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Countries commit to toughening up civil asset recovery regimes


Many of the countries that participated in the recent anti-corruption summit in London are to review or strengthen their rules governing recovery of stolen assets, with a particular emphasis on 'non-conviction based' confiscation powers, it has emerged.

Countries including India, Afghanistan, Italy and Malta, have committed to strengthen their asset recovery regimes through the introduction of unexplained wealth orders (UWOs) and linked civil forfeiture powers. Others will work on the development of "internationally-endorsed guidelines" on managing the return of stolen assets, according to individual statements from participating governments at the summit.

The UK published its own plans for the potential introduction of UWOs for consultation last month, as part of wide-ranging reforms to the anti-money laundering rules. It will also 'provide resources' for and co-host the first meeting of a new 'global forum' on asset recovery next year, which will initially focus on returning stolen assets to Nigeria, Ukraine, Sri Lanka and Tunisia.

The forum, which will bring together governments and law enforcement agencies, will "strengthen co-operation between the countries that have had assets stolen and the countries where those assets are hidden", according to a UK government statement. However, civil fraud and asset recovery expert Alan Sheeley of Pinsent Masons, the law firm behind Out-Law.com, questioned the fact that the first meeting of the forum would be held in the United States given "its own failings in respect of transparency".

"If governments are to stand united in the fight against fraud it is imperative that the US forces through the same measures – a key one of which is a public register of true company ownership," said Sheeley, who pointed out that no US states required any beneficial ownership information as part of their company registration laws.

However, he welcomed the focus on civil recovery powers in the post-summit statements of many of the participating governments.

"Enforcement and recovery rates for recovering the proceeds of crime in the UK are disappointingly low," he said. "In 2012/13, 673,000 offenders were convicted of a crime, many of which had a financial element. Nonetheless, only 6,392 confiscation orders - equating to less than 1% of convictions - were granted, and only 26 pence in every £100 of criminal proceeds actually confiscated."

"Law enforcement is already swamped and does not have enough resources. This is a failing in the system; and often, for victims of fraud and economic crime, the only way to secure the assets that rightly belong to them is through instructing civil fraud solicitors and the use of freezing orders, disclosure orders and search and seize orders," he said.

Altogether, 20 countries including Switzerland, Nigeria, France and Germany have committed to some form of strengthening or reinforcing their existing legislation around stolen assets. In addition, 11 countries have committed to develop the first internationally-endorsed guidelines on asset recovery, with a particular focus on transparency and accountability.

The current US administration has submitted new legislation to Congress that would require all companies formed within the country to file "adequate and accurate beneficial ownership information" with the US Treasury, according to its own post-summit statement. However, it is not clear how far these proposals will get before the US election in November.

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