Fci, gac, is, ar final 2 4-14

Part 2:

Financial Crime Investigations

International Standards

Global Anti-Corruption

Asset Recovery

CFCS Examination Preparation Series February 5, 2014

Presented By

Beth Berenbaum, Ken Barden, Charles Intriago, Brian Kindle, Hillary Rosenberg, and Jeff Sklar

Managing Partner

Sklar Heyman Hirschfield & Kantor

Bellmore, NY

Jeff Sklar

Kenneth Barden

Senior Anti-Corruption Advisor

US Agency for International Development

Washington, DC

Counsel Lewis Baach

New York

Hillary Rosenberg

Financial Crime Investigations


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Legal Underpinnings

• Common law systems

• Rely on case law, precedent

• Legal remedies not in statutes are available

• Examples – UK, US, Canada, India, Australia

• Civil law systems

• Written laws determine rights, remedies and actions

• Examples – Latin America, Continental Europe, Japan

• Helps evaluate ground rules of place where investigation and possible litigation is conducted, costs, likelihood of success

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Public vs. Private Investigations

• Public investigation by law enforcement agency, grand jury, regulatory body

• Deploys all powers, authority of government

• Private investigations by civilians without government powers

• Can obtain powerful tools from courts, equitable remedies, bankruptcy and insolvency laws

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Investigative Tools and Techniques

• Compulsory power to obtain documents and testimony

• Telephone, electronic wire intercepts by government agencies

• Search warrants

• Mutual Legal Assistance Treaties (MLATs) and less formal mutual assistance

• Undercover operations

• Physical surveillance

• Whistleblowers, anonymous tips, informants

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Open-Source Intelligence

• Publically available information, often online

• Many sources, often free and easily discoverable • Online searching and web content • Media outlets and news sources • Public records • Geospatial open source • Professional conferences, live events • Observation and reporting

• Investigation should usually start with exhaustive OSINT

before moving to more time-consuming methods

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Online Open-Source Tools

• Online information increasingly critical in financial crime investigations

• Advanced web searching

• Searching social networks, blogs

• Utilizing free and paid online databases

• “Deep web” sources

• Reverse image searches

• Archived web sites

• Financial criminal use online tools, investigator should take steps to remain secure and anonymous online

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Interviewing Techniques

• Usually best to begin interviews with persons farthest removed from suspected crime

• Differences between interrogation and interview. In interview, investigator should establish rapport with witness and seek detailed responses.

• Look for knowledge of event, persons or entities involved, physical and intangible evidence

• Plan all elements of interview: location, objectives, needs of the witness

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Intelligence vs. Evidence

• Intelligence furthers investigation but is not generally admissible in court

• Photos posted online

• Information in a news article

• Hearsay statements

• Evidence must meet legal rules of admissibility, be material and prove or disprove some relevant matter

• Commercial records obtained by subpoena

• Statements made freely to law enforcement agent

• Facts observed by enforcement agent conducting lawful surveillance

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Investigations Across National Borders

• Many financial crime investigation require assistance from other nations and jurisdictions

• When requesting assistance from another nation for, consider:

• Its legal and statutory requirements • How to assure that the information will be admissible as evidence • Will investigative subject be notified of request for assistance? Are

you legally compelled to inform the subject? • Level of probable cause needed to authorize investigative

techniques and enforce court orders

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Tips and Whistleblowers

• Common trigger of financial crime investigations • Encouraged by laws authorizing rewards, protections • Can come from any level of organization up to board of directors • Wise to maintain skepticism in contact with whistleblowers,

who may have their own profit, revenge motives

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Investigating Employees

• Some companies have rules on employee cooperation in internal investigations, but they must not conflict with laws

• Employee usually has no legal obligation to agree to an

interview

• Employer may usually provide employee e-mail, phone logs and computer usage without employee permission, knowledge

• Investigator should consult lawyer on whether it is legal,

advisable to obtain employee records without consent

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Court Orders

• Search warrants • Granted by judge to government agencies, • Specify time, place and items to search • Failure to follow terms may render evidence useless

