All Funds and International Seizure Cooperation of the USA and the UK
| Date | 01 April 1997 |
| Pages | 111-129 |
| DOI | https://doi.org/10.1108/eb025824 |
| Published date | 01 April 1997 |
| Author | Fletcher N. Baldwin |
| Subject Matter | Accounting & finance |
Journal of Financial Crime — Vol. 5 No. 2 — Analysis
ANALYSIS
All
Funds
and International Seizure Cooperation of
the USA and the UK
Fletcher N. Baldwin, Jr
INTRODUCTION
When the physical and psychological wall separat-
ing East from West crumbled in 1989, the West
preferred and encouraged the substitution of free
enterprise. The wall's disappearance left a fertile
playground for legitimate, as well as illegitimate,
business.
The opening of this business playground paral-
leled at about the same time the almost instanta-
neous access to communication and information
through computers and with its accompanying
intrusion into and invasion of personal and
governmental privacy, was making its way on to
the world scene.1 The result of combining free
enterprise with computer technology produced an
alternative as well as a golden, albeit illicit, oppor-
tunity for financial success. The globalisation of
illicit trade forced individuals and governments
from their parochial posture into a forced aware-
ness of, and a participation in, the world arena.
This globalised arena is a world where laws,
statutes and ordinances are often inadequate
because of their narrow, constricted focus. It is a
world where some of the acts and many of the
actors know few if any geographical or territorial
boundaries and are global in their plans and activi-
ties.
As a result, today, a quarter of all the circulat-
ing money world wide is illicit, the profits of
crime, money that is in need of laundering.
Washed, cleaned, recycled, made usable in the
legitimate market — that is the money laundering
process. Utilising today's technology, the move-
ment of money may leave no paper trail. A wire
transfer is a simple push of the button. To wire
transfer through several banks world wide takes far
less than five minutes. The perpetrator of fraud
has an incredible headstart. It takes a considerably
longer period of time to trace the funds. A govern-
ment's best hope of stopping the transfer of these
funds is not at the transfer point but, rather at the
time and place the funds cither (1) begin their
journey or (2) at their ultimate destination.
Any amount of money can be wire transferred
bank to bank around the world. Once money gets
past that first bank, it can be laundered through as
many as 200 other banks. The ultimate goal of
most money launderers is to deposit the illicit pro-
ceeds in an account beyond the reach of the long
arm of US jurisdiction. The money launderer has
been expanding the arena in which he operates
through the use of computers. Meanwhile the
USA has countered with the expansion of the
boundaries of its jurisdiction, both in rem and in
personam.
In an attempt to deal with the illegal activities
that produce and/or accompany organised crime
and the vast sums of money that go with it, the
USA has instituted task forces, money laundering
regulations, asset forfeiture programmes, and
spearheaded conventions and declarations invol-
ving international cooperation in taking the profit
from the criminal. The most important of the
attacks on illicit funds has come from the execu-
tive and legislative branches of the government.
Now, however, the judicial branch has joined the
attack. An example is All Funds, a decision from
the US Circuit Court of Appeals, Second Circuit,
HI
rem civil forfeiture case. The US Court joined
with courts in the UK to remove targeted profits
from the illicit market-place. All Funds involved
successful seizure, in rem, of illicit funds even
though the claimants had never set foot in the
jurisdiction and the money would, at best, travel
through the jurisdiction on its way to destinations
unknown.
This seizure of illicit funds is the author's area
of focus, approached from a constitutional per-
spective. At this juncture, focus is upon All Funds
as a significant opinion with respect to one ques-
tion concerning the lawfulness of the international
Page 111
Journal of Financial Crime — Vol. 5 No. 2 — Analysis
reach of the long arm of the US court system. All
Funds will serve as an indication of the direction
the US courts will continue to move in and the
response that cooperating countries will provide.
All Funds is also an excellent tool for the develop-
ment and strategic focus upon emerging transna-
tional cooperation that must of necessity transcend
formalism.
All Funds involves judges, lawyers, prosecutors
and law enforcement officers who combine in
comparative and developmental law implementa-
tion in spite of the prophetic reality that the given
set of factors would have resulted in cooperative
failure.
All Funds is an example of the functional
approach to law. Although the court at each level
of review examined law as an important compo-
nent of social control, the judges went beyond that
component when it became obvious that the most
important instruments of social control failed to
offer a successful resolution. The conception of
social control implies the notion of governance2
although it is viewed as a broader, more ubiquitous
notion in AH Funds. Governance itself implies
policy, which in turn implies choice and decision.
The result in All Funds should be viewed in the
broadest sense, as embodying interests that can be
clarified and implemented as clear policy choices.
On both sides of the Atlantic those interests were
seen from the perspective of the engaged obser-
vers,
as 'common transnational interests'.
The working conception of the opinions pre-
sents a collaborative effort formulated in the con-
text of a process of authoritative decision, ie a
decision, conditioned both by control and author-
ity, whereby members of the community, however
narrowly or broadly defined through the careful
articulation of shared demands and expectations,
and using, from a cross-cultural point of view, very
diverse institutional forms and procedures, clarify
and secure their common interests. The commu-
nity context invoked in All Funds provides an
example of a complex transnational community
decision to shed borders for common security
purposes.
The theories developed during the journey of
All Funds are intended to sustain operational inter-
national as well as domestic law conceptions. The
theories argue for association with formalistic the-
ories of law, yet opt out of such a regime. A basic
tenet of the All Funds theory of construction is the
effort to give 'law' a sufficiently distinctive 'juridi-
cal'
imprimatur; to make the law, and the pro-
fessional that practices it, a phenomenon apart
from the social and power processes of the com-
munity of which it is an outcome. Is All Funds
theory successful? No, because in practice the
opposite resulted. The case docs not implicate
sophisticated versions of conventional international
law. The case begins with a working hypothesis,
the notion that law is a set of complex interacting
precepts (rules, norms, principles) and that the
intellectual task of judges is to apply rules to facts.
Although some measure of discretion is conceded,
the rules were nevertheless referred to in deferen-
tial terms. In the analysis the working hypothesis
was ignored. The test for success in All Funds was
pragmatism.
The courts seemed ultimately to reject the
working assumptions, because it was readily appar-
ent that to do so would result in neither social
science nor human rights having much to contri-
bute to 'law', in the context of this case. What
became apparent was law in vacuo has nothing to
add to the store of important goals of other legit-
imate perspectives, including law enforcement. If
this be the standard, All Funds succeeds.
The fact is that conventional legal theory and its
autonomous law assumptions in some instances
inhibit the broadening of the boundaries of other
concerned disciplines, and remain themselves
unenriched by what those disciplines might have
to offer the 'law'.
Stated simply, a constitution, a treaty, a statute,
or more aptly a constitutive process, is not merely
a document of impractical formalism or a docu-
ment whose importance is a matter of aesthetics
or, as conventionally viewed in the USA, an
instrument of governance simply fed by prece-
dent.3 It is suggested that a constitutive process is
an identifiable process of the kinds of social and
political decisions that continuously, over time,
establish and maintain the larger processes of law
and governance which Professor McDougal would
call the processes of authoritative decision.4 Con-
stitutive processes decisions serve to identify and
characterise
authoritative decision makers; they
articulate and seek to specify the basic community
policies of society; they establish the basic struc-
tures of authority, serve to allocate power for
effective sanctions, authorise procedures appropri-
ate to diverse structures of authority and institu-
Page 112
To continue reading
Request your trial