Asset Recovery Oct 2011  Author Gavin Shiu Kornerstone
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Asset Recovery Oct 2011 Author Gavin Shiu Kornerstone

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Asset Recovery Oct 2011  Author Gavin Shiu Kornerstone Asset Recovery Oct 2011 Author Gavin Shiu Kornerstone Presentation Transcript

  • Gavin Shiu Senior Assistant Director of Public Prosecutions
    • “ The heart of an effective anti money laundering regime is the ability to :
    • seize
    • restrain
    • confiscate
    • proceeds and instrumentalities of money laundering and other predicate offences
    • in order to remove them from the financial system ” .
    • APG-2005
    • Drug Trafficking (Recovery of Proceeds) Ordinance Cap., 405 (DTROP)
    • Organised and Serious Crimes Ordinance Cap.,455 (OSCO)
    • International Conventions
    • FATF and APG
    • Main Ordinances
    • Others
    • Drug Trafficking (Recovery of Proceeds) Ordinance (Cap. 405) – since 1989 [DTROP]
    • Organized and Serious Crimes Ordinance (Cap. 455) – since 1994 [OSCO]
    • United Nations (Anti-Terrorism Measures) Ordinance (Cap. 575) – since 2002, some provisions not in force
    • High Court Rules, O. 115 - 117
    • Drug Trafficking (Recovery of Proceeds) (Designated Countries and Territories) Order
    • (Cap. 405A)
    • Mutual Legal Assistance in Criminal Matters Ordinance (Cap. 525)
    • Prevention of Bribery Ordinance (Cap. 201)
    12/07/11 GTS/ DOJ
    • Restraint
    • When
    • What
    • Variation
    • Confiscation
    • How
    • Enforcement
    • Tracing of defrauded or stolen or laundered money/assets – Why?
    • Money / assets is it the proceeds of a crime or the benefit (proceeds) gained by a defendant?
  •  
    • Only money or property that directly or indirectly are proceeds of crime?
    • NO
    • See s 2(6) OSCO
    • Proceeds is not the ordinary man’s understanding of the term
    • It has a special meaning under OSCO
    • Property includes payments or other awards received at any time in connection with an offence (s2(6)(a)(i))
    • a payment before the commission of the offence
    • Award has a broad meaning
    • Pecuniary advantage connected to an offence (s2(6(a)(iii))
    • Wide and flexible meaning
    • May include being able to use a position to make a gain, even if gain itself is not illegal if there is the connection to the offence
    • Examples:
    • A fraud facilitates a transaction and professional fees are generated relating to the transaction not the fraud
    • Money is utilised to facilitate a fraud but comes from non crime sources
    • When property is identified as proceeds of crime what is to be done?
    • Police may restrain and confiscate but what about you?
    • MUST be aware of Section 25A of OSCO
    • What are your obligations?
    • Compulsory Reporting
    • Scope : Everyone
    • Structure of Offence
    • Punishment
    • Legal Professional Privilege & Confidentiality
    12/07/11 GTS/ DOJ
    • Section 25A(1) OSCO- the reporting offence – summary offence
    • Failing to report to an authorised officer
    • Knowledge or suspicion that any property is or is connected to the proceeds of an indictable offence
    • Within a reasonable time
    12/07/11 GTS/ DOJ
    • in whole or in part directly or indirectly represents any person’s proceeds of an indictable offence
    • was used in connection with; or
    • is intended to be used in connection with,
    • an indictable offence.
    12/07/11 GTS/ DOJ
    • Only Subjective
    • actual knowledge or suspicion concerning the nature of the property
    • no objective qualifier, such as “reasonable” for the alternative mental state of “suspicion”
    • Suspicion: “ there is a possibility, which is more than fanciful, that the relevant facts exist “ - and the suspicion is in some cases settled K Ltd v Natwest Bank (2006) EWCA Civ 1039, [2007] 1 WLR 311
    12/07/11 DOJ
    • Suspecting property has the quality defined in s.25A(1) falls a long way short of having demonstrable proof that the property is of that quality
    • What matters is what the defendant thought, not what the reasonable person would have thought in the particular circums tances
    12/07/11 DOJ
    • Failing to report in a reasonable time
    • What is reasonable?
