, perform the functions
and duties assigned to us by the Attorney General including tendering advice on criminal cases and before
trial to be in conformity with the Law.

* International Law and ASEAN Legal Affairs Division, Deputy Director, Office of The Attorney General, Union of Myanmar.

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V. JUDICIAL SYSTEM OF MYANMAR
The present judicial system was adopted by the Judiciary Law, on 27 June, 2000. All Criminal Courts
in Myanmar have to adhere strictly to the established procedure and practice of admitting documentaryand material evidence, examining witnesses, and examining complainants and the accused. Basic legal
principles to be observed in conducting criminal cases are that the burden of proof lies on the prosecution.
In criminal cases Law Officers play significant rules by giving legal opinion to the police before sending
the case to the court, conducting before the court on behalf of State, and if he or she is not satisfied withthe order of the court, filing appeal and revision to higher courts in order that the accused be convicted andthe sentence be enhanced.

VI. LEGISLATION ON THE AREAS OF CORRUPTION
There is various legislations in Myanmar containing provisions for taking action against
corruption.
1. The Prevention of Corruption Act
It is the main law and it provides more effective measures. This Law provides special rules ofevidence that the burden of proof relies on the accused, if the acceptance of a bribe by the accused has
been proved. The Law also provides that the Court may presume an accused guilty of corruption if heowns or owned too much money or properties beyond his income, where the accused cannot prove his
lawful ownership of such money or properties. Any person convicted under section 4(1) (c) /4(2) of thislaw is punishable with imprisonment for a term which may extend to seven years. Besides, all benefits
obtained by the accused by committing such offense shall be confiscated. The punishment under this law ismore severe and effective than the punishment prescribed under the Penal Code. So, in Myanmar, serious
corruption cases are prosecuted under with law. The law also authorizes investigating police officers tomake necessary inspections of the bank accounts or registers of the accused and / or his or her dependents.
However, the law requires obtaining prior sanction from the relevant appointing authority of the accused
before taking action under this Law.
2. The Penal CodeIt provides, under sections 161 to 171, corruption offences by or relating to public servants. Taking ofgratification by public servants other than legal remuneration in respect of an official act; taking gratificationin order, by corrupt or illegal means, to influence a public servant, taking gratification for exercise of
personal influence with public servant, without consideration, from persons concerned in proceedings orbusiness transacted by a public servant, disobeying direction of the law by a public servant, with intent tocause injury to any person, framing an incorrect document by public servant with intent to cause injury
to any person; unlawfully engaging in trade by a public servant, are corruption offences punishable withimprisonment ranging from one year to three years, or with fine, or with both.
3. The Narcotic Drugs and Psychotropic Substances Law
It has particular provisions for taking action against investigating officers who commit corrupt acts.
Section 18 of the Law provides, inter alia, that a person authorized to search, arrest, seize, exhibit andinvestigate in respect of any offence under that law shall be, on conviction, punished with imprisonment
for a term which may extend from 5 years to 10 years, if he is guilty of asking for and accepting any money
and property as gratification either for him or herself or for another person, or accepting a narcotic drug or
psychotropic substance unlawfully.
4. The Control of Money Laundering Law
The Law prescribes, under section 25, members of the investigation body not to demand or accept− 111 −

money or property either for him or herself or for any other person as a gratification; substitution of an
offender with any other person so that action cannot be taken against him or her imprisonment of an
offender without taking action against him or her. The breach of such prohibitions may be punishable withimprisonment for a term which may extend from a minimum of 3 years to a maximum of 7 years and may
also be liable to a fine.
5. The Myanmar Police Force Maintenance of Discipline Law
It has wide provisions concerning corruptions. Especially, its sections 17 and 18 provide various kindsof corruptions. Section 17 prohibits a person subject to that law not to commit, unnecessarily detaining ofa person against the law, failing to bring his or her case before the proper authority for investigation, taking
in or bringing in or allowing to be taken in, due to his or her negligence, articles which are prohibited frombeing taken in or brought into the prison or police custody, causing or allowing a prisoner or a person incustody to strike or otherwise ill-treat another person subject to that Law or any prisoner under custody,
striking or ill-treating his or her subordinate, allowing to escape any person for whom he or she has aduty to keep or guard, and demanding or accepting cash or kind in a corrupt manner from any person.
The offender who violates any of such prohibitions, on conviction by Police Court, may be punished withimprisonment up to 3 years or less punishment as prescribed in that Law. Section 18 of the Law further
prohibits a person subject to that Law not to commit theft of any property belong to the Myanmar Police
Force or any person subject to that Law, dishonestly misappropriate or convert to his or her own use ofsuch property, committing criminal breach of trust in respect of such property, dishonestly receive or retain
any such property, will-fully destroy or injure or cause loss through negligence of any such property,
dishonestly misappropriate, obliterate, destroy , injure or cause loss through negligence, any exhibit, or
do any other thing with intent to defraud or to cause wrongful gain or wrongful loss. The violation of
any of such prohibitions shall be punishable with imprisonment up to 3 years or such less punishment asprescribed by that Law.
6. The Defense Services Act, the Pyithu Hluttaw Election Law, the Commercial Tax Law, the Forest Law
and the Fire Services Law
They also provide provisions for taking action against corruption.
7. The Criminal Law Amending Act
It is the more effective procedural law in taking action against corruptions. If the Government has
the reasons to believe that an accused in a corruption case obtained money or property by committing suchan offence, it may direct to submit an application to the District Administrative Officer for the attachmentof a warrant on such money or property. These speedy actions may deter or freeze or exhibit the money orproperty obtained by the accused in a timely manner.

VII. THE MEANING OF THE LAW TAKING ACTION AGAINSTTHE OWNERSHIP OR SALE OF PROPERTY OBTAINED BYILLEGAL MEANS
It means the Government is authorized to confiscate movable or immovable property of a person
who obtained such property by illegal means or from illegal business or brought with money evaded fromincome tax.

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VIII. MYANMAR TAKING ACTION AGAINST CORRUPTION
Myanmar launched many operations to suppress corruption from 1974 to 1988. The Crocodile
Operation, Machinery Operation, Shark Operation, Hinsa Operation, and Varasein (or Thunder Bolt)
Operation are significant among others. The White Elephant Operation was also a special one and thisOperation took action against even intelligence and customs officials.

IX. CRIMINALIZATION OF MONEY LAUNDERING
Money Laundering was criminalized under several provisions contained in the Control of Money
Laundering Law 2002. To implement this Law effectively, Rules relating to the Control of Money
Laundering Law was issued in 2003.The Central Control Board formed under this Law has the powers topass an order confiscating money and property obtained by illegal means(Section 8(1)).Chapter IX of theRules prescribes the details for confiscation.

