Oscar Solorzano
Head, Latin America ICAR
Oscar Solórzano is the Head of Latin America for the Basel Institute’s International Centre for Asset Recovery (ICAR) and the Institute’s legal representative in Peru.
Since joining ICAR in 2012, Oscar has worked on a range of high-profile international corruption and asset recovery cases in Peru and across Latin America. Working with judicial, prosecutorial and law enforcement authorities, he helps to develop and execute strategies to trace illicit assets laundered to foreign jurisdictions, including seizing and confiscating the proceeds of the crime.
In particular, he gives advice on the application of non-conviction-based confiscation laws as strategies for the international recovery of assets. He also provides legal advice around mutual legal assistance in criminal matters. Oscar regularly represents the Basel Institute as a speaker at international seminars and conferences on anti-money laundering, anti-corruption, international cooperation and asset recovery.
Prior to joining the Basel Institute, Oscar was working as a research fellow and as teaching staff for a course on economic criminal law at the University of Geneva, Switzerland. While working in Geneva, he was involved in several publications and research projects concerning the corruption of public officials, asset recovery, money laundering, confiscation and corporate liability of legal entities. This exposure led him to subsequently undertake a doctoral thesis in 2009 entitled “The international asset recovery of illicit assets of high-ranking public officials” at the University of Geneva.
He holds a law degree plus a Master of Law in International Relations from the University of Fribourg, Switzerland. He was admitted to the Peruvian bar in 2019 after gaining a second law degree from the Pontifical Catholic University of Peru, where he occasionally lectures on matters of asset recovery, mutual legal assistance and financial crime. He speaks fluent English, Spanish, Italian, French and Portuguese.
Publications
Policy Brief 16: Enforcing foreign non-conviction based forfeiture orders
Case Study 13: The Beauty Queen case: non-conviction based forfeiture across borders
The James Stone case: Peru’s fight to recover assets (The Academy Bulletin)
In an article published in the Fall 2024 issue of the Bulletin of the International Academy of Financial Crime Litigators, Oscar Solórzano describes an asset recovery case between Peru and Luxembourg involving a businessman named James Stone.
It provides insight into some of the challenges that some States face in recovering proceeds of corruption from international financial centres, despite the binding rules and soft laws adopted in recent years. It looks at both the mutual legal assistance (MLA) process and the legal defences raised by the account holder – who admitted to the corrupt dealings and has since fled to the United States.
The case offers important lessons for States either holding or seeking to recover assets linked to historical acts of corruption.
This is the fourth issue of The Academy’s Bulletin. It has been established to transmit the work of Academy Fellows, draw attention to matters of importance to the legal community and provide high-level analysis of cutting-edge issues in global financial crime investigations and litigation. The Basel Institute on Governance acts as Secretariat to the Academy.
Working Paper 54: Targeting illicit wealth through non-conviction based forfeiture: Identifying human rights and other standards for Latin America
This Working Paper explores the wide variety of non-conviction based (NCB) forfeiture laws in Latin America, with a special focus on the region’s predominant model, Extinción de dominio.
It argues that NCB forfeiture legislation, which allows for the recovery of stolen assets outside of criminal proceedings, can contribute significantly to a state’s criminal policy response to rampant economic and organised crime.
The paper emphasises the importance of critically reviewing and harmonising domestic practices of NCB forfeiture around emerging standards, so that they can reach their large potential in asset recovery. Ensuring their alignment with international human rights and other recognised norms and procedural rules ultimately builds trust, lends legitimacy and fosters judicial cooperation in international NCB forfeiture cases.
About this report
The paper is based on experience gained through the Basel Institute’s International Centre for Asset Recovery (ICAR), which since 2006 has supported partner countries in investigating, prosecuting and recovering assets arising from grand corruption and other crimes.
This paper is published as part of the Basel Institute on Governance Working Paper series, ISSN: 2624-9650. You may share or republish the Working Paper under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY-NC-ND 4.0).
Suggested citation: Solórzano, Oscar. 2024. ‘Targeting illicit wealth through non-conviction based forfeiture: Identifying human rights and other standards for Latin America.’ Working Paper 54, Basel Institute on Governance. Available at: baselgovernance.org/publications/wp-54.
La extinción del dominio de bienes instrumentalizados
This publication (in Spanish) focuses on the use of non-conviction based forfeiture legislation in Peru (Extinción de Dominio) to recover instrumentalities of crime. It is a collaborative effort of asset recovery experts of the Basel Institute on Governance under the Programa GFP Subnacional or Subnational Public Finance Management Strengthening Programme in Peru, funded by the Swiss SECO Cooperation.
Introducción
El Programa de Fortalecimiento de la Gestión de Finanzas Públicas a nivel Subnacional en el Perú (2024-2028) busca fortalecer las capacidades de los funcionarios encargados del cumplimiento de la ley, especialmente aquellos que participan en los procesos de recuperación de activos en los niveles central y subnacional.
En los últimos años, la recuperación de activos ha ocupado un importante lugar en la política criminal peruana, especialmente mediante la dación del Decreto Legislativo 1373 - Decreto Legislativo sobre Extinción de Dominio, que incorpora al ordenamiento jurídico peruano un poderoso instrumento para contrarrestar el patrimonio criminal. La consolidación de esta herramienta precisa de conocimientos especializados en la materia, así como la correcta interpretación de las categorías y presupuestos de la extinción de dominio, en armonía con los principios del Estado Constitucional de Derecho que la alberga.
Con miras a la consecución de este objetivo, el Programa GFP Subnacional reconoce el importante rol de la doctrina jurídica como fuente mediata para aliviar los cuestionamientos que surgen en la aplicación de las leyes, y para orientar el conocimiento hacia la correcta adopción de decisiones. Por ello, esta publicación académica es un producto de conocimiento creado con la finalidad de servir como insumo teórico y práctico en la aplicación de la extinción de dominio.
En su primer número, con el fin de coadyuvar en el proceso de especialización de los operadores de justicia, esta publicación aborda diversas cuestiones jurídicas acerca de la recuperación, a través de la extinción de dominio, de los instrumentos empleados en la comisión de actividades ilícitas, dada su disposición para la lesión de bienes jurídicos protegidos por nuestro ordenamiento.
A Swiss–Peruvian asset recovery case boosts prospects for non-conviction based forfeiture (The Academy Bulletin)
In an article published in the inaugural issue of the Bulletin of The International Academy of Financial Crime Litigators, Oscar Solorzano and Gretta Fenner analyse a recent decision of the Swiss Federal Supreme Court, which cleared the way for returning funds tied to corruption to Peru. The decision sets an important precedent for the use of non-conviction based forfeiture laws to recover illicit assets in the absence of a criminal conviction. This is a crucial step in the fight against global corruption.
The Bulletin is a new publication from The International Academy of Financial Crime Litigators. It has been established to transmit the work of Academy Fellows, draw attention to matters of importance to the legal community and provide high-level analysis of cutting-edge issues in global financial crime investigations and litigation. The Basel Institute on Governance acts as Secretariat to the Academy.
La capacidad de Chile para recuperar activos ilícitos: Un diagnóstico conforme a los 9 principios de la recuperación de activos
Este diagnóstico tiene el propósito de contribuir a la mejora continua de las capacidades de los Estados beneficiarios en la recuperación de activos ilícitos originados en la perpetración de crímenes graves como la corrupción, el lavado de activos, el tráfico ilícito de drogas, entre otros.
De manera secuencial, este diagnóstico valora la capacidad de respuesta institucional y legislativa que los Estados implementan para enfrentar el fenómeno de la delincuencia financiera y el flujo de activos ilícitos. En ese sentido, se examina la cadena de valor de la recuperación de activos implementada en Chile, sobre la base de las reglas adoptadas por las organizaciones encargadas de determinar los estándares internacionales.
No obstante, este diagnóstico no pretende ser exhaustivo. Por el contrario, se presenta como un documento de trabajo que ofrece un panorama general de la problemática de la recuperación de activos en Chile.
El diagnóstico está dividido en dos capítulos principales.
- El primero describe el marco institucional y las principales prerrogativas que Chile prevé en el marco del proceso de recuperación de activos.
- El segundo capítulo valora el marco jurídico e institucional en función de los nueve principios relativos al proceso de recuperación de activos y los estándares internacionales en la materia.
Finalmente, una parte conclusiva acompaña a este diagnóstico.
Este diagnóstico ha sido desarrollado en el marco del Programa “Apoyando a las partes interesadas en la adopción del decomiso sin condena como herramienta para la recuperación de activos”, financiado por la Oficina de Asuntos Internacionales de Narcóticos y Aplicación de la Ley (INL) del Departamento de Estado de EE. UU.
La capacidad de Colombia para recuperar activos ilícitos: Un diagnóstico conforme a los 9 principios de la recuperación de activos
Este diagnóstico tiene el propósito de contribuir a la mejora continua de las capacidades de los Estados beneficiarios en la recuperación de activos ilícitos originados en la perpetración de crímenes graves como la corrupción, el lavado de activos, el tráfico ilícito de drogas, entre otros.
De manera secuencial, este diagnóstico valora la capacidad de respuesta institucional y legislativa que los Estados implementan para enfrentar el fenómeno de la delincuencia financiera y el flujo de activos ilícitos. En ese sentido, se examina la cadena de valor de la recuperación de activos implementada en Colombia, sobre la base de las reglas adoptadas por las organizaciones encargadas de determinar los estándares internacionales.
No obstante, este diagnóstico no pretende ser exhaustivo. Por el contrario, se presenta como un documento de trabajo que ofrece un panorama general de la problemática de la recuperación de activos en Colombia.
El diagnóstico está dividido en dos capítulos principales.
- El primero describe el marco institucional y las principales prerrogativas que Colombia prevé en el marco del proceso de recuperación de activos.
- El segundo capítulo valora el marco jurídico e institucional en función de los nueve principios relativos al proceso de recuperación de activos y los estándares internacionales en la materia.
Este diagnóstico ha sido desarrollado en el marco del Programa “Apoyando a las partes interesadas en la adopción del decomiso sin condena como herramienta para la recuperación de activos”, financiado por la Oficina de Asuntos Internacionales de Narcóticos y Aplicación de la Ley (INL) del Departamento de Estado de EE. UU.
