Commonwealth initiatives in the tracing, seizing, freezing and forfeiture of drug proceeds
Commonwealth scheme and model Iegislation
Commonwealth Commercial. Crime Unit
Author: D.A. CHAIKIN
Pages: 111 to 114
Creation Date: 1984/01/01
Commonwealth Law Ministers have recognized that improved domestic measures for tracing, seizing, freezing and forfeiting illegally acquired assets, including the proceeds of drug trafficking, should be complemented by international initiatives. To this end, the Commonwealth Secretariat is formulating a Commonwealth scheme for mutual judicial assistance in criminal matters to strengthen the ability of national authorities to investigate, prosecute and convict international drug traffickers. Work is also being done to develop model legislation governing the attachment of assets believed to have been illegally acquired. In addition. the Commonwealth Commercial Crime Unit has for the past three years been developing intelligence on illicit money operations relating to drug traffickers and other organized criminals. The Commonwealth Secretariat considers that the fight against organized drug crimes requires a wide-ranged response, including improved laws, greater training and education and increased international cooperation.
Since 1977, Commonwealth Law Ministers have considered the efficacy of laws for seizing, freezing and forfeiting assets engaged in illicit drug trafficking and also those relating to serious white collar crimes and the organized Criminal enterprises. More recent Commonwealth Law Ministers meetings have recognized that improved domestic measures for tackling the problem of organized drug-related Crimes should be complemented by international initiatives
The commission of drug trafficking offences often involves two or more jurisdictions. Similarly, the proceeds of drug trafficking are, except for casual or small-scale drug trafficking, inevitably transferred out of jurisdiction and laundered so as to become untraceable. It thus follows that if law enforcement authorities are to combat illicit trafficking in drugs and laundering of moneys derived from such trafficking, they will require assistance from a foreign jurisdiction.
International judicial assistance is usually granted to foreign authorities on the basis of comity, declarations of reciprocity, bilateral treaties or multilateral conventions. Co-operation is based on mutual trust and confidence. Diplomatic and political considerations are crucial. In regard to the forfeiture of property associated with criminal activity there would seem to be at least three common law principles which need to be highlighted. They are as follows :
(a) The lack of a domestic power to order the preservation of property pending the outcome of a foreign proceeding;
(b) The want of jurisdiction to transfer title to movable property situated abroad;
(c) The inability of courts of one country to enforce the criminal judgements including forfeiture orders of another country.
There is a common legal tradition within the Commonwealth of providing mutual assistance in the administration of justice. The Legal Division of the Commonwealth Secretariat is at present formulating a Commonwealth scheme for mutual judicial assistance in criminal matters which is, inter alia, intended to strengthen the ability of national authorities to investigate, prosecute and convict international drug traffickers. The Commonwealth scheme may include a provision for the recognition and enforcement of criminal court orders. Such a provision would mean that a forfeiture order in one country would be enforced in another Commonwealth country and that there would be no safe haven in the Commonwealth for drug-generated money.
At the Law Meeting in February 1983, Commonwealth Law Ministers recognized that one of the most effective methods of attacking serious crime was through the seizure of profits derived from crimes and that this was particularly appropriate in such crimes as drug trafficking and fraud. They requested the Legal Division to study the matter further and to prepare model legislation. The Legal Division is at present giving attention to the development of model legislation for the attachment of assets derived from a broader spectrum of offences than merely those relating to narcotics.
The Commonwealth Law Ministers have given the Commonwealth Commercial Crime Unit (CCCU) an extensive mandate, inter alia, to combat organized Crime through the strategic and tacticaluse of intelligence. CCCU has for the past three years been concerned with developing intelligence on illicit money operations of drug traffickers and other organized criminals. Of the 5()() Cases in which CCCU has provided direct investigatory and intelligence assistance, a substantial number have involved the laundering of moneys derived from drug trafficking. The seriousness of some of these cases may be illustrated by the following cases:
(a) Letters of credit were found in the possession of a courier arrested in a Commonwealth country. Inquiries pursued by CCCU established that these letters of credit were falsified and had been issued by a bank in the Pacific, which was controlled by an organized Crime figure in North America. The documents were part of a scheme to launder substantial amounts of money representing the profits from illicit narcotics trafficking. Appropriate action was taken against the bank. Confirmation that this individual was still involved in this ``business" convinced the authorities to reactivate their inquiries that led to prosecution and Conviction.
(b) A jurisdiction in a developed Commonwealth country seeking a substantial investment in a specific project, entered into agreements with several companies in North America and Europe. Although those companies had been given a clean bill of health by various official and unofficial bodies, CCCU inquiries revealed that one of the main companies involved in the transaction was operated by a known mafia drug launderer and that his associates had been involved in major fraudulent schemes. The companies in North America that entered into those agreements also had Connections with various organized Crime activities. The Government was duly warned
. (c) CCCU received a request from the Government of a country that was not a member of the Commonwealth for assistance in tracing the whereabouts of the daughter of a wealthy politician who had allegedly been kidnapped and brainwashed by a socio-religious cult. After five days CCCU confirmed the location of the daughter and received intelligence that the cult had unaccountable income. After placing an informant in the cult, CCCU was able to verify that the cult was controlled by an organized criminal syndicate and was being used to launder money derived from illegal drug related activities. Information was passed to the appropriate authorities and action has been taken against the cult in a number of countries.
These cases indicate the close relationship between commercial crime, drug trafficking and money laundering. The integration of international criminal activities requires new responses and in particular the development of an effective intelligence capability orientated to loss prevention.
Apart from its more operational role, in regard to investigations and intelligence. CCCU has a mandate to assist in training law enforcement personnel, and to this end has organized two international symposia and a number of regional workshops which have been directed to the financial aspects of crime including the role of offshore bank centres and tax havens.
CCCU has also advised Commonwealth jurisdictions on the development and structure of their offices to deal with economic crime. It has encouraged developing countries to use the intelligence generated by their exchange control laws to detect and interdict the movements of illegally obtained money. This has enhanced the ability of such countries to trace money.
CCCU has also commissioned a number of studies into various subjects directly relevant to the question of forfeiture of illicit assets. In addition to a report entitled "The seizure and forfeiture of property associated with serious criminal activity , which was considered at the meeting of the Commonwealth Law Ministers in 1983, a number of studies, including one on police powers and the seizure of drug moneys and another on the use of offshore banks and crime, are currently being prepared. CCCU is particularly concerned about facilitating research into drug laundering techniques which do not leave an audit trail. The creation of underground banking systems in certain ethnic communities and the advent of a true cashless, if not paperless, society in the more developed States, will have immeasurable effects on the tracing, investigation and prosecution of organized drug-related Crime.
The Commonwealth Secretariat considers that combating organized drug crimes requires a wide-ranged response, including improved laws. greater training and education and increased international co-operation. The Commonwealth initiatives are, however, only a small contribution to the international efforts directed at removing profits from drug traffickers. The Commonwealth Secretariat welcomes the developments that are taking place in other international agencies, such as the International Criminal Police Organization (Interpol) and the Division of Narcotic Drugs, and is ready to work closely with such agencies in order to remove the profits from drug crimes.