X. RELATED INSTITUTIONAL MEASURES◦In Myanmar, corruption cases are cognizable case under the provisions of the Code of Criminal
Procedure. Therefore those cases may be investigated by the Bureau of Special Investigation officers or
Police Officers without obtaining warrant of a court. Bureau of Special Investigation (BSI) is conferredauthority to investigate corruption cases under the provisions of the Bureau of Special Investigation and theInvestigation Department Act, and the Myanmar Police Force is authorized to do so under the provisionsof the Code of Criminal Procedure.
◦Being a cognizable case, BSI Officers and Police Officers may book case against the accused at therespective police station, request for sanction to prosecute the accused from the relevant Ministry, arrest theoffender, examine the accused and witnesses, seize the exhibits, construct the case, ask for expert opinions
on the exhibits if necessary, ask for legal advice from the Office of the Attorney General or various Law
Offices for sound construction of the case and reconstruct the case in accordance with the legal adviceof the Office of the Attorney General or the respective Law Office, and file the case before a competentand relevant Court. Usually, the Bureau of Special Investigation investigates serious corruption cases andrefers other corruption cases to Myanmar Police Force for investigation. If the case is not strong enoughfor sending up to the Court, and it is necessary to take some other action, such corruption case is referredto the Government department concerned for taking departmental action.
◦
Under section 197 of the Code of Criminal Procedure, if an accused who is a Judge, Magistrate or
any public servant who is not removable from his or her office save by or with the sanction of the President
or relevant Ministry, is accused of any offence alleged to have been committed by him or her while actingor purporting to act in the discharge of his or her official duty, no Court shall take cognizance of suchoffence except with such previous sanction.
◦
When such cases are sent up before the Courts, BSI prosecutors or Law Officers conduct prosecution
in those cases. Throughout the prosecution period, prosecutors consult with the relevant Investigation
Officers of the case to construct the case strongly. If necessary, the Law Office concerned files appeals
or revisions against the order and judgment of original or appeal Court to enhance punishment so as toobtain effective and deterrent punishments. The BSI may request the relevant Law Office to file revisionin those cases. If the accused is acquitted by the Court, The Office of the Attorney General may file anappeal against acquittal order to the Supreme Court. The BSI or the Myanmar Police Force may apply tothe relevant Law Office or Office of the Attorney General to file an appeal against acquittal.

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XI. ADMINISTRATIVE MEASURES AGAINST CORRUPTION
All civil service personnel in Myanmar are responsible for abiding by the Fundamental Rules andSupplementary Rules. Those Rules prescribe that Government servants shall not, except with the priorsanction of the Government, accept directly or indirectly on his or her own behalf or on behalf of any otherperson, or permit any member of his or her family so as to accept any gift, gratuity or reward.

XII. CONFISCATION, FREEZING AND SEIZING OF PROCEEDSOF CRIME◦
Myanmar laws allow for the confiscation of criminal property under the following pieces oflegislation:(i)
Narcotic Drug and Psychotropic Substances Law 1993 in respect of cases concerning the following
offences:(a)	Cultivation, Possession, Transportation, and Sale of narcotic drugs, psychotropic substances or
chemical/plants used in the production of the same;(b) Laundering the proceeds of (a);(c) Accepting Bribes in connection with (a);(d) Conspiracy to commit (a) or (b).
(ii)
Section 8(i) of the Control of Money Laundering Law, 2002 allows the CCB to pass an orderconfiscating money and property obtained by illegal means.
(iii)
The Code of Criminal Procedure, 1889, Section 517 allows for the general confiscation of items ofproperty including money, and other valuable property.
◦
Although Criminal Procedure Code Section 517 is general in nature, it can widely apply and use invarious corruption cases before the court as evidence and exhibits including money and property. Criminal
Procedure Code Section 517 provides as follows:(1) When an inquiry or a trial in any criminal Court is concluded, the Court may make such order as it
thinks fit for the disposal, by destruction, confiscation, or delivery to any person claiming to be entitledto possession thereof, or otherwise, of any property or document produced before it or in its custody, orregarding which any offence appears to have committed, or which has been used for the commission of any
offence.
(2) When the High Court or a Court of Session makes such order and cannot through its own officers
conveniently deliver the property to the person entitled thereto, such Court may direct that the order be
carried into effect by the District Magistrate.
(3) When an order is made under this section such order shall not, except where the property is livestock or
subject to speedy and natural decay, and save as provided by sub-section(4), be carried out for one month,or, when an appeal is presented, until such appeal has been disposed of.
(4) Nothing in this section shall be deemed to prohibit any Court from delivering any property under
the provisions of sub-section (1) to any person claiming to be entitled to the possession thereof, on his
executing a bond with or without sureties to the satisfaction of the Court, engaging to restore such property
to the Court, if the order made under this section is modified or set aside on appeal.
Explanation.--In this section the term “property” includes in the case of property regarding which an− 114 −

offence appears to have been committed, not only such property as has been originally in the possession orunder the control of any party, but also any property into or for which the same may have been converted
or exchanged, and anything acquired by such conversion or exchange, whether immediately or otherwise.
I also would like to present the MFIU.

XIII. THE FINANCIAL INTELLIGENCE UNIT AND ITS FUNCTIONS◦ The Central Control Board on Money Laundering Order 3/2004 established the Myanmar Financial
Intelligence Unit ("MFIU"). Myanmar has chosen the Law Enforcement model of an FIU. The MFIU
is a unit under the Ministry of Home Affairs; it is headed by a Police Colonel, the head of the Myanmar
Police Force's ("MPF") Department against Transnational Crime.
◦ The MFIU is the sole body in Myanmar authorized to receive transaction reports. The reports aredelivered to the MFIU by the reporting bodies either by courier/messenger or through the post or by
fax or electronic means.
◦ The MFIU has signed MOUs to govern the exchange of information and financial intelligence with theThai FIU, AMLO and Indonesian FIU, PPATK.

XIV. DOMESTIC AND INTERNATIONAL COOPERATION FOR
EFFECTIVE INVESTIGATION AND PROSECUTION OF
CORRUPTION
Bureau of Special Investigation, Myanmar Police Force and Law Office cooperate for soundconstruction of the corruption cases at the pre-trial stage and during trial period. The Courts at various
levels pass effective and deterrent punishments against the offenders of corruption cases. The Supreme
Court instructs all Courts at all levels to pass effective and deterent punishments, on conviction, against theaccused of corruption cases.

XV. INTERNATIONAL COOPERATION◦ Myanmar is a Party to the ASEAN Treaty on Mutual Assistance in Criminal Matters. Under this treaty
assistance is rendered among Parties. Besides, Myanmar has already enacted The Mutual Assistancein Criminal Matters Law 2004. It is the main Law in Myanmar for bilateral, multilateral and regional
co-operation for effective search, seizure and confiscation of exhibits in criminal matters including
corruption.
◦ This Law contains provisions for Search, Seizure and Confiscation of Exhibits as follows:
Section 25
With respect to request of any foreign State the Central Authority shall, if granted
after scrutiny the request of a foreign State to search, seize, control, issue restraining order or confiscate theexhibit is granted instruct the relevant government department and organization to search, seize, control,
issue restraining order and confiscate in conformity with the existing laws.
Section 26(a) The Central Authority shall administer the property seized as exhibits, property
controlled and property confiscated under the request of a foreign State in conformity with the bilateralagreement.
Section 26(b) If there exists no bilateral agreement between the two States, the confiscated property
shall vest in the State.
◦ Myanmar has already signed the United Nations Convention against Corruption and thoroughly studies− 115 −

the Convention for the development of a main Law to effectively suppress the corruption.

XVI. CONCLUSION
This is the current situation in Myanmar. Myanmar has a good basic legal and regulatory frameworkfor freezing, seizure and confiscation. However, in international co-operation in corruption cases,
Myanmar has little experience. Myanmar is ready to co-operate in this area and make the provisions oflaws operational.
Thank you.

