Can Non-Conviction based (NCB) asset

forfeiture be compliant with the Rule of Law?

Briefing Paper

Overview
1. Jai Ramaswamy, Chief of the Asset Forfeiture and Money Laundering Section
of the US Department of Justice, recently declared in relation to asset forfeiture
that:
“[I]f we want to do this right, it may take some time, but part of what we are
trying to promote is the Rule of Law. It doesn’t make us do any good […] if
we acquire these goods in a way that violate those basic tenets of fairness,
due process, etc. That takes time; it can be frustrating […] but I also
appreciate that there is then public buy-in, there is legitimacy to what we’ve
done; it doesn’t look like we’re running kangaroo courts […]”i
2. Ramaswamy’s comments are extremely on point. While the world bears witness
to various corruption scandals, governments, NGOs and the law enforcement
community alike continue exploring mechanisms to recover kleptocratic money
and to return ill-gotten gains to their country of origin in an accountable
manner. As Ramaswamy’s quote suggests, procedures must be followed to
bring asset recovery in line with the Rule of Law. His comments also speak to
the broader difficulties of fighting corruption in a manner that complies with
the Rule of Law. As President Buhari of Nigeria once declared:
“I am not unaware of the challenges of fighting corruption in a manner
consistent with respect for human rights and the Rule of Law”.ii
3. Asset recovery – the process by which law enforcement agencies and courts
deprive criminals and criminal organizations of their ill-gotten gains through
seizure of these assets – raises a number of questions. Specifically, Non-
Conviction Based (NCB) asset forfeiture (also known as ‘civil forfeiture’)
galvanises both praise and criticism, with most attention focussing on the
constitutional dangers it entails with respect to human rights and due process
protections for the defendant.
4. The research upon which this paper is based iii provides guidance on how
various ‘developing country’ jurisdictions can implement NCB in a manner that
is compliant with due process and the Rule of Law. In the process, it shows that
it is possible for countries to minimize prospects for abuse in NCB. The research
also contributes to our understanding of how tensions between the need to fight
corruption and recover assets while respecting civil and political rights can
operate in practice.

Key Messages

• NCB is a much-maligned asset recovery tool which attracts both praise and
criticism. The latter revolves around the lifting of constitutional protections for
the defendants, lower procedural safeguards, and the potential for NCB to
encroach on human and property rights.

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• Rule of Law safeguards – such as independent courts and robust judicial
structures which guarantee property rights protection – are a prerequisite to the
effective implementation of NCB.

• As experience from various countries demonstrates, NCB can be Rule of Law

compliant where certain safeguards are put in place.

• There are, however, challenges to the implementation of these safeguards,

including the lack of understanding of incentives/disincentives for reforms; a
possible conflict between human rights and anti-corruption commitments;
judicial independence (or lack thereof); and the state of property rights
regimes.

Introduction
5. In the world of international development, the large-scale plundering of state
resources is particularly problematic because it deprives many governments
with resources to invest in health, education and infrastructure. Ongoing
transparency campaigns and investigative reports have also demonstrated the
transnational nature of corrupt money, whereby a lot of the ill-gotten gains tend
to be siphoned off abroad to offshore jurisdictions. The problem is that such
funds can seldom be recovered and returned.iv
6. Because criminals tend to place greater value on the money and assets rather
than time in prison, a well-known law enforcement strategy consists in ‘taking
the profit out of crime’. This can be achieved either through domestic criminal
prosecution and confiscation, or through Non-Conviction-Based (civil)
forfeiture mechanisms (NCB).

Non-Convictions Based forfeiture mechanisms and due

process implications
7. NCB (sometimes called ‘civil forfeiture’) provides a mechanism for freezing
criminally tainted assets and their instrumentalities, and then forfeiting these to
the states if so decided by the courts. Specifically, NCB refers to the legal
process allowing for the “restraint, seizure and forfeiture of stolen assets without
the need for a criminal conviction.” v NCB targets property, and not a person
like in criminal cases.vi It uses a civil standard of proof (i.e. on a ‘balance of
probabilities’) as the prevailing benchmark) vii. It also shifts the onus of proof
onto the defendant, who must thus prove the lawful origins of his/her assets. viii
The Box below further elaborates on the NCB process.