    • Depends on circumstances
    • May allow for consultations or obtaining legal advice – Regulations
    • Practice Direction P
    12/07/11 DOJ
  • What should be the Reporting Approach? Risk Based Approach
    • S creen for suspicious activity indicator(s)
    • A sk appropriate questions
    • F ind out records for review
    • E valuate
    • Authorised officer- police and customs
    • Joint Financial Intelligence Unit (JFIU)
    • STREAMS
    • Regulations
    12/07/11 GTS/ DOJ
  • 1,583 in a month 395 in week 56 in a day Several during this presentation.
  •  
  •  
    • Purpose :
      • To facilitate possible confiscation of realisable property of crime after conviction of the Defendant. (19(2)) Legislative steer.
    • Nature :
      • Akin to Mareva Injunction.
    • Jurisdiction :
      • Court of First Instance (15(1))
    • Proceedings have been instituted against D for a specified offence (arrest warrant or charged)
    • Proceedings have not been concluded
    • Reasonable cause to believe D has benefited from the specified offence
    • Evidence of dissipation of assets
    • Prohibit dealing with any realisable property
    • Authorised officer may seize any realisable property
    • Court may appoint a Receiver to manage the restrained assets
    • Affected party may vary/discharge the order
    • Any property held by D
    • Any property held by a person as gift (directly or indirectly) from D going back 6 years from charge
    • Any property subject to effective control of D regard to family, domestic and business relationships
    • Affected party may apply to vary for :
      • Reasonable Living expenses; but not to a luxurious standard
      • Reasonable legal expenses
      • O.115, r 4 (Cheng Wai-keung & Ors [2003] HKCFI 329)
      • Non disclosure ( SJ v CKS & Anor (No.2) HKC [2001] 611)
    • Application : Prosecutor/Respondent
    • Grounds :
      • Mareva Injunction obtained by victim.*
      • Confiscation order made.
      • insufficient evidence against D.
      • Respondent has no money/run out of money.
    • Confiscation Order is deemed to be a sentence passed on D in respect of convictions for appeal purpose
    • Submit s.10 statement to the trial judge which states :
      • D convicted of a specified offence. (Reasons for Verdict)
      • Whether D benefited from that offence.
      • Value of his benefit (proceeds) from that offence.
      • Court determine the amount to be realised.
      • Fix a period of imprisonment in default
    • Broad – any payments or other rewards received in connection with an offence
    • Any property derived or realised directly or indirectly from above
    • Any pecuniary advantage in connection with the offence
    • Shing Siu-ming (No.2) [2000] 3 HKC 83
    • Osei [1988] Crim LR 775
    • Court will fix a term of imprisonment in default. (Time to pay)
    • Appointment of receiver to realise assets.
    • Variation of confiscation order :
      • Realisable assets inadequate.
      • Actual value of realisable assets greater than that at the time of assessment.
    • *Property jointly owned.
    • *Victim.
    • Confiscation: the actual proceeds of crime? No
    • Court shall determine whether the person has benefited from the specified offence
    • And if he has whether his proceeds of that offence total at least $100,000
    • If court determines he has benefited to an amount of at least $100,000
    • THEN in accordance with Section 11, the court shall determine the amount to be recovered and
    • A confiscation order shall then be made for that amount
    • The amount to be recovered by the confiscation order
    • Shall be what the court assesses to be the value of the defendant’s proceeds of the specified offence(s) of which he was convicted
    • Therefore, the confiscation order is for the value of what the court assesses is the benefit (proceeds) derived by a convicted person from his specified offence
    • The order is not asset based and not based on actual stolen or defrauded monies
    • This is why for criminal asset recovery there is no difference in white or black
    • The confiscation order should be looked on as a determination by the court of what a criminal owes Hong Kong – he is obliged to pay us from whatever sources
    • Property acquired through inheritance
    • Property acquired through a legitimate business
    • Property acquired through savings from earlier legitimate employment
    • Property acquired through share trading or other market investments
    • Confiscation Order is deemed to be a sentence passed on D in respect of convictions for appeal purpose
    • Submit s.10 statement to the trial judge which states :
      • D convicted of a specified offence. (Reasons for Verdict)
      • Whether D benefited from that offence.