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MEASURES TO FREEZE, CONFISCATE AND RECOVER
PROCEEDS OF CORRUPTION, INCLUDING PREVENTION
OF MONEY-LAUNDERING
Panumas Achalaboon*

I. MEASURES TO FREEZE,CONFISCATE AND RECOVER PROCEEDSOF CORRUPTIONThe Organic Act on Counter Corruption, B.E. 2542 of Thailand is the principal law dealing withcorruption cases involving government officials, who are divided into two categories: “State officials” and“persons holding a political position”. (Appendix A)
These officials play a crucial role not only in central government, but also in State enterprise andlocal government organizations. Thailand makes efforts to control and eradicate corruption among theseofficials through inspecting their assets and liabilities when taking and vacating office and comparing thedifference. If it is found that the official gained an unusual increase in property without reasonable grounds,
he or she may be prosecuted and removed from office and be subject to asset measures. This document only
focuses on asset measures in corruption cases.
The commission administering corruption cases in this Act is the National Counter Corruption
Commission (N.C.C. Commission) which has following main duties and powers;(i) to inquire into facts, summarize the case and prepare the opinion to be submitted to the Senate,
Removal from Office;(ii) to inquire into facts, summarize the case and prepare the opinion to be referred to the Attorney
General for the purpose of prosecution in the Supreme Court of Justice’s Criminal Division for Persons
Holding Political Positions;(iii) to inquire and decide whether a State official has become unusually wealthy or has committed an
offence of corruption, malfeasance in office or malfeasance in judicial office; and(iv) to inspect the accuracy and actual existence of assets and liabilities of State officials and inspectchange of assets and liabilities of the persons holding political positions.

II. INSPECTION OF ASSETS AND LIABILITIES
A. Declaration of Accounts Showing Assets and Liabilities of Persons Holding Political Positions
Persons holding political positions have the duty to submit an account showing their assets andliabilities and those of their spouses and children who have not become sui juris as they actually exist on
the date of the submission to the N.C.C. Commission on each occasion of taking or vacating office.

*Public Prosecutor, International Affairs Department, Office of the Attorney General of Thailand.

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B. Declaration of Accounts Showing Assets and Liabilities of State Officials
Not every State official has to declare assets and liabilities. The law prescribes that only some State
officials holding positions stated by law have the duty to submit to the N.C.C. Commission an accountshowing their assets and liabilities and those of their spouses and children who have not yet become suijuris upon taking office and upon vacating office.
These positions are President of the Supreme Court of Justice, President of the Constitutional Court,
President of the Supreme Administrative Court, Attorney General, Election Commissioner, Ombudsman,judge of the Constitutional Court, member of the State Audit Commission, Vice President of the Supreme
Court of Justice, Vice President of the Supreme Administrative Court, Chief of the Military Judicial Office,judge of the Supreme Court of Justice, judge of the Supreme Administrative Court, Deputy Attorney Generaland person holding a high-ranking Position such as the Commander of a National Force, the Commanderin-chief in respect of military officials and the Commander of the National Royal Thai Police
In addition to these positions of State Officials, the N.C.C. Commission has the power to prescribe
the additional positions of State officials who will be under the obligation to submit an account showing
assets and liabilities.
C. Scope of Declaration and Required Documents
These assets and liabilities declared by persons holding political positions and State officials must
include assets and liabilities in foreign countries and those which are not in possession of that persons, theirspouses and children who have not become sui juris.
In the case where a person holding political positions or a State official holds more than one position,that person must submit separate accounts showing assets and liabilities for every position in accordancewith the time prescribed for the submission of the account in respect of such position.
The account showing assets and liabilities must be accompanied by copies of supporting documents
evidencing the actual existence of such assets and liabilities as well as a copy of the personal income tax
return for the previous fiscal year.
D. Time for Submission(i) In the case of taking office, such person must submit within thirty days from the date of taking
office.
(ii) In the case of vacating office, such person must submit within thirty days from the date of vacation.
(iii) In addition to the case of the vacating of office, the person who vacates his or her office, must also
re-submit an account showing assets and liabilities within thirty days from the date of the expiration of one
year after the vacation of office.
(iv) For a person holding a political position, who has already submitted the account, who dies while inoffice or before submitting the same after the vacation of office, an heir or an administrator of the estateof such person must submit an account showing assets and liabilities existing on the date of such person’s
death within ninety days from the date of the death.
E. Disclosure
The account and supporting documents submitted by the Prime Minister and Ministers must be
disclosed to the public without delay but not later than thirty days from the date of the expiration of the time
limit prescribed for the submission of such account. The account of the persons holding other positions
cannot be disclosed to any person unless the disclosure will be useful for the trial and adjudication of cases
or for the making of a determination and is requested by the Court or State Audit Commission.

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F. Sanctions
If any person holding a political position and a state official intentionally:(i) fails to submit an account showing assets and liabilities and supporting documents to the N.C.C.
Commission within the time prescribed by this Act; or(ii) submits such account and supporting documents with false statements; or(iii) fails to disclose facts which should have been disclosed in such account and supporting documents,that person shall vacate office from the date of the expiration of the time limit prescribed for the submissionof the account showing assets and liabilities or from the date of the discovery of such act.
In addition, that person can not hold a political position or a state official position for the period offive years from the date of the vacation of office.
In this case, the N.C.C. Commission will present the case to the Constitutional Court for final decision
and, when the Constitutional Court gives a final decision that it is the case of an intentional submissionof the account showing assets and liabilities and supporting documents with false statements or failure
to disclose facts which should have been disclosed, such person shall vacate the position currently held,
without prejudice to the acts previously done by such person while in office.
G. Inspection Report of a Person Holding a Political Position
In the case where the inspection report of a person holding a political position reveals an unusualchange in the property owned by that person, the N.C.C. Commission will request the person holding thepolitical position, or his or her heirs or the administrator of the estate, to explain the acquisition of suchproperty. If that person cannot explain the source of unusual change, the N.C.C. Commission will pass theresolution that such person has had an unusual increase in his or her property.
In this case, the President of N.C.C. Commission will furnish all existing documents together with
the inspection report to the Attorney General for instituting prosecution in the Supreme Court of Justice’s
Criminal Division for Persons Holding Political Positions so that the unusually increased assets will devolveon the State.
H. Allegation of Unusual Wealth
The allegation that any person holding a political position or any State official is unusually wealthy
can be made by an ordinary person or the N.C.C. Commission
If an ordinary person files the allegation, it must at least contain the following particulars:(i) the name and address of the person making the allegation;(ii) the name or position of the alleged culprit;(iii) the allegation and circumstance under which the alleged culprit has allegedly become wealthy.
After the allegation, the N.C.C. Commission will make a preliminary determination. If the alleged
culprit has already submitted an account showing particulars assets and liabilities, the N.C.C. Commission
will take such account into consideration.
In the case where the allegation meets the requirements or where there is a reasonable cause tosuspect that the alleged culprit has become unusually wealthy, the N.C.C. Commission will proceed thefact inquiry.
For the purpose of a fact inquiry, the N.C.C. Commission can order the alleged culprit to show
particulars of the assets and liabilities of the alleged culprit, which must not be less than thirty days andmust not be more than sixty days.
1. Temporary Seizure
If the N.C.C. Commission discovers that any property of the alleged culprit is connected with theunusual wealth and is under the circumstance convincingly indicative of the possibility of its transfer,− 119 −

