Forfeiture of the profits and proceeds of drug crimes

Sections

ABSTRACT
Drug trafficking and organized crime
Profits derived from drug trafficking
Bank secrecy and tax havens
Money laundering schemes
Laws and enforcement measures at the international Ievel
United Nations action
Conclusions
Annex
UNITED NATIONS
Suggestions for inclusion in an international instrument to address the forfeiture of the proceeds of drug trafficking

Details

Author: R. T. STAMLER
Pages: 3 to 19
Creation Date: 1984/01/01

Forfeiture of the profits and proceeds of drug crimes

R. T. STAMLER Officer in Charge, Drug Enforcement Branch, Royal Canadian MountedPolice, Ottawa, Ontario, Canada

ABSTRACT

Drug trafficking is controlled by well-organized international criminal syndicates, whose only motives for becoming involved are to make profits and secure influence, which in turn help perpetuate illicit drug distribution networks. For example, one producer of illicit opium receives approximately $Can 650 for 10 kilograms of opium, from which onekilogramofheroinisproducedandsoldtoend-usersforupto $Can 12 million. The risks involved for those at the highest level of international criminal syndicates is extremely low since they are financiers who may never come indirect contact with illicit drugs.or the law enforcement authorities.The proceeds of drug crimes are laundered through sophisticated international transactions often covered by legitimate operations.

Current legislative provisions at both national and international levels are inadequate to support effective action to trace, freeze, seize and secure the forfeiture of the proceeds of crimes and to prosecute individuals who knowingly possess such proceeds. In pursuance of recent resolutions of the Commission on Narcotic Drugs, the Division of Narcotic Drugs of the United Nations Secretariat convened two expert group meetings, one in 1983 and the other in 1984, to consider ways and means of dealing with this problem. The meetings recommended the establishment of machinery that would facilitate, at both national and international levels, concerted action to deprive drug traffickers of the proceeds of their crimes. The annex to this article contains provisions recommended by the second expert group meeting for inclusion in an international instrument to supplement existing provisions of the international drug control treaties in order to deal more effectively with the profits of drug crimes.

Drug trafficking and organized crime

Drug trafficking is to a large extent dominated by organized criminal syndicates whose sole purpose is to secure financial profit and power. Generated by street drug sales, a virtually unlimited flow of money moves upwards to high-level international criminals. These funds help to perpetuate illicit drug distribution networks, which function without regard to national boundaries and taxation systems or the regulations applied to legitimate trade and commerce.

Such a flow of money provides the power necessary to ensure that the trafficking systems continue to function. Bribes, pay-offs and the corruption of public officials are only a few of the criminal acts that trafficking organizations are prepared to commit in order to establish and maintain such systems. The vast profits are laundered and reinvested into legal and quasi-legal business ventures. These, in turn, provide a shield of respectability to the syndicate leaders.

The risks involved are extremely low for the financiers and high-level international criminals, who may never come into direct contact with illicit drugs. In such circumstances, the drug trafficking syndicates can be expected to flourish and to continue supplying illicit drugs to meet the permanent demand from groups within society willing to pay the price for them.

Profits derived from drug trafficking

Drug trafficking generates more revenue for criminal organizations than any other type of criminal activity. The profits derived from drug trafficking are clearly revealed by the increase in the value of illicit drugs as they move from the producer to the abuser. An illicit opium producer may receive from $Can 500 to $Can 80() for l() kilograms of opium, which in turn produces one kilogram of pure heroin that sells in production areas for approximately $Can 5,000. When one kilogram of pure heroin is delivered to major distribution centres, it may sell for $Can 75,000 at the wholesale level. The final product that emerges, after heroin is cut and diluted to street-level purity, is a capsule dosage unit containing a small percentage of heroin which is sold to the addict for $Can 45 per unit. This means that one kilogram of heroin can generate sales of up to $Can 12 million ( [ l] , p. 31; [ 2] ).

The illicit opium producer may make only several thousand Canadian dollars from his annual harvest, while the organized criminal syndicates which manufacture, transport and sell heroin on the illicit markets receive billions of tax-free dollars annually. The same situation exists with respect to cocaine, where only the geographical and ethnic backgrounds of criminals are different.