A capacidade do Brasil de recuperar ativos ilícitos: Um diagnóstico de acordo com os 9 princípios da recuperação de ativos
O objetivo deste diagnóstico é contribuir para a melhoria contínua das capacidades dos Estados beneficiários de recuperar ativos ilícitos provenientes da perpetração de crimes graves, tais como corrupção, lavagem de dinheiro, tráfico de drogas, entre outros.
De forma sequencial, este diagnóstico avalia a capacidade de resposta institucional e legislativa que os Estados implementaram para enfrentar o fenômeno da delinquência financeira e o fluxo de ativos ilícitos. Neste sentido, avalia-se a cadeia de valor da recuperação de ativos implementada no Brasil, com base nas regras adotadas pelas organizações encarregadas de determinar as normas internacionais.
No entanto, este diagnóstico não pretende ser exaustivo. Pelo contrário, apresenta-se como um documento de trabalho que oferece uma visão geral sobre o problema da recuperação de ativos no Brasil.
O diagnóstico está dividido em dois capítulos.
- O primeiro descreve a estrutura institucional do Brasil e suas principais prerrogativas no processo de recuperação de ativos.
- O segundo avalia a estrutura legal e institucional em conformidade com os nove (9) princípios relacionados ao processo de recuperação de ativos e às normas internacionais.
Este diagnóstico foi possível graças ao financiamento do Bureau of International Narcotics and Law Enforcement Affairs (INL) e do Departamento de Estado dos EUA, no âmbito do programa intitulado “Apoio na adopção da perda sem condenação como uma ferramenta para a recuperação de activos (Programa INL)”.
La capacidad de Brasil para recuperar activos ilícitos: Un diagnóstico conforme a los 9 principios de la recuperación de activos
Este diagnóstico tiene el propósito de contribuir a la mejora continua de las capacidades de los Estados beneficiarios en la recuperación de activos ilícitos originados en la perpetración de crímenes graves como la corrupción, el lavado de activos, el tráfico ilícito de drogas, entre otros.
De manera secuencial, este diagnóstico valora la capacidad de respuesta institucional y legislativa que los Estados implementan para enfrentar el fenómeno de la delincuencia financiera y el flujo de activos ilícitos. En ese sentido, se examina la cadena de valor de la recuperación de activos implementada en Brasil, sobre la base de las reglas adoptadas por las organizaciones encargadas de determinar los estándares internacionales.
No obstante, este diagnóstico no pretende ser exhaustivo. Por el contrario, se presenta como un documento de trabajo que ofrece un panorama general de la problemática de la recuperación de activos en Brasil.
El diagnóstico está dividido en dos capítulos principales.
- El primero describe el marco institucional y las principales prerrogativas que Brasil prevé en el marco del proceso de recuperación de activos.
- El segundo capítulo valora el marco jurídico e institucional en función de los nueve principios relativos al proceso de recuperación de activos y los estándares internacionales en la materia.
Este diagnóstico ha sido desarrollado en el marco del Programa “Apoyando a las partes interesadas en la adopción del decomiso sin condena como herramienta para la recuperación de activos”, financiado por la Oficina de Asuntos Internacionales de Narcóticos y Aplicación de la Ley (INL) del Departamento de Estado de EE. UU.
News and blog
El desmantelamiento de la ley de recuperación de activos más exitosa de Perú es un paso atrás para el país - y la justicia
See English version A veces parece que el apoyo de alto nivel a la lucha contra la corrupción y la delincuencia se da la vuelta. Es el caso de Perú, país estrechamente asociado al Instituto de Basilea sobre la Gobernanza desde hace más de una década Un logro emblemático en este tiempo ha sido la aprobación en 2018 de una nueva ley de decomiso sin condena, la Extinción de dominio, y su despliegue en todo el país a través de un subsistema judicial que incluye fiscalías, tribunales y cortes de apelación descentralizadas y especializadas. La Ley de Extinción de Dominio de Perú se considera un elemento innovador en la lucha contra la corrupción y la delincuencia organizada grave. El año pasado, la Fiscalía de la Nación aplaudió el uso de la ley para recuperar 94 millones de dólares en activos ilícitos hasta la fecha. Se ha aplicado en casos nacionales e internacionales que han sentado precedentes importantes y han reforzado el mensaje de que el delito no es rentable Desde la adopción de la Convención de las Naciones Unidas contra la Corrupción CNUCC en 2003, el decomiso sin condena se ha convertido en una norma internacional. La ley de Extinción de dominio se basa en un modelo común en América Latina que fue introducido por primera vez por la Oficina de las Naciones Unidas contra la Droga y el Delito UNODC . La Extinción de dominio se ajusta a los estándares establecidos por Grupo de Acción Financiera Internacional GAFI , cuyas Recomendaciones 4 y 38 actualizadas hacen ahora obligatoria legislación de decomiso sin condena. GAFILAT, el capítulo latinoamericano del GAFI, también ha reconocido la utilidad de esta herramienta en el contexto latinoamericano. Sin embargo, ahora se encuentra al borde del precipicio, a punto de ser desmantelada o debilitada hasta el punto de resultar casi inútil. Lucha contra el Estado de Derecho A finales de 2024, advertimos que el Proyecto de Ley 3577-2022 representaba un ataque a la Extinción de dominio. Este Proyecto, pretende modificar la legislación peruana de Extinción de dominio, entre otras cosas, condicionando su aplicación a una condena penal. Al hacerlo, el Proyecto de ley distorsiona el concepto jurídico de decomiso sin condena . Al introducir una condena penal como condición básica para su aplicación, el Proyecto de ley hace casi inútil la ley actual. Introduce una contradicción fundamental que carece de lógica o de justificación legal. En Ecuador se han introducido recientemente restricciones similares, que han reducido drásticamente el ámbito de aplicación de la ley. Lamentablemente, el proyecto de ley fue aprobado por el Congreso en segunda lectura el 10 de abril, a pesar de las preocupaciones planteadas por la Fiscalía de la Nación, el Poder Judicial e incluso el Presidente. En este momento, no está claro si el proyecto de ley afectará sólo a los casos futuros o si repercutirá en los miles de casos en curso a nivel nacional e internacional. Los principios jurídicos y el sentido común sugerirían lo primero, pero todo el proceso de modificación de la ley ha obedecido más a consideraciones políticas que jurídicas. Posibles consecuencias Lo que parece obvio es que los abogados defensores de los concernidos por el nuevo Proyecto de ley emprenderán pronto acciones para liberar los bienes actualmente asegurados por medidas preventivas. Esto incluye a figuras políticas de alto perfil, como ex presidentes condenados por corrupción en el escándalo de corrupción Lava Jato Odebrecht . Por ejemplo, los bienes incautados por los fiscales especializados de Extinción de dominio en relación con la reciente condena del ex presidente Alejandro Toledo corren el riesgo de ser liberados. No se trata sólo de corrupción. Los procedimientos de Extinción de dominio en curso también se centran en activos ilícitos vinculados a otras formas de delincuencia grave y organizada, como el narcotráfico y delitos medioambientales como la pesca ilegal, la minería y la deforestación. Estos casos también se quedarían en el camino. ¿Cuál es la razón? Como cualquier ley nueva, ha habido algunas incoherencias y preocupaciones en torno a su aplicación. En un reciente documento de trabajo analicé estas preocupaciones y abogué por una mayor armonización con las normas internacionales de derechos humanos para garantizar la confianza y la legitimidad, así como la cooperación internacional Sin embargo, estas preocupaciones se debieron a la aplicación de la ley , no a su concepto o legitimidad jurídica/social. En resumen, las preocupaciones se dividen en dos grupos: Técnicas: Fiscales y jueces han aplicado en algunos casos criterios que no se ajustan a las doctrinas de derechos humanos. El análisis de los casos problemáticos muestra en efecto que la ley ha sido utilizada controversialmente en contados casos para decomisar bienes de terceros inocentes o de empresas por culpa o negligencia de sus empleados. El fortalecimiento de las capacidades de los fiscales y jueces competentes en cuestiones delicadas y técnicas como la vulneración de los derechos fundamentales contribuiría en gran medida a eliminar este riesgo. Políticas: Una de las razones de esta cuestión es la aparición de un discurso de "mano dura" contra la delincuencia organizada. Esto atrae usualmente a muchos partidarios y da lugar a una retórica populista de aplicación eficaz de la ley contra los "malos". Esta situación ha dado lugar a la errónea percepción de que la ley de Extinción de dominio es un garrote que blandir contra el crimen organizado. Las consecuencias de esta forma de ver han generado un pequeño número de violaciones de los estándares internacionales aplicables que han servido para dar a los opositores un argumento válido para atacar la esencia de la ley, aunque los errores provengan de su aplicación. La crítica es la base de la mejora continua, por lo que acogemos con satisfacción que se planteen estas preocupaciones a través de un debate abierto. Creemos que abordarlas debe ser una prioridad y, en última instancia, hará que la ley sea más eficiente. El Basel Institute ha apoyado activamente iniciativas en este sentido, por ejemplo a través de convenciones de jueces y fiscales y de diálogos abiertos con expertos, así como mediante nuestra participación en GAFILAT y en otros foros pertinentes sobre recuperación de activos. Implicaciones más amplias En mi opinión, y la opinión de muchos de mis colegas de Perú y la región, este ataque a la Extinción de dominio tendrá un impacto desastroso en la lucha contra la corrupción y otros delitos graves en el Perú. Además de potencialmente afectar los casos en curso, los cambios en la ley eliminan el efecto disuasorio de las leyes de recuperación de activos y generan un terreno fértil para la impunidad. También es probable que perjudique la posición internacional de Perú. Las Recomendaciones 4 y 38 actualizadas del GAFI no sólo hacen obligatoria la adopción de leyes de decomiso sin condena; el GAFI ha dejado claro que dicha ley también debe ser operativa y eficaz, y debe respetar los derechos humanos. El proyecto de ley es contrario a la letra y al espíritu de estas Recomendaciones y las contradice profundamente. Se espera que este revés legislativo afecte a los resultados de Perú en su próxima quinta ronda de evaluación mutua por el GAFI. Las consecuencias de esto podrían tener consecuencias significativas para la reputación y la economía de Perú, particularmente si es incluido en la lista gris. Mi primera esperanza es que las enmiendas no sean ratificadas por la Presidente de la República, que tiene el poder constitucional de vetarlas. Una segunda fuente de esperanza es el poder judicial. Cabe esperar resistencia por parte de los jueces de primera línea de los juzgados especializados en Extinción de dominio, dado que lo más probable es que las acciones legales para descongelar activos mencionadas anteriormente se decidan en estos tribunales. En última instancia, probablemente serán la Corte Suprema o el Tribunal Constitucional los que determinen si el nuevo proyecto de ley se aplicará y cuándo, y se pronuncien sobre su compatibilidad con la Constitución y el Derecho internacional. Por último, existe la esperanza de contar con el apoyo de la comunidad internacional, ya que este asunto no sólo es relevante para Perú. También es un tema crítico para otros países que ven ataques similares contra leyes que han demostrado ser eficaces contra la corrupción de alto nivel y el crimen organizado. Más información Working Paper 54: Targeting illicit wealth through non-conviction based forfeiture, de Oscar Solórzano, explora las leyes de Extinción de dominio en América Latina y aboga por su mayor armonización con las normas internacionales de derechos humanos para fomentar la confianza y la legitimidad. Vea una serie de conversaciones en YouTube de expertos del International Centre for Asset Recovery ICAR del Basel Institute on Governance debatiendo el tema. Véase la declaración 2024 de Oscar Solórzano sobre esta cuestión.