NCB in a nutshellix

NCB typically begins with an investigation to secure the necessary evidence that an
asset is either proceeds of unlawful activities or an instrumentality of an offence.
This investigation can be conducted separate from or together with criminal
procedures. Where investigators/prosecutors are satisfied with the evidence, a Court
order is often presented with a motion to freeze the assets (e.g. the cash in a bank
or an expensive car that needs to be impounded), which the Court grants (or not),
often within a short timeline. This can be done ex parte if the defendant fails to meet
the deadline and/or fails to appear in Court. The Court ruling will often include the
motivation for freezing the assets and identify a respondent/defendant. It may also
prescribe a time limit during which the investigators can continue assembling
evidence, and/or for the suspect to build his or her defence and prove the licit
origins of his or her assets. However, sometimes this is defined in the Statutes. In
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South Africa and Namibia, this is known as the ‘preservation’ stage. Following this
period, the Court must rule on the case. It will determine whether the assets should
be returned back to the defendant or forfeited to the State where it can be shown
they are either proceeds of unlawful activities or and instrumentality(ies) of an
offence(s). In South Africa and Namibia, this is known as the ‘forfeiture’ stage.
However, there are differences in how countries go about these steps, both in terms
of who has the authority to undertake it, the role of the courts, and statutory limits.
Once the final forfeiture order is granted, the state is normally empowered to use
the assets as it sees fit (some countries provide a centralised fund, for example to
assist bolstering enforcement agencies).

8. NCB has attracted a fair bit of criticism since it involves lifting due process
protections for the accused who can be punished without him/her enjoying the
normal due process protections otherwise afforded to all defendants in a
criminal case.x NCB is viewed by some as an assault on due process which
raises serious constitutional concerns, in part because it interferes with property
rights of third parties in the absence of a criminal conviction.

9. Despite the criticism, the application of NCB has withstood constitutional

scrutiny when challenged in courts, for example in South Africa, Namibia or
the Philippines.xi South African law, court rulings, along with other proponents,
recognize that NCB is a ‘critical’ tool for recovering the proceeds and
instrumentalities of corruption since conventional remedies to fight crime have
failed.xii Law enforcement authorities also tend to argue that NCB provides a
swift and efficient way to recover assets, not only because of its broad scope of
application, but also since the alternative – criminal confiscation – entails a
level of technical complexity that often acts as a deterrent against pursuing
corruption cases. Indeed, criminal forfeiture requires tracing the assets back to
their origin, which requires technical skills some countries don’t have.
Moreover, causality may also be hard to establish in cash-based societies,
which qualifies to a lot of developing countries.

NCB and the Rule of Law: making the connection

10. Why focus specifically on asset forfeiture, NCB, and the Rule of Law? As stated
above, without Rule of Law that ensures legal certainty, transparency and
accountability and access to justice and rights, NCB forfeiture risks infringing
on property and human rights. Thus, the Rule of Law is clearly an enabler where
asset forfeiture and NCB are concerned. Little wonder that the UN Convention
Against Corruption (UNCAC) also recognise the importance of the Rule of Law
and due process of law to adjudicate property rights, both in the preamble and
opening articles on preventive measures. xiii Moreover, the prosecution of
corruption often takes an international dimension, and courts in many
jurisdictions can only accept evidence (e.g. gathered in ‘victim’ countries) which
meets certain exacting Rule of Law standards. Thus, developing the local
investigative, prosecutorial and legal ecosystem in ‘victim’ countries in a
manner that is Rule of Law compliant is fundamental.
11. Because of the powers associated with it, NCB can lead to creating significant
and arbitrary state powers to interfere with property rights in the absence of a
criminal conviction. This overwhelming capacity to do harm is worrying where
state capacity is weak and its powers are left unchecked, for example through
independent courts. Thus, it is clear that robust judicial structures and rights
protection are a prerequisite to the effective implementation of NCB. Rule of
Law safeguards help prevent corruption and ensure that NCB is not diverted
from its original objective. They also help build trust in NCB, thus contributing
to their long-term sustainability and effectiveness. Paradoxically, therefore, Rule
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 of Law can help curb abuse in NCB, but the success of NCB also depends on
the stability of Rule of Law institutions.