• Subpoena

• Compels a person or entity to produce records, items or testimony at a place and time

• Considerable variation on process among countries

• Preservation orders or litigation holds • Prevent electronic evidence from being deleted or altered

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Beneficial Owners

• Typically refers to person who maintains ultimate control over funds, assets, legal entities or financial accounts

• Includes individuals who own or control, directly or indirectly,

greater than a certain percentage of a legal entity • Recognizes that person in whose name an entity is formed,

asset is held, or account is opened is not necessarily the person who truly controls them

• Determining beneficial owners is critical in KYC, due diligence,

investigations, AML and anti-corruption, and more, as it is key to true source, origin and control of funds

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Corporate Registries

• Collect and store information pertaining to corporations and other legal entities created within a given jurisdiction

• Typically maintained by a government agency or department • May be a single registry for an entire nation, or multiple

registries for different states, regions or cities, depending on jurisdiction

• Serve several purposes: • Record creation or incorporation of new legal entity • Collect required information on legal entities • Make some or all collected information publicly available

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•The following information is usually available from corporate registries:

•The name and type of the legal entity •Date of the company formation, and date when the company was dissolved

if no longer in existence •Articles of incorporation and other company formation documents •A physical address of the corporation, or address of formation agent •Name and address of a registered agent for the company

•Some jurisdictions will provide:

•Names and addresses of the legal entity’s directors or officers •Names and addresses of the shareholders, members or other legal owners

of the legal entity

•Beneficial owner of legal entity is very rarely available

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• Many jurisdictions offer access to registries through websites. Some international bodies also maintain sites that allow direct or indirect access to registry information:

• International Association of Commercial Administrators (IACA)

http://www.iaca.org/ • Corporate Registers Forum (CRF) http://www.corporateregistersforum.org • European Business Register (EBR) http://www.ebr.org/section/4/index.html • European Commerce Registers’ Forum http://www.ecrforum.org/ • Association of Registrars of Latin America and the Caribbean (ASORLAC)

http://www.asorlac.org/ingles/portal/default.aspx

http://www.iaca.org/

http://www.corporateregistersforum.org/

http://www.ebr.org/section/4/index.html

http://www.ecrforum.org/

http://www.asorlac.org/ingles/portal/default.aspx

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Types of Financial Institution Records

• Critical source to “follow the money” in financial crime investigations, often need court order to obtain

Examples

• Deposit tickets • Deposited checks • Checks drawn • Debit memos • Credit memos • Outgoing wire transfer orders • Incoming wire transfers

• Cashier’s checks sold • Foreign currency sold • Signature cards • Monthly statements • Cancelled checks • Cashier’s checks • Money orders sold

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Summarizing Financial Institution Records

• Investigator should prepare summaries of information in documents from an institution, including:

• Deposits and withdrawals • Checks written on the account • Wire transfers into or out of the account • Fluctuations in account balances

• Obtain all documents related to account opening and customer

onboarding: application, customer ID, signature card, due diligence and Know Your Customer records

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What Financial Institution Records Show

• Some leads that a financial account analysis can provide:

• Names of persons, entities that received funds • Names of persons, entities that deposited money • Sources, amounts of income or revenue • Cash withdrawals and purchase of cashier’s checks • Activities of previously unknown businesses and ventures • Wire transfers to, from offshore havens, accounts, nominees • Previously unknown accounts • Liabilities, which lead to other financial statements • Asset acquisition, disposition

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Other Financial and Commercial Records

Examples

• Commercial invoices • Cancelled checks • Receipts, related expense

documentation • Journal entries

• Statement of cash flows • Vendor and customer lists • Physical inventory • Reconciliation of

intercompany accounts

• Tax returns are also a valuable source of information if they can be obtained legally

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Protecting the Evidence

• All records should be treated as possible evidence • Implement chain of custody from the start

• Document chronology of handling of evidence • Where it was initially located, who got it, where it was

stored, who handled it • Obtain originals where possible

• Maintain records for their integrity • Assure that electronic evidence is not altered or unintentionally

overwritten

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Key Lessons

• Recognize the types of documents and records that can be

employed in financial crime investigations

• Understand the differences between evidence and intelligence, and the proper role of each

• Open source intelligence is highly valuable – be familiar with open sources, online and otherwise

Review Question

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Securities King was a stock brokerage that collapsed after it was revealed to be running a Ponzi scheme. The scheme has left behind numerous defrauded investors and the brokerage is now being liquidated in bankruptcy court.

