Forfeiture of the proceeds of drug-related crimes: a Swedish point of view
Legal provisions in Sweden relating to tracing and forfeiting the proceeds of drug crimes
The role of the police
The role of the Customs
Control of money transfers
Assistance from banks and other financial institutions
Possibility of enforcing forfeiture decisions made by a foreign court
Author: S. RIBERDAHL , S. ÄNGBY
Pages: 51 to 59
Creation Date: 1984/01/01
S. ÄNGBY * Supreme Court, Stockholm, Sweden
The Narcotics Drugs Act in Sweden provides for extensive legal means to trace, sequestrate and forfeit the proceeds of drug crimes. The sequestration and forfeiture orders are made by courts of law. As it is often difficult to prove connections between drug trafficking and property derived from it, certain possibilities of amending the national law are discussed with a view to overcoming these difficulties.
Another problem arises when a court order to forfeit the proceeds of a given trafficking operation cannot be implemented, as those individuals to whom such order applies have neither domicile nor property in Sweden, though they may have property in their own country. Similarly, problemsare also encountered when the proceeds of drug crimes are transferred abroad. Current co-operation between Governments does not provide effective measures to deal with these problems, and, for this reason,the authors are of the opinion that the Commission on Narcotic Drugs should consider the matter with a view to adopting an international agreement on mutual assistance between Governments in tracing, freezing and forfeiting the profits of drug crimes.
The profits derived from drug crimes may be used for various purposes, such as purchasing drugs for personal consumption, further expansion of drug trafficking and investment in legitimate businesses. Economic gain is the motivating force behind drug trafficking, and for this reason it is extremely important that traffickers should be deprived of their profits. It is assumed that if the trafficker is forced into a position in which his chances of making a profit are substantially reduced or eliminated, this may discourage him from further involvement in drug trafficking.
*The views expressed in this article are those of the authors and do not necessarily reflect the views of the Swedish Government.
Not only drugs but also the proceeds of their illegal sale are often smuggled over the borders. The major drug traffickers who are financing and directing illegal operations often have assets in countries other than that in which the crimes are committed. Effective co-operation between drug law enforcement authorities of different countries is important if there is to be any chance of recovering the profits made from such crimes.
Two questions need to be answered in recovering the profits arising from drug trafficking: how to trace the property that constitutes the proceeds of drug trafficking; and when this is accomplished, how to secure its forfeiture, particularly when the illegally acquired assets are transferred abroad. These questions have been studied from the aspect of international co-operation by the Council of Europe Co-operation Group to Combat Drug Abuse and lllicit Trafficking in Drugs (the Pompidou Group) and by two expert group meetings held by the Division of Narcotic Drugs at Vienna in 1983 and 1984 on the forfeiture of the proceeds of drug crimes [ [ l] , [ 2] ]. lt would be possible for interested Governments to arrive at an international agreement on mutual assistance in tracing the proceeds of crimes arising from drug trafficking and enforcing forfeiture orders made by courts of law in various countries to deprive criminals from such proceeds. The following paragraphs briefly describe the legal provisions on forfeiture and their implementation in Sweden.
Section 6, of paragraph l of the Narcotics Drugs Act, Sweden, provides for the forfeiture of profits obtained from narcotic drug offences. To make an order for the forfeiture of such profits, the law requires the existence of proof that a given property has been derived from a criminal offence. ln addition to the principal offender and his associates in committing a criminal offence, the forfeiture order may be imposed upon an individual who has made a profit from that offence or, after the offence, has acquired property constituting proceeds of that criminal activity. The property may be acquired by such means as marriage, inheritances, wills and gifts.
The law provides for any amount of a drug found in the offender,s possession to be forfeited; if the drug cannot be forfeited its equivalent value is determined, and this, together with the proceeds derived from the offence, may be forfeited. If, for example, an individual has been convicted of several conveyances, but only the drugs found in the last conveyance were confiscated, the value of the drugs conveyed earlier and the profit derived there of may be forfeited. lt had not been clear in the past whether the value of the drugs so forfeited should be determined on the basis of their price on the legal or on the illegal market. It had also been unclear whether all remuneration from the sale of a drug should be considered as proceeds of crime or whether a deduction should be made for costs that might be incurred in the sale. The Supreme Court in Sweden has now established that the value of a drug is to be calculated as an equivalent of the remuneration from sale on the illegal market without any deduction for sale costs. The entire remuneration from the sale of a drug can be forfeited, and there is no reason, for this purpose, to make a distinction between the value of the sold drug and the proceeds from the sale. If an object has been used as payment for drugs, the object may be forfeited as well.