move, transformation or concealment, the N.C.C. Commission has the power to issue an order of temporary
seizure or attachment of that property, without prejudice to the right of the alleged culprit to submit anapplication for taking such property for use with or without bail or security.
When there occurs a temporary seizure or attachment of the property, the N.C.C. Commission willconduct the proof of the property without delay. In the case where the alleged culprit is unable to present
evidence that the property under temporary seizure or attachment is not connected with the unusual wealth,
the N.C.C. Commission will have the power to continue its seizure or attachment until it passes a resolutionthat the allegation has no prima facie case, which must be within one year from the date of the seizure
or attachment or until the court passes a final judgment dismissing the case. However, if the proof issuccessful, the property will be returned to such person.
2. Case Proceeding
If the N.C.C. Commission has conducted a fact inquiry and passed a resolution that the alleged
culprit has become unusually wealthy, it will proceed as follows:(i) in the case where the alleged culprit is a person holding a political position, the N.C.C.
Commission will file the case to the Attorney General for submission of a motion to the Supreme Court ofJustice’s Criminal Division for Persons Holding Political Positions requesting the Court to order that theproperty devolve upon the State;(ii) in the case where the alleged culprit is the President of the Supreme Court of Justice, Presidentof the Constitutional Court, President of the Supreme Administrative Court, Election Commissioner,
Ombudsman, judge of the Constitutional Court, member of the State Audit Commission, Vice President of
the Supreme Court of Justice, Vice President of the Supreme Administrative Court, Chief of the Military
Judicial Office, Deputy Attorney General or is the person holding a high ranking position, the N.C.C.
Commission will file the case to the Attorney General for submission of a motion to the Court having
competence to try and adjudicate the case, requesting the Court to order that the property devolve upon theState;(iii) in the case where the alleged culprit is the Attorney General, the N.C.C. Commission willsubmit a motion to the Court having competence to try and adjudicate the case, requesting the Court toorder that the property devolve upon the State;(iv) in the case where the alleged culprit is a State official who is not a person in (i), (ii) and (iii),
the N.C.C. Commission will file the case to the Attorney General for submission of a motion to the Court
having competence to try and adjudicate the case, requesting the Court to order that the property devolve
upon the State. Moreover, the N.C.C. Commission will notify the allegation to the superior or the person
having the power to appoint or remove the alleged culprit for the purpose of issuing a punitive order of
expulsion or dismissal on the deemed ground of corruption.
3. Time for Submission of a Motion
The Attorney General or the N.C.C. Commission must submit a motion requesting the Court toorder that the property devolve upon the State within ninety days from the date the case is received fromthe N.C.C. Commission.
4. The Burden of Proof
In the case in which a request is made that the property be ordered to devolve upon the State, theburden of proof to the Court that the said property does not result from the unusual wealth is upon the
alleged culprit.
5. Execution
If the Court gives an order that the alleged culprit’s property in respect of which the N.C.C.
Commission has passed a resolution confirming its representing the unusual wealth or the unusual increase
devolve upon the State, but the execution is unable to be conducted in whole or in part of such property,
the execution may be conducted of other property of the alleged culprit within the prescription of ten years,− 120 −

but it shall not be conducted in excess of the value of the property ordered by the Court to devolve upon
the State.
I. International Cooperation Regarding Freezing, Confiscation, and Repatriation of Proceeds ofCorruption
The Act on Mutual Assistance in Criminal Matters B.E. 2535 (1992) of Thailand is the law providing
assistance and seeking for assistance regarding investigation, inquiry, prosecution, forfeiture of property
and other proceedings relating to criminal matters to/from a foreign state. The Attorney General or the
person designated by him is the Central Authority of Thailand. One main function of the Central Authority
is to consider and determine whether to provide assistance to a requesting state; and, whether to seek
assistance from a foreign government.
Assistance to a foreign state shall be subject to the following conditions:(i) Assistance may be provided even if there exists no mutual assistance treaty between Thailand andthe requesting state, providing that such state commits to assist Thailand under the similar manner whenrequested;(ii) The Act which is the cause of a request must be an offence punishable under Thai laws except when
Thailand and the requesting state have a mutual assistance treaty otherwise specifying;(iii) A request may be refused if it affects national sovereignty or security, or other crucial public interestsof Thailand, or relates to a political offence;(iv) Assistance shall not be related to a military offence.
The state having a mutual assistance treaty with Thailand shall submit its request for assistancedirectly to the Central Authority. The state having no such treaty shall submit its request through a diplomaticchannel.
The request for assistance from a foreign state to forfeit or seize property located in Thailand shallprovide the description of the property and its location or the habitation of the person having it in possession,in detail sufficient to be acted upon.
In case of the request for forfeiting the property, it shall be also be accompanied by the original or theauthenticated copy of the final judgment of the Court of the requesting state forfeiting such property.
In case of the request to seize the property, it shall be accompanied by the original or authenticatedcopy of the order of the Court of the requesting state to seize such property before the Court makes ajudgment or a final judgment of its forfeiture.
Upon the receipt of the request, the Competent Authority (the Executive Director of the International
Affairs Department, the Office of the Attorney General) shall apply to the Court having jurisdiction overthe location of the property for the judgment of its forfeiture or the order of its seizure.
The Court may order the forfeiture of the property specified in a request if there is a final judgmentof a foreign Court and it is forfeitable under Thai law.
Where the foreign Court has made a pre-judgment order seizing the property or made a forfeitureorder against it but the order is not yet final, the Court, if it thinks fit, may make an order seizing it if it isseizable under Thai laws.
The Court shall have the power to order the forfeiture or seizure of property, even if the offence
giving rise to forfeiture or seizure may not have taken place in Thailand.
The property forfeited by the judgment of the Court shall be devolved on the State, but the Court may
give a judgment for rendering it useless or for its destruction.
In terms of asset recovery (UNCAC Chapter V), because Thailand has not ratified this Convention,
there is no Thai legislation allowing the Thai Government to repatriate proceeds of corruption to the victim(requesting) country.
As mentioned above, under the Act on Mutual Assistance in Criminal Matters B.E. 2535 (1992) ofThailand, the property forfeited by the judgment of the Thai Court according to the request for assistancefrom a foreign state shall be devolved on the requested state. However, if the treaty between Thailand and− 121 −

other countries otherwise specifies, the property or proceeds of corruption forfeited shall remain to therequesting state.
J. Conclusion
Asset proceeding is one of the measures and law enforcement methods to deal with corruption cases.
There are also criminal prosecutions by the Office of the Attorney General and removal from office by the
Senate. The N.C.C. Commission plays a leading role in fact inquiry and inspection of assets and liabilities.
It has the power to issue and order of temporary seizure and attachment of the property.
However, the check and balance system will be scrutinized by the Attorney General and the Court
before unusually wealthy assets devolve upon the State.