The South American coca-bush farmer receives approximately $Can l,000 for 250 kilograms of coca leaves which yield a minimum of one kilogram of pure cocaine hydrochloride. This kilogram of cocaine sells for up to $Can 18,000 in South America and for approximately $Can 100,000 at the wholesale level in North America or Europe. By the time it has been diluted and reaches the user level, one kilogram of cocaine generates a minimum of $Can l.2 million. More than 100 tonnes of cocaine are produced annually in South America ( [ l] , pp. 36 -46; [ 3] ).

Similar massive profits can be reaped in the case of cannabis. Current intelligence estimates show that in one South American country up to 20,000 hectares are cultivated with cannabis plants, producing annually between 25 and 50 thousand tonnes of high-quality cannabis destined for the illicit world markets. The value of this production is estimated at over $Can 2 billion. Street sales produce a cash flow of hundreds of billions of dollars. Numerous other countries in the world produce hundreds of tonnes of illicit cannabis generating billions of dollars in profits annually ( [ l] , pp. 59 -60; [ 4] ). Clandestine laboratories and substances diverted from licit sources add billions of additional dollars to the illicit drug profits that can be made by drug traffickers ( [ l] , p. 72).

Bank secrecy and tax havens

The illegally acquired profits may be converted into legitimate funds through complex financial laundering operations. Once the profits have been "cleaned", they may be injected into the regular economy by way of acquisition or infiltration of legitimate business [ 2] .

Although criminal enterprises amass enormous profits from illegal activities, most national laws and international systems are not designed to provide for or facilitate the tracing, freezing, seizure and forfeiture of such profits. A drug trafficker may be imprisoned for a long period of time, but the proceeds of his illicit drug sales are likely to be waiting for him upon his release. If the profits have been laundered and reinvested in legitimate businesses, or if they have been used for purchasing assets or properties under other jurisdictions, they are virtually impossible to trace.

Many national laws and international systems are inadequate to cope with these problems, because they are concerned almost exclusively with isolated offences involving the imprisonment of individuals while leaving the profits and resulting power base of the criminal organization intact. Drug trafficking syndicates receive their profits through a series of transactions made by a number of different people over a period of time. Provided that accumulated profits remain intact, drug trafficking syndicates will be able to survive any measures undertaken by a given Government to prosecute their members.

The ownership of money can often be established if it remains within the national boundaries of one country. Once it is transferred outside those boundaries through a money laundering scheme, it becomes cloaked with perpetual anonymity. This is made possible by laws which authorize numbered secret bank accounts and nominee corporations whose beneficial owners are shielded from scrutiny, and which subject bank employees, lawyers and other professionals to criminal or civil liability for revealing information on the true ownership of assets [ 5]

Jurisdictions with protected secret banking and corporate privileges enabling funds and assets to be placed beyond the reach of national tax collectors have grown in popularity in recent times. The guarantee of financial privacy has become attractive both to a wide variety of individuals and to criminal organizations. The development of transnational banking systems and international business and commerce has facilitated the establishment of sophisticated laundering procedures designed to move money directly from criminal activities into foreign banks protected from scrutiny by law enforcement officials. For the drug trafficker, such financial privacy is an essential means of concealing the profits derived from illicit drug sales [ 5] .

Money laundering schemes

In one case, law enforcement officers from Canada, Hong Kong, Singapore,Thailand and the United States of America attempted to identify and seize money being transferred from North America to Thailand via the Netherlands, Hong Kong and Singapore. ln that specific case they followed the transfer of several million dollars. The money derived from heroin sales in North America was transported in cash to Hong Kong and then deposited into an industrial and commerical bank. From that bank it was transferred to an import-export company, which was operating principally as a money laundering service for the South-East Asian area. When the funds were received by the import-export company in Hong Kong, a corresponding credit appeared with a similar company in Singapore. Instructions from the company in Singapore generated further paperwork in Thailand, where the last transaction in the chain occurred. Cash was paid to an unidentified individual and it was suspected that the funds were moved northwards to the benefit of one of the major drug syndicate leaders. No assets were seized, but it was clearly established that millions of dollars had been moved through the laundering system. 1

From tonnes of high-potency heroin, manufactured annually in South- East Asia from the 600 tonnes of illicit opium produced in the region, billions of dollars in profits are made to finance the insurgent armies and pay the syndicate leaders that ensure the continuation of the drug trafficking operations ( [ l] , pp. 24 - 26).