Dismantling Peru’s most successful asset recovery law is a step backwards for the country – and justice
Ver versión en español. Sometimes it seems like high-level support for the fight against corruption and crime is being turned on its head. That includes in Peru, a close partner country of the Basel Institute on Governance for more than a decade. A flagship achievement in this time has been the adoption of a new non-conviction based forfeiture law in 2018, Extinción de dominio, and its rollout across the country via a judicial subsystem including decentralised and specialised prosecutor’s offices, tribunals and appeals courts. Peru’s Extinción de dominio law is widely seen as a gamechanger in the fight against corruption and serious organised crime. Last year, the Attorney General applauded the law’s use to recover USD 94 million in illicit assets. It has been applied in both domestic and international cases that have set important precedents and bolstered the message that crime doesn’t pay. Since the adoption of the United Nations Convention against Corruption UNCAC in 2003, non-conviction based forfeiture has become an international standard. The Extinción de dominio law is based on a common model in Latin America that was first introduced by the United Nations Office on Drugs and Crime UNODC . It aligns with the requirements of the Financial Action Task Force FATF , whose updated Recommendations 4 and 38 now make non-conviction based forfeiture legislation mandatory. GAFILAT, the Latin American chapter of the FATF, has also recognised the usefulness of this tool in the Latin American context. Yet now it is on a cliff edge, on the verge of being dismantled or weakened to the extent that it is almost useless. Fighting against the rule of law At the end of 2024, we warned of an attack on Extinción de dominio in the form of Bill 3577-2022. This seeks to amend Peru’s Extinción de dominio legislation by, among other things, making its application conditional on a criminal conviction. In doing so, the Bill distorts the legal concept of non-conviction based forfeiture. By introducing a criminal conviction as a basic condition for its application, the bill renders the current law almost useless. It introduces a fundamental contradiction that lacks logic or legal justification. Similar restrictions have been introduced in Ecuador recently, which have drastically reduced the scope of the law’s application. Unfortunately, the Bill was passed by Congress at a second reading on 10 April 2025, despite concerns raised by the Attorney General’s Office, Judiciary and even the President. At this point, it is unclear whether the Bill will affect only future cases or whether it will impact the thousands of ongoing cases at the national and international levels. Legal principles and common sense would suggest the former, but the entire process of amending the law has been driven more by political than legal considerations. Potential consequences What seems clear is that the defence lawyers of those impacted by the new Bill will soon take action to release assets currently secured by preventive measures. This includes high-profile political figures, such as former presidents convicted of corruption in the Lava Jato Odebrecht corruption scandal. For example, assets seized by specialised Extinción de dominio prosecutors in relation to the recent conviction of former President Alejandro Toledo risk being released. It's not only about corruption. Ongoing Extinción de dominio proceedings are also targeting illicit assets linked to other forms of serious and organised crime, like drug trafficking and environmental crimes such as illegal fishing, mining and deforestation. These cases too would fall by the wayside. What’s the rationale? Like any novel law, there have been some inconsistencies and concerns around its application in practice. I explored these concerns in a recent Working Paper and argued for closer alignment with international human rights standards in order to ensure trust and legitimacy, as well as international cooperation. These concerns were triggered by the law’s application in practice , not by its concept or legal/social legitimacy. In brief, the issues fall into two camps: Technical: Prosecutors and judges have in some cases applied criteria that are not in line with those developed by human rights tribunals. Analysis of flawed cases shows that it has been applied to confiscate assets of innocent third parties or of companies due to the fault or negligence of their employees. Specialised training for relevant prosecutors and judges on sensitive and technical issues such as the infringement of fundamental rights would go a long way to eliminating this risk. Political: One reason for the above issue is the emergence of a “tough” discourse against organised crime. This attracts many supporters and gives rise to populist rhetoric of efficient law enforcement against the “bad guys". It has led to misperceptions that the Extinción de dominio law is a cudgel to wield against organised crime. The consequences are a small number of violations of international standards that have given opponents a valid argument to attack the essence of the law, even though the errors stem from its implementation. Criticism is the basis for continuous improvement, so we welcome the raising of these concerns through open discussion. We believe that addressing them should be a priority and will ultimately make the law more effective. The Basel Institute has actively supported initiatives to do this, for example through conventions of judges and prosecutors and through open dialogues with experts, as well as through our participation in GAFILAT and other relevant asset recovery forums. Wider implications In my view, and the view of many of my counterparts across Peru and the region, this attack on Extinción de dominio will have a disastrous impact on the fight against corruption and other serious crime in Peru. As well as potentially destroying or diminishing ongoing cases, it eliminates the deterrent effect of asset recovery laws and opens the door to impunity. It will also likely harm Peru’s international standing. The FATF’s updated Recommendations 4 and 38 not only make the adoption of non-conviction based forfeiture laws mandatory; the FATF has made it clear that such a law must also be operational and effective, and it must respect human rights. The Bill is contrary to the letter and spirit of these Recommendations and deeply contradicts them. This legislative setback is expected to affect Peru’s performance in its upcoming fifth-round mutual evaluation by the FATF. The consequences of this could have significant reputational and economic consequences for Peru, particularly if it is grey listed. Reasons for hope My first hope is that the amendments are not ratified by the President of the Republic, who has the constitutional power to veto them. A second source of hope is the judicial branch. Resistance can be expected from frontline judges in specialised Extinción de dominio lower courts, given that the legal actions to unfreeze assets mentioned above will most likely be decided in these courts. Ultimately, it will probably be the Supreme Court or the Constitutional Court that will determine if and when the new Bill will be applied and rule on its compatibility with the constitution and international law. Finally, there is hope of support from the international community, as this issue is relevant not only for Peru. It is also a critical issue for other countries seeing similar attacks on laws that are proven to be effective against high-level corruption and organised crime. Learn more Working Paper 54: Targeting illicit wealth through non-conviction based forfeiture by Oscar Solórzano explores Extinción de dominio laws in Latin America and argues for their closer alignment with international human rights standards to foster trust and legitimacy. View a series of conversations on YouTube by experts of the Basel Institute’s International Centre for Asset Recovery debating the topic. See Oscar Solórzano’s 2024 statement in Spanish on this issue.
El desmantelamiento de la recuperación de activos en el Perú: Un llamado a la cautela y a la construcción de consensos en torno al Proyecto de Ley 3577-2022
El Basel Institute on Governance, como entidad internacional dedicada a promover la buena gobernanza y a combatir la corrupción, ha seguido de cerca los avances legislativos en materia de recuperación de activos en el Perú y en América Latina. En este sentido, advertimos el importante retroceso que significaría la aprobación del Proyecto de Ley 3577-2022, que busca modificar la Ley de Extinción de Dominio, desnaturalizando su contenido y reduciendo su ámbito de aplicación de manera contraria a la política criminal vigente y a los estándares internacionales que el Perú como Estado está obligado a respetar. Con no poco esfuerzo, el Perú se ha logrado ubicar entre los países más destacados en materia de recuperación de activos en los últimos años, tanto al nivel doméstico como internacional, generando la admiración de la comunidad internacional en esta materia. Testimonio de esto son los números casos internacionales que Perú ha conseguido ganar desde la puesta en marcha del sistema nacional de recuperación de activos. Uno de los factores clave, es sin duda la Extinción de Dominio, una ley regional que permite la recuperación de activos ilícitos, fuera de un proceso penal, cuando un Tribunal reconoce su carácter ilícito. El Proyecto de Ley 3577-2022 significa el desmantelamiento del subsistema de Extinción de dominio por varias razones, entre las principales: Desnaturaliza al instituto jurídico del decomiso sin condena. Al introducir como condición básica para su aplicación una condena penal, el Proyecto vuelve a la actual ley inútil en su aplicación e introduce una contradicción fundamental que carece de lógica y de justificación jurídica aparente. Debilita, entiéndase desmantela en la práctica, el subsistema descentralizado de Extinción de dominio. Desde la adopción de la ley en el 2019, el Perú, con el apoyo de la comunidad internacional y las organizaciones internacionales especializadas en esta materia, ha realizado denodados esfuerzos para crear un subsistema único en la región que implicó la creación de fiscalías, procuradurías y juzgados especializados descentralizados. Lo que inicialmente se concibió como una buena práctica internacional, quedaría sin efecto práctico si se reduce abruptamente el ámbito de aplicación de la ley como pretende hacer el Proyecto de ley. Graves consecuencias reputacionales y económicas para el Perú. Desde la adopción de la Convención de las Naciones Unidas contra la Corrupción CNUCC en el 2003 – pero particularmente desde noviembre del 2023 con la adopción de nuevos estándares globales en materia de recuperación de activos – el decomiso sin condena del cual hace parte la Extinción de Dominio se ha convertido en un estándar internacional. En efecto, las nuevas recomendaciones 4 y 38 del Grupo de Acción Financieras Internacional GAFI , una organización global de lucha contra las finanzas ilícitas, introduce de manera obligatoria la adopción de leyes como la Extinción de dominio en los países miembros. El Proyecto de ley es contrario a la letra y el espíritu de estas recomendaciones y las contradice profundamente. En ese contexto, cabe señalar que el Perú se apresta a pasar la 5ta ronda de evaluaciones del GAFI y es de esperarse que este retroceso legislativo afecte notablemente su performance y, por tanto, los resultados de la evaluación. Las consecuencias de lo anterior, podrían traer consecuencias reputacionales y económicas importante para el Perú. Favorece el desarrollo del crimen organizado y violento en el Perú. Uno de los elementos clave de las leyes de recuperación de activos es la disuasión. La evidencia empírica demuestra que las organizaciones criminales se desarrollan en países que carecen de estas herramientas jurídicas indispensables. Es de esperarse por tanto que el debilitamiento de la ley de Extinción de dominio, tendrá un impacto certero en la expansión del crimen organizado en el Perú, con consecuencias difíciles de estimar. Por los motivos antes esgrimidos, el Basel Institute on Governace hace un llamado a la reflexión y a la búsqueda de consensos en beneficio de la ciudadanía y de la justicia del Perú. En particular, se hace un señalamiento a las autoridades legislativas competentes, las autoridades judiciales, los colegios profesionales y a la sociedad civil organizada de las graves consecuencias que la adopción del Proyecto podría tener en el Perú. Si bien se debe reconocer que en la implementación del subsistema se han podido identificar algunas disfuncionalidades consideramos que la solución debe transitar por otros senderos que los que plantea el Proyecto. Por otro lado, no es inhabitual que la implementación de un sistema tan complejo, que introduce además un cambio paradigmático en las reglas de la justicia, haya generado dudas y reacciones de todas las partes interesadas. Consideramos, sin embargo, que dichas disfuncionalidades emergen en el contexto de la aplicación de la ley y no necesariamente en su concepción o legitimidad jurídica y social, ya que, como se ha dicho, este tipo de leyes constituye un estándar internacional reconocido, incluso por los tribunales internacionales en materia de derechos humanos. Por lo expuesto, consideramos que la aprobación del mencionado proyecto es apresurada y requiere mayor debate, reflexión y la generación de consensos. El Basel Institute on Governance se pone a disposición del Estado peruano para colaborar en este proceso, brindando asistencia técnica y compartiendo nuestra experiencia internacional. Creemos que una reforma integral de la Ley de Extinción de Dominio debe ser una oportunidad para fortalecer el Estado de Derecho y recuperar los activos ilícitos en beneficio de la sociedad peruana. Oscar Solorzano Director del Basel Institute-Perú Más información Descargue este texto PDF . Lea nuestro Working Paper 54: Targeting illicit wealth through non-conviction based forfeiture: Identifying human rights and other standards for Latin America. Lea la Guía de Buenas Prácticas sobre Extinción de Dominio y Decomiso no Basado en Condena y un blog relacionado de Oscar Solórzano. Consulte también nuestra YouTube playlist sobre la recuperación de activos en América Latina.