Safeguards in Practice

12. The research shows that some developing countries have put in place due
process safeguards to address the issues created by the lower standard of
proof, and thus that NCB forfeiture can be implemented with good effect in a
manner that is consistent with due process, human rights, and the Rule of Law.
Even as critics of NCB recognise, when it is compliant with due process, it can
be an efficient tool in the fight against corruption. xiv The research identified the
following safeguards that are implemented in practice across various
constituencies:
a) Lawfulness and proportionality as a means to protect property rights: One
way to ensure this infringement on property rights is justified is to ensure it is
lawful (i.e that the interference is authorized by law, which is itself legally
certain). Moreover, rights can be curtailed if they are proportionate to the
goals sought. In practice, therefore, courts have used proportionality tests to
ensure NCB doesn’t interfere on individual rights and to address the risk that
‘punishment’ meted out on the accused through confiscation of proceeds of
crime or the instrumentalities isn’t too harsh. xv The South African approach
consists in a two-step judicial test, one focussing on instrumentality, and
another on proportionality.
b) Compensation: Some jurisdictions have established that the interference with
property involved in civil forfeiture should be accompanied by compensation
when it affects third parties unfairly and unreasonably, or when it may restrict
a person’s peaceful enjoyment of his/her right. Courts in South Africa and
Namibia can vary preservation orders to avoid inflicting undue hardship.
c) Mitigating the risk of ‘reverse onus’ provisions: Shifting the onus onto
defendants is arguably easier since a defendant is best placed to justify that
his property was lawfully acquired, or not acquired directly or indirectly from
the commission of an offence, than it is for the authorities to establish the
contrary. But reversing the burden of proof is fraught with dangers, as it could
undermine the fair trial rights of the accused, which ensure that anyone
accused of a crime by the state has the procedural right to a presumption of
innocence and a right to a defence.
Lord Bingham, a preeminent UK judge, decided that proportionality tests,
which are undertaken to evaluate whether the reversal is justified, provide
one way to guard against abuse in reverse onus provisions. xvi It remains to
be seen how courts in developing countries can effectively apply such a test,
however. Moreover, it is worth noting there have been legal challenges
against the presumption of innocence in various jurisdictions, but courts have
found that reverse onus provisions are lawful on the condition that the
presumption is restrictively worded, rebuttable, and reasonable. xvii

Another way to address the risk inherent in reverse-onus provisions is to vary

the standard of proof throughout the asset forfeiture process. South Africa,
for example, places the burden at the preservation stage on the National
Director of Public Prosecutions (NDPP), which must demonstrate that it has
“reasonable grounds” to believe that the property is the proceeds or
instrumentality of a crime.xviii At the forfeiture stage, the burden continues to
lie with the NDPP, but the standard is on a balance of probabilities, a higher
standard than at the preservation stage, though still short of what is required
in criminal cases. This two-stage procedure thus brings in additional safety

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 by ensuring that the state shows that its suspicions are justified and also
restricts the state’s ability to initiate such proceedings without a certain level
of proof. In the Ukraine, a Bill proposes to introduce a ‘partially reversed
burden of proof’. The Colombian legislation also applies a ‘dynamic burden
of proof’.

d) Protections against self-incrimination: A central tenet of criminal justice

systems is that any person who is charged with a criminal offense is entitled
to be presumed innocent until proven guilty. A corollary right is that the
accused is not compelled to give evidence during the trial. This is important,
since NCB can often be conducted in parallel to a criminal trial. In such
circumstances, it is good practice for the statutes to clarify whether a forfeiture
case can proceed alongside a criminal case, but in such a way that compelled
information from the asset owner is not used against him/her in a criminal
case. However, it should be noted that the South African courts have ruled
there is no privilege against self-incrimination because the evidence in civil
litigation is not compelled, which, it is argued, means that defendants are
much less inclined to contest a case because the statements they make may
be used against them in a criminal case.xix

a) Challenging forfeiture orders and right to appeal: Embedded within the NCB
process is the right for defendants to appeal decisions. This means that the
authorities must not only give notice to all those who may have an interest in
a property or asset which is subject to a forfeiture order; but also that a person
may challenge that decision within a certain time-frame. In South Africa, the
‘innocent owner’ must prove, on a balance of probabilities, that the proceeds
were acquired legally, for consideration and that he or she has, since the key
legislation was introducedxx, neither known nor had reasonable grounds to
suspect that the property is the proceeds of an unlawful activity or is an
instrumentality of an offence (this is known as the ‘innocent owner defence).