1Presentation made by Royal Hong Kong Police to the Meeting of Operational Heads of National Narcotics Law Enforcement Agencies, Far East Region. Wellington, New Zealand, 1982.

Illicit cocaine sales in North America result in the generation and distribution of funds through criminal organizations in much the same way that traffickers move money in South-East Asia. One cocaine trafficking organization used one part of its organization to manage drug distribution to end-users and another separate part to collect the proceeds of illicit sales. At no time did the individuals who collected the money make contact with those engaged in the cocaine distribution. The money was eventually received by a major travel agency and then distributed to higher-level syndicate leaders and to the individuals involved in the drug distribution and money-collecting parts of the organization. The travel agency had allied offices in South America that arranged for payments to be made to the traffickers and producers involved in the operation in South American countries. The actual movement of funds did not take place until drug distribution had been finalized, thus making it difficult to connect the monetary transactions to specific drug transactions [ 6] .

In another case a bank employee was arrested with eight other persons in a money-laundering scheme involving more than §Can 100 million in profits derived from cocaine trafficking. Another group of traffickers were arrested after officials at a leading brokerage house became suspicious w.hen they moved $Can 38 million through their brokerage account in two months [ 5] .

In a money-laundering investigation it was disclosed that the illegal profits were transferred from one country (A) to another country (B). Country B provided, through its laws, extensive financial privacy to investors. The criminals in country A established a corporation in a third country (C), which they owned and controlled through nominees in that country. Country C also provided extensive financial privacy to investors. The money held by a bank in country B was owned by the corporation in country C. An extensive investigation was launched by country A to trace . and identify the proceeds. Requests for investigative assistance were dispatched formally to countries B and C. Country C responded, stating it was unable to co-operate because there were no illegal funds held within that country and no offence had been committed there. Before country A could initiate prosecution it was necessary to acquire evidence of the ownership of the funds. That evidence was held in countries B and C. Country B, after a very long delay, responded that it was unlawful for any bank to release information with respect to an account without the consent of the client or an order of the court, and that the court would only issue an order if a criminal charge had been instituted in country A and arogatory commission was authorized to proceed in country B on the basis of that criminal charge. The investigation in country A was terminated, the individuals involved . were never prosecuted, and their financial base remained intact. 2

2Royal Canadian Mounted Police investigation completed in 1981.

One drug trafficker recently testified at a public enquiry that, to facilitate the laundering of profits from his cannabis trafficking operation, he incorporated a company in one tax haven jurisdiction, which in turn held the profits of his drug operation in a bank in another tax haven country. Both countries have strong bank and corporate secrecy laws. 3

Drug traffickers benefit from internationally protected banking facilities, from the secrecy laws pertaining to corporate and trust records, and from the lack of measures prohibiting the possession of drug trafficking proceeds, which all greatly contribute to the success of criminal drug trafficking organizations. The involvement of drug traffickers in such crimes undermines the international banking system and other institutions concerned with legitimate trade and commerce, and may threaten the integrity of some Governments.

Laws and enforcement measures at the international Ievel

At present, in many countries the possession of the proceeds of drug trafficking is not treated as a crime when a given drug trafficking offence has not occurred within the national territory. ln fact, countries which make it a crime to release banking information outnumber those which make it a crime knowingly to possess the proceeds of drug trafficking. ln such circumstances, it is virtually impossible for a Government to obtain assistance in tracing, freezing, seizing or securing the forfeiture of proceeds when an international money-laundering scheme has been used.

Tracing and identifying illicit drug movements around the world has led to the prosecution of persons found to have been involved in the manufacture, transport, sale and use of illicit drugs. International cooperation in this area of law enforcement has been aided by the two international drug control conventions [7, 8], and as a result has facilitated the arrest of many drug couriers and low-level traffickers who move from one jurisdiction to another. The two conventions have also facilitated the seizure of illicit drugs.

Since possession of the proceeds of drug trafficking is generally not recognized as a crime, and since there is no international agreement on cooperation, tracking the flow of such proceeds in the world is not easy to achieve. Without the ability to trace the proceeds, it is not possible to secure their seizure or forfeiture and the prosecution of those who benefit from them.

