Asset Tracing in Asset Asset Tracing in Asset Recovery ActionsRecovery Actions

Daniel H. ClamanDaniel H. ClamanAssistant ChiefAssistant Chief

Asset Forfeiture & Money Asset Forfeiture & Money Laundering SectionLaundering Section

U.S. Department of JusticeU.S. Department of Justice

USD 1.5 to

5 billion

USD 23 million to 1 billion

USD 300 million or more

USD 106 to 700 million

USD 4 to 8

billion

USD 3 to 14

billionUSD 4.5 to

45 billion

USD 1 to 2.8

billion

USD 100 million

““We must work together to ensure that We must work together to ensure that

corrupt officials do not retain the illicit corrupt officials do not retain the illicit

proceeds of their corruptionproceeds of their corruption……When When

kleptocrats loot their nationskleptocrats loot their nations’’ treasuries, treasuries,

steal natural resources, and embezzle steal natural resources, and embezzle

development aid, they condemn their development aid, they condemn their

nationsnations’’ children to starvation and disease. children to starvation and disease.

In the face of this manifest injustice, In the face of this manifest injustice,

asset recovery is a global imperative.asset recovery is a global imperative.

–– U.S. Attorney General Eric HolderU.S. Attorney General Eric Holder

Global Forum VI Doha, Qatar November 7, 2009Global Forum VI Doha, Qatar November 7, 2009

U.S. DEPARTMENT OF JUSTICE

KLEPTOCRACY ASSET RECOVERY

INITIATIVE�� Attorney General Holder Announcement at Attorney General Holder Announcement at

African Union Summit Kampala, Uganda 2010African Union Summit Kampala, Uganda 2010

�� Prosecutor Team Focused on Asset RecoveryProsecutor Team Focused on Asset Recovery

–– Asset Recovery Requires Dedicated ResourcesAsset Recovery Requires Dedicated Resources

�� Coordination with U.S. Law EnforcementCoordination with U.S. Law Enforcement

�� Compliments Other U.S. Action to Deny Safe Compliments Other U.S. Action to Deny Safe

Haven and Support Asset RecoveryHaven and Support Asset Recovery

–– Technical AssistanceTechnical Assistance

–– Visa Denial and RevocationVisa Denial and Revocation

OVERVIEW

�� Why Asset Tracing is Important to Why Asset Tracing is Important to Asset RecoveryAsset Recovery

�� How Asset Tracing Fits Into Broader How Asset Tracing Fits Into Broader CaseCase

�� Who does Asset Tracing Work and Who does Asset Tracing Work and the Role of Prosecutor in Asset the Role of Prosecutor in Asset TracingTracing

�� Types of EvidenceTypes of Evidence

ASSET TRACING DURING THE INVESTIGATION

�� Identify Assets for RecoveryIdentify Assets for Recovery

�� Identify Location of EvidenceIdentify Location of Evidence

�� Identify other criminal actorsIdentify other criminal actors

–– Bribe Payers, Money LaunderersBribe Payers, Money Launderers

�� Identify witnessesIdentify witnesses

–– Persons Extorted, Financial AdvisorsPersons Extorted, Financial Advisors

�� Identify New Leads for InvestigationIdentify New Leads for Investigation

–– Shell Companies, Trusts, Other EntitiesShell Companies, Trusts, Other Entities

ASSET TRACING IN PROSECUTON

�� Prove the CrimeProve the Crime

–– Prove Benefit for Corruption ChargeProve Benefit for Corruption Charge

–– False StatementsFalse Statements

–– Transaction for Money LaunderingTransaction for Money Laundering

–– Jurisdiction for prosecutionJurisdiction for prosecution

ASSET TRACING FOR CONFISCATION

�� Prove Basis for Restraint and Prove Basis for Restraint and ConfiscationConfiscation

–– Relationship between criminal Relationship between criminal defendant and propertydefendant and property

–– Relationship between crime and Relationship between crime and propertyproperty

FORFEITURE SYSTEMS

�� Criminal ForfeitureCriminal Forfeiture

–– Need Personal Jurisdiction (Need Personal Jurisdiction (in personamin personam) ) -- -- defendant must be presentdefendant must be present

–– Need criminal convictionNeed criminal conviction

–– ADVANTAGEADVANTAGE: Government can forfeit : Government can forfeit criminalcriminal’’s legitimate property if illicit s legitimate property if illicit assets cannot be foundassets cannot be found

FORFEITURE SYSTEMS

�� In RemIn Rem ForfeitureForfeiture

–– Need Need in rem in rem jurisdiction jurisdiction -- -- court must court must exercise some control over the propertyexercise some control over the property

–– Only property derived from or involved Only property derived from or involved in the crime can be forfeitedin the crime can be forfeited

–– ADVANTAGEADVANTAGE: Criminal conviction not : Criminal conviction not necessary, can forfeit property from necessary, can forfeit property from dead criminals or fugitivesdead criminals or fugitives

ASSET TRACING FOR CONFISCATION

�� ConvictionConviction--Based ForfeitureBased Forfeiture

–– Prove Defendant Owns PropertyProve Defendant Owns Property

–– Fight False Claims from Nominees Fight False Claims from Nominees

–– May Need to Show Property Involved May Need to Show Property Involved in Crimein Crime

�� NonNon--Conviction Based ForfeitureConviction Based Forfeiture

–– Must Prove Property Involved in Must Prove Property Involved in CrimeCrime

ASSET TRACING FOR MUTUAL LEGAL ASSISTANCE

�� Provide Factual Basis to Compel Provide Factual Basis to Compel Production of RecordsProduction of Records