You are an investigative professional who has been asked to look into a lawyer suspected of involvement in the Ponzi scheme.

The lawyer is thought to have handled funds for Securities King through his firm’s account. There has been no prior investigation of the lawyer, and you currently have little information him or his firm.

What would be the most appropriate first step to take in your investigation?

Review Question

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A. Request that a bankruptcy court judge name you a

receiver of Securities King

B. Contact the lawyer to schedule an interview

C. Thoroughly research the lawyer and his firm online

and in public records

D. Conduct physical surveillance of the lawyer to

understand his movements

International Standards


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Overview

• Combating financial crime is an international and cooperative affair

• Financial crime is global phenomenon, requires coordinated action at international level

• International standards set the pace for most of the formal financial sector

• Some national laws have an extra-territorial “international standards” effect

United Nations

• UN Security Council Resolutions

– Sanctions programs

• United Nations Convention Against Corruption

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UNODC

• IMOLIN database

–Legal library of AML and related laws

–https://www.imolin.org/

https://www.imolin.org/

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Transparency International

• Anti-corruption NGO with over 100 chapters

worldwide • Provides research, analysis and reporting on

corruption, corporate and financial transparency issues globally

• Releases Corruption Perceptions Index annually • http://www.transparency.org/research/cpi/ove

rview

http://www.transparency.org/research/cpi/overview

http://www.transparency.org/research/cpi/overview

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Corruption Perceptions Index

OECD

• OECD Anti-bribery Convention

• Initiatives related to:

– Anti-money laundering

– Tax fairness and sharing

• Database of tax sharing agreements

– Corporate transparency

– Illicit financial flows

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FATF

• Outgrowth of OECD

• Formerly 40 + 9 Recommendations, now 40 Recommendations

• Sets standards for AML cooperation among countries

• Peer reviews

• “Non-cooperative” jurisdictions, black or grey lists

World Bank

• Stolen Asset Recovery Initiative (StAR) • http://star.worldbank.org/star/

• Doing Business Reports

–Database of business laws, regulations and data on business climate and transparency

–www.doingbusiness.org

http://star.worldbank.org/star/

http://www.doingbusiness.org/

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Basel Committee

• Establishes principles relating to banking supervision

• http://www.bis.org/bcbs/

• Basel III Accords

• Customer Due Diligence for Banks

• Consolidated KYC Risk Management

http://www.bis.org/bcbs/

Wolfsberg Group

• Group of largest international banks

– Set standards for private banking, correspondent banking relationships

• Wolfsberg AML Principles for Private Banking

• Wolfsberg Principles for Intermediaries

– Maintains Due Diligence Repository database

– http://www.wolfsberg-principles.com/diligence.html

http://www.wolfsberg-principles.com/diligence.html



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EGMONT Group

• Organizations of FIUs meeting standards • Provides cooperation between FIUs

INTERPOL

• Cooperative effort among police of countries

• Issue Notices to members that share information, provide warnings, or request that members track or detain suspects

• Modeled after FATF on regional basis

• APGML

• Others

• Conduct peer reviews

FATF-style Regional Bodies

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National Laws with International Effect

• US:

• USA Patriot Act

• FCPA

• FATCA

• UK:

• UK Bribery Act

• EU:

• Directives

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Key Lessons

• May not be used on day-to-day basis, but

international standards shape public and

private efforts

• International best practices may not be your

best practices

• Review source documents where possible

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Review Question

• What organization would likely provide the most

useful sources of information for assessing

corruption risks of a country?