New GAFILAT guide: Why asset recovery laws need to align with human rights and other international standards
A new guide to non-conviction based forfeiture published by GAFILAT, the Latin American body of the Financial Action Task Force FATF sets out good practices for this powerful but under-used form of asset recovery legislation. It also emphasises the need for laws to align with both domestic constitutions and international human rights standards. The GAFILAT guide was drafted by Oscar Solórzano in collaboration with the region’s Asset Recovery Network RRAG . Oscar is Head of Latin America at the Basel Institute on Governance and a Senior Asset Recovery Specialist with many years of experience supporting government partners across Latin America in high-profile, complex cases of corruption and asset recovery. In this Q&A, he explains the approach, relevance and impact of the Guía de Buenas Prácticas sobre Extinción de Dominio y Decomiso no Basado en Condena , which was published by GAFILAT in 2024 and financed by EU member states through the COPOLAD III cooperation programme. COPOLAD III is a consortium led by the Italo-Latin American Association IILA and FIIAPP of the Spanish Cooperation. 1\. What is the guide about and who is it for? This is a guide to good practices in non-conviction based forfeiture for Latin America. It analyses the existence and implementation of non-conviction based forfeiture mechanisms in the 18 GAFILAT countries, which provided useful data during the drafting process and very detailed comments during the review. The guide contains an analysis of economic criminality in Latin America and the public policy response. It also addresses the essential concepts and standards applicable to non-conviction based forfeiture, presents case studies and explores available data from GAFILAT countries. Policymakers, legislators, law enforcement and judicial practitioners, law students and civil society – including journalists who report on these complex topics – will benefit from the guidance. 2\. Why is there a need for guidance? The expansion of non-conviction based forfeiture legislation has accelerated in Latin America in recent years, and not necessarily in the most coordinated or harmonised way. In line with the updated FATF standards relating to asset recovery, it is expected that it will continue to expand in the region. In effect, the FATF’s updated Recommendations 4 and 38 make the adoption of non-conviction based forfeiture laws mandatory and seek to ensure that decisions based on these laws can be enforced internationally. The guide therefore appears at an ideal time. It proposes a way to harmonise this type of law while respecting the legislative diversity that exists in the region. 3\. The idea is that non-conviction based forfeiture can reduce economic and organised crime – even without the threat of criminal convictions. Can you justify that? Economic crimes are perpetrated for the purpose of obtaining illicit economic advantages. Laws that reduce such economic advantages are a concrete step forward. And jurisdictions with more powerful and varied legal tools are more likely to see their crime rates decrease, simply because there is a concrete societal response to the criminal phenomenon. Without comprehensive asset recovery laws and an effective judicial apparatus to implement them, various incentives for engaging in profitable criminal activity arise. Some studies show that the lack of effective legal mechanisms targeting criminal assets has, among other things, allowed an explosion of organised and economic crime in Latin America in all its manifestations. The same goes for the growth of public-sector corruption. Assets stolen through corruption have rarely been confiscated in the past, when asset recovery was only possible in the context of criminal proceedings. It is naïve to think that a legislative instrument alone can change the reality of crime in Latin America, where the most fearsome drug cartels operate and, according to all international indices, corruption is rampant from north to south. However, the empirical experience I have gathered while working for almost 15 years in this part of the world indicates that there is a positive difference in the criminal situation of countries that effectively implement asset recovery mechanisms. A robust legal toolkit for asset recovery also alters the behaviour of criminal organisations, which have to bear higher costs to develop more sophistication in their criminal activities or simply relocate their activity to jurisdictions less equipped with legal tools and the ability to wield them. In Peru, to take a positive example, non-conviction based forfeiture is proving a powerful way to get at numerous politicians who have been accused of corruption, but where criminal proceedings seem to be never-ending. The independence of Peru’s non-conviction based forfeiture law from criminal procedures allows prosecutors to target assets even if their owners inevitably slip through the nets of justice. 4\. What does the guide show about the prevalence and success of different forms of non-conviction based forfeiture in the region? On paper, there has been a lot of progress in the adoption of non-conviction based forfeiture in Latin America. Only two countries in the region do not have any form of non-conviction based forfeiture law. The most predominant form is arguably Extinción de dominio, which has existed for 13 years. Ten out of the 18 countries have incorporated it into their legal arsenals and apply it in various forms and degrees. Extinción de dominio is a flexible law that can operate in civil, criminal or administrative matters, or even completely independently. It has developed specific concepts that make it possible to broaden the grounds for asset forfeiture. It lists an extensive catalogue of rights of the defence which, as stated in the Guide, seem to go far beyond the internationally established standard. In practice, however, recovery rates remain modest in relation to the volume of criminal assets generated in and flowing through the region. The best practices guide argues that a lack of effective implementation of existing laws partially explains the poor performance. The quality of implementation is influenced by political, economic and social interests. These are not necessarily addressed in the guide, which limits itself to technical and legal issues. However, the guide proposes some concepts and comparative practices that have the modest objective of guiding national authorities in applying this indispensable tool. 5\. What are success factors and challenges? In many Latin American countries, non-conviction based forfeiture is only taking its first baby steps. But from a Darwinian perspective of law – i.e. survival of the fittest – I observe that the laws that thrive are those that align with international standards and the constitutional rights of the countries that adopt them. In other words, those laws that develop around recognised global standards and practices but that are also designed to work in specific local contexts. Since 2020, together with my colleagues and many passionate and competent local partners, I have implemented programmes promoting non-conviction based forfeiture laws in the region. That experience has helped me to see that there is a group of countries that have what we can call a “European” approach to the issue, and whose laws apply only in a narrow set of scenarios. Others have more hard-hitting practices that evoke the laws used in countries such as the United States, and have transposed common law practices and principles into civil law frameworks without further reflection. Despite an increase in asset recovery rates, in many cases this has led to distortions and challenges, which are partially explored in the guide. 6\. What does the guide tell us about non-conviction based forfeiture in international cases? International asset recovery is a very different animal from domestic asset recovery and has political implications. That said, since 2014 several Latin American countries have tried to pierce the once impenetrable veil of the European financial system with non-conviction based forfeiture procedures. Switzerland and then Luxembourg were the first European countries to accept these laws as valid, in particular in relation to decisions based on Extinción de dominio. Today, almost all countries accept provisional measures based on these laws and some can directly enforce the resulting decisions. Even if the practice of enforcing non-conviction based forfeiture judgments is not abundant, we hope that the new standards adopted by the FATF on this matter will help to accelerate international asset recovery. 7\. The guide emphasises the need to align laws with international human rights standards. Why? In my opinion, this is fundamental. It is inconceivable that the ideals of justice can be achieved to the detriment of human rights. Rather than a random matter left to the discretion of states, respecting human rights in the adoption of non-conviction based forfeiture laws is an international treaty obligation. Most countries adhere to the so-called control of conventionality doctrine, i.e. the obligation to align any domestic legal instrument or practice with binding rules arising from international treaties such as the American Convention of Human Rights. This presupposes that the adoption of any domestic rule and practice on non-conviction based forfeiture must respect human rights and the practice of human rights courts. This is a condition sine qua non of any asset recovery law. The guide cites two examples of setbacks to the use of non-conviction based forfeiture laws in the region on the basis of human rights deficits. We can agree or disagree with the premises used by the countries’ High Courts to reach their conclusions. But what is clear is that a lack of consideration for human rights can also play a paralysing role. This challenge is vividly illustrated in Peru right now, where the Ombudsman has filed a claim against the use of non-conviction based forfeiture with the Constitutional Tribunal on the grounds that it could violate the right to property and the principle of the presumption of innocence. On a more positive note, a human rights lens can enhance the application of this type of law, especially in the context of international cooperation. On the one hand, more attention to human rights brings more legitimacy and acceptance to laws and therefore better recovery rates. On the other hand, a human rights lens also offers national legislators the ability to adopt more incisive standards when there are, for example, elements of organised crime or other exceptional conditions that make the application of some human rights more flexible. 8\. How does the guide help navigate the human rights topic in practice? As the guide explains through a study of the jurisprudence of the European Court of Human Rights, the issue is constantly evolving. The guide provides Latin American legislators and practitioners with examples of how to develop the human rights approach in a clearer way and enables them to critically review concrete non-conviction based forfeiture cases in various parts of the world. It emphasises two human rights that are central to non-conviction based forfeiture: the right to property and the right to a fair trial. This will be enormously beneficial in ensuring that new or revised non-conviction based forfeiture laws in Latin America are in line with the updated FATF Recommendations. The guide advocates for the adoption of laws that are in harmony with human rights principles and specifies that their international enforcement is a recognised standard. Similarly, the interpretative notes to the revised FATF Recommendations 4 and 38 – and the very coherence of the FATF system – indicate that the respect for human rights is fundamental to the adoption and application of these laws. The human rights perspective is likely to be an important element in the forthcoming fifth round of FATF Mutual Evaluations in GAFILAT countries, where the technical compliance and effectiveness of these laws with FATF standards will be under the microscope. Learn more See the Guía de Buenas Prácticas sobre Extinción de Dominio y Decomiso no Basado en Condena . Read a related blog by Oscar Solórzano: FATF seeks to change the landscape of international asset recovery: what this means for Latin America.