Some national authorities, in examining their laws, believe that successful action in this area depends on the ability to confiscate the assets of convicted drug traffickers. Since highly organized criminals are not likely tobecome directly involved in the possession, sale or distribution of illicit drugs, their identity may not be known when a particular drug offence is discovered. If possession of the proceeds is not itself an offence, little investigative action can be taken to trace the money flow from previous illicit drug sales. As a result, only the property of persons convicted of drug trafficking in the same country where the property is located is likely to be subject to confiscation. Such an approach will do little to help identify and prosecute the organized criminals who control international drug trafficking syndicates

3Testimony given at Bahamas Commission of lnquiry, 1984.

The sophisticated international trafficker will eventually acquire, possess and use the profits of the drug crimes which he arranges through lower level traffickers or couriers. It is the act of acquiring, possessing or using the profits derived from international drug trafficking that ought to be made a criminal offence. If an international instrument containing provisions against such a crime existed, it would clearly facilitate the establishment of national laws and procedures for tracing, seizing, freezing and securing the forfeiture of the proceeds of drug offences.

United Nations action

The Commission on Narcotic Drugs, in a resolution on forfeiture of the proceeds of drug crimes adopted at its February 1983 session, recognized that depriving drug traffickers of their proceeds would be an effective means of reducing the illicit traffic [ 9] .At its special session in 1984, the Commission provided guidelines for action against international drug trafficking and related organized criminal activities [ 10] .

A first expert group meeting on the forfeiture of the proceeds of drug crimes was held by the Division of Narcotic Drugs of the United Nations Secretariat at Vienna from 24 to 28 October 1983 [lI]. The meeting examined possible measures to counter bank secrecy regulations in cases involving drug-related assets, and considered the means that might be employed to trace and identify the proceeds of drug crimes as a first step leading to the freezing or seizing of such assets and eventually to their forfeiture.

The meeting concluded that while considerable progress had been made in exchanging information, intelligence and evidence between national enforcement agencies in respect of drug trafficking, similar advances had not been achieved in respect of those who possess the proceeds of drug trafficking and eventual forfeiture of such proceeds. Major gaps in legal provisions at the national level and insufficient co-operation at the international level made it possible for drug traffickers to hold their illegally acquired assets [ [ 11] ].

The lack of criminal laws prohibiting the possession of illegal assets makes it impossible in many jurisdictions to investigate such assets and to provide international judicial co-operation for this purpose. This situation has been further complicated by the existence of business and bank secrecy laws in many jurisdictions [ [ 11] ].

The meeting noted that the provisions of the existing international drug control treaties provide a framework for the development of both national legislation and bilateral agreements [ [ 11] ].

The expert group meeting made, inter alia, the following recommendations in regard to measures that might be taken to improve the situation at the international level:

"76. National legislation should declare it an offence knowingly to have the possession or disposition of assets being the profits or proceeds of drug trafficking whether such trafficking took place within the State or in some foreign jurisdiction.

"64. Consideration should be given to supplementing and augmenting such bilateral arrangements with a protocol or protocols to the Single Convention on Narcotic Drugs, 1961 and the Convention on Psychotropic Substances, or by the adoption of a separate convention which could serve as a multilateral framework on the basis of which more detailed and specific bilateral agreements could be negotiated and concluded, and which would also provide guidance to the legislatures of Member States when considering any amendments to national legislation to facilitate the tracing and forfeiture of the profits and proceeds of drug crimes.

"65. The Commission on Narcotic Drugs should consider proposing the elaboration of a convention or protocol which would be open to adherence by States Parties to the international drug control treaties relating to co-operation in order to cover the gathering of evidence to ensure the forfeiture of the profits and proceeds of drug crimes. The Commission might also consider the desirability of convening an expert group to draft an instrument along these lines" [ 11] .

A second expert group meeting on the forfeiture of the proceeds of drug crimes was held by the Division of Narcotic Drugs of the United Nations Secretariat at Vienna from 29 October to 2 November 1984 [ 12] . The meeting concluded that the most appropriate approach would be to negotiate an international instrument which would include a number of clauses addressing the problematic issues and would be open to adherence by Member States [ 12] .

The meeting also concluded that it ought to be a crime knowingly to acquire, possess, use or launder the proceeds of drug trafficking, irrespective of where such trafficking occurred. It was recommended that such crimes should be included in the penal provisions of the proposed international agreement, to allow for effective action to trace, freeze, seize and secure the forfeiture of the proceeds of drug trafficking and to prosecute those persons who knowingly possessed, used or acquired such proceeds [ 12] .