b) The right to legal aid: This protection underpins the realization of the
abovementioned safeguards, and is a broader principle enshrined in most
legal systems. Some countries provide for legal assistance to vulnerable
people. But Colombia also proscribes the claimant’s use of seized or frozen
assets for legal fees or living expenses. South Africa makes an allowance for
living expenses from the seized assets, and to cover his defence (within limits).
Without such limit, the claimant would have nothing to lose from litigating
endlessly until funds have been depleted. Naturally, providing access to legal
aid out of frozen funds also presupposes that the seized assets are properly
managed in a way that their value does not decrease.

c) Restricting the value of forfeited assets: In the US, where pushback against
NCB has been particularly important due to a tendency by some law
enforcement authorities to engage in ‘policing for profit’, some states have
responded to this by placing a threshold beyond which seizure of assets can
only happen through criminal, not civil mechanisms.

Implementation challenges

13. The Stolen Asset Recover (StAR) Initiative has identified a number of conditions
that developing countries should put in place to facilitate asset recovery without
which the effective recovery of stolen wealth and return of assets could be
hampered. This includes, among others: effective laws and institutions, which
depend on strong legislative and regulatory frameworks, together with
institutions that have operational independence; investigation and pursuit of
cases, which in turn, could be said to depend largely on political will; effective
interaction among agencies; informal practitioner-to-practitioner cooperation
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 as well as better international cooperation mechanisms, including through
Mutual Legal Assistance (MLA) requests; and development of the capacity of
practitioners.xxi In addition to this, the research identified various challenges
that may affect the implementation of the aforementioned due process
safeguards to varying degrees, particularly in a developing country context:
a) Understanding incentives/disincentives for change and for addressing
corruption: It is often held that fighting corruption requires ‘political will’. True
as that might be, the precise meaning of this term is contested. Instead, it has
been suggested that understanding the political economy of change and the
incentive/disincentive systems for addressing corruption and tackling asset
forfeiture is more fruitful approach. This is a first and necessary stage needed
to inform asset recovery reform.

b) The possible conflict between human rights and anti-corruption commitments:

There appears to be a tension that emerges from international laws that grant
increased powers of confiscation, and international human rights standards
that enshrine due process. But as has been argued in the broader literature,
this tension does not appear to be insurmountable. xxii The key point is that
implementing the due process safeguards essentially helps allay the
possibility that the two types of obligations conflict.

c) Court systems and judicial independence (or lack thereof): Whether and how
the various due process safeguards are implemented ultimately depends on
the presence of a fair and impartial judiciary. In other words, where there is
no judicial review, and where courts are unable to undertake a
proportionality analysis, this could severely undermine due process in
forfeiture cases. Lack of judicial independence and a weak court system (e.g.
court delays) could also hamper the implementation of citizen’s and property
rights. Measures to strengthen judicial independence and court systems in
general can thus have spillover effects on asset forfeiture.

d) Property rights regimes: Related to the above point, courts have an important
role in protecting property rights regime. As already discussed, some
countries have constitutionally enshrined property rights protections
prescribing that there can be no deprivation of property except in terms of
law of general application, and more generally, that no law may permit
arbitrary deprivation of property. In practice, however, identifying the actual
property owner is challenging, especially where there is no land registry
linking property to an owner, or where it is of poor quality. This causes a risk
that courts may order expropriation and, in the process, inflict harm to or loss
for a third party. In short, where asset forfeiture is concerned, deed registry
and strong expropriation laws are important to protect property rights. But so
is an independent judiciary which is able to undertake a proportionality
analysis, hear appeal processes and ensure the defendant’s right to a fair
trial.