FATF seeks to change the landscape of international asset recovery: what this means for Latin America
At a recent meeting of the Asset Recovery Network of GAFILAT – the Latin America body of the Financial Action Task Force or FATF – Oscar Solórzano explored what the latest changes to the FATF standards could mean for asset recovery practice in Latin America. Through our International Centre for Asset Recovery ICAR , we are an observer member of the GAFILAT Asset Recovery Network or Red de Recuperación de Activos RRAG and regularly provide training and technical input to the group’s deliberations. The meeting took place in Bogotá, Colombia, on 25–26 June 2024. In November last year, new global rules on international asset recovery came into force which are intended to change the prevailing global judicial practice. These new rules clarify and complement currently applicable international standards. The revisions to FATF Recommendation 4 introduce, among other things, the obligation for FATF member states to implement non-conviction based confiscation mechanisms to complete the arsenal of legal tools used to combat economic crime. The standards of the United Nations Convention Against Corruption UNCAC do not contain such an obligation to legislate on non-conviction based confiscation Article 31 UNCAC . As a result, until now the global adoption and implementation of such tools has been erratic. The updated FATF Recommendation 38 establishes an obligation to cooperate internationally in non-conviction based confiscation cases. Not only are countries obliged to implement such mechanisms themselves. They are, first and foremost, obliged to provide mutual legal assistance to countries seeking to recover assets internationally through non-conviction based confiscation. The new recommendation clarifies the rule in Article 54 1 c UNCAC Mechanisms for asset recovery and international cooperation that left it to the discretion of the requested state whether or not to cooperate when a victim state seeks to recover assets via non-conviction based confiscation. The UNCAC standard in this regard is also limited to corruption offences, while the FATF standards have a broader scope. More cases, more requests? More than 20 years after UNCAC introduced what were then considered revolutionary asset recovery standards, the FATF has taken a decisive step aimed at changing the global asset recovery landscape. In fact, many developing countries have already enacted these innovative asset recovery tools. In Latin America, for example, only two countries do not possess any form of non-conviction based confiscation law. Thus, it is to be expected that Latin American states that have suffered from rampant economic crime will seek to recover more assets internationally. Cases will be stimulated by the possibility of seeing requests for information, seizures and non-conviction based confiscation judgments enforced in the financial centres holding those assets. Recommendation 38 codifies some recent judicial practice in GAFILAT countries, such as Peru or Colombia, which have been successful in their efforts to recover illicit assets from Switzerland, Guernsey, Luxembourg and other European financial centres based on non-conviction based confiscation mechanisms. In these cases, efficient international cooperation has been provided based merely on national legislation and the understanding that international asset recovery is a shared responsibility which cannot be obtained without the cooperation of both the victim state and the state where the assets are located. Urgent need to align with human rights standards From my experience, research and conversations with asset recovery professionals all over the world, however, non-conviction based confiscation has raised concerns and is not globally and coherently applied. The lack of harmonisation and the great variety of applicable standards have contributed to the poor performance of this legal mechanism at the international level, particularly with regard to the international enforcement of judgments. Will the FATF’s updated standards be enough to foster international asset recovery via non-conviction based confiscation? The response to this question is not as clear as it seems. This is because international asset recovery procedures depend on the fulfilment of other standards. For example, the non-conviction based confiscation law used by the victim state should not contravene the fundamental principles of the requested state, particularly its domestic interpretation of human and other constitutional rights. This means that non-conviction based confiscation decisions in a victim state must comply with basic principles of the rule of law and internationally recognised standards of human rights – the right to property and to a fair trial, to name just two. The adoption and implementation of fair non-conviction based confiscation procedures, anchored in the rule of law, are the starting point for fruitful international cooperation. It is also a crucial part of the shared responsibility of victim states. The picture within Latin America In my speech at the RRAG meeting, I explained that judicial practice in GAFILAT countries has exposed shortcomings and a diverse practice in the enforcement of international non-conviction based confiscation judgments. Lack of clarity on channels of judicial cooperation Many Latin America states are still unclear about the judicial cooperation channel to be used in the execution of non-conviction based confiscation decisions, given their quasi-civil nature and the arguments regularly made to distance these legal devices from criminal proceedings. Indeed, some question why a law of a civil nature would seek international cooperation in criminal matters. The simplest answer is probably that, despite the civil standards used in non-conviction based confiscation, the purpose is to confiscate criminal assets, which is a matter dealt with by international cooperation in criminal matters. Moreover, cooperation in criminal matters provides more and better judicial safeguards, is mostly free of charge for the requesting state and is regulated by bilateral treaties and binding international law. Direct enforcement of foreign judgements not always possible Some Latin American states can execute foreign decisions through exequatur mechanisms in criminal matters, enabling the judicial enforcement of judgments in the terms and extension as expressed in the foreign decision. The exequatur procedure is a form of judicial cooperation in criminal matters which exists in civil law countries. It has been used by Latin American countries to enforce non-conviction based confiscation final and enforceable decisions in European financial centres. In this model of execution the requested state the financial centre only verifies that the foreign confiscation decision respects internationally recognised standards of due process for example, if the asset holder or other affected persons has had effective access to defence mechanisms in the foreign procedure or if the notification has been properly served, among others . Once this verification is carried out, the decision is generally enforced following the exact terms ordered by the foreign authority. The exequatur procedure generally involves sometimes lengthy judicial proceedings in the requested state where the defence can make again its case before a judge of the requested state with limited power of cognition. That is to say, the judge of the exequatur does not rule on the merits of the case. His or her powers are limited to verifying the respect of due process and judicial guarantees in the foreign procedure. The requested judicial authority enforcing the foreign non-conviction based confiscation decision is bound by the factual findings made by the requesting authority. This is the so-called direct enforcement model. The drawbacks of indirect enforcement Other Latin American states cannot directly enforce foreign conviction- or non-conviction based confiscation judgments. Instead, their domestic law regularly compels their judicial authorities to initiate domestic proceedings with a view to obtaining a domestic confiscation order. This indirect enforcement of foreign judgements usually involves re-litigation, new evidentiary requirements, appeals processes, etc., and can lead to catastrophic delays and failures of cases. A concrete example of the drawbacks of this model of enforcement has emerged in a recent case of international asset recovery between Peru and Mexico. Since 2021, Peru has sought the enforcement of a final and enforceable judgment under its Extinción de dominio law – the local form of non-conviction based confiscation law – through judicial cooperation in criminal matters in relation to a Peruvian politically exposed person’s corrupt account sitting in the Mexican financial system. Despite the efforts of both Mexican and Peruvian authorities to advance this case, it is noteworthy that the enforcement stage is taking longer than the whole recovery process in the Peruvian Extinción de dominio procedure. Progress visible In some countries, mainly in Central America, a form of international judicial cooperation for the homologation of foreign civil judgements has been used to enforce non-conviction based forfeiture judgements. For example, Honduras recently executed an Extinción de dominio judgment obtained in Guatemala through a civil procedure aimed at homologating foreign civil decisions. This successful cooperation between the two countries actively enforcing Extinción de dominio allowed the recovery of a property that had been corruptly acquired by a Guatemalan politically exposed person. Despite the complexity described above, most Latin American states use the channels of judicial cooperation used in criminal cases in cases of non-conviction based confiscation. Although the practice is not abundant, the cases mentioned above may well represent the beginning of real good practice in judicial cooperation, leading to better results in the fight against corruption and other scourges that plague this part of the world. The updated interpretative notes to the FATF’s Recommendation 38 encourage the “direct enforcement” of foreign confiscation orders to make these international processes more efficient. In many cases, the implementation of the new standards will therefore require changes in both legislation and judicial practices. A positive step but a long path ahead We believe the FATF new standards are a move in the right direction towards solving some of the challenges I identify above. Still, much remains to be done by the international community and by domestic authorities to ensure that we see concrete judicial successes, smooth international cooperation and the return of far greater quantities of stolen assets to victim states.
