Using Asset Forfeiture to fight crime

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Using asset forfeiture to fight crime
Willie Hofmeyr Head Asset Forfeiture Unit,
RSA 27 12 845 6696 wh_at_npa.gov.za
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Financial disruption

• Focusing on the money has become more and more
  important in international law enforcement
  recently
• Some experts go as far as saying that it is so
  difficult to put organised criminals behind bars
  that the focus of law enforcement should be on
  the financial disruption of syndicates
• The reason is that the most vulnerable part of
  organised crime is often the huge amount of cash
  generated or required for operations
• Crime bosses want to stay away from the crime,
  but not the money

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Organised crime and economic crime

• Organised crime operates increasingly like a
  business, seeking the best investment
  opportunities ie high returns and low risk
• Increased involvement in economically motivated
  crime where the returns are high and risks are
  low
• White collar crime
• abelone for drugs
• Financial disruption (such as money laundering
  control and asset forfeiture) is aimed at
  decreasing the returns and increasing the risk

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Legal and institutional framework

• POCA - Prevention of Organised Crime Act (1998)
  provides for two types of forfeiture
• Criminal forfeiture depends on conviction, at
  end of trial
• Civil forfeiture no conviction required
• Complex civil litigation and lack of
  specialisation meant that forfeiture was little
  used before 1998

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Criminal forfeiture

• Chapter 5 of POCA based on UK law
• Requires a conviction, but process is civil
• Similar to normal civil judgement
• Obtain a confiscation order for the value of the
  benefit of the crime - eg R2m
• If not paid voluntarily, execute against property
  through a realisation order (as in normal civil
  litigation)
• Can execute against any property not only
  tainted property (as in normal civil litigation)
• Can freeze property early - even before charge
  through a restraint order to ensure that it is
  not dissipated

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Some advantages

• Value is gross benefit, ie anything that passed
  through hands - no deduction for expenses
• Can also recover gifts made within last 7 yrs
• Forced disclosure of all assets on affidavit
  Immunity against use in criminal proceedings
• Protection for victims of crime
• Law entitles victims to ask for postponement to
  prove own civil claims in court
• Mostly ask court to pay victims directly

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5) Presumptions re benefit

• Presumptions that all property owned is proceeds
  of crime
• to deal with lifestyle criminals eg drug dealers
• Use when accused benefited from crime
• Benefit R 0.5m
• plus all assets R 2.0m
• plus all income for last 7 years R 1.5m
• plus all expenditure in last 7 yrs R 1.0m
• TOTAL ORDER R 5.0m
• Ie order for R5m even though assets are only R2m
• Defendant must prove what is legitimate
• Even if prove R2.5m of legitimate assets, state
  can still forfeit all R2m assets because of
  unexplained income

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Civil forfeiture

• Chapter 6 of POCA based on US model
• Forfeit through a civil action evidence on a
  balance of probabilities
• Preservation order to freeze property
• Unlike criminal forfeiture
• A criminal conviction is not necessary
• It has to be tainted property proceeds or
  instrumentalities
• Action in rem - directly against property, not
  against the person

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Proceeds

• Direct evidence against specific property eg the
  actual stolen car or money
• Circumstantial evidence against specific property
  
• Eg cash seized from known drug dealers or
  couriers
• Circumstantial evidence that all assets of a
  crime boss are proceeds through a full financial
  investigation
• Property remains proceeds even it is in the hands
  of a new owner eg a minor child or company
• But it must be proved that it is still
  essentially the same property and this can be
  difficult to prove when there are many and
  complex transactions

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Instrumentalities

• Traditionally criminal law allows for
  confiscation of instruments - gun used to commit
  murder etc
• In POCA includes assets used directly for crime
  or used to facilitate or hide the crime
• May be problem where the value of the property is
  grossly disproportional to seriousness of the
  underlying crime
• Much litigation on instrumentalities at present
  after Mohunram judgement in CC
• But focus on only about 3 of cases done by AFU
• Though they are important as they have a broader
  crime prevention role

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Innocent owner defence

• Potentially contentious issue
• Many US laws no innocent owner defence
• In SA, try to balance individual rights and
  sophisticated schemes of criminals
• Onus on state to prove property is tainted
• Then onus on owner to prove innocence
• Did not suspect proceeds or instrumentality
• Acquired legally and for value

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Some general benefits of asset forfeiture

• It has an important deterrent effect by hitting
  the crime bosses where it hurts most - in the
  pocket
• Many criminals see gaol as an occupational
  hazard, but expect their families to be
  comfortable while they are in prison, and that
  they will be well-off when they come out
• Making their families poor, removing their
  favourite playthings and pensions causes real
  pain and can help to break the cycle
• It is also important to remove the asset base of
  crime even when convict syndicate heads, must
  ensure that businesses, properties, cars, bank
  accounts and other assets of the organisation do
  not remain behind for the use by a new leadership

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Conclusion

• Asset forfeiture is a vital part of the war
  against corruption - it hits the corrupt where it
  hurts most - in the pocket
• But most importantly, forfeiture is a vital
  weapon to take the profit out of corruption
• This is especially important in economically
  motivated crime where deterrence is low at the
  moment
• To deal effectively with crime, it must become
  true that crime does not pay