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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.
The changing face of corruption and security: Munich Security Conference 2024
Corruption was on the main programme of the Munich Security Conference on 16–18 February 2024 for the first time. Gretta Fenner, Managing Director of the Basel Institute on Governance, moderated a panel discussion featuring Bernardo Arévalo, President of Guatemala, Nikolai Denkov, Prime Minister of Bulgaria, Ketakandriana Ke Rafitoson, Vice Chair of Transparency International and Sheldon Whitehouse, U.S. Senator and Chairman of the Senate Committee on the Budget. The main challenge in Gretta Fenner’s closing words, referring to the theme of this year’s conference report “Lose-Lose”: “If we do not understand, acknowledge and then act accordingly in relation to the critical role of corruption undermining everything to do with stability, global governance and international law, we will have a lose-lose situation. And we cannot allow that to happen.” Beyond classical corruption The Munich Security Conference's decision to include corruption as a “spotlight” in the conference programme, together with other non-traditional security topics such as sexual violence, climate finance and mineral supply chains, was highly welcome. It coincides with a rise in recognition and concern over strategic or "weaponised" corruption as a threat to national, regional and global security and peace. As Fenner emphasised at the outset, corruption even in the narrow sense of bribery must be of great concern to the defence and security community. When kickbacks or other bribery schemes lead to the purchase of the wrong military equipment, to the construction of substandard infrastructure, or to half the ordered ammunition missing, it has direct and potentially deadly consequences. What we must also talk about more is the use of corruption for longer-term geo strategic goals. In other words, when corruption is used as an instrument – indeed a weapon – of power and influence at home and abroad. And when, as a consequence, it completely evades and thereby undermines global governance and international law. The result, in the words of Ke Rafitoson, is “an escalation of violence and conflicts around the world.” Corruption has long been seen as a “soft governance” issue, she said, but now: “We have to recognise that corruption has become a global threat.” Vicious cycle: state capture and transnational organised crime Take just about any case of state capture – when power is consolidated in the hands of a few elites, who misuse state institutions to serve their own narrow purposes – and you can trace how corruption is wielded as a highly functional tool to gain and preserve power and influence. That pattern is clearly visible in Guatemala, where President Arévalo’s recent election success owes much to popular unrest over corruption and to his personal anti-corruption campaigning. Corruption has penetrated every arm of the state over the last 20 years, he explained. Money stolen through corruption is used to empower criminal elites, who then further capture the political system in order to extract more rents – and on it goes in a vicious circle. That has serious implications on peace and stability far beyond Guatemala as it emboldens and empowers transnational organised crime, he said, including the trafficking of drugs, humans and wildlife. “When you have corrupt officials, they are quite open to the type of big-money incentives that transnational organised crime can put on the table. On the other hand, transnational organised crime is interested in pushing politicians into office.” In the end, you find the entire governance of countries is in the hands of corrupt actors and of criminal groups. Driven by the transnational nature of organised crime, this can quickly lead to entire regions descending into a vicious circle of illegitimate governance and crime, and eventually into ever greater instability and violence. Control over critical sectors Much concern over strategic uses of corruption for geopolitical purposes also centres on foreign states gaining influence over sectors that are critical for sovereignty, security and stability, such as energy, water and minerals. Historical links and geographical proximity to kleptocratic states increase a country’s vulnerability. Bulgaria has recently struggled with exactly that phenomenon. Noting parallels with Guatemala’s experience of state capture and organised crime, Prime Minister Denkov emphasised that corruption was not just used as a way for individuals to make money for narrow personal gain: “Along with classical corruption schemes, you have another type of corruption at a huge scale that affects all aspects of our lives.” Russia-related energy deals in Bulgaria have wasted more than a billion euros, Denkov said, and resulted in little except total energy dependence on the aggressive autocratic Russian regime. It is clearly a security concern when corrupt deals result in a foreign state gaining power over critical sectors such as energy – not least when they involve sensitive installations such as nuclear power plants. On the positive side, an anti-corruption focus is leading Bulgaria towards a much brighter future, not only in terms of its energy independence but also more broadly in terms of the quality of its governance, of rule of law and of its role in protecting the Euro-Atlantic alliance. In the last two years, with parties in government who subscribe to the fight against corruption, the country has succeeded in removing oil and gas dependence with strategic and transparent energy arrangements. It is also working persistently towards freeing other sectors from state capture. Bulgaria’s example shows how political commitments to transparency, participation and anti-corruption can help countries loosen the grip of corrupt states on sectors critical to their security. How anti-corruption and security communities can join forces Anti-corruption and defence/security communities often work in bubbles, but closer collaboration could bring benefits to both sides. Anti-corruption tools and knowledge Despite legitimate concerns about foreign power and influence through corruption, it’s not helpful to see corruption purely as a foreign threat. Many countries need to do more to prevent corruption and illicit financial flows domestically, since these ultimately threaten both their own and global security. Tried and tested anti-corruption tools are essential to get one’s own house in order. Senator Whitehouse gave a powerful description of how the U.S. introduced a series of anti-corruption reforms following the realisation that: “We were the problem. The greatest location for hiding corruptly obtained assets was the United States of America. So we began to take that apart.” Apart from basic transparency measures like beneficial ownership registers, priorities for many states should include cracking down on enablers such as unscrupulous lawyers and accountants. These are often based in high-income jurisdictions but are key to enabling corruption in other countries. Senator Whitehouse also testified to the usefulness of working with civil society in devising and implementing the anti-corruption reforms. Likewise, in general security policy making could benefit greatly from the knowledge and analysis of specialist anti-corruption organisations whose understanding of connections between corruption and security, and related data, facts