Interview: Applying Peru’s non-conviction based forfeiture law in international cases
Oscar Solórzano, Head of Latin America at the Basel Institute on Governance and Senior Asset Recovery Specialist at our International Centre for Asset Recovery, interviewed Dr Hamilton Castro Trigoso, Provincial Prosecutor of the First Provisional Provincial Prosecutor's Office for Extinción de dominio in Lima, on his experiences in investigating and enforcing asset confiscation judgements abroad. The case that Hamilton Castro came to talk about is not just any case. It is a final decision that the prosecutor has just obtained in the Peruvian judicial system that recovers part of the assets of a General who collaborated with the criminal organisation led by Vladimiro Montesinos. Montesinos was the Head of Intelligence under the corrupt government of Alberto Fujimori and widely acknowledged as the former President’s right-hand man. The General fled the country and died before justice was able to catch him. But it is catching up with his assets and helping ensure they cannot now be enjoyed by his surviving relatives. Insightful viewers will be able to see and understand the emotion of the prosecutor, who maintains that his job is not only to recover illicit money but also to contribute to restoring the meaning of the word justice in Peru. You can watch the video in Spanish with English subtitles here or read the answers below in English translation. 1 – Solórzano: Dr. Castro, what does the confiscation of the Malca account mean for Peru? What does the judgement – after 20 years – signify for the country's fight against corruption? Castro: The Malca Villanueva case is of utmost importance for Peru for more than one reason. First, because of who the man was. General Malca Villanueva was a prominent member of Alberto Fujimori's government, serving as Minister of the Interior and then Minister of Defence. Afterwards, he was rewarded when he retired from the Ministry of Defense – from the Army – by being made Ambassador of Peru in Mexico. He carried out this diplomatic role for around two years, despite having no experience whatsoever. Second, this case carries a message of non-impunity regarding the recovery of illicit assets, even when part of them are held in accounts abroad. An important point about this case is that the criminal justice system in Peru was never able to apprehend General Malca Villanueva, nor his family. He died in 2015 in a resort in Brazil called Santa Catalina. So this judgement is extremely important. It sends a message that justice may take time, but it arrives nonetheless. 2 – It has been nearly three years since the Extinción de dominio law entered into force in Peru. How well is this non-conviction based forfeiture mechanism working in the country? I am optimistic about the implementation of Legislative Decree No. 1373, which is the law that introduces the mechanism of Extinción de dominio in Peru. The results in these two and a half years have been highly positive. The Specialised Prosecutors' Offices at the national level have achieved a large number of sentences in various cases. Some of these are extremely important, such as the case of Malca Villanueva, which show that the mechanism of Extinción de dominio is a well-crafted criminal policy tool targeting the assets of criminals. This has been quite well understood by our practitioners and has allowed definitive judgements to be obtained. Compared to the time it takes to prove the criminal responsibility of accused individuals in traditional criminal proceedings, and to confiscate their assets, Extinción de dominio is much faster. So, as I said, I am very optimistic about the implementation of this new law. Of course there is a long way to go. There are challenges we have to overcome and many tasks we still have to do \ for instance in relation to mutual legal assistance\ . We understand, however, that the rules are versatile. We cannot not rule out the possibility that at some point the Extinción de dominio law could be reformed in some aspects. Not just to make the law more effective in terms of prosecuting assets, but also about improving the provisions aimed at protecting the fundamental rights of affected persons. At the practical level, the subsystem suffers the shortcomings of any other prosecutorial body in Peru. But in general terms, both the Judicial Branch and the Public Prosecutor's Office have been able to put in place a specialised subsystem of prosecutors and judges. Their number may increase in the future depending on the workload. 3 - What do you think are the challenges that this tool faces at the international level? What can be done to improve its global application? The good success we have had over the last six years in recovering illicit assets abroad, especially in the Fujimori and Montesinos complex of cases, is linked to more than one factor. It was certainly not easy, and the successes are the result of the efforts of a large number of individuals and institutions, both in the requested and requesting States. We went knocking on the door of several countries with a new and unknown tool for them. It has taken us several years and a lot of effort to get recognition for our decisions of Extinción de dominio. By doing so, we have learned the difficulties associated with international judicial cooperation in criminal matters. One of these problems is the speed with which foreign evidence is obtained from abroad. For that, we have set up in Peru a swift system of legal procedures that include the transfer of evidence from criminal proceedings to Extinción de dominio. This has made it possible to save a lot of time, because the criminal proceedings had already gathered abundant evidence in the Malca Villanueva case. This even includes reviews of bank statements and financial information from other countries that were used in Extinción de dominio proceedings. The correct interpretation of the principle of speciality in this case has allowed us to use bank information from countries such as Switzerland, Panama or other financial centre in which the accounts that we are trying to recover are located. The modern, correct and lawful interpretation of this principle has allowed us to understand that it is not violated if the information obtained through international judicial cooperation is transferred from criminal proceedings to Extinción de dominio as these proceedings are criminal policy tools conceived to target criminal assets. There have been other success factors in recent years, but these first two are fundamental. I must also mention strategic alliances such as with the Basel Institute on Governance, which has allowed us to better understand the nature of these tools and of international judicial cooperation, and to establish proper and efficient contacts with authorities of other countries. This in turn has allowed us to use other mechanisms, such as spontaneous cooperation or informal information-sharing with the authorities of other countries. Within this framework of mutual cooperation, we have been able to move faster and obtain good results in recovering illicit funds deposited in accounts in financial centres such as Switzerland, Luxembourg, Andorra and others. Finally, it seems to me that these best practices have already had a good result and should be applied in the case of Malca Villanueva's Mexican bank account. The judgement we have obtained in Peru is not sufficient; through the mechanisms of international judicial cooperation, it will have to be transferred to Mexico for execution. All the experience that we have acquired in these years and in other cases will be useful to recover the USD 1.5 million or so stashed in Malca's account in Mexico. 4 – What is the key message that prosecutors in other countries should take into account when seeking to recover assets held in foreign jurisdictions? Legal practitioners, prosecutors and judges in any jurisdiction need to understand that recovering such assets goes beyond what the domestic jurisdiction can do alone. It is extremely important to establish partnerships with institutions that allow us to gain a better understanding of the tools of international judicial cooperation. This enables the requesting State to adjust to international standards and the standards of the requested State. The point is that judgements in these cases should not remain purely ornamental and domestic, but be duly executed in financial centres like Switzerland, Luxembourg or Andorra. These countries have a different legal system and in some cases respond to different legal traditions than Latin American countries. So it is important to establish direct contact with the authorities of those countries in order to understand their standards and ensure that our request for mutual legal assistance is duly executed there. More See the Malca Villanueva news story. Our technical and policy assistance in Peru, and this interview, are supported by the core donors of the International Centre for Asset Recovery as well as the Swiss State Secretariat for Economic Affairs SECO Cooperation in Peru through the multi-year Subnational Strengthening Public Finance Management programme. Watch the video
Opinion: The return of stolen assets requires innovative thinking, dialogue and collaboration
Claims that Switzerland is “paternalistic” in its approach to returning stolen assets to their rightful countries are simplistic, argues Senior Asset Recovery Specialist Oscar Solórzano in this opinion article for Swiss news and information platform Swissinfo. The article is available on the Swissinfo site in German and Spanish. Switzerland is sometimes criticised for having a “paternalistic” approach to international asset restitution, as discussed in a recent article by Sibilla Bondolfi. This criticism relies on a simplistic and misleading story of how “typical” international asset recovery works. It goes like this: An unscrupulous politician in a developing country steals money from the public coffers and stashes it in an international financial centre. There are mansions, yachts, bank accounts, luxury cars and other caprices. At some point, the financial centre decides to return what is left. Several emblematic cases, including those of Marcos Philippines , Abacha Nigeria and Fujimori Peru , display some of these features. But life and the law are more complicated. There is no "normal" way to return stolen assets First, asset restitution is a fast-evolving field with significant variation over time and geography. While the return of stolen assets is a fundamental principle under the United Nations Convention Against Corruption UNCAC , it sets only a few ground rules. For example, it provides for states to voluntarily conclude agreements, on a case-by-case basis, for the final disposal of confiscated assets. It thus leaves considerably discretion to the concerned states to agree on the terms of the restitution. In this context, asking what a "normal" asset restitution process looks like is akin to asking what "normal" clothes look like. UNCAC nevertheless establishes two key criteria that from a legal standpoint have an impact on the asset return processes. Firstly, it differentiates between situations in which the final confiscation order is issued by the judicial system of the victim state and situations in which the recipient state, i.e. the state where the assets were found, waives the need of a final confiscation order to return the illicit assets. Secondly, it differentiates whether the assets to be returned are the proceeds of embezzlement or other forms of corruption. If the proceeds were embezzled public money, the victim state has an absolute right to restitution. For any other offence, restitution will depend on the capacity of the victim state to unravel the facts of the case, which is often challenging for international corruption and money laundering schemes. A collaborative process, not a unilateral return The second important feature of asset return is that victim states of corruption can and should be valid and proactive counterparts through cooperation and dialogue. Asset restitution is not simply about a powerful financial centre giving back money to a victim state. Rather, I see it as a collaborative process in which all states involved must show great maturity in order to achieve a common goal: restorative justice. However, not all victim states have the capacity yet to play their part in the restitution process in full. In such situations, legislation in place in Switzerland allows it to return illicit funds in some scenarios without any need for a confiscation order in the victim state. This legislation is considered to be highly innovative and a sign of great willingness on the part of Switzerland to recover and return stolen assets. From "victim" states to proactive partners That being said, many victim states have significantly improved their capacity to recover illicit assets in recent years. By applying their own laws and processes, they are now more frequently able to issue final confiscation orders, which they then seek to enforce through international judicial cooperation in order to have the money returned. This is the scenario in the international asset recovery cases in which I have been involved between Peru and various financial centres, including Switzerland. The ability of victim states such as Peru to investigate, prosecute and execute judgements in complex corruption and money laundering cases is a clear testimony of progress in the country’s judicial system. It is precisely what is needed to turn the "victim" into a proactive partner and empowers it to take a stronger role in determining how the returned funds will be used. Dialogue is worth the extra time This is a very positive development. But of course, a dialogue is always more complex than a “monologue” and usually takes more time too. The increased complexity – often resulting in the process needing more time – is however easily offset by the great potential inherent in this form of dialogue for advancing asset recovery and cooperation. It enables the states to understand each others' priorities, resolve legal loopholes and reconcile their interests. This was very much understood and wanted by Peru in the restitution process described in the above-mentioned article. In fact, Peru early on took the first step to request a dialogue with Switzerland to discuss modalities for the return of the stolen assets when it became clear that confiscation was possible. This form of dialogue is also key to mitigate the political risks that restitution may entail. After all, the ups and downs of politics are common in many victim states, and in recent times Peru is no exception. Asset return in practice: a tripartite agreement The third aspect is how this looks in practice. The recent tripartite agreement on asset restitution between Peru, Switzerland and Luxembourg has drawn attention and, in the above-mentioned article, some unhelpful sneers about corruption in Peru's justice system and how Switzerland is "planting saplings" in Peru to clear its guilt. This is unfortunate because the tripartite agreement, which covers nearly USD 28 million from a complex of cases relating to Fujimori, is a good illustration of close cooperation between states, in a collaborative spirit, aimed at combining various political interests and achieving the common goal of justice. The returned assets are not being spent on saplings but on further strengthening the national asset recovery system and criminal prosecution in Peru. A positive precedent for asset restitution Did Switzerland or Luxembourg impose this on Peru and thus is behaving in a neo-colonial way? No, really not. The proposal to use the funds for this purpose was made by the Peruvian counterparts, and notably the prosecuting and judicial authorities. They know best where the country is weak and where the money can be put to good use. That is what the returned funds will go towards, used and administered by Peruvian authorities. In my opinion, this restitution agreement is a powerful symbol in many ways and should be considered an example for others to follow. Using the money to strengthen the victim state’s asset recovery system is an expression of recognition of the considerable efforts and progress already made by Peruvian investigators, prosecutors and judges, who bravely tackle complex cases involving high-level criminals despite challenging conditions and scarce resources. By investing the returned money into these institutions, the money further serves to multiply the impact of the return, as we expect the reinforced institutions to continue and scale up their asset recovery efforts. The value of asset recovery goes far beyond the money It is also a powerful reminder that asset recovery is not only about returning money, but it is about healing historical wounds, restoring credibility to justice institutions and building a stronger future with less corruption. Because indeed, USD 28 million compared to the Peruvian GDP is only a tiny sapling in a large forest. Given that, what better than to plant it somewhere it can thrive and be seen to bear fruit.
