Cayman's Chief Justice calls
on world community:
Work together to achieve
global standards for the forfeit of the Proceeds of Crime
Current anti-money-laundering initiatives, including the Vienna Convention and other multi-lateral treaties and conventions, have not been entirely effective in combating drug trafficking and organised crime, said Cayman's Chief Justice Anthony Smellie, Q.C. He called on the world community to cooperate in closing the gaps through the development of global standards.
The Chief Justice was addressing the Pacific Rim International Conference on Money Laundering and Financial Crime, in Bangkok, Thailand, late March. He was invited to speak on developing global standards in the face of present challenges to the restraint and forfeiture of the proceeds of crime.
The conference was organized and hosted by the Thai Government and supported by the United Nations Drug Control Programme (UNDCP), Financial Action Task Force (FATF), and the United States Government. More than 500 delegates as well as representatives of various supporting and funding agencies attended.
The head of Cayman's Judiciary outlined the existing world initiatives, including Cayman's leading-edge innovations, but said that these measures have not provided "a truly effective solution" because what is needed is "the wholesale confiscation of the proceeds of crime." This goal, he said, requires the implementation of "civil forfeiture measures on a global scale."
As such, civil measures would continue to be based on established legal principles, while being more amenable to incorporation of "common procedural requirements designed to avoid the unnecessary obstacles to international cooperation." Based thus, such standards would achieve their aims without "the prerequisite need and difficulties of proving crimes to criminal standard, when its objective-forfeiting the proceeds-is entirely different."
Included in the new standards, he said, should be "an obligation to share recovered proceeds with other countries involved with or assisting in their recovery."
"Asset-sharing should therefore not be seen merely as a political tool to buy cooperation in the international struggle against crime," he continued. "It should be regarded as an international obligation."
Speaking to the issue of tax evasion as a predicate offence for money laundering and the making of confiscation orders, the Chief Justice noted, "Few issues can be more vexed in the context of seeking to arrive at global standards for the restraint and forfeiture of the proceeds of crime." The reason for this is that present day "Euro-Socialist" governments, in particular, seem unable or unwilling to recognise that "tax evasion is not an offence againstthe law of all humanity."
xplaining, he said, "While it is criminal and rightly punishable at the domestic level, tax evasion is not readily amendable to multilateral standards, the rules being as variable as the regimes from which they spring."
As a consequence, the offence of tax evasion did not lend itself to ease of international definition, he said, adding, "Not only is there no readily identifiable mutual criminal basis for enforcement of purely fiscal measures, but Commonwealth courts have long declared that they have no obligation to enforce the fiscal measures of foreign countries."
As such, he said, "tax evasion and other purely fiscal offences are hardly likely ever to become universally accepted as predicate offences for the translational interdiction of the proceeds of crime." He continued that while most right-thinking persons would agree that tax cheating was wrong, sovereign states are not "likely to forego the perceived fiscal benefits which their different tax systems allow for the sake of interdicting the proceeds of foreign tax evasion -- at least not without treaties which provide reciprocal benefits."
The Chief Justice said that attempts to treat fiscal offences as crimes for the purposes of inclusion in global standards for the restraint and forfeiture of proceeds of all serious crimes may only add further barriers to the attainment of the original goals. He quoted the Council of the Caribbean Financial Action Task Force (CFATF): "Initiatives relating to tax evasion and tax avoidance should not be allowed to compromise the genuine anti-money-laundering efforts of the CFATF."
Turning to the key obstacle to effective anti-money-laundering efforts, Mr. Smellie said that for many countries this boiled down to attempts to employ "conviction-based forfeiture measures" as opposed to the more effective "civil-based proceedings."
"As an enhanced measure of society's response to the threat of serious crime, the civil/in rem procedure carries all the (requisite) attributes and justificationswithout the need and difficulties of proving crime to the criminal standard when the objective of forfeiting the proceeds is entirely different."
The Chief Justice said that further continuing barriers to effective international efforts in combating money laundering included:
The failure of many countries to make transparent the true beneficial ownership of assets. "Despite the various international initiatives, corporate vehicles and trusts are still allowed to be used to mask the criminal nature of assets," he noted. "It is axiomatic that the corporate veil should not be allowed to protect assets where the necessary prima facie link to criminal conduct is shown."
The inability to use information provided for the prosecution of one matter when provided for another specified matter, as arises from the typical Mutual Legal Assistance Treaty (MLAT). "Once there is a settled international standard for the provision and use of information for the prosecution of crime and the restraint and forfeiture of the proceeds, there should be no reason why information provided for use in one such matter or aspects of a matter should not be available for use in another," the Chief Justice said, "provided, of course, that the other matters meet the standards for disclosure and that it can be shown without the formality of further requests as between the international authorities."
The Chief Justice, in explaining why the typical MAT request is processed at quickly as in only six weeks in the Cayman Islands, said that other speakers had expressed concern that delays in the provision of international legal assistance can often result in the assistance being so late that it becomes literally worthless.
Other delegates spoke of information being provided to their requesting countries after legal proceedings had concluded. "We don't allow that to happen in the Cayman Islands," the Chief Justice said, "We stick to six weeks." He said that prime factors locally were the cooperation of the private sector and the small size of the jurisdiction.