A recent amendment to the Narcotic Drugs Act imposes a penalty for the acquisition of drugs for the purpose of sale, and the sum of money intended for such acquisition may be forfeited. This primarily applies to money received by a person for delivery of drugs to a seller. The money is, in such cases, considered a means of committing an offence. 1
The amendment makes a special provision for the keeping or conveyance of the remuneration for drugs. Such an action is considered a criminal offence if it is designed to promote illicit trade in narcotic drugs. In this context trade means conveyance on a professional basis, as well as largescale acquisitions or conveyances. Remuneration, including money or other property proceeded with in this way, may also be declared forfeit. The purpose of the amendment is to improve the legal means of confiscating illegally acquired property and profits at all levels of organized drug trafficking including property of anonymous organizers and financiers of such trafficking who may have never personally participated in conveyances or acquisitions.
Proceeds arising from drug crimes need not have immediate relation to remuneration received for the sale of drugs. All payment made to a given person to commit a drug offence, whether actually committed or not, can be forfeited, such as payment received by a carrier for his services. Forfeiture is not compulsory. For example, if the offender does not possess assets, forfeiture may be unnecessary.
The basic principles governing forfeiture are set out in chapter 36 of the Swedish Penal Code. These principles also constitute guidelines for forfeiture provisions ofa special penal law, which treats most cases.Only one third of the forfeiture cases are treated under the Penal Code. Are cent amendment to the Penal Code provides for the proceeds of crime committed in the course of business activities to be liable to forfeiture.
The forfeiture order is always made by a court of law. The task of the police is to confiscate property liable to forfeiture. Confiscations are confirmed by a public prosecutor.
1 Fordetails, see section 6 (paragraphs 1 and 2) of the Narcotics Drugs Act, Sweden.
ln conformity with chapter 26 of the Code of Procedure, property of a criminal suspect can be sequestrated if there is reason to believe that the suspect is concealing assets. A sequestration order is also many by a court of law.The task of the police is to take sequestrated property into custody. This is also confirmed by the prosecutor.
Swedish law provides for extensive legal means to trace and confiscate the proceeds of crime. Even though the legal means of enforcing forfeiture are satisfactory, there are still some problems that need to be dealt with. Proving that property has been acquired by drug trafficking is usually the task of the prosecution. ln practice. it is difficult to prove a connection between property and drug trafficking. One way to overcome this problem might be to change the law to the effect that in a case where it is suspected that the property has been derived from drug trafficking, a suspect must show that he has acquired it legally; if he fails to prove this, then the property will be forfeited.
Strong objections have been raised to such a proposal.The international conventions for the protection of human rights maintain that a person accused of a crime shall be considered innocent until his guilt has been established bylaw. There can be no question of making a forfeiture order on the sole grounds of suspicion that a crime has been committed.
Since the profits derived from drug crimes are great and substantially contribute to the increase in drug abuse and trafficking, and, as a result, cause human suffering and social deprivation, an attempt should be made to explore the possibilities of confiscating such profits without jeopardizing legal security. ln Sweden, it is already possible in cases of forfeiture of profits gained from criminal business activities to estimate the value of such profits on the basis of reasonable probability, when full evidence of the value cannot be produced.
The following case illustrates where an extension of forfeiture possibilities should be feasible. An individual had been suspected of a serious drug offence and a large consignment of drugs was found in his home. lt was proved that he had acquired and stored the drugs and that he intended to convey them. He was convicted and the drugs were forfeited. It could not be proved that he was guilty of earlier conveyances, despite strong suspicion that he was involved in them. The investigation found that he possessed considerable property, but it could not be proved that his property was connected with any other drug offences. ln cases in which a person is convicted of serious drug offences and his property is suspected of being derived from drug crimes, the convicted individual should, in the view of the authors, be obliged to provide reasonable evidence that his property has been acquired by some means other than drug crime; if he is able to do this, then his property should not be forfeited; but if he fails to provide evidence, it can be assumed that his property has been derived from drug crime and it should then be subject to forfeiture.
Property acquired as a result of profits from drug trafficking is often transferred to other members of the family. Such property may, for example, exist in the form of cars or houses. In cases where the property can be proved to be derived from drug crimes, the individuals possessing it can in some situations be convicted of receiving such property and the forfeiture order can be made. In some cases this is not possible as the individuals possessing the property may have been the victims of some form of deception. In the view of the authors, in cases in which the property has been derived from drug trafficking, it should be subject to forfeiture.