The Russian arms dealer case: how Peru recovered stolen assets from a Swiss bank account through non-conviction based confiscation
I recently participated in a panel on the role of non-state actors in the recovery of stolen assets and proceeds of corruption at the 2020 International Anti-Corruption Conference, at which I presented the so-called “Russian arms dealer case”. The case is relatively small in monetary terms – around USD 700,000 plus interest – but hugely significant in terms of asset recovery efforts and international co-operation. In this case, the Peruvian State used a non-conviction based confiscation technique to recover a bank account frozen in Switzerland. The account contained illicit commissions paid in the context of the purchase of war planes by the Peruvian government during the armed conflict with Ecuador. This case was the first of a series of cases between Peru and Switzerland applying non-conviction based confiscation techniques. It has paved the way for other proceedings, some of which are still pending in the tribunals. This case also illustrates one way in which the Basel Institute, through its International Centre for Asset Recovery ICAR , provides assistance to victim countries in recovering assets stolen through corruption. In addition to this type of technical assistance on specific asset recovery cases, ICAR also delivers capacity building programmes and contributes to states’ efforts to introduce legislative and institutional reforms to facilitate asset recovery. All of the facts described below are contained in the relevant and publicly available Swiss and Peruvian jurisprudence. Case study: the Russian arms dealer Vladimiro Montesinos Torres was the chief of the Peruvian intelligence service and advisor of former Peruvian President Alberto Fujimori in office from 1990 to 2000 . Montesinos headed a criminal organisation through which he systemically distributed bribes to public officials to accumulate influence over vast areas of government, the media and public life in Peru. Fujimori and Montesinos orchestrated large procurements for the Peruvian state that were tainted with corruption and resulted in massive losses for Peru. Together with their enablers, they stole several US billions of dollars in public assets from Peru. In 1998, Montesinos and Fujimori instigated the purchase of military aircraft by the Peruvian state. The vendor was a Russian state-owned company by the name of Rosvooruzhenie, whose vice-director was a Russian citizen called Yuri Khozyainov. Montesinos and his allies received illicit commissions totalling more than USD 16 million in relation to a single procurement contract. These commissions were paid into two Swiss bank accounts at First International Bank of Israel FIBI and Bank Leumi in Zurich. This scheme, as well as later acts of money laundering, were detected and subsequently investigated in several jurisdictions, including Peru, Switzerland and Luxembourg. It was later revealed that Khozyainov was deeply implicated in Montesinos’ money laundering scheme. Of the USD 16 million in illicit commissions, around USD 708,000 were forwarded to an account held by Khozyainov at the bank Credit Lyonnais. The bank reported Khozyainov's account to the Swiss Financial Intelligence Unit FIU and it was subsequently frozen as part of a Swiss money laundering investigation. A few years later, Peru also investigated the case, applying non-conviction based confiscation techniques. It requested and exchanged evidence with Switzerland through the formal channels of mutual legal assistance MLA . Khozyainov appealed the seizure of the assets in Switzerland, claiming Peru did not grant him a due process and that the freeze violated the Swiss MLA regulations. In February 2014, the Swiss Federal Court rejected Khozyainov’s appeal and upheld the freezing order Decision RR.2013.164 . In February 2016, the Peruvian courts ordered the confiscation of Khozyainov's Swiss bank account and, two months later, requested Switzerland to execute the decision and to hand over the assets, including interest. Switzerland granted MLA and executed the request in June of that year, but Khozyainov appealed to the Swiss Federal Criminal Court. The court rejected his arguments and ordered the return of the frozen assets to Peru Decision RR.2016.147 . Arguing a further violation of rights of constitutional nature, Khozyainov lodged an appeal at the Swiss Federal Supreme Court, which ultimately ruled that that the Peruvian investigation and trial was fair in all aspects. The value of early preparatory meetings Among the many lessons learned in this process was the great importance of preparatory meetings between central and executing authorities. It is continuously pointed out in international fora that for an asset recovery case to be successful it needs to be closely coordinated between requesting and requested states. We profoundly adhere to this statement. In practice this means that substantive work needs to be undertaken as a basis for such discussion and coordination. The case examined here has provided Peru and Switzerland with the opportunity to discuss in detail the mechanisms Switzerland will use to recognise and execute the Peruvian decision based on a typology of confiscation which is unknown in the Swiss legal framework. On the other hand, these preliminary meetings allowed the Peruvian authorities to understand the conditions in the Swiss domestic legal framework for the execution of foreign confiscation orders. Creating precedent-setting jurisprudence Obviously, the above-mentioned exercise requires innovative thinking and a deep knowledge of both legal systems as well as the languages and legal traditions. ICAR’s specialists, in close coordination with prosecutors of the requesting and requested state, supported these efforts. The end conclusion was that both legal systems had equivalent provisions for dealing with similar underlying facts. This enabled the Peruvian decision to be admitted in Switzerland for execution. Financial investigations at the heart of asset recovery Independently of the underlying legal action that led to the recovery of the illicit assets, Switzerland’s capacity to cooperate in such asset recovery scenarios depends on two main preconditions pertaining to the foreign procedure. First, the respect of due process requirements in the victim state. Second, that the asset is of criminal origin, i.e. is linked to a crime. This is necessary in order to execute the foreign decision through MLA in criminal matters. It is no simple matter to demonstrate in court that assets – especially when they undergo several transformations in a money laundering scheme – are the proceeds of a crime. In the course of our work in Latin America, ICAR’s financial investigators and their Peruvian counterparts had been able to establish with a high degree of certainty that the assets in the Swiss accounts originated in the Peruvian treasury. To do this, they needed to analyse a large amount of financial data received by Peru through MLA channels. The financial reports were able to reconstitute the paper trail and were used by the Peruvian prosecutors to satisfactorily support their claim in the domestic courts. At the same time, the financial investigation showed without a shadow of doubt that the assets result from the corruption offence perpetrated by Montesinos and his associates. This in turn provided the legal argument that the Swiss authorities needed to cooperate in criminal matters, even if the underlying foreign confiscation order did not result from ordinary criminal proceedings but from a non-conviction based confiscation action.
Oscar Solorzano sets out the arguments for non-conviction-based forfeiture in online conference
As part of a week-long virtual conference by the Grupo de Estudios del Sistema Penal, Head of Latin America and Senior Asset Recovery Specialist Oscar Solorzano presented in Spanish on the contested topic of non-conviction-based forfeiture of assets. Recovering assets when a criminal conviction is not possible Non-conviction-based NCB asset forfeiture is a critical tool for recovering assets arising from corruption when a criminal conviction is not possible. Examples are when the wrongdoer has died or fled the jurisdiction, or is immune from prosecution. The UN Convention against Corruption UNCAC and the Financial Action Task Force both support its use, and Peru has already managed to achieve landmark recoveries under its recently introduced NCB legislation, Extinción de Dominio, which is being implemented with ICAR support and training. But in practice there are many hurdles to the full use of NCB forfeiture. A particularly frustrating hurdle is that some requested States refuse to provide mutual legal assistance in cases of NCB forfeiture because a similar mechanism doesn’t exist in their domestic legal framework. The debate is a complicated one but crucial when a victim State is trying to recover the proceeds of corruption located in an international financial centre. The response to its request for assistance will depend on the nature and scope of the law that allows for foreign investigation. Some of these issues are summarised in these notes from the ICAR-organised side event of the Conference of the States Parties to the UNCAC in Abu Dhabi last year, as well as in Oscar Solorzano’s speech at that event. To understand the practical implications, see also this interview with Specialised Prosecutor Hamilton Castro: Landmark asset recovery case puts Peruvian non-conviction-based confiscation legislation to the test also in Spanish . No impediments please In the online conference, after covering the main topics of debate Oscar Solorzano argued that legislators should strike a balance between the adoption of stronger confiscation laws and the legal rights of individuals. On the one hand, he said, States wish to fight rampant financial criminality through increasingly incisive legal tools. On the other hand, several centuries of legal developments focused on the protection of individual rights creates a distortion that limits the possibilities for a victim State to investigate and execute seizures in the requested state without a criminal conviction. From our perspective, he concluded: When "atypical" confiscation laws pursue the proceeds of terrible crimes such as corruption… …when their nature does not constitute a penalty in the strict sense.. …and when the procedural guarantees of individuals are respected in a fair trial… We consider that there should be no impediment to providing international assistance – either during the investigation phase or during the execution of final judgments of foreign non-criminal confiscations. See more View recorded presentation by Oscar Solorzano Training for specialised Peruvian prosecutors in new non-conviction-based confiscation legislation New specialised courts to apply novel Extinción de Dominio legislation in Peru Stefan Mbiyavanga, Legal Specialist for Latin America, also spoke about challenges and best practices for recovering assets hiding in international financial centres. See his key points and recording here.
