Using asset forfeiture to fight crime

1. Using asset forfeiture to fight crime Willie Hofmeyr Head: Asset Forfeiture Unit, RSA +27 12 845 6696 wh@npa.gov.za

2. 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 disruptionof 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

3. 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

4. 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

5. 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 orderto ensure that it is not dissipated

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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”