A. Basel Committee

B. Transparency International

C. Interpol

D. Wolfsberg Group

Global Anti-Corruption


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Overview • Corruption has many definitions, takes many forms

• Bribery

• Government and Private Companies (commercial bribery)

• Widespread negative consequences of corruption to economic development, fair markets and competitiveness, civil society

• Increased awareness & enforcement • Increased enforcement of the FCPA

• UK Bribery Act, Russia Anti-Corruption Law, and Brazil Anti-Corruption Law (effective January 28, 2014)

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Overview • NGO Efforts:

• OECD - monitors implementation, enforcement of Anti-Bribery Convention

• World Bank –debars companies, individuals who engage in corruption

• Transparency International –reports on corruption; corruption perception index

• United Nations – Convention Against Corruption – 140 signatories

• Compliance • Increased enforcement worldwide, expectation companies develop, implement internal

controls to prevent and detect corruption

• Without anti-corruption programs, companies face legal, reputational, financial risk

• ACFCS focuses on corruption of public officials, especially involving corporations, business entities

Emphasis on Anti-Corruption “As we’ve all seen – and as President Obama has said – “[t]he struggle against corruption is one of the great struggles of our time.” Fortunately [...] corruption is no longer widely seen as an accepted cost of doing business. It is no longer tolerated as an unavoidable aspect of government. On the contrary – it is now generally understood that the consequences of corruption are devastating – eroding trust in public and private institutions, undermining confidence in the fairness of free and open markets, siphoning precious resources at a time when they could hardly be more scarce, and all too often breeding contempt for the rule of law [...] This is why, as Attorney General, I’ve consistently worked to ensure that anticorruption remains a top priority for my colleagues at every level of the United States Department of Justice – within as well as beyond our borders.” – Attorney General Eric Holder at the Arab Forum on Asset Recovery in Morocco (Oct. 28, 2013)

I am acutely aware that we have many urgent law enforcement priorities – fighting child exploitation, stemming the flow of narcotics from South America and elsewhere, stopping gang violence. I am here to tell you that fighting global corruption is just as urgent, and with the momentum of many countries behind us, now is the time to redouble our anti-corruption efforts. – Former Deputy Attorney General, Lanny Breuer, ACI Conferences on the Foreign Corruption Practices Act (Nov. 16, 2012)

http://www.justice.gov/iso/opa/ag/speeches/2013/ag-speech-131028.html

Country Corruption Perception Index

FCPA Enforcement

0 100 200 300 400 500 600 700 800 900

Alcatel-Lucent (2010)

Weatherford (2013)*

Daimler AG (2010)

JGC Corp. (2011)*

Technip (2010)*

Snamprogenti Netherlands BV (2010)*

ENI/Snamprogetti (2010)*

Total S.A. (2013)*

BAE Systems (2010)*

KBR/Haliburton (2009)*

Siemens (2008)

Top Ten FCPA Monetary Settlements (corporations)

Settlements (in millions)

The Foreign Corrupt Practices Act (FCPA)

• U.S. law enacted in 1977 (15 U.S.C. §78dd-1, et seq.)

• Two areas

- Anti-bribery provision

- Books and records provision

• Enforceable by DOJ and SEC – broad extra-territorial jurisdiction

- DOJ: Criminal, civil jurisdiction over U.S. companies, and

their subsidiaries and agents, wherever located

- SEC: Civil jurisdiction over U.S. “issuers”, includes foreign

companies with ADRs, registered debt

FCPA Anti-Bribery Provision

• Prohibits:

– Giving, offering, promising, soliciting

even if: offer never accepted; payment never made; purpose/intent not achieved; bribe recipient does not know that something is wanted in return

– Anything of value

– To a foreign official

– With the intent to improperly influence that official or secure an improper advantage

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What is a “Bribe?” • A bribe can be anything of value that will improperly influence or provide an unfair advantage

in order to obtain or retain business.

• Includes:

• Cash

• Gifts

• Entertainment

• Tickets to sporting events

• Extra nights in a hotel

• Side trips to vacation spots

• Internships

• Loans at preferred rates

• Charitable contributions

• Invitations to conference/seminars/training sessions

• Free use of property or goods

• Access and influence

• May be provided directly or indirectly and includes things given to family members or associates if the intent is to influence.