      • Value of his benefit (proceeds) from that offence.
      • Court determine the amount to be realised.
      • Fix a period of imprisonment in default
    • Broad – any payments or other rewards received in connection with an offence
    • Any property derived or realised directly or indirectly from above
    • Any pecuniary advantage in connection with the offence
    • Shing Siu-ming (No.2) [2000] 3 HKC 83
    • Osei [1988] Crim LR 775
    • Court will fix a term of imprisonment in default. (Time to pay)
    • Appointment of receiver to realise assets.
    • Variation of confiscation order :
      • Realisable assets inadequate.
      • Actual value of realisable assets greater than that at the time of assessment.
    • *Property jointly owned.
    • *Victim.
    • In every case of specified offences is there a benefit? Should we not deny him of it?
    • Tracing of Black money some value
    • Prove offence and if easily confiscated should be a target of restraint and confiscation
    • If 2 or more benefited should the benefit be split? (divided between Ds)
    • Not necessarily, depends on evidence
    • Can be joint and several (ie one accused owes all of a joint benefit)
    • Can be split if reasonable evidence of a division
    • What is his benefit from the crime? (not what was stolen or defrauded or laundered, necessarily)
    • How large is it? That is, what would be the value?
    • What assets does he have?
    • Which are the easiest to restrain and confiscate?
    • Have other defendants benefited that may not be obvious at first glance?
    • Should restraint of assets be done before the case goes overt or simultaneously? Risk of dissipation.
    • Are there assets overseas?
    • Are there victims?
    • Emphasise denying the fruits of crime
    • It is not a revenue raising exercise
    • It is part of the penalty (purpose of appeal deemed to be part of a sentence, Section 8(8A))
    • It is punishment, deterrence and prevention of serious crime
    • OSCO and DTROP are powerful
    • Underused, but why?
    • Mind set, includes training to prosecute core offences
    • Troublesome- bank docs, account records
    • Hard work
    • Need to increase awareness and use
    • No provision to restrain some property for a victim and some for confiscation; and
    • No provision to allow victims to be allocated a share of a confiscation
    • Boiler rooms
    • 419 Scams
    • No easy solution
    • Group actions
    • Recourse to the Executive
    • Share with other jurisdictions
    • Share with other Government bodies domestically
    • Asset sharing agreements
    • What is meant?
    • Forfeiture of assets without having any conviction for a crime
    • Civil proceedings are used based on civil procedure
    • In some cases no evidence called all based on affidavits
    • Why? Thought easier to achieve to get the big fish
    • senior figures in organised crime keep distant from the crimes committed but controlled by them
    • Difficult to prove their guilt so assets remain not confiscated
    • A civil forfeiture system therefore provides a method to effectively disgorge assets from such senior figures
    • Disadvantages :
    • Seen akin to convictions based on evidence that would be inadequate for a criminal case
    • Effectively reverse onus provisions are used
    • Often not used for big fish but indiscriminately
    • Both Criminal and Civil forfeiture
    • Nearly all cases today are civil
    • Sue item of property not the person
    • Probable cause established
    • Owner must prove on a ‘preponderance of evidence“ that it is not
    • Cost high and can take years
    • Political will required
    • Chief Executive and Exco
    • Legco
    • Is there a real need?
    • Will resources be put in that justify the effort to change?
    • Can more resources be put in to the present system?
    • Conviction based
    • Restraint preventative and facilitates confiscation
    • Realisable property and benefit from proceeds broadly defined
    • Confiscation follows conviction and part of sentencing
    • Confiscation may be appealed
    • Restraint and Confiscation
    • Basic premise conviction equals confiscation simple and easy to justify but
    • conviction based therefore cumbersome/slow
    • subject to too many qualifications
    • In personam worldwide
    • Welcome exchange of views
    • Hope you have had benefit from the course
    • Rights of the author are asserted