III. MONEY LAUNDERING
Anti-Money Laundering Act B.E. 2542 (1999) of Thailand mainly focuses on two parts: offence andasset measures which closely rely on each other.
In terms of the offence, any person who will be said to commit an offence of money laundering is:(i) transfer, accept a transfer of or convert the asset connected with the commission of an offence
for the purpose of covering or concealing the origin of that asset or, whether before or after the commission
thereof, for the purpose of assisting other persons to evade criminal liability or to be liable to lesser penalty
in respect of a predicate offence; or(ii) act in any manner whatsoever for the purpose of concealing or disguising the true nature,acquisition, source, location, distribution, or transfer of the asset connected with the commission of apredicate offence or the acquisition of rights therein.
It could be noticed that the elements of the charge as mentioned above must link to a predicate
offence. This means that there must be any person committing a predicate offence and the person who
commits the offence of money laundering is doing one of the elements of the charge relating to predicate
offence for the purpose specified by the law. These two persons (predicate offence and offence of money
laundering) probably could be the same. In this case, he will be prosecuted for both the predicate offence
and offence of money laundering.
In Thailand, there are eleven predicate offences of which nine offences are in the Anti-Money
Laundering Law (Appendix A) and other two 13 predicate offences are in the Human Trafficking Law andthe Election Law which is deemed to be predicate offences under the Anti-Money Laundering Law.
Therefore, there are eleven predicate offences in Thailand. The burden of proof in both elevenpredicate offences and offence of money laundering is beyond reasonable doubt. If a public prosecutor
cannot meet that requirement, the court will dismiss the case and the offender will be freed. However, AntiMoney Laundering Act B.E. 2542 (1999) separates offence from the asset measures. The case of predicate
offences and the case of money laundering are in the jurisdiction of Criminal Court and the case of asset
measures is in the jurisdiction of Civil Court. If the Criminal Court dismisses the case, it will not affect thecase of asset measures in the Civil Court. This means that the Civil Court can give an order that the asset be
devolved on the State if it is satisfied that the asset is connected with the commission of the offence.
A. Measures to Prevent Money-Laundering
1. Report and Identification(i) Financial Institutions
When a transaction is made with a financial institution, the financial institution has the duty to report− 122 −

that transaction to the Anti-Money Laundering Office when it appears that such transaction is:(i) a cash transaction exceeding two million Baht;(ii) a transaction connected with the asset worth more than five million Baht;(iii) a suspicious transaction, whether it is the transaction under (i) or (ii) or not
In the case where there subsequently appears a reasonable ground to believe that any transaction
already made without being reported is a transaction required to be reported by a financial institution, that
financial institution has to report it to the Anti-Money Laundering Office without delay.
(ii) Land Offices
Any land office has to report to the Anti-Money Laundering Office when it appears that an application
is made for registration of a right and juristic act related to an immovable asset to which a financial institution
is not a party and which is of any of the following descriptions:(i) requiring cash payment in a larger amount than two million Baht;
(ii) involving a greater value of an immovable asset than five million Baht, being the assessment
value on the basis of which fees for registration of the right and juristic act are levied, except in thecase of a transfer by succession to a statutory heir; or(iii) being made in connection with a suspicious transaction.
(iii) Professions
Some professions stated below have the duty to report to the Anti-Money Laundering Office anytransaction when it is carried out in cash of a value exceeding the amount prescribed in the Ministerial
Regulation (No Ministerial Regulation issued so far) or is a suspicious transaction:◦ Professions that undertake provision of advice or being an adviser in transactions relating to theinvestment or movement of funds, under the law governing securities and stock exchange;◦ Professions relating to trading of precious stones, diamonds, gems, gold, or ornaments decorated with
precious stones, diamonds, gems, or gold;◦ Professions relating to trading or hire-purchase of cars;◦ Professions acting as a broker or an agent in buying or selling immovable property;◦ Professions relating to trading of antiques under the law governing selling by auction and trading of
antiques;◦ Professions relating to personal loan under supervision for business that are not a financial institution
under the Ministry of Finance Notification relating to Personal Loan Business under Supervision orunder the law governing financial institution business;◦ Professions relating to electronic money card that are not a financial institution under the Ministry of
Finance Notification relating to electronic money card or under the law governing financial institution
business;
Professions relating to credit card that are not a financial institution under the Ministry of FinanceNotification relating to credit card or under the law governing financial institution business;◦ Professions relating to electronic payment under the law governing the supervision of electronic
payment service business.
2. Asset Proceedings(i) Provisional Seizure
In conducting an examination of the report and information on transaction-making, if there is areasonable ground to believe that any asset connected with the commission of an offence may be transferred,
distributed, moved, concealed or hidden, the Transaction Committee have the power to order a provisional
seizure or attachment of such asset for the duration of not more than ninety days.
The person having made the transaction in respect of which the asset has been seized or attached− 123 −

or the stakeholders in the asset can present evidence that the money or asset in such transaction is not theasset connected with the commission of the offence in order that the seizure or attachment order may be
revoked.
(ii) Case Proceeding
In the case where there is convincing evidence that any asset is the asset connected with thecommission of an offence, the Secretary-General of the Anti-Money Laundering Office will refer the caseto public prosecutor for consideration and filing a petition to the Court for an order that such asset be
devolved on the State without delay.
After filing a petition, if there is a reasonable ground to believe that the asset connected with thecommission of the offence will be transferred, distributed or taken away, the Secretary-General will refer thecase to the public prosecutor for filing a petition to the Court for provisional seizure or attachment of such
asset prior to an order. The Court has to consider this petition as a matter of urgency. If there is a convincing
evidence that the petition is justifiable, the Court will give an order as requested without delay.
Upon the receipt of the petition filed by the public prosecutor, the Court will order the notice thereof
to be posted at that Court and the same will be published for at least two days in a newspaper widelydistributed in the locality in order that the person who may claim ownership or interest in the asset may filean application before the Court has an order.
The Court will also order the submission of a copy of the notice to the Secretary-General for postingat the Anti-Money Laundering Office and at the police station where the asset is located. If there is evidence
that whoever may claim ownership or interest in the asset, the Secretary-General will notify in writing tothat person for the exercise of rights therein. The notice will be sent by registered post to such person’s mostrecent recorded address as shown in the evidence.
(iii) The Owner and the Beneficiary of Assets
Before the Court gives an order, the person claiming ownership in the assets in respect of which the
public prosecutor has filed a petition for it to be devolved on the State can file an application satisfyingthat:( i) the applicant is the real owner and the asset is not connected with the commission of the offence,or(ii) the applicant is a transferee in good faith and for value or has secured its acquisition in good faithand appropriately in the course of good morals or public charity.
In addition, before the Court gives an order, the person claiming to be a beneficiary of the asset
in respect of which the public prosecutor gas filed a petition for it to be devolved on the State can file anapplication for the protection of his rights. For this purpose, that person has to satisfy that he is a beneficiaryin good faith and for the value or has obtained benefit in good faith and approximately in the course of good
morals or public charity.
However, if the person claiming to be the owner or transferee or beneficiary of the asset is the person
who is, in the past, associated with an offender of a predicate offence or and offence of money laundering,it shall be presumed that such asset is the asset connected with the commission of the offence or transferredin bad faith, as the case may be.
(iv) The Court Order
When the Court has conducted an inquiry into the petition filed by the public prosecutor, if the Court
is satisfied that the asset to which the petition relates is connected with the commission of the offence andthat the application of the person claiming to be the owner or transferee is not tenable, the Court will givean order that the asset be devolved on the State.
If the asset is cash, the Anti-Money Laundering Office has to forward one half to the Anti-Money
Laundering Fund and another half to the Ministry of Finance. If it is the other type of asset, rules of the− 124 −

cabinet will be followed.
If the Court deems that the asset in the petition is not related to the commission of an offence, theCourt will order return of the said asset. In this case, where there is no claimant to the restrained asset within
two years from the date the Court made the return order, the asset will be transferred into the Fund.