and reports, can support security-related decision making. Embedding anti-corruption across the functions of state Beyond applying tools in specific areas, panellists concluded that states need to embed anti-corruption as a strategic priority across all aspects of security in its widest sense – from procurement to peace building to the development of strong and independent institutions. The U.S. designation of corruption as a core national security issue has helped to “put corruption higher up the agenda,” said Senator Whitehouse. This is vital because, as President Arévalo also emphasised: “We were used to corruption being a problem of bad administration…. Now we are seeing political criminal cliques organising to take control of state institutions in order to make them work for corruption. This is a fundamental threat to the viability of democratic states. It is beyond a threat to the security establishment.” Ukraine’s experience also shows that anti-corruption needs to be elevated as a core and state-wide security issue. Reacting to the panel discussion, Ukrainian anti-corruption activist Hanna Hopko explained that while Ukraine has made significant progress on fighting corruption since the 2014 Maidan Revolution, the illegal invasion of Ukraine by Russia has propelled corruption to the top of the country’s priorities: “Russia’s aggression against Ukraine has redefined the struggle against corruption. In the past, we considered the fight against corruption to be about… eliminating kickbacks, \ money laundering in\ offshore jurisdictions, vanity construction projects… \ Now\ it is crystal clear that without strong institutions, producing strong policies and implementing them, anti-corruption means nothing.” In other words, Ukraine can only win this war if it wins the war against corruption and builds strong, independent institutions resilient to external attempts to corrupt and control them. A tough fight ahead Guatemala and Bulgaria are just two countries facing a tough fight ahead to dismantle corrupt systems and create a well-governed state that works for the people. Legal reforms are important but not sufficient, stressed Denkov. “You have to have the people. It is not only the leaders. In every position you have to have a person who is willing to fight every day.” Those people will need a lot of energy, said Senator Whitehouse: “For the corruption machine, maintaining corruption is life or death. You take away their corruption, there goes their money, there goes their power, their limousines, there goes everything. So they fight to defend it with determination…. The energy and persistence and determination of the corrupt needs to be matched by similar energy, persistence and determination of those trying to root out corruption.” And that energy can only come from the recognition that corruption is, according to “is no longer \ just\ a nuisance. It is a direct political threat,” according to President Arévalo. “ Until we do not recognise that, we are not going to really be able to muster the energy, imagination and commitment at the international level to fight corruption effectively.” Learn more See the full recording on the Munich Security Conference website. See related articles on corruption and peace building and on how corruption fuels insecurity by affecting power.
Latin America’s model law on non-conviction based forfeiture of illicit assets turns 10 – what now?
A model law on non-conviction based forfeiture NCBF , drafted 10 years ago by UNODC to support countries in Latin America in their efforts to recover stolen assets, will be updated following four days of intense discussions among practitioners and asset recovery experts from across the continent. Specialists from our International Centre for Asset Recovery ICAR team in Latin America were among those contributing to the discussions of the NCBF Model Law Ley Modelo de Extinción de Dominio . Extinción de Dominio is the dominant form of NCBF mechanism in Latin America, including in Peru, where ICAR is assisting the authorities in rolling out a national system for NCBF and has seen some encouraging successes. A model for NCBF laws across Latin America Central to the participatory review process of the NCBF Model Law, the meetings sought to illuminate its contribution to efforts to recover stolen assets in countries that have implemented such an NCBF mechanism. Speakers highlighted that the Model Law has served as a reference document for many countries in drafting NCBF legislation that fits their domestic legal systems and contexts. These laws have since helped to recover assets arising from organised crime and corruption. The discussions also highlighted good practices and aspects that require updating in line with the fast-evolving field of asset recovery, such as how to recover assets held in the form of cryptocurrencies, and evolutions in international judicial cooperation. Other key points included issues the possibility of extending international instruments, such as the Inter-American Convention on Mutual Assistance in Criminal Matters, to specifically include forms of NBCF. Participants called for more guidance on developing suitable mechanisms to manage seized and confiscated assets, as well as on procedural aspects specific to this type of law. These are areas in which countries that are further ahead in the implementation of Extinción de Dominio mechanisms can usefully take the lead. Sharing on-the-ground experiences with NCBF laws Oscar Solórzano, the Basel Institute’s Head of Latin America and Senior Asset Recovery Specialist, presented some practical case studies that demonstrate the challenges of international judicial cooperation in asset recovery. On the other hand, he pointed to encouraging experiences of such international cooperation from Peru, which has succeeded in recovering assets from abroad using its 2019 Extinción de Domino law see case links below . Oscar also remarked positively on the progress made by some European jurisdictions in recognising the validity of this model of NCBF legislation. Dennis Cheng, Senior Asset Recovery Specialist, moderated a panel reflecting on the significant advances made in Latin America in respect of NCBF over the last 10 years and participated in the closing session. Promoting innovation in asset recovery Participants in the four-day meeting included prosecutors, judges, academics and policymakers from Argentina, Bolivia, Brazil, Chile, Colombia, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Panama, Paraguay and Peru. Many of these are leading voices in the asset recovery field who are also involved in the Asset Recovery Knowledge Community established by ICAR earlier this year. It is hoped that the reflections and knowledge products emerging from the Asset Recovery Knowledge Community will support the legal foundations of the NCBF Model Law as it is revised over the coming months, as well as its application in practice. Learn more See the UNODC press release: UNODC conmemora los diez años de la Ley de Modelo de Extinción de Dominio. Encouraging cases based on Peru’s 2019 Extinción de Dominio law include the Ibárcena case involving a deceased Navy General, the Russian arms dealer case, the military aircraft case of Moshe Rothschild Chassin, and the recent terrorist financing case of The Nun La Monja . A comprehensive description of all cases can be found in the 1,100-page Compendium of Jurisprudence on Extinción de Dominio published in July by Peru’s Procuraduría General del Estado.