The "favourability" principle - UNCAC's plug adapter for enforcement of non-conviction-based confiscation requests
Opening remarks and a presentation of key concepts by Oscar Solórzano at the side event “Living up to the spirit of articles 43 and 46 UNCAC” during the eighth session of the Conference of the States Parties to the United Nations Convention against Corruption, Abu Dhabi, 16-20 December 2019. Ladies and gentlemen, let me please welcome you to the side event “Living up to the spirit of articles 43 and 46 UNCAC”. The title suggests that the purpose of this session is to achieve the goals of the Convention, and specifically articles 43 on international cooperation and 46 on mutual legal assistance MLA . To achieve the goals of the Convention, it is of course important that States Parties initiate legislative revisions where domestic legislation is not up to standard. We would like to talk about something else, however: using domestic legislation to its full extent, approaching legal challenges presented by asset recovery cases with a mindset of "Yes we can " Where possible, law enforcement authorities should do whatever is permitted by their domestic law and practice. This means applying underlying concepts in a constructive manner and - in many settings - changing the way foreign MLA requests are received and executed. In the asset recovery field, for instance, consider the practices of authorities charged with the execution of foreign requests related to non-conviction-based confiscation NCBC actions. Of course, confiscation laws may differ between the two countries. But differences in legal systems alone are not grounds to refuse MLA. Why? Because the UNCAC policymakers envisioned this situation and introduced a favourability principle: States should interpret the provisions of the Convention in a manner that is most favourable to international cooperation in judicial matters. In order to live up to the favourability principle of UNCAC, States do not need new laws, but rather to explore solutions in the existing legal framework. Favourability does not mean "anything goes". But countries can learn from their peers, and that is what we are hoping to promote this morning. Certain European countries have acquired expertise in enforcing foreign NCBC requests, while acknowledging differences in domestic laws. To prove this, the panel of experts will showcase recent international asset recovery cases between Switzerland and Peru based on NCBC laws. I will start by providing the conceptual perspective of the cases from my experience as Senior Asset Recovery Specialist at the Basel Institute’s International Centre for Asset Recovery. I will then invite Hamilton Castro, a Peruvian specialised NCBC prosecutor with whom I have worked closely on several important asset recovery cases, to explain through a case presentation why in some scenarios NCBC is the only viable option to recover illicit assets. Barbara Kammermann, Legal Officer, Division for Mutual Legal Assistance at the Swiss Federal Office of Justice, will then explain what the challenges in that case were and what legal avenues Switzerland used to enforce the Peruvian NCBC request. Finally, two distinguished practitioners, Markus Busch, Head of Division at the Federal Ministry of Justice and Consumer Protection in Germany and Muthoni Kimani, Director of the Asset Recovery Office in Kenya, will react and present their thoughts on "favourable" approaches to NCBC. Enforcing non-conviction-based confiscation in Europe: can UNCAC provide the plug adapter? ------------------------------------------------------------------------------------------ In cases of mutual legal assistance MLA in criminal matters, law enforcement authorities are often confronted with a variety of legal provisions potentially applicable to a case. A norm of a bilateral MLA treaty and a norm in domestic MLA law may address the same issue. Choosing the solution that is more favourable to the assistance required is the reasoning behind the “favourability principle”. A coherent interpretation of such fundamental principle means that a refusal of MLA should be a measure of last resort. In the UNCAC, favourability is deliberately formulated very broadly so as to enable States Parties to provide MLA to “the widest measure”. One such application of the favourability principle is the granting of MLA when a requesting State seeks to recover illicit assets from a requested State through non-conviction-based confiscation NCBC . Objectives of the panel Advocate for an interpretation of favourability that promotes NCBC as a valid basis to recover ill-gotten assets. Encourage the introduction of the obligation to “sufficiently explain” the decision of the requested State to refuse MLA on the grounds that NCBC is incompatible with its legal framework. Pledge for a policy dialogue aiming at revising such a rule or practice so as to meet UNCAC’s standard. This presentation is divided in three parts: I will take a “back to the roots” approach to confiscation. I would then like to introduce a discussion of the “supposed affected rights” in NCBC procedures. Finally, I would like to convey the lessons learned from international asset recovery efforts involving Peru and Switzerland. What is confiscation? During the Middle Ages, confiscation was a widely unpopular measure with the general public as it was often applied for malicious purposes. It was only in the context of the trade in illegal drugs that a wider concept of confiscation was reintroduced: in most countries, confiscation is now considered a reparative measure that only seeks to target illicit wealth. Additional punitive effects and deterrence are not commonplace among the vast majority of States Parties. According to UNCAC, confiscation is the permanent deprivation of assets by a competent authority. Simply put, proceeds of crime must be taken away in order to ensure that "crime does not pay". The reparative nature of confiscation has important consequences for its procedural treatment in many countries. In common law jurisdictions, as well as a rising number of European and Latin American countries, confiscation is treated as a “civil” measure closer to the “unjust enrichment” of civil law than to a sanction imposed by a criminal court. A direct consequence of this interpretation is that safeguards of criminal procedure, such as the presumption of innocence, do not apply as as confiscation is not considered an accusation in criminal matters. For that reason, it can be ordered in just but simplified procedures. In its contemporary interpretation, confiscation is not to be considered a pecuniary sanction. It is certainly neither a civil reparation nor a fine. A civil reparation is based on the concept of harm while a fine is an ordinary criminal sanction. Confiscation, on the other hand, has its basis in the provenance of the funds derived from the crime. It is said that confiscation in its basic form targets the assets that are the “proceeds” of crime. As said, most countries in continental Europe share the reparative conception of confiscation. The constant jurisprudence of the European Court of Human Rights ECHR assessing the scope of individual European States relating to NCBC is very clear in this regard. Extinción de dominio The Peruvian NCBC law, extinción de dominio law roughly translated as the extinction of possession follows the same reasoning as the one exposed in the ECHR caselaw. It is directed against the asset and has a reparative nature. Its essential aim is to take assets linked to crimes out of circulation in a special proceeding directed against objects. In any event, it is not intended to punish the perpetrator of the crimes. The main problem with this point of view is that a pure in rem action - directed against objects - is an alien concept to European civil law countries. This concept, imported from the US legal arsenal, enables the use of a completely different procedure governed by civil standards but granting, however, effective procedural rights to the asset holder in a two-fold judicial process. This is particularly important because one of the main arguments to refuse MLA in NCBC is that it affects fundamental rights. But what human rights are we talking about? What rights are violated in NCBC? I think it is a valid question that needs special consideration. Fundamental rights in play The Peruvian extinción de dominio law grants due process and fundamental rights without restriction. They are in fact fundamental principles of this piece of legislation. The asset holder is granted a large number of procedural rights, including: the right to a fair hearing; the right to inspect the casefile; the right to provide evidence; the right to appeal and to a judicial review; constitutional courts and international human rights tribunals complete the review possibilities of this action. The discussion in Europe and Latin America basically revolves around two fundamental rights: the right to property and the protection of procedural guaranties. Property rights Latin American States have brought innovative understanding to overcome the difficulties linked to the protection of the right to property: property must have a licit origin to deserve the protection of the State and it must be exercised according to social and public interest as imposed by constitution. The first limitation to property arises therefore from the Constitution itself. Likewise, property rights are not “absolute” in the sense that they can suffer limitations when confronted with other similar or superior interests. This is the case for instance when the State develops more incisive confiscation rules to protect collective interests, which may have an impact in property rights. Procedural rights A persistent argument is that NCBC procedures do not grant, in general, the same procedural rights as criminal confiscation. For some, NCBC tools circumvent the defences of the criminal proceedings and therefore limit the fundamental rights of the defence. In most cases, indeed, the procedural guaranties are modulated according to the nature of the action: reparative and in rem . As NCBC targets assets, it does not include a general presumption that the assets under investigation are licit, as it is the case in proceedings against persons. In my view this makes perfectly senses as the asset holder’s freedom is not in play, luckily the ECHR and the majority of constitutional courts follow this idea. In dubio pro reo literally “the doubt benefits the offender” is another of the rights inappropriate in NCBC procedure. The prosecution still supports the burden of proof but if a doubt persists regarding the origin of the asset, it does not benefit the asset holder. In practice, the burden of proof is lowered to the civil standard of balance of probabilities, which means that the judge decides on the confiscation when he or she thinks that it is more probable that the assets arise from a crime than that they don’t. What lessons were learned? NCBC procedures are better placed to recover illicit assets Several interconnected asset recovery cases in Peru show that NCBC procedures are necessary and adequate in certain scenarios. In these Peruvian cases, the criminals the beneficial owners of the Swiss accounts intentionally absconded from Peru upon the initiation of the criminal investigation. As the Peruvian Constitution prohibits in absentia trials, it would have been impossible to confiscate through criminal proceedings as a criminal prosecution cannot take place. In such scenarios, it is unacceptable to let the criminals knowingly avoid the criminal accusation and enjoy the benefits of their crimes, simply because of old-fashioned legislation or narrow concepts pertaining to confiscation. Favourability must be applied in the Requested State order to overcome such a legal loophole. Impact on MLA The success of Peru in these cases heavily relied on the active involvement and support of Swiss authorities. For the cooperation to succeed, the nature of the investigatory or judicial proceeding in the victim country is highly relevant for Switzerland’s ability to cooperate. It is therefore important to find common grounds of understanding between requesting and requested States and to jointly decide what is feasible and what is not in terms of international MLA. We believe, the adapter plug, the common language among States, is that confiscation is not punitive but a remedial measure. When States want to use NCBC to punish the perpetrators of crime, it becomes a “penalty” – whereupon criminal safeguards apply without any restrictions. NCBC laws must therefore be limited to assets arising from crimes. In this respect, Swiss authorities determined that the Peruvian NCBC law complies with Swiss human rights and public order standards. The Swiss Federal Tribunal and the Federal Criminal Court have both confirmed that Switzerland can cooperate with foreign NCBC investigations and is also capable of enforcing the resulting decisions. Likewise, the European Court of Human Rights, applicable in Switzerland, has repeatedly confirmed that: "\ C\ ommon European and even universal legal standards can be said to exist which encourage the confiscation of property linked to serious criminal offences such as corruption, money laundering, drug offences and so on, without the prior existence of a criminal conviction". Ensuring a sound implementation of the specialized asset recovery framework Asset recovery laws cannot translate into investigations, seizures, confiscations and asset restitutions in the absence of proper specialization and implementation. The extinción de dominio law foresees the progressive implementation of a specialized prosecution and court apparatus, with a nation-wide deployment of 22 courts and 3 courts of appeal devoted to NCBC, each with designated specialized judges, prosecutors and investigative police. The specialization is particularly important as it gives the justice operator, particularly judges, the necessary comprehension and experience to decide on actions which are conceptually disconnected from the criminal trial.
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