It is always difficult to prove that an individual who is involved in drug trafficking is guilty. This particularly applies to anonymous organizers and financiers, who make the biggest profits from drug trafficking. These individuals may never deal with drugs themselves and may not be directly involved in delivering payments. They may be engaged in legitimate businesses and when questioned as to the source of their property, they cite their businesses. If their information does not tally with that given to the tax authorities, they apologize for their lack of tax morals, well knowing that an investigation into tax offences takes considerable time, and that the penalty that may be imposed on them in the course of time for such offences is much lighter than any they would have received for drug crimes. If there is good reason to believe that an individual is involved in drug crime but because of insufficient evidence cannot be convicted of a drug offence, the tax authorities should be notified with a view to recovering the illegally acquired assets.
In Sweden, special units entirely devoted to the task of dealing with drug crimes have been set up. A central unit that runs an intelligence operation to trace proceeds from criminal activity has been in existence for the last two years. Information about suspected individuals and branches of trade is collected and processed. These investigations process information about the economic status of the suspected individuals and businesses. The intelligence operation includes information obtained from tax authorities and banks, and from some foreign drug-law-enforcement authorities.The object of such investigations is to obtain a complete picture of the economic circumstances of the suspects before proceeding to house searches, arrests, actual hearings and other coercive measures. Such investigations, though only recently introduced, have already shown positive results. This work, however, needs improvement, particularly with regard to finding out what happens to the proceeds of drug crimes.
The police officers engaged in intelligence procedures should be given training to improve their knowledge of economic matters. They should know how to obtain information about the economic status of individuals and business companies and how to use the information obtained. The police should in certain cases be assisted by economic experts to enable them to assess complicated matters. Co-operation with other authorities and institutions concerned, such as tax authorities, banks and insurance companies, should be intensified and improved. The provisions on secrecy may be an obstacle to such co-operation. Demands for personal integrity must be fully respected, but in cases of serious drug crimes, such respect should not obstruct the exchange of information between the authorities concerned. lt is essential that the police are able to investigate both drug crimes and their economic aspects.
In order to trace and ensure forfeiture of the profits derived from drug crimes, there must be effective co-operation between the police authorities in different countries. There is already direct co-operation between certain countries in the exchange of information divulged in the course of investigations. Some countries have narcotics police officers stationed abroad, which facilitates the tracing of illegally acquired property.
There are sometimes certain bureaucratic obstacles to quick and concerted action by the police authorities in the countries concerned, but it is in the interest of all countries that every effort should be made to make effective international co-operation against drug crimes possible.
Customs have an important role to play in tracing the proceeds of drug trafficking and making their forfeiture possible. The profits from the sale of drugs are usually transferred abroad in the form of banknotes. It is essential that the physical control of travellers and means of transport moving across the borders should be intensified, and that the Customs should concentrate not only on the drugs themselves but also on sums of money that are brought into or taken out of the country. For the purpose of preventing drug trafficking, the Customs should be granted both the legal means and the resources to make effective checks of those entering and leaving the country. In October 1984, the Government proposed that the Swedish Parliament pass legislation to this effect.
International customs co-operation is based on a number of conventions, and such co-operation is well developed, thus providing a practical basis for concerted international action by customs administrations to help trace the proceeds of drug crimes.
According to Swedish criminal investigations, sophisticated methods for making payments for drugs outside the country seem to be rare, but such methods may be used. Payment can be made from a bank account in Sweden to another abroad. The prospects for discovery of such transactions are good, provided the police work together with the Central Bank of Sweden.
Payment through a company account is difficult to trace, since it appears as if a current payment has been made for goods imported by the company in the course of its legitimate business. The Central Bank of Sweden can help to trace such transactions. If the payment exceeds a certain sum, it is recorded, and the Bank can supply the necessary details about the payee. After obtaining information from the Customs, the payment can be checked to see if it corresponds to the sum in the bill of clearance indicating the value of the goods actually imported.
Information from banks, exchange offices and other financial institutions is valuable in tracing the proceeds of drug crimes. Secrecy provisions in Sweden do not prevent banks and financial institutions from divulging such information in cases where there is suspicion of crime. In some countries, however, divulging such information, at least to an agency from a foreign country, is out of the question for various reasons. There may be inadequate records, which make it impossible to produce information, or, more commonly, such records exist but secrecy regulations prevent their being disclosed. The authors are recommending to the international community that efforts should be made to remove such obstacles for the purpose of tracing drug crimes.
