December 9, 2009
Third Regional Seminar on Good Governance for Southeast Asian Countries

INTRODUCTORY REMARKS

Haruhiko UKAWA, LL.M.
Deputy Director, UNAFEI

It is my pleasure to be given this opportunity to address a group of distinguished criminal
justice and law enforcement specialists attending the Third Regional Seminar on Good
Governance for Southeast Asian Countries. We have decided to organize this Seminar on
the subject of “Measures to Freeze, Confiscate and Recover 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 thisparticular topic, and then shall proceed with a general over view of the major issues
relevant to the topic.

A. Why Asset Recovery?
Why Asset Recovery?
Because it is important and, at the same time, an extremely complicated area of law¸ withwhich the law 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 governancechallenges and threats to the stability and security of societies, undermines institutions andvalues of democracy, and jeopardizes sustainable development and economic prosperity.”
Corruption also constitutes a major obstacle in the international fight against transnationalorganized crime and terrorism.
Consequently, once a corruption scheme is uncovered, public officials involved should bepromptly removed and appropriate criminal sanctions need to be imposed. While these areno 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-1-

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 suchinjustice.
Seen from the victim country’s perspective, such transfers are outright usurpation ofmonies rightfully belonging to its people; looting of monies that could have been spent for
useful governmental purposes, such as basic health or education programs, poverty
reduction, environmental protection, and institution-building for the country’s overall
integrity. The precise scope of the problem and the amount of assets 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 orderof billions and trillions of dollars every year. Suffice it to say that the drain of national wealthand collateral damages in terms of foregone growth is staggering.
The problem of stolen assets should be a matter of concern for the countries into which theassets are transported as well. Such assets are often hidden in the financial centers ofdeveloped

countries,andin

today’sworld,

whereabusesof

globalfinancialsystem—particularly money-laundering—are considered serious criminal conduct, suchcountries need to be prepared to provide appropriate and timely responses if they wish tocontinue to be seen as responsible and reputable financial centers. Developed countries,
in their capacity as donors of development assistance and foreign aid, also have legitimate
interests in seeing that the funds provided are spent in accordance with sounddevelopment policies, and for the national good 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 United Nations Convention Against Corruption
which reads “The return of assets pursuant to this chapter is a fundamental principle of thisConvention, 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 byvictim countries. Nigeria recovered more than $500 million, Peru nearly $185 million, andthe 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 transferredback to their respective national treasuries. In the case of Nigeria, more than seven years
after the death of General Sani Abacha, in the case of Peru, three years after the politicalbribery scandal broke and President Fujimori fled the country, and in the case of the-2-Philippines, eighteen years have past since the “People Power Revolution,” which put anend to Marcos’s regime. Heartening though these cases were, we know that successful
repatriation of stolen assets is still rare.
Retracing myriad of steps of asset transfers is a time-consuming enterprise, and it is notrealistic to take such actions in every single case of corruption. Naturally, they will have tobe limited to where the amount of money involved is substantial or the nature of theunderlying corruption is egregious. On the other hand, however, there is no reason why itshould be limited to cases of grand corruption in which hundreds of million dollars werestolen by national leaders. There is a need to systemize and streamline the process so thatcross-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
that are recipients of stolen assets. Specific issues and difficulties involved will be
described in the following section. Before proceeding, however, let me point out that theinitial obstacle to overcome is the lack of experience and expertise on the part of criminal
justice and law enforcement practitioners. This is no secret or mystery given that it isrelatively 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 andRecover Proceeds of 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.

B. Issues and Difficulties
1. 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 ofstolen 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 thesuspicious transaction reporting systems are major examples of commonly employed-3-

measures to prevent, deter, and detect corruption and money-laundering resulting from
corruption. Every jurisdiction is expected to have their laws and regulations in compliancewith 40+9 FATF recommendations and requirements of UNCAC, and whether and how thatis achieved are matters of interest.
Furthermore, the measures I have just described presuppose the establishment ofanti-corruption bodies and financial intelligence units. These bodies should not only beestablished, but adequately empowered, staffed and financed so that they will be able toexecute their expected responsibilities.
At this point, in connection with identification and tracing of stolen assets, let me stress thatjurisdictions 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 inmind that proceeds of crime are geographically mobile, and they will quickly move tojurisdictions where compliance is ineffective, enforcement is limited, and transparency is
below international standards.
2. Freezing
As I have already mentioned, asset recovery is an arduous and time-consuming process,and as such 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 thisby requiring financial institutions that have filed suspicious transactions reports toautomatically freeze relevant assets for several days, during which the authorities will havetime to consider the course of actions to be taken. There also may be instances in which itis 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 ofproperty rights.
3. Confiscation
Procedural requirements in the judicial phase of the asset–recovery process mostfrequently 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-4-

to be confiscated. An obvious solution to these 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 theirdomestic law, taking measures as may be necessary to allow confiscation without acriminal 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.
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 existingprocedures and traditional principles such as presumption of innocence may be still open
to debate. Many would like to know the experiences of and lessens learned in jurisdictions
that already have these measures in place.
4. Repatriation
Repatriation, the final step in the international asset recovery process, can also raise quite
complicated issues such as disposal of the confiscated property—whether and to what
extent victim countries can claim ownership—and the treatment of costs incurred by therequested 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 type of underlying corruption offences. At the same time, 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 inconnection with these mattes would be very helpful.
5. General Impediments.
I have so far described some of the issues and difficulties that are encountered in theprocess of international asset recovery. However, the single most pervasive impediment
may be the differences and variations in substantive laws and criminal procedures among
the states and jurisdictions, which is exactly what the kleptocrats and money-launders try
to exploit. Dialogue, sharing of information, creating relationship and network, anddeveloping cumulative knowledge and experiences should be the key to overcome thislongstanding issue in international cooperation and mutual legal assistance.

-5-C. CONCLUSION
Confiscation of criminal proceeds and repatriation of stolen assets restore justice andrepair damages done to the victim country. They are also powerful deterrents that hit thekleptocrats where it hurts them most. 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 much called for. I hope thisseminar will contribute to your understanding of the subject and, in the long run, helptranslate the text of UNCAC into effective action.

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