Mexico

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.

Peru orders confiscation of USD 1.5 million stashed in Mexico by a corrupt Army General

In the first such case in the Americas, Peru has issued a judgement ordering the non-conviction based confiscation of over USD 1.5 million in assets frozen in Mexico. The achievement adds to Peru’s substantial experience and jurisprudence involving its 2019 law of Extinción de dominio . The non-conviction based forfeiture NCBF law allows assets of illicit origin to be confiscated in a judicial procedure, even if a criminal conviction is not possible. The case is one of several that our International Centre for Asset Recovery ICAR team in Latin America is supporting through technical assistance and capacity building. It involves money stolen by former Army General Victor Manuel Malca Villanueva during the corrupt government of Alberto Fujimori from 1990–2000. Malca Villanueva made a series of cash deposits to his account at the Mexican-based Banco Bital while serving there as Ambassador of Peru, which the bank flagged as suspicious and reported to the authorities. Malca Villanueva died in 2015 at a Brazilian seaside resort, but his wife and children remain beneficiaries of the bank account. Surging ahead in the use of NCBF mechanisms for asset recovery That Peru has been able to issue this judgement available here is a significant achievement in itself. Many countries in Latin America, and indeed in the world, either do not possess such legislation or do not make effective use of it, despite its endorsement in international anti-corruption treaties and standards. It is an achievement based on Peru’s decision to implement the law strategically through a system of courts, tribunals and capacity building. ICAR has provided support to this effort and continues to contribute to it. It is also a testimony to the perseverance and commitment of individuals in the Peruvian government and justice system. These include in particular prosecutors Milagros Pereda, Coordinator of the Specialised Prosecutor for Extinción de Dominio in Lima, and Dr Hamilton Castro. Sharing experiences and knowledge to foster international cooperation Providing insights into the case is part of Peru’s ongoing efforts to share knowledge and lessons learned as widely as possible, in order to help other jurisdictions seeking to draft or implement NCBF laws as well as foster international cooperation. In an interview with our Head of Latin America Oscar Solórzano, Dr Castro explains the significance of the Malca case, takes stock of how the law is working in Peru after nearly three years, and gives his perspective on the challenges and opportunities for international cooperation in NCBF cases. At the Basel Institute and through ICAR, we continuously support the efforts of practitioners in Peru and other countries to share experiences with non-conviction based forms of asset forfeiture. Current initiatives in this regard include: our Asset Recovery Knowledge Community in Latin America our support to the development of a 1,100-page Compendium of Jurisprudence on Extinción de Dominio our participation in the review of UNODC’s Model Law on Extinción de Dominio our observer member status in the Asset Recovery Network of GAFILAT, the regional body of the Financial Action Task Force. We hope that Peru’s success, and its foundations, will inspire other jurisdictions to develop, implement and make good use of NCBF laws to recover stolen assets. These illicit funds would otherwise remain frozen in faraway bank accounts or, worse, in the hands of the corrupt former public officials and their relatives and co-conspirators. We also hope the increased understanding of the principles behind NCBF laws such as Extinción de dominio – and the safeguards they should and do contain – will encourage requested States to live up to their commitments to provide victim States such as Peru with the widest level of cooperation possible. This applies both during the proceedings and in the execution of NCBF orders. We look forward to supporting this precedent-setting case, and hope to see the safe return of the stolen money to the people of Peru. 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. In addition, we are implementing a separate project of the US Department of State Bureau of International Narcotics and Law Enforcement Affairs INL , which aims to explore the potential for innovation in asset recovery through NCBF mechanisms in Latin America, Sub-Saharan Africa and Lusophone countries.

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

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.

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