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APPENDIX A“State official” means a person holding a political position, Government official or local official
assuming a position or having permanent salaries, official or person performing duties in a State enterpriseor a State agency, local administrator and member of a local assembly who is not a person holding apolitical position, official under the law on local administration and shall include a member of a Board,
Commission, Committee or of a sub-committee, employee of a Government agency, State enterprise orState agency and person or group of persons exercising or entrusted to exercise the State’s administrative
power in the performance of a particular act under the law, whether established under the government
bureaucratic channel or by a State enterprise or other State undertaking.
“Person holding a political position” means Prime Minister, Minister, Member of the House ofRepresentative, Senator, Political parliamentary official under the law on parliamentary officials, Governorof Bangkok Metropolitan, Deputy Governor of Bangkok Metropolitan and member of the Bangkok
Metropolitan Assembly, Local administrator or member of a local assembly of a local governmentorganization the income or budget of which is not lower than that prescribed in the Government Gazette by
the National Counter Corruption Commission.

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APPENDIX B
In Anti-Money Laundering Act B.E. 2542 (1999), “predicate offence” means any offence- relating to narcotics under the law on narcotics control or the law on measures for the suppressionof offenders in offences relating to narcotics;- relating to sexuality under the Penal Code in respect of procuring, seducing or taking away for
an indecent act a woman and a child for sexual gratification of others, offences of taking away a childand a minor, offences under the law on measures for the prevention and suppression of women andchildren trading or offences under the law on prevention and suppression of prostitution only in respectof procuring, seducing or taking away such persons for their prostitution, or offences relating to being anowner, supervisor or manager of a prostitution business or establishment or being a controller of prostitutes
in a prostitution establishment;- relating to public fraud under the Penal Code or offences under the law on loans of a public fraud
nature;- relating to misappropriation or fraud or exertion of an act of violence against assets or dishonest
conduct under the law on commercial banking, the law on the operation of finance, securities and credit
foncier businesses or the law on securities and stock exchange committed by a manager, director or any
person responsible for, or interested in, the operation of such financial institutions;- relating to malfeasance in office or malfeasance in judicial office under the Penal Code, offence
under the law on offences of officials in State organizations or agencies or offence of malfeasance in officeor corruption under other laws;- relating to extortion or blackmail committed by claiming an influence of a secret society or criminal
association under the Penal Code;- relating to smuggling under the customs law;
- relating to terrorism under the Penal Code;- relating to gambling under the law on gambling, limited to offences relating to being an organizerof a gambling activity without permission and there are more than one hundred players or gamblers at one
time, or the total amount of money involved exceeds ten million Baht.

− 127 −DISCUSSIONS AND RECOMMENDATIONSSUMMARY OF DISCUSSIONS
The discussion sessions were chaired by Mr. Ricardo V. Paras III, Chief State Counsel, Departmentof Justice of the Republic of the Philippines.
Mr. Panumas Achalaboon, Public Prosecutor, International Affairs Department, Office of the Attorney
General, Thailand, sat as Co-Chair, by consensus of the participants.
Mr. Haruhiko Ukawa, Deputy Director of UNAFEI, supported the Chairs as General Editor of the
discussion sessions.
Topic (i): Measures to get information to identify and trace the proceeds of corruption, including
effective use of FIU information.
In this first part of the discussion session, the participants addressed their experiences with Financial
Intelligence Units (FIUs); the desirable qualities or character of FIUs; the use of information held by FIUs;
and asset declaration.
All but one of the participating countries had already established FIUs and the participants discussed
their experience with such institutions. They addressed the matter of obtaining information from financial
institutions: co-operation and compliance from financial institutions are essential for an FIU’s operation.
Chair Paras enquired of the participants about the willingness of financial institutions to comply with knowyour-customer rules, Suspicious Transaction Reports (STRs) and other reporting requirements. A participantfrom the Philippines responded that compliance in his country is generally satisfactory. The terrorist attacksof 9/11 led to increased acceptance on the part of financial institutions that political leadership demands
more stringent records and anti-money laundering measures. As global financial transactions tightened after
9/11, the financial institutions accepted that an era of financial reporting had arrived and that the prudent
provider of financial services would know his or her customers well. The participant from Malaysia also
voiced confidence in the level of compliance in his country, but a visiting expert to the seminar expressedsome reservation as to the willingness of financial institutions to divulge information to FIUs. It was notedthat the effective discharge of FIU duties is directly tied to their independence. The participants echoed thisprinciple throughout the discussions.
This discussion of the importance of independence for FIUs led the participants to focus on theelements required for an FIU to function at optimal efficiency. To prevent the use of private financial
information for political gain the participants agreed that FIUs must be politically neutral. They further
agreed that sufficient human and financial resources were indispensable.
The discussion also addressed the use of information held by FIUs, both between domestic law
enforcement agencies and international counterparts. All agreed that the use of information held by FIUs
should not be heavily restricted. Links between the FIU and its country’s law enforcement agencies ensurethat the FIU’s work is an effective contribution to the fight against financial crime in all its forms. A visiting
expert from the USA explained that authorized US law enforcement agencies had direct access to all
Suspicious Activity Reports (SARs) and STRs filed with FinCEN, the US Department of Treasury’s FIU.
Law enforcement agencies do not have to wait for FinCEN to analyse or forward any of the information.
This is particularly useful because FIUs are not necessarily aware of the relevance of particular pieces
of information they acquire. Regarding international exchange of information, a participant from thePhilippines explained that the Philippine AMLC has both proactive and reactive functions in exchanging
intelligence via Egmont Secure Web.
Regarding asset declaration by government officials, the participants discussed the requirements of
the respective countries and the relative merits and demerits of differing levels of stringency. The Philippine
requirements are extensive, encompassing the assets and liabilities of spouses, children and extended
family. Annual updates are also required. A participant questioned the practicality of requiring politicians
to file asset declarations. Both the Philippines and the USA make such requirements of parliamentarians. A
visiting expert from the USA explained that the US has both public and non-public agency reports and both