The provisions suggested by the meeting for inclusion in an international instrument to facilitate the tracing, freezing, seizing and forfeiture of the proceeds are listed in the annex to this article [ 12] .

Conclusions

The expert group meeting recommended the basic measures required for effective national and international action to deprive drug traffickers of the profits of their illicit activity [ 12] .

The measures, if adopted, would permit each Member State to take action to trace, freeze, seize and secure the forfeiture of the proceeds of drug crimes within its domestic territory, and to prosecute those who knowingly possess such proceeds, without regard to where the drug trafficking took place [ 12] .

Knowledge that the proceeds have been derived from drug trafficking is an essential element of the offence. This concept will protect legitimate third parties who come into contact, possession or control of the proceeds innocently and benefit. While it will protect the banks, their employees and other persons who possess or control funds without knowledge of the drug crime, it will permit law enforcement authorities to trace and investigate the possession of that property which is connected with or derived from drug crimes.

The proposed measures follow closely the pattern already established by the existing international drug control treaties. The current enforcement of provisions against drug offences at the international level is effective because every country treats the trafficking of illicit drugs as a crime. Co-ordinated enforcement action in several countries may have been undertaken [ 12] .

It may be desirable that the same approach be adopted in respect of the proceeds of drug trafficking. The adoption ofan international instrument to expand the existing drug control conventions [7, 8] in respect of this aspect of enforcement is an important step to ensure more effective international cooperation to trace, freeze, seize, and secure the forfeiture of the proceeds of drug trafficking.

The adoption of model provisions contained in the recommendations of the expert group meeting on the forfeiture of the proceeds of drug crimes would resolve one of the main problems facing countries in their attempts to dismantle the major drug trafficking syndicates that control the international illicit drug trade [ 12] .

Annex

UNITED NATIONS

DIVISION OF NARCOTIC DRUGS

SECOND EXPERT GROUP MEETING ON THE FORFEITURE

OF THE PROCEEDS OF DRUG CRIMES,

VIENNA, 29 OCTOBER TO 2 NOVEMBER 1984 [ 12]

Suggestions for inclusion in an international instrument to address the forfeiture of the proceeds of drug trafficking

The meeting proposed the following elements for inclusion in an international instrument to supplement the provisions already embodied in the Single Convention on Narcotic Drugs, 1961, as amended by the 1972 Protocol [ 7] and the Convention on Psychotropic Substances 1971 [ 8] .

""Elements which might be included in the preamble

"The Parties,

"(a) Recognizing that the Single Convention on Narcotic Drugs, 1961, as amended by the 1972 Protocol (and the Convention on Psychotropic

Substances) require the Parties to make arrangements for the coordination of preventive and repressive action against the illicit traffic in drugs;

"(b) Desiring to reinforce the measures already provided in these

Conventions in order to counter new patterns of operation adopted by drug traffickers;

"(c) Recognizing that the illicit trafficking in drugs is increasingly dominated by criminal organizations whose purpose is to secure financial profit and power;

"(d) Recognizing that such illicit trafficking in drugs generates considerable proceeds;

"(e) Recognizing that criminal organizations often utilize domestic and international financial business and commercial systems to conceal the source, disposition and movement of illegally acquired proceeds;

"(f) Recognizingthat present legislative and other control mechanisms are not always adequate to support the fullest desirable international cooperation and exchange of relevant financial information relating to drug trafficking operations;

"(g) Acknowledging that the continued use of these systems by drug traffickers may undermine the economy, security and social order of nations;

"(h) Desiringto deprive drug traffickers of the proceeds of their crimes and thereby to eliminate their main incentive for engaging in drug trafficking;

"(i) Considering that the development and enforcement of effective legislative and other control measures and sanctions against the acquisition, possession and movement of the proceeds of drug trafficking requires international co-operation in the application of coordinated action;

"(j) Desiringto provide an international instrument to deprive drug traffickers of proceeds of drug crimes."

"Elements which might be included in any clause setting out "Definitions, 4

"The following are suggested:

"(a) Drug Trafficking as defined by:

  1. The Single Convention on Narcotic Drugs, 1961, as amended by

the 1972 Protocol [ 7] ;

  1. The Convention on Psychotropic Substances [ 8] . .

"(b) Forfeiture of proceeds: means an order by a court of criminal or civil jurisdiction or other competent authority for deprivation of proceeds derived from drug trafficking.