A highlight in 2017: WCO adopts Collective Action in customs. What will 2018 bring?
Looking back on developments in Collective Action in 2017, one of the events that stands out was the World Customs Organization’s WCO formal adoption of Collective Action as an innovative approach to enhance integrity and combat corruption in Customs and Tax administration. The WCO Integrity Sub-Committee held its 16th Session on 9-10 March 2017 at the WCO headquarters in Brussels. Over 150 delegates representing WCO Member administrations and stakeholder organisations participated in discussions that ensued after a warm welcome by the Chairperson, Mrs. Sigfríður Gunnlaugsdóttir from Iceland Customs. On the first day, a joint session of the Capacity Building Committee and the Integrity sub-Committee was held. The theme of the joint session was Collective Action to promote Integrity, the examples that were presented in the session came from those who are actually implementing them, and were all very inspiring. I was honoured to have contributed to the WCO’s elaboration of its background paper on Collective Action\ that formed the basis of the WCO’s endorsement, available here, and present on the panel. The example that stands out though came from the Director of Customs of the Guatemala Revenue Authority, and a representative from the Guatemalan private sector who presented on the benefits of joining forces to fight corruption. This was a dramatic case and a groundbreaking alliance that shows the power of Collective Action. The presenters started the story with a reminder of what 36 years of devastating civil war had caused in their country, which was bad enough in itself but was then compounded by corruption on a grand scale that weakened the country even further. In 2015 numerous government officials were arrested in Guatemala over their alleged involvement in ‘La Linea’ “the line” , which was the name given to the hotline businesses would call to access corrupt officials to obtain illegal discounts on their Customs duties. This fraud scheme was a multi-million dollar operation that included the Superintendence of Tax Administration SAT . The supposed priority given to the collection of duties and taxes led to an increase in the physical inspection of goods, in turn this induced importers to offer bribes either to avoid the Customs duty or to obtain reduced tariffs. These kickbacks were then shared amongst a wide network of government officials. The clean-up operation in Guatemala is described in the June 2017 edition of WCO News. It included investigations and prosecutions, re-staffing of the SAT and the creation of working groups and committees that are dedicated to ensuring clean Customs. The private sector sought to ensure its voice was heard regarding its concerns and this resulted in the formation of a Committee for Dialogue and Cooperation between Public and Private Entities in Customs Affairs. This Collective Action approach, described in our B20 Collective Action Hub, enabled the representatives to discuss improvements and to share best practices that will benefit everyone. Of course the system is not perfect, the public and private sectors do not agree on everything and there are challenges in achieving sustainability and making progress at a pace that is quick enough for everyone. But all agree that dialogue is better than bribery, Guatemala has taken a courageous step, the WCO has recognised this and it is an inspiring story and an example of what can be achieved even in circumstances that appear extremely challenging. Collective Action is not a panacea but it can play a part in tackling some of the tough aspects of corruption. So as we are attending the WCO Integrity Sub-Committee meeting again this year in Brussels, we’re hoping the WCO will report on further such initiatives employing a Collective Action approach to combat corruption in customs, similar to the story from Guatemala. \ World Customs Organisation, Capacity Building Committee, 8th Session, Collective Action to Promote Integrity, HC0108E1a, 2 February 2017
Liechtenstein and Guatemala host a joint ICC - ICAR workshop on financial investigation
In the context of the ICC Assembly of State Parties held in New York in December, the ICC and ICAR jointly organised a side event on financial investigation in the context of investigations into serious international crimes. Hosted by the missions of Liechtenstein and Guatemala to the UN, the event brought together policy makers and practitioners to discuss the stumbling blocks to and the potential of tracing and recovering assets stolen in the context of or by perpetrators of serious international crime. Participants agreed that enhancing the Court's capacity in financial investigation would contribute to the Court's mission and mandate.