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Asset Recovery Orders

The term "asset recovery order" means one of two things: either

- where, in civil litigation, a party obtains orders to protect and ultimately return to their true owner assets which have been wrongfully denied them; or

- in criminal cases, the state obtains orders to protect and confiscate assets which have been obtained by criminal means. In this case they are rarely "recovered" in the true sense of the word.

In civil cases, we use the word "unlawfully" but in criminal cases we use the word "illegally." This is important but, increasingly, we see poor drafting of laws removing this distinction.

Poor drafting (often resulting from, amazingly, a poor grasp of English by those who draft laws and, even more incredibly, a poor grasp of basic legal principles and traditions) has also led to the term "asset recovery" in cases where there is no actual recovery.

So, for example, unless the state is acting to "recover" moneys stolen from a victim and to return those moneys to the victim, the state is not "recovering." Instead it is "confiscating."

Again, while the term "asset recovery" has become common and it is convenient, it is in relation to criminal cases involving, say, drugs trafficking, a term that is both inaccurate and misleading.

Some might argue that it is appropriate to use the term "asset recovery" in respect of actions by the state because, although the action takes place in the criminal courts, many countries define it as a civil action. That, however, belies the nature of the action: there are several reasons why the action is dealt with as a civil case.

First, the action for confiscation takes place after conviction and conviction marks the end of the liability aspect of the criminal trial which, in most common law jurisdictions, is where the Jury ends its responsibility. Punishment, in most common law countries, is a matter for the Judge not the jury. Confiscation of criminally derived assets is not punishment: it is a process by which criminals are deprived of the benefits of their crimes.

The reasons that it is performed as a civil procedure within the criminal court are

- the trial judge is familiar with the case meaning costs and time are saved

- the evidence as to origin, amounts, benefits and tracing is weighed on the balance of probabilities (i.e. the civil burden) not the beyond all reasonable doubt (i.e. the criminal law burden).

- while the confiscation orders are civil in nature, failure to surrender assets as ordered has consequences for the criminal law sentencing: in effect (but not in law), at the time of making the confiscation order, the judge pre-determines a penalty for contempt and that order will be a term of imprisonment in default of surrender, such penalty to be served consecutively with (i.e. immediately after) the sentence for the primary offence.

In the civil and criminal worlds, the process for securing and recovering or confiscating (as the case may be) assets differs from jurisdiction to jurisdiction but there are certain common aspects:

1. Assets are identified to the satisfaction of the Court or competent authority

2. Assets are frozen by court Order or by Order of "a competent authority." This means that they remain in the legal ownership and physical possession of whoever has them but subject to an Order that they must not be disposed of, transferred (either physically or legally) or allowed to come to any harm that might adversely affect their value.

3. Assets are seized - that means that physical possession is taken by the party obtaining or making the Order but legal ownership remains with the person against whom the Order is made.

4. Assets are confiscated - this means that legal ownership is transferred to the person obtaining the Order or at the Court's direction.

There are cases where the state can properly be said to be "recovering" assets: that is where the state is both the prosecutor and victim for example tax evasion or over-payments made under corrupt contracts.

Subscribers to a site licence for World Money Laundering Report are able to post, without additional charge, details of Asset Freezing, Asset Seizure and Asset Confiscation Orders in the GlobalKYC system and to make them available to those who may be holding relevant assets worldwide.

There is a separate class of Notice relating to Asset Arrest Orders which are similar to freezing orders but relate, specifically, to marine vessels and aircraft.

Notices are free to read (no-cost registration required).