"(c) Freezing of proceeds: means an order by a court of criminal or civil jurisdiction or an action or order by any other competent authority to a person or corporation or other legal entity who has possession of assets or proceeds to temporarily prohibit their transfer, conversion, disposition or movement and include an order enabling another person or domestic authority in trust, to hold, control, manage or dispose of such assets or proceeds (in particular perishable goods and/or immovable property).

"(d) Launder: means conceal or disguise the true nature, source, disposition, movement or ownership of proceeds connected with, arising from, related to, or resulting from any offences referred to in article 36 of the Single Convention on Narcotic Drugs, 1961 [ 7] , or article 22 of the Convention on Psychotropic Substances [ 8] , and shall be held to include the movement or conversion of assets or proceeds by any means, including electronic transmission.

"(e) Legitimate Third Party: includes, but may not be limited to, a person, corporation or other legal entity, who, acting bona fide and without knowledge or notice of incriminatory circumstances has lawfully acquired the right to own, use, control or possess property.

4Refers to a suggested subtitle for an international instrument.

"(f) Proceeds:shall include, but not be limited to, all forms of property, whether corporeal or incorporeal, movable or immovable, tangible or intangible, and includes real estate and personal property of every description and shall include deeds and instruments relating to or evidencing the title or right to property, or giving a right to recover or receive money, goods or real estate, or any order, acquittance or other security that entitles or evidences the title of any person:

  1. to a share or interest in a public stock or fund or in any of a body

corporate, company or society, or,

  1. to a deposit in a savings bank or other bank.

"Proceedsshall also include: a document of title to lands, goods, or property wherever situated; money or valuable security issued by any

Government; any chose-in-action; any credit evidencing an interest in property.

"Seizing of proceeds: means an order by a court of criminal or civil jurisdiction or an action or order by any other competent authority to a person or domestic authority authorizing such person or domestic authority to physically remove proceeds from the possession or control of another person or corporation or other legal entity, and placing such proceeds in the possession and control of another person or domestic authority so as to temporarily prohibit the transfer, conversion, disposition or movement of such proceeds.

"Tracing of proceeds: means determining the true nature, source, disposition, movement or ownership of proceeds connected with, arising from, related to, or resulting from any offences referred to in article 36 of the Single Convention on Narcotic Drugs, 1961 [ 7] , or article 22 of the Convention on Psychotropic Substances [ 8] , and shall beheld to include determining the movement or conversion of assets or proceeds by any means, including electronic transmission."

""Elements which might be included in any clause setting out 'Action to Facilitate the Forfeiture of the Proceeds of Drug Trafficking' 5

"The following elements are suggested for inclusion:

"Having due regard to their constitutional, legal and administrative systems, the Parties shall:

"(a)Make arrangements at the national level for co-ordination of preventive and repressive action against the acquisition, possession and transfer of proceeds derived from the illicit traffic in drugs; to this end they may usefully designate an appropriate agency responsible for coordination of action to trace, seize, freeze and forfeit and prosecute in respect of such proceeds.

5 Refers to a suggested subtitle for an international instrument.

"(b)Assist each other to prevent the acquisition, possession and transfer of proceeds of drug trafficking.

"(c)Introduce and harmonize to the extent possible, in order to facilitate effective co-ordinated action, national legislation and administrative measures relating to the tracing, seizing, freezing and forfeiture of the proceeds of drug trafficking.

"(d)Facilitate international co-operation between appropriate national agencies so as to ensure consultation in respect of investigations and of judicial or other action which is proposed to be taken in respect of assets, proceeds or persons situated within the territorial jurisdiction of other Parties.

"(e)Ensure that where legal papers are transmitted internationally for the purpose of judicial proceedings, the transmittal be effected in an expeditious manner to the bodies designated by the Parties; this requirement shall be without prejudice to the right of a Party to require that legal papers be sent to it through the diplomatic channel."

""Elementswhichmightbeincludedinanyclausedealingwiththe "Adoption of Additional Measures to Facilitate Closer Co-ordination of Action in Respect of the Forfeitureof the Proceeds of Drug Trafficking' 6

"Notwithstanding anything contained in this Convention, Parties are encouraged to enter into bilateral arrangements or treaties whenever this is deemed necessary to establish reciprocity and greater mutual administrative and judicial assistance for the purpose of identifying, tracing, seizing, freezing or forfeiture of the proceeds of drug trafficking."