Under the provisions of the European Convention on Mutual Assistance in Criminal Matters, an authority investigating crimes in a State party to this Convention may obtain relevant information from a financial institution in another state-party if such information exists. As only European countries can become parties to this Convention, it cannot be used for joint operations between all countries in the world in which drug crimes occur. Applications to invoke this Convention are made by a court and go through diplomatic channels, as far as Sweden is concerned.This means that it may take a considerable time for an authority investigating a crime to receive the information required. To provide information on this matter, certain state-parties to this Convention require that the investigation should have advanced to a stage where there is a definite suspect for a particular crime. It may, therefore, be difficult to obtain the necessary information from a foreign bank at an early stage of a given investigation.
House searches in a country other than that in which a given drug crime is being investigated may prove valuable in tracing and forfeiting proceeds from such crimes. The problems faced in implementing this measure are similar to those described above in connection with obtaining information from financial institutions abroad. Furthermore, there is no possibility of taking any informal action, for it is a coercive measure requested from a Government of one State to another. This type of action obviously needs to be speeded up. For example, it may be necessary to make a house search of a drug trafficker arrested in Sweden whose domicile is abroad. Such a search may disclose the property derived from drug crimes or help indicate where such property can be found. A search must be made before the associates of a suspect are informed about his or her arrest; otherwise the illegally acquired property may disapperar. Mutual assistance may also be useful in such matters as hearing witnesses and experts.
As a result of the shortcomings in co-operation between the Governments concerned, criminals engaged in international drug trafficking can seldom be punished and there is little opportunity for the authorities to trace and confiscate the proceeds of their crimes. This is an extremely unsatisfactory aspect of the struggle against drug crimes. In order to suppress international drug trafficking effectively, it is necessary to reach an agreement between Governments on mutual assistance in combating drug crimes. The agreement should provide for assistance that can be given most effectively and without delay. international drug traffickers respect no frontiers, and it is essential that Governments of countries concerned overcome certain obstacles to the concerted action against such trafficking and its related crimes.
Article 35 of the Single Convention on Narcotic Drugs, 1961 [ 3] , and article 21 of the Convention on Psychotropic Substances, 1971 [ 4] set out provisions serving as general guidelines for mutual assistance in matters relating to drug trafficking. These provisions should be extended to include relevant information from banks, exchange offices and other financial institutions; house searches; and the examination of witnesses and experts. The amendments to the international conventions should be formulated so as to avoid bureaucratic obstacles in order to facilitate action as much as possible. For example, such action would be quicker if the agency in charge of the actual investigation were authorized to make applications to a counterpart agency in a requesting country, without proceeding through diplomatic channels. As authorities in a requesting country may not know who is the appropriate authority to be approached abroad in this matter, there should be a central authority to be responsible for such applications. The Chief State Prosecutor would appear to be in Sweden most suitable for this function.
If a court decides to confiscate the equivalent value of drugs used in a given trafficking operation, as well as the proceeds of such trafficking, the total material value to be forfeited in such a case may be considerable, especially if that illegal operation has been carried out over a long period. Such decisions are sometimes unlikely to accomplish much, as those to whom they apply often have no domicile or property in the country where the conviction is made. They may, however, have property in their own country. It often happens that those who have acquired the profits by means of drug crimes in their own country transfer them to another country. Only a few States have signed the European Convention on the International Validity of Criminal Judgements (The Hague, 28 May 1970), which interalia,Contains provisions on forfeiture in articles 45 -47. Other possibilities of enforcing a decision on forfeiture made in a foreign country seem to be at present limited.
In order to achieve an effective control of drug crimes both at the. national and international levels, it is essential that all countries concerned introduce adequate legislation on forfeiture of property acquired through drug trafficking. In the view of the authors, the Commission on Narcotic Drugs should consider the possibilities of reaching an international agreement on the tracing and forfeiture of the proceeds derived from drug crimes. These should, for example, contain prescriptions concerning acknowledgment and enforcement of foreign decisions on the forfeiture of property acquired through drug offences. Such provisions can be incorporated into the Single Convention on Narcotic Drugs, 1961, as an amendment to article 37 [ 3] , and into the Convention on Psychotropic Substances, 1971, as a new article 22 bis [ 4] . If such an international agreement is reached, it would probably be most appropriate for it to include a provision on the basis of which the country where the drug crime has taken place may benefit most from the forfeited property.
l. "Report of the Expert Group on the Forfeiture of the Proceeds of Drug Crime''002
2. Second expert group meeting on the forfeiture of the proceeds of drug crime (MNAR/1984/13).003
3. 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), pp. 38 -39.004
4. Convention on Psychotropic Substances,1971(United Nations publication, Sales No. E.78.XI.3). pp. 24 -25.