− 131 −

government officials and politicians must disclose their assets. Chair Paras mentioned time/response limits
to more properly implement the requirement to disclose assets and liabilities. Participants then discussed
what constitutes an appropriate time limit to place upon investigations of declarations.
Topic (ii): The development of laws and international co-operation to actualize freezing, confiscation,and recovery of the proceeds of corruption, including prevention, criminalization and prosecution ofmoney-laundering.
The participants discussed the responsibilities incumbent on signatories to the UNCAC. Eachparticipating country is a signatory to the UNCAC, and most have ratified it. The participants also addressedvarious aspects of the financial investigation process: identification, freezing, confiscation, and repatriationof the proceeds of crime. The participants also discussed measures against cash smuggling, including therequirements placed upon financial institutions regarding foreign currency exchange. Finally, they also
addressed international co-operation in asset recovery.
Regarding freezing, the participating countries have differing requirements and procedures; somepermit administrative freezing by law enforcement authorities, but most require judicial involvement
through court orders. Some participating countries do not permit the use of freezing orders to secure nonconviction-based forfeiture.
One expert cautioned against issuing freezing orders too early in an investigation, stating insteadthat finding intelligence and building a network are more useful long-term objectives than simply seizing
funds once identified.
Other matters relating to freezing orders which the participants discussed include the proceduresfor ex parte orders, the most desirable period of validity of freezing orders and the need to protect third
parties. One expert pointed out that the temporary UN Security Council Resolution 1373 makes freezingof terrorist assets an obligation.
More detailed discussion of non conviction-based forfeiture (NCB) then followed. UNCAC Art.
54.1 (c) requires States Parties to consider taking such measures as may be necessary to allow NCB in orderto render mutual legal assistance (MLA), but not all of the participating countries provide for NCB.
Chair Paras explained that NCB is used in the Philippines and extolled its usefulness when the
defendant cannot be prosecuted because of death, flight or absence. Further advantages of NCB forfeiture
are that it may allow for a lower burden of proof than the “beyond a reasonable doubt” standard required of
criminal conviction, and that jurisdiction can be more easily established in NCB cases. In criminal cases,
the action is in personam and the physical presence of the defendant is essential, but an NCB case is inrem, a procedure against the asset, rather than the person, and jurisdiction can be established by serving asummons on the title holder. In the event that the title holder cannot be located, the summons can be servedby publication.
Regarding international co-operation in asset recovery, the participants noted that repatriation ofstolen assets is not automatic and that requests for assistance must be filed in accordance with the UNCAC
or other relevant instruments. In this regard, the General Editor spoke of the importance of a strong networkof practitioners who make active use of informal channels of communication. Such measures can be used
immediately; they do not require any legislative changes or other reform. Informal consultation regarding
draft requests can increase the request’s executability and avoid later procedural difficulties in the requested
state. Participation in international fora such as the Good Governance Seminars or other UNAFEI training
programmes can facilitate the building of such a network of practitioners and the sharing of experience andexpertise.
At the conclusion of the discussion sessions, the following Recommendations were adopted byconsensus.

− 132 −

RECOMMENDATIONS
We hereby acknowledge the following points.
Preamble - Recognition of Current Situation:
1. Economic crimes, including corruption and money-laundering, are committed for the purpose ofobtaining profit. Thus, identifying, freezing, seizing and confiscating the proceeds of crime are themost effective measures against those criminal activities. Further, the successful confiscation andrecovery of the proceeds of corruption are vital to eradicate poverty and to secure sustainable economic
development and the rule of law, especially in developing countries.
2. A variety of problems impede the abilities of prosecutors and investigators to confiscate and recover
the proceeds of corruption, such as weaknesses in the prevention and control of money-laundering,legal loopholes, lack of expertise and resources to successfully trace, freeze and confiscate assets, both
domestically and internationally, as well as insufficient trustful international co-operation.
3. As international transactions have become increasingly easy to conduct, so too has it become easier
to move corruption and money-laundering proceeds across borders. Investigation and prosecution
authorities face immense challenges in tracing and proving complex transnational flows of money
and successfully freezing and confiscating the illegally acquired, transferred and diverted assets,
particularly when the assets are located abroad. Under these circumstances, international co-operation
among financial and criminal justice authorities in the relevant countries and mutual legal assistance inthe freezing and confiscation of the proceeds of corruption have become focal issues in recent years.
It has, therefore, become indispensable for each country to both adopt and fully implement effective
legislation and practical measures for identifying, freezing, confiscating and repatriating the proceedsof corruption as may be provided in existing international agreements and conventions.
We hereby adopt by consensus the following Recommendations:
Recommendations:
1. Accession to the United Nations Convention against Corruption should be duly considered in order toutilize the Convention as an effective tool for identifying, freezing, confiscating and repatriating of theproceeds of corruption;
2. To implement obligations in the UNCAC, criminalization of acts of corruption in accordance with the
UNCAC should be duly considered by respective countries. Such acts of corruption criminalized inaccordance with the Convention should be included as predicate offences of money laundering;
3. Establishment of a Financial Intelligence Unit to gather and analyse information regarding financialtransactions is considered essential to detect money-laundering and the laundering of the proceedsof corruption. Establishment of an FIU is called for by Article 14 of the UNCAC. FIUs should be
adequately empowered and staffed so that they will be able to carry out their functions effectively
and without undue influence. FIUs should provide the widest possible co-operation to their foreigncounterparts without unduly restrictive conditions;4. Financial institutions and FIUs should comply with relevant FATF 40+9 recommendations, which are
the accepted international standards for an effective anti-money-laundering regime, especially thoseregarding the duty to verify every customer’s identity and beneficial ownership and to report suspicioustransactions;
5. In order to effectively detect the proceeds of corruption, criminal justice authorities and officials should
pay adequate attention to suspicious transactions reported to their FIUs;
6. Criminal justice authorities and FIUs should develop the capacity of their officers by providing
professional training on financial investigations including accounting procedures, new payment
methods, and recent developments in identifying, freezing, confiscating and repatriating proceeds ofcorruption;− 133 −

7.

Law enforcement authorities should not ignore the myriad ways that the proceeds of corruption are
moved and be alert to the fact that not all funds are moved through the formal financial sector. In order
to combat cash smuggling and to promote targeting and interdiction of cash couriers, law enforcement
and other relevant authorities should enhance international sharing of information and experience as
regards the modes of operation employed by cash couriers and effective detection methods;
8. Establishment of an obligatory asset disclosure system for appropriate public officials, including highranking officials and politicians, should be considered. Access to such information should be granted
to appropriate investigative authorities;
9. In order to prevent dissipation of the proceeds of corruption, adequate legislation and proceduresshould be enacted so that criminal justice authorities or FIUs are empowered to promptly take freezing
measures;10. Criminal justice authorities, upon receipt of a request from another country to freeze the proceeds ofcorruption located in their country, should act promptly to ensure that the funds are so restrained;
11. To ensure the effectiveness of freezing orders, authorities should be able to obtain such orders withoutalerting the subject of the investigation;
12. Adequate legislation and procedures for criminal conviction-based asset confiscation should beenacted, and properly implemented;
13. Where not already in effect, consideration should be given to enacting a law to allow for the confiscationof proceeds of corruption without a criminal conviction, especially in cases in which the offendercannot be prosecuted by reason of death, flight or absence or in other appropriate cases;
14. The possibility of shifting the burden of proof regarding the origin of alleged proceeds of corruption
should be considered;
15. Concerning cases involving the embezzlement of public funds or the laundering of such embezzled
funds, a legal mechanism which allows a requested country to return those confiscated funds to arequesting country should be in place, as mandated by Article 57 of the UNCAC;
16. Criminal justice authorities should effectively utilize mutual legal assistance as a measure to realize
freezing, confiscation and recovery of proceeds of corruption;
17. Criminal justice authorities should provide the widest possible co-operation to their foreign counterparts
so that proceeds of corruption can be effectively and promptly detected, frozen, confiscated andrecovered. Such co-operation should be provided without unduly restrictive conditions;
18. Criminal justice authorities should strengthen and utilize informal channels with their counterparts inother jurisdictions prior to making a formal request for mutual legal assistance in order to facilitate
active information exchange. Sharing of draft requests should be encouraged in order to avoid delays
and to ensure that final versions will be executable in the requested country;
19. All investigative agencies are encouraged to build trustful co-operation at the domestic, regional andinternational levels, to ensure efficient investigations for a better prospect of conviction and/or asset
recovery;
20. Participation in international fora, such as this Regional Seminar on Good Governance, to exchange
experiences and possible solutions with other jurisdictions, should be encouraged. Participants shouldshare with criminal justice and other authorities in their respective jurisdictions the knowledge gained
from such international fora; and21. Notice should be taken of assistance provided by the joint UNODC-World Bank Stolen Asset Recovery
Initiative in developing and implementing measures to facilitate asset recovery.