""Elements which might be included in any clause setting out "Penal Provisions Relating to the Proceeds of Drug Trafficking' 6

"The following provisions might merit inclusion:

"Having due regard to their constitutional, legal and administrative systems, the Parties shall:

"(a)Treat as a punishable offence the acquisition, possession, use or laundering of proceeds with the knowledge that such proceeds, in whole or in part, were obtained or derived directly or indirectly from drug trafficking, irrespective of where such trafficking occurred.

" (b)Make arrangements at the national level to receive from another Party requests for investigative assistance to identify or trace the proceeds of drug trafficking.

6 Refers to a suggested subtitle for an international instrument.

" (c)Make arrangements to establish or authorize a court of criminal or civil jurisdiction or other competent authorities to receive and examine requests for investigative assistance; to appoint a commissioner,judge, or other competent authority to compel the attendance of witnesses, to hear and record such testimony as may be deemed relevant to identify and trace the proceeds of drug trafficking within their respective territories.

" (d)Make arrangements at the national level to authorize the issuance of a judicial or executive order for the production of bank, financial, corporate or business records which may be required to identify or trace the proceeds of drug trafficking within their respective territories.

" (e)Make arrangements to transmit to the requesting party all testimony and documents or copies thereof, obtained pursuant to sub paragraphs (c)and (d)of this article.

" (f)Make arrangements at the national level to seize, freeze or cause to be forfeited such proceeds of drug trafficking as may be found or situated within their respective territories in accordance with the provisions of this article.

" (g)Make arrangements to authorize a court of criminal or civil jurisdiction or other competent authority upon the application by or on behalf of another Party or by their own domestic authority to issue an order to seize or freeze proceeds, where the court or competent authority is satisfied that a punishable offence as described in sub-paragraph (a)of this article has been committed in any jurisdiction and where the proceeds are situated within the jurisdiction of the court or other competent authority. Also ensure that seizing or freezing orders :

  1. prohibit the transfer, conversion, disposition or movement of any

of the proceeds out of the jurisdiction,

  1. may be made prior to the institution of formal charges, but subject

to a reasonable time limitation,

  1. be set aside or varied where circumstances so require upon

subsequent motion brought by a party or any person having an interest in the proceeds or otherwise,

  1. permit the appointment of a manager or trustee who may be

authorized to sell, control or manage the proceeds (cases requiring such appointments may include property subject to rapid depreciation, perishable goods or ongoing business enterprises),

  1. be issued notwithstanding that the proceeds may be mixed or

intermingled with other proceeds which are not proceeds of drug trafficking,

  1. be subject to legitimate third party interests.

"(h)Make arrangements, subject to the interests of legitimate third parties, to authorize a court of criminal or civil jurisdiction to receive an application for an order to forfeit proceeds whether or not such proceeds are already the subject of a seizing or freezing order:

  1. when a person has been convicted in any jurisdiction of an offence

described in sub-paragraph (a)and the court finds the property in question to be the direct or indirect proceeds of that offence,

  1. notwithstanding the absence of any prosecution or conviction,

when the court is satisfied that the owner of the proceeds had knowledge that the proceeds were.derived directly or indirectly from drug trafficking in any jurisdiction.

"(i)Ensure that in any prosecution mentioned in sub-paragraph (a)or in any proceeding for a seizing or freezing order, mentioned in sub paragraph (g),or in an order of forfeiture mentioned in sub-paragraph

  1. (h),evidence establishing:

  2. that a person, association of persons, corporation or other legal

entity was connected to an action described as an offence in sub paragraph (a),and

  1. that at or about the same period of time, the person, association of

persons, corporation or other legal entity acquired substantial amounts of money, property and/or valuable securities, and

  1. that in relation to the value of the property the person, association

of persons, corporation or other legal entity had no apparent legitimate source of income to account for the acquisition, will be considered, in the absence of evidence to the contrary, prima facieproof that the money, property and/or valuable security was knowinglyderived, directly or indirectly, as proceeds of drug trafficking.

