The Recovery of Criminal Proceeds Generated in One Nation and Found in Another

Published date01 March 2002
Pages268-276
DOIhttps://doi.org/10.1108/eb026026
Date01 March 2002
AuthorStefan D. Cassella
Subject MatterAccounting & finance
Journal of Financial Crime Vol. 9 No. 3
The Recovery of Criminal Proceeds Generated in
One Nation and Found in Another
Stefan D. Cassella
It is now common for criminals to generate proceeds
of crime in one country and to transfer those proceeds
to another country. For example, drug traffickers
who generate enormous profits from the sale of
cocaine and other controlled substances in the USA
will employ professional money launderers to move
the money from the USA to financial institutions
abroad.
How the money gets there varies from case to case:
it may be deposited into a bank and sent overseas by
wire;
it may be converted into bank cheques, money
orders, travellers' cheques or other monetary instru-
ments that are then sent across the border by mail
or by courier; it may be converted into merchandise
that is exported to a foreign country and then turned
back into cash when the goods are sold; or it may
simply be smuggled out of the country as bulk
cash. The latter, it turns out, is an increasingly popu-
lar form of money laundering, in that it avoids the
creation of the paper trail that is generated by the
various currency transaction reporting requirements
now in effect in the USA.
What happens to the money once it is outside the
USA also varies from case to case. It may simply
go into a bank account that the criminal or his
family controls; it may be stored in a safe deposit
box, or used by the drug trafficker to invest in land,
domestic securities, businesses or personal items; or
it may be sold through the black market currency
exchange to a third party who then uses it to
make his own investments, or to pay for foreign
imports.
In the latter case, of course, the money derived
from the original criminal offence no longer belongs
to the drug trafficker, but to a third party who has
wittingly or unwittingly allowed the criminal to
wash his dirty money by trading his US dollars for
local currency. This, as will be seen, makes recovery
of the criminal proceeds by law enforcement doubly
difficult.
In any event, the point is this: whatever the
mechanism, the proceeds of crimes committed in
the USA frequently find their way into foreign
bank accounts or foreign assets held by foreign
criminals, or into accounts held by third parties
who acquire the money through a money broker in
exchange for local currency, or even into the
accounts of fourth parties who receive it in exchange
for goods shipped to the third party who needed US
dollars to pay for foreign imports.
Of course, there is a mirror image to this problem:
there are criminals all over the world, not only drug
traffickers but corrupt public officials, swindlers and
traffickers in human cargo, who hide the money
looted from the public treasury, or taken from an
innocent victim, by placing it in a bank account or
investing in land or securities in the USA. In both
cases,
the question is how do we recover the money
while taking into account the rights of possibly inno-
cent persons into whose possession the money may
have passed.
GOOD WILL IS NOT ENOUGH
There is an international consensus that countries
must cooperate with each other to address the
globalisation of money laundering. But good will
and good intentions are not enough. There have to
be in place, in each country, judicial procedures set-
ting forth what must be done when one country
asks another to help it in recovering the proceeds of
crime. Right now, there are no such procedures,
which is causing enormous problems for law
enforcement.
It must be understood at the outset that even if law
enforcement in one country is successful in locating
criminal proceeds in another country in a foreign
bank account, for example it must seek the
cooperation of the foreign jurisdiction in seizing or
restraining the property. While criminals can move
assets across international borders with reckless aban-
don, no country can act unilaterally to recover that
money once it has left its jurisdiction. Mutual legal
assistance between countries is required. But because
our laws are so different, it is frequently impossible to
obtain such assistance in time for it to be useful. Enor-
mous obstacles block the way. For example, many
countries will not recognise a request for assistance
Journal of Financial Crime
Vol.
9, No. 3, 2002, pp. 268-276
© Henry Stewart Publications
ISSN 1359-0790
Page 268

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