�� Identify Assets for RestraintIdentify Assets for Restraint

�� Provide Factual Basis for Provide Factual Basis for Restraint and ConfiscationRestraint and Confiscation

TEAM RESPONSIBILTY FOR ASSET TRACING

�� InvestigatorInvestigator

�� Summary WitnessSummary Witness

�� Expert WitnessExpert Witness

�� ProsecutorProsecutor

INVESTIGATOR ROLE IN ASSET TRACING

�� Identification of Assets, Leads, Identification of Assets, Leads, Evidence Evidence

–– Must be Quick, Must Read the Must be Quick, Must Read the DocumentsDocuments

–– Before Trial May Not Need to Be Before Trial May Not Need to Be ExhaustiveExhaustive

–– Document Exploitation TeamDocument Exploitation Team

–– Investigator May Testify or Provide Investigator May Testify or Provide AffidavitAffidavit

SUMMARY WTNESS ROLE IN ASSET TRACING

�� Explain Financial Movements to Explain Financial Movements to Judge or JuryJudge or Jury

–– Provide Financial Expertise to Make Provide Financial Expertise to Make Sense of Complicated TransactionsSense of Complicated Transactions

–– Volume of transactions, recordsVolume of transactions, records

–– By Oral Testimony or By ReportBy Oral Testimony or By Report

�� Corroborate or Refute Witness Corroborate or Refute Witness TestimonyTestimony

Offshore Bank

Financial Criminal Foreign Country

Shell Corporation

Domestic Bank

UNRAVELTHE MONEY TRAIL

EXPERT WTNESS ROLE IN ASSET TRACING

�� Different Role from Summary Different Role from Summary WitnessWitness

––But could be same personBut could be same person

�� Opinion Regarding Lack of Opinion Regarding Lack of Business Purpose to TransactionsBusiness Purpose to Transactions

�� Explain Fraudulent Invoicing, Explain Fraudulent Invoicing, Kickbacks, Improper BenefitsKickbacks, Improper Benefits

PROSECUTOR ROLE IN ASSET TRACING

�� Help Shape InvestigationHelp Shape Investigation

�� Request or Issue Production Request or Issue Production Orders or Mutual Legal Orders or Mutual Legal Assistance RequestsAssistance Requests

�� Conduct Witness ExaminationsConduct Witness Examinations

�� Plan Presentation of EvidencePlan Presentation of Evidence

�� Explain to the CourtExplain to the Court

TRACING EVIDENCE

�� Bank and Financial RecordsBank and Financial Records

–– Wire transfer records, SWIFT, Wire transfer records, SWIFT, account opening documents, etc.account opening documents, etc.

�� Financial AdvisorsFinancial Advisors

�� CoCo--conspiratorsconspirators

�� Defendant/TargetDefendant/Target

–– Financial Disclosure StatementsFinancial Disclosure Statements

–– WiretapWiretap

�� Corporate , Government RecordsCorporate , Government Records

COMPELLING PRODUCTION OF TRACING EVIDENCE

�� Production Orders, Subpoenas, Production Orders, Subpoenas, Search WarrantsSearch Warrants

––Bank Records, Breaking PrivacyBank Records, Breaking Privacy

�� Sworn Statements or DepositionsSworn Statements or Depositions

�� Can be Used as EvidenceCan be Used as Evidence

OTHER TRACING INFORMATION

�� Public Records Public Records

�� InterviewsInterviews

�� Surveillance Surveillance

�� Financial Intelligence UnitsFinancial Intelligence Units

�� But Not Always Admissible as But Not Always Admissible as Evidence Evidence

–– Suspicious Activity Reports, FIU Suspicious Activity Reports, FIU analysesanalyses

MUTUAL LEGAL ASSISTANCE FOR TRACING

�� Formal Mutual Legal AssistanceFormal Mutual Legal Assistance

––Compulsory process needed (bank Compulsory process needed (bank records, etc.)records, etc.)

––Authentication for AdmissibilityAuthentication for Admissibility

�� Informal Mutual Legal Informal Mutual Legal AssistanceAssistance

––Compulsory process not neededCompulsory process not needed

––Egmont FIU requestsEgmont FIU requests

INVESTIGATIVE CHALLENGES

�� International Banking TransactionsInternational Banking Transactions

–– Different authorities have different Different authorities have different pieces of the puzzlepieces of the puzzle

–– Mutual Legal Assistance ProceduresMutual Legal Assistance Procedures

�� Use of Trust and Corporation Use of Trust and Corporation Structures to Frustrate InvestigationStructures to Frustrate Investigation

�� Costs of Financial ExpertiseCosts of Financial Expertise

Asset Recovery as a Global Imperative

�� U.S. Department of Justice U.S. Department of Justice

Kleptocracy Asset Recovery Kleptocracy Asset Recovery

InitiativeInitiative

�� Urge Other Nations to Commit Urge Other Nations to Commit

ResourcesResources

�� Together We Can Produce More Together We Can Produce More

RecoveriesRecoveries

USD 1.5 to

5 billion

USD 23 million to 1 billion

USD 300 million or more

USD 106 to 700 million

USD 4 to 8

billion

USD 3 to 14

billionUSD 4.5 to

45 billion

USD 1 to 2.8

billion

USD 100 million

Daniel H. Claman

Assistant Chief, International Unit

Asset Forfeiture and Money

Laundering Section

U.S. Department of Justice