“Foreign Official” Definition

• Very broad definition

• “Officer or employee of a foreign government or any department, agency, or instrumentality”

– Includes employees of all levels (high ranking & low ranking)

– Instrumentality – government owned or controlled agency


• Fact Intensive inquiry—control is key

– Pending 11th Circuit decision U.S. vs. Esquenazi

• Not determinative:

o Whether individual considered a government official under local law

oWhether the company is “public”


• Examples include: o Government agencies at all levels

o State controlled natural resource companies (e.g. Aramco, Gazprom, Petrobras)

o Sovereign Wealth Funds (e.g. GIC, SAFE, SAMA, KIA)

o State-controlled pension funds

o Employees of NGOs (World Bank, IMF, United Nations)

o May include US Citizens who are employees of foreign state-owned entities

o Staff at state-Run Hospitals

o Members of Political Parties, Royal Families

FCPA Books & Records Provision • Only applicable to issuers under U.S. securities laws

• BUT: should still be part of robust compliance program for private companies

• Requires companies to: • Make and keep books and records which accurately and fairly reflect

transactions and dispositions of assets Bribes disguised as “fees” “commissions” “other expenses”

No proof of bribery required

• Devise and maintain system of internal accounting controls to “provide reasonable assurances" that transactions accurately recorded and properly authorized

• Control person liability: willful blindness; causing misstatement in books and records

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UK Bribery Act • Enacted in 2010, effective July 2011 • Goes beyond FCPA in scope, strictness:

• Prohibits both commercial and government bribery • Provides for affirmative defense if entities adopt

“adequate procedures” designed to prevent bribery • No facilitation payments allowed

• Covers any UK citizen, all corrupt activities in UK, and any

company with operations in UK

• Stiff penalties – unlimited fines for corporations, 10 years for individuals

• Very limited enforcement so far

Compliance Program Requirements • Basic Requirements – 4 pillars:

1. Governance – High level commitment; individual responsible for oversight and accountability • Independence • Access to the board

2. Risk Based Policies and Procedures “tailored to a company’s business” • clear policy/code of conduct/ethics • “commitment from senior management” • risk assessment • due diligence • monitoring • confidential reporting, internal investigations, disciplinary measures

3. Training/Awareness program 4. Continual Independent Testing and Updating of Controls

Morgan Stanley Case

• DOJ highlighted that the employee: – Received more than 35 notices and reminders on the anti-

corruption policy – Trained on FCPA when hired – Received at least 32 compliance trainings—8 which

addressed FCPA issues – Certified that he read, understood, and agreed to comply

with Code of Conduct

• Underscores importance of documentation in a compliance program

Morgan Stanley Case • April 2012: Morgan Stanley Managing Director in real

estate business in China pleaded guilty to charges under FCPA.

– Agreed to disgorge $250,000, forfeit real estate in China worth

$3.4 mm, barred from the U.S. securities industry and received a 9 month jail sentence.

• However, citing its strong Anti-Corruption program, U.S. authorities did not charge Morgan Stanley.

– First time U.S. gov’t publicly credited a firm’s anti-corruption

compliance program as reason for declination.

Agency & Successor Liability • Agency Liability - companies liable for acts of agents

undertaken within the employment scope and intended to benefit company, e.g. subsidiary, finder o Actions, knowledge imputed to parent, even where parent lacks

actual knowledge, direction or authorization over corrupt activity o Main factor is “control” see e.g., Alcoa FCPA case

• Successor liability - in acquisitions, mergers, joint ventures, other business engagements, liability for acts of predecessors o Expected to conduct pre & post transaction due diligence and

monitoring to detect and mitigate corruption-related risk o No “head in the sand” defense

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Due Diligence

• 5 main areas to examine when conducting due diligence:

1. Country Corruption Risk 2. Industry Risk 3. Nexus with government officials 4. Reputation for corruption 5. Third-party involvement

(Intermediaries/Business Partners)