"(j) Ensure that in any prosecution for an offence described in sub paragraph (a),or for a seizing or freezing order described in sub paragraph (g),or for an order of forfeiture described in sub-paragraph

  1. (h),it is not fatal to the application that the proceeds acquired by a

person, association of persons, corporation or other legal entity were acquired from legitimate sources as well as from the proceeds of drug trafficking, or of an offence as described in sub-paragraph (a) of this article. The criminal charge or legal orders may be adjusted or amended to reflect such mixing, and forfeiture be related to that portion of the proceeds derived from the offence described in sub paragraph (a),or from drug trafficking in any jurisdiction.

"(k)Ensure that courts or other competent authorities, which have been empowered in respect of any legal proceeding proposed by this article, be authorized to receive in evidence:

  1. any books or records kept by any bank or financial institution,

  1. any books or records kept in the ordinary course of business,

  2. any books or records pertaining to or establishing corporate or

business ownership, including any copies thereof, and computerized records or records of an electronic nature.

"(l)Ensure that the national laws permit courts of criminal jurisdiction, to impose upon convicted persons appropriate fines in addition to jail terms, in cases where such persons have acquired substantial proceeds from drug trafficking and where the evidence suggests that they may still have possession of, or access to, some or all of those proceeds.

"(nm)(i) The offences enumerated in sub-paragraph (a)of this article shall be deemed to be included as an extraditable offence in any extradition treaty existing between Parties. Parties undertake to include such offences as extraditable offences in every extradition treaty to be concluded between them.

  1. If a Party which makes extradition conditional upon the existence

of a treaty receives a request for extradition from another Party with which it has no extradition treaty, it may consider this instrument as the legal basis for extradition in respect of the offences enumerated in sub-paragraph (a)of this article.

Extradition shall be subject to the other conditions provided by the law of the requested Party.

  1. Extradition shall be granted in conformity with the law of the

Party to which application is made, and, not with standing parts (i) and (ii) of this sub-paragraph, the Party shall have the right to refuse to grant the extradition in cases where the competent authorities consider that the offence is not sufficiently serious.

"(n)The provisions of this article shall be subject to the provisions of the criminal law of the Party concerned on questions of jurisdiction.

"(o)Nothing contained in this article shall affect the principle that the offences to which it refers shall be defined, prosecuted and punished in conformity with the domestic law of a Party and that procedures to which this article refers shall be defined and executed in conformity with the domestic law of a Party.

"(p)Nothing contained in this article shall be construed to abrogate the rights of legitimate third parties who, in good faith, have acquired the right to own, use, control or possess property."

References

001

l. R. C. Fahlman, RCMP National Drug lntelligence Estimate 1982 (Ottawa, Royal Canadian Mounted Police, Drug Enforcement Branch.1983

002

R. T. Stamler and R. C. Fahlman, "The profits of organized crime: the illicitdrug trade in Canada", Bulletin on Narcotics (United Nations publication), vol.35,No.2(1983),pp.61-70

003

R. T. Stamler, R. C. Fahlman and S. A. Keele, ``Illicit traffic and abuse of cocaine", Bulletin on Narcotics (United Nations publication), vol. 36, No. 2 (1984), pp. 45 - 55.

004

R. T. Stamler, R. C. Fahlman and S. A. Keele, ``Recent trends in illicit drug trafficking from the Canadian perspective", Bulletin on Narcotics (United Nations publication), vol. 35, No.4 (1983), pp. 23 - 32.

005

Committee on Governmental Affairs, United States Senate, PermanentSubcommittee on Investigations, Crime and Secrecy, The Use of Offshore Banks

006

R. J. Perry, Lecture at the Canadian police College, Anti-Drug profiteering Course, Ottawa, Canada, 17June 1982.

007

Single Convention on Narcotic Drugs, 1961. as Amended by the 1972 Protocol Amending the Single Convention on Narcotic Drugs, 1961 (United Nations publication, Sales No. E.77.XI.3).

008

Convention on Psychotropic Substances 1971(United Nations publication, Sales No. E.78.XI.3).

009

Official Records of the Economic and Social Council, 1983, Supplement No. 5 (E/1983/15), p. 56

010

Offcial Records of the Economic and Social Council, 1984. Supplement No. 3 (E/1984/13), pp. 44-45.

011

``Report of the expert group on the forfeiture of the proceeds of drug crimes" (DND/Wp 1983/23/Rev. l).

012

`"Report of the second expert group meeting on the forfeiture of the proceeds of drug crimes" (MNAR/1984/13).