− 134 −

PARTICIPANTS, VISITING EXPERTS & ORGANIZERS LIST

A. Participants
Overseas Participants
Mr. Vathanak Sina Neang

Director
Legal Affairs Department
Ministry of JusticeCambodia

Mr. Yanuar Utomo

Head
Sub Division Evaluation and Monitoring
International Legal Cooperation Division
Legal Bureau
Attorney General's Office
Indonesia

Mr. Xaysana Souliyavong

Vice Chief
Civil Department
Office of the Northern Part People's Prosecutor
Lao P.D.R.

Mr. Chew Tham Soon

Head
Compliance OfficeSecretariat to Inspector General of Police
Royal Malaysian Police
Malaysia

Ms. Lwin Lwin Than

Deputy Director (Law Officer Grade 1)
International Law and ASEAN Legal Affairs Division
Office of the Attorney General
MyanmarMr. Panumas Achalaboon

Public Prosecutor
International Affairs Department
Office of the Attorney General
ThailandPhilippine Participants
Mr. Ricardo V. Paras III

Chief State Counsel
Department of Justice

Mr. Miguel F. Gudio Jr.

Assistant Chief State Prosecutor
Department of Justice

Mr. Archimedes V. Manabat

City Prosecutor
Department of Justice− 135 −

Ms. Merba A. Waga

State Prosecutor
Department of Justice

Ms. Ma. Cristina M. Barot

State Prosecutor
Department of JusticeMs. Grace V. Ruiz

State Prosecutor
Department of Justice

Ms. Rosalie R. Cumla

State Counsel
Department of Justice

Ms. Pamelyn A. OmalinState Counsel
Department of Justice

Mr. Roman G. Del Rosario

Assistant Solicitor General
Office of the Solicitor General

Mr. Aristotle R. Mejia

Assistant Solicitor
Office of the Solicitor General

Ms. Melanie Quimbo

Assistant Solicitor
Office of the Solicitor General

Ms. Julia C. Bacay-Abad

Deputy Director
Legal Evaluation Group
Anti-Money Laundering Council Secretariat

Mr. Richard David C. Funk II

Deputy Director
Compliance and Investigation Group
Anti-Money Laundering Council Secretariat

Mr. Levy V. Mendoza

Director
Presidential Commission on Good Government

Mr. Danilo R. V. Daniel

Director IV
Research and Development Department
Presidential Commission on Good Government

Ms. Catherine G. Pascua

Investigation and Protection Officer
Graft Investigation and Prosecution Office
Office of the Ombudsman

Mr. Silverio T. ManuelActing Director
Field Investigation Office
Office of the Ombudsman− 136 −

Philippine Observers
Ms. Nancy G. Lozano

State Counsel
Department of Justice

Ms. Leilani R. Fajardo

State Counsel
Department of Justice

Ms. Myrna P. Medina

Director
National Police Commission
Department of the Interior and Local Government

Ms. Donna Lynn Abaya-Caparas

Acting Asstant Director
National Police Commission
Department of the Interior and Local Government

Mr. John Felix

Chief
Legal Division
Parole and Probation Administration
Department of Justice

B. Visiting Experts
Mr. Emile van der Does de Willebois

Senior Financial Sector Specialist
Financial Market Integrity Unit
World Bank
U.S.A.

Ms. Linda M. Samuel

Deputy Chief
Asset Forfeiture and Money Laundering Section
Criminal Division
U.S. Department of Justice
U.S.A.

C. Adviser
Mr. Robert E. Courtney III

AttachéU.S. Department of JusticeEmbassy of the United States in Manila

D. Organizers
UNAFEI
Mr. Masaki Sasaki

Director

Mr. Haruhiko Ukawa

Deputy Director

Mr. Naoyuki Harada

Professor− 137 −

Ms. Yoshiko Kawashima

Senior Officer

Mr. Ikuo Kosaka

Officer

Ms. Grace Lord

Linguistic Adviser

UNODC RC
Mr. Michel Bonnieu

Senior Regional Legal Adviser
Legal Advisory Programme
UNODC Regional Centre for East Asia and the PacificOrganizing Committee of the Philippines
Mr. Severino H. Gaña, Jr.

Assistant Chief State Prosecutor
National Prosecution Service
Department of Justice

Ms. Deana Penaflorida Perez

Senior State Prosecutor
National Prosecution Service
Department of Justice

Ms. Mildred Bernadette B. Alvor

State Counsel
Office of the Chief State Counsel
Department of Justice

Mr. Charlie L. Guhit

State Counsel
Department of JusticeMs. Gilmarie Fe S. Pacamarra

State Prosecutor
Department of Justice

Ms. Anna Noreen T. Devanadera

Associate Prosecution Attorney
Department of Justice

Mr. Cesar Angelo Chavez III

Associate Prosecution Attorney
Department of Justice− 138 −

SEMINAR SCHEDULE

9 December

Opening Ceremony
Opening Address by Mr. Masaki Sasaki, Director, UNAFEI
Address by the Honourable Ms. Agnes Devanadera, Secretary of Justice, Republicof the Philippines
Address by Mr. Michel Bonnieu, Senior Regional Legal Adviser, UNODC RC
Special Address by His Excellency Mr. Makoto Katsura, Ambassador of Japan toThailandIntroduction
Introductory Remarks by Mr. Haruhiko Ukawa, Deputy Director, UNAFEI
Presentation by Mr. Michel Bonnieu

10 December

Papers and Contributions
Individual Presentation AMLC, the Philippines
Individual Presentation OSG, the Philippines
Individual Presentation PCGG, the Philippines
Individual Presentation Cambodia
Individual Presentation Indonesia
Individual Presentation Lao PDR
Individual Presentation Malaysia
Individual Presentation Myanmar
Individual Presentation Thailand
VE Presentation, World BankVE Presentation, US DOJ

11 December

Discussion Session
Adoption of the Recommendations
Closing Ceremony
Address by Mr. Masaki Sasaki, Director, UNAFEI
Address by Mr. Michel Bonnieu, UNODC RC
Closing Remarks by Honourable Secretary Devanadera− 139 −

APPENDIXPHOTOGRAPHS• Commemorative Photograph• Secretary Devanadera’s Speech• Discussion Session• Introductory Remarks

UNAFEI

Commemorative Photograph

Secretary Devanadera’s Speech− 142 −

Discussion Session

Introductory Remarks− 143 −ADDENDUM

A letter received, post publication, from Singaporean Authorities

The following letter from the Director of the Corrupt Practices Investigation Bureauof Singapore, received post-publication on 21 April, 2011, is hereby attached as an
addendum to this report. Neither UNAFEI nor the government of Japan expresses
any opinion on the conflicting views expressed by the Philippine and Singaporeanauthorities. This addendum does not imply any endorsement.