Third Party Relationships • Managing third-party relationships is critical

• Intermediaries/Finders/Agents

• Joint Ventures

• Subsidiaries

• Other Business Partners

• Due Diligence – Risk Based: Enhanced and Standard

• Understand qualifications and associations, including reputation and associations with foreign officials

• Understand business rationale and proposed role

• Ensure contract terms describe the role

• Representations and Warranties

• React to Risk- implement controls

Third Party Intermediary Anti-Corruption Controls

• Pay is commensurate with the work performed

• No discretionary bonuses

• “Success fees”

• Pre-Engagement Training

• On-Going Monitoring and Oversight

• Periodic due diligence refresh

• Training

• Audit rights

• Annual Compliance Certifications

• Documentation

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M&A Anti-Corruption Controls

• Pre-acquisition due diligence • Detect transaction specific corruption-risk, e.g. deal’s pricing,

bribe built into a transaction, obtaining rights or land • Protect against liability with contractual representations

• Post-Acquisition Integration • Incorporate entity into compliance program

• Continual Monitoring • Audit rights • Training • Documentation

• Protects against legal liability, as well as reputational and financial risk (valuation of deal, loss of revenue stream)

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Corruption Red Flags

• Lack of cooperation in providing answers to questions as part of due diligence process

• Payments or promises to government officials or private

sector counterparties • Records of fee payments to a third party are significantly

higher than other third parties in the same industry sector, without compelling business rationale

• Abnormal compensation arrangements, such as excessive

commissions or unusual reimbursements

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• Payments to offshore accounts • Substantial payments to contractors , employees or third parties

with little experience in the field they purportedly work in

• Sloppy book keeping and poor financial controls • Lack of transparency & documentation

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• Excessive use of cash; payments in cash • Invoices from companies or third parties that are vaguely

worded or do not clearly describe services performed • Employees or third parties with close ties or past business

associations with government officials • Employees or third parties who have entered into a business

arrangement or transaction at request of a government official

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• Third parties using multiple shell companies to conduct transactions, or are themselves a shell company

• Use of third parties that do not seem to have expertise or

rationale connection to the deal • Hiring of a third party to perform tasks that require no special

knowledge or skills • Large gifts to clients or client representatives

Key Lessons

• Corrupt payments are increasingly made through complex channels – not just stacks of cash and a bag man

• Third parties are a recurring risk, should be one focus of anti-corruption programs

• US FCPA has international reach, has acted as standard-setter in many respects – should be understood

• Developing and Implementing a Compliance Program tailored to business is essential and helps insure against additional legal risk

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Practice Question

You are a compliance analyst at a multinational financial institution that provides banking and investment services to large institutional customers. Your institution is currently seeking new business opportunities providing services to universities, hospitals, and other institutions with potential ties to political officials and government agencies. Your institution plans to expand into Norway, India, Botswana and Chile and has asked you to assess the corruption risks of offering its services in each nation. What is an accurate risk rating for these countries?

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Practice Question

A. Providing investment and banking services in Norway poses the highest risk for corruption due to a history of bribery by Norwegian state-owned oil companies. B. Providing services in India poses the highest risk for corruption due to the prevalence of state-owned entities and Politically-Exposed Persons (PEPs). C. Providing investment and banking services in Botswana poses the highest risk for corruption due to widespread graft in government contracts. D. Providing services in Chile poses the highest risk due to connections between the Chilean government and international organized crime rings.

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Practice Question

The private equity business tells you they would like to hire a third party in China to find a mining company in which to invest. The business also would like to place three employees on the company’s board of directors. The business would like to hire Mr. X, the former deputy of the Natural Resources Dep’t in China for his connections. The contract calls for a US$60,000 a month fee as well as a success fee which will be 1% of the total deal. What are some red flags? What kinds controls can be implemented to mitigate the corruption risk?

Asset Recovery


• Traditional approach: Asset tracing: Attacking profits, discover where assets are hidden and freeze them

• New approach: Money flow investigation: Attacking money flow, discover how money flowed back to criminal, identify vulnerabilities, seek to interdict funds

Concepts of Asset Recovery Investigations

• To justify asset recovery operation, professionals should prepare:

• List of assets for which recovery is sought • Actual or appraised value for each asset • Names and contact information of persons who may

have interest in asset • Listing of registered owners, lien holders on assets • Statement explaining legal theory or justification behind

freezing each asset • Copies of all investigative or analysis reports in the case • Copies of all court orders previously issued in the case

Making the Case for Asset Recovery Operations

• Investigators

• Forensic accountants

• Lawyers

• Analysts and support staff

Typical Members of Asset Recovery Team

Initial Considerations for Asset Recovery Team

• Does asset have value? Heavily encumbered What will it cost to preserve it during process

• Are there innocent owners who may impede

recovery?

Equitable Weapons of Courts

• Restraining and mandatory injunctions

• Civil search warrants

• Break and search orders

• Accounting

• Constructive trust

• Appointment of receivers •Many others found in CFCS manual

Other evidence-gathering tools

• Production orders

• Search warrants

• Customer information orders

• Account monitoring orders

• Disclosure orders, subpoenas or summons

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Typical records kept by financial institutions

• Transaction and wire transfer records o ID requirements on transactions over $3,000

• Know Your Customer and other customer data o Due diligence reports oPhoto IDs o Signatures o Information on customer relationships o Information on source of customer’s wealth or funds

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Regulatory Records

• Subpoena Required - Bank Examination Records - Applications Records - Ownership and Location Information - Financial Data

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Receivership

• Serve to locate, safeguard, recover assets • Trustees, receivers, administrators, liquidators, officeholders • Step in shoes of directors, entitled to all information

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Subpoena Tips

• Comprehensive production of records - Subsidiaries, affiliates, etc. - Use “bank terminology” • Wire transfers - Fedwire or SWIFT - Authorization document, letter or form

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Asset forfeiture

• Criminal forfeiture - against the defendant or person • Civil forfeiture - in rem’ - against property - proceeds, instrumentality of crime • Substitute assets

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Asset forfeiture

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International Assistance

• Freezing Orders - Mareva injunctions

• Pure Bill of Discovery - Norwich Pharmacal

• Production Order - Bankers Trust Orders

• Stand and Deliver - Anton Piller Orders

• Lis pendens

• Letters rogatory

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Mutual Legal Assistance Treaties (MLATs) • Taking testimony of persons • Providing documents, records and evidence • Service of documents • Locating or identifying persons • Executing requests for search and seizure • Identifying, seizing and tracing proceeds of crime

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• Foreign ministries, nation's chief legal officer

• Embassies – yours and theirs

• “Back channel" assistance, for location of witnesses, authentication of records

• Direction to useful public sources to uncover true beneficial owner

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Enforcement of Judgments

• Uniform Foreign Money Judgments

Recognition Act • Domestic judgments often are enforced in

other countries based on "comity"

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Liability of Third Parties

• Third parties can be valuable, if difficult, targets for asset recovery operations • Preliminary questions on liability - Identify payees - Find related entities - Check public records -Understand regulatory requirements

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Liability of Third Parties

• Preliminary questions on liability - Intelligence sources - Affiliated entities - Gratuitous donees - Fraudulent conveyances - Overpaid investors

Possible Third Party Targets

• Banks

• Broker-dealers, investment advisers, etc.

• Company directors

• Employees

• Lawyers

• Auditors and certified public accountants

Key Lessons

• Understand viable targets for asset recovery options

• Understand information sources, including open sources like corporate registries

• Many asset recovery operations have cross-border component – recognizing international tools is essential

Review Question

• You are employed as part of an asset recovery team seeking to recover funds from a corrupt government official indicted for bribery and embezzlement in Canada. You have identified financial accounts and properties the official held in several common-law countries, including Australia and the UK.

You are concerned that the official may attempt to transfer funds out of his accounts or dispose of properties while legal proceedings against him are still underway. What is one legal tool you could use to prevent the official from transferring these assets?

A. Letters rogatory

B. Anton Pillar order

C. Mareva injuction

D. Production order

Your Questions