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i.Jai Ramaswamy, Center for Strategic and International Studies, Returning Stolen Assets: Current Issues
and Future Challenges or the International Community, Washington D.C. (Oct. 24, 2014).
ii.His Excellency Muhammadu Buhari, President, Fed. Republic of Nigeria, Keynote Address at The
Commonwealth Event: Tackling Corruption Together: A Conference for Civil Society, Business and
Government Leaders (May 11, 2016).
iii
Tromme M, Spring 2019, Waging War Against Corruption in Developing Countries: How Asset
Recovery Can be Compliant with the Rule of Law, Duke Journal of Comparative & International Law,
29(2), https://scholarship.law.duke.edu/djcil/vol29/iss2/ Countries under review include: South Africa,
Namibia, Botswana, the Philippines, Mexico and Colombia
iv
Phyllis Atkinson, Introduction to International Centre for Asset Recovery, Tracing Stolen Assets: A
Practitioner’s Handbook 19–22 (2009),
https://www.baselgovernance.org/sites/collective.localhost/files/publications/asset-tracing_web-
version_eng.pdf and See Kevin M. Stephenson et al., World Bank & UNODC, Barriers to Asset Recovery:
An Analysis of the Key Barriers and Recommendations for Action 3 (2011),
http://documents.worldbank.org/curated/en/204221468338390474/Barriers-to-asset-recovery-an-
analysis-of-the-key-barriers-and-recommendations-for-action
v
Greenbrg et Al, Stolen Asset Recovery Initiative, Stolen Asset Recovery: A Good Practices Guide for Non-
Conviction Based Asset Forfeiture 1, 1 (2009), at xv.
vi
A distinction is often made between ‘in rem’, and ‘in personam’ forfeiture.
vii
Comparatively, criminal cases require proof to be based ‘beyond reasonable doubt’
viii
NCB usually involves two stages, one where the assets are frozen, and one when they are forfeited. In
South Africa, the standard of proof differs.
ix This description attempts to generalise the NCB process, however there may be variations from
jurisdiction to jurisdiction.
x
Liberty (The National Council for Civil Liberties), Proceeds of Crime: Consultation on Draft Legislation
¶ 5.1 (May 2001), https://www.libertyhumanrights.org.uk/sites/default/files/jun-proceeds-crime-
draft.pdf
xi
See Falk v NDPP 2012 (1) SACR 265 (CC) (South Africa); Shalli v. The Attorney-General [2013]
NAHCMD 5 (Namibia); Republic of the Phil. v. Sandiganbayan, G.R. No. 152154 (S.C., Nov. 18, 2003)
(Philippines)
xii
See NDPP v. Mohamed NO & Others 2002 (4) SA 843 (CC) (S.Afr.); Prevention of Organised Crime
Act 121 of 1998, supra note 15.
xiii G.A. Res. 58/4, United Nations Convention Against Corruption, UNCAC (Oct. 31, 2003).
xiv Martin Collins & Colin King, The Disruption of Crime in Scotland through Non-Conviction Based
Forfeiture, 16 Journal of Money Laundering Control 379 (2013); AJ van der Walt, Civil Forfeiture of
Instrumentalities and Proceeds of Crime and the Constitutional Property Clause, 16 South African Journal
of human rights 1 (2000); Colin King, Using Civil Processes in Pursuit of Criminal Law Objectives: A
Case Study of Non-conviction-based Asset Forfeiture, 16 International justice of Evidence & Proof 337,
337–63 (2012).
xv
As has been remarked, proportionality tests can only work in jurisdictions where the constitution protects
private property against expropriation without compensation, and even then, only in those instances
where the courts are willing to treat a disproportionate or excessive regulatory control of the use of
property as an expropriation. For more on this and specific examples, see Tromme, M, Note iii
xvi Sheldrake v. Director of Public Prosecutions [2004] UKHL 43, [20]–[21], ¶ 21 (appeal taken from
Eng.).
xvii Greenberg et Al, Note v, at 61. Reversal of the burden of proof is also encouraged by Article 12(7)
of the U.N. Convention Against Transnational Organized Crime, G.A. Res. 55/25, U.N. Doc
A/RES/55/25 (Jan. 8, 2015). For legal challenges against the presumption of innocence, see generally
R v. Rezvi [2002] UKHL 1 (appeal taken from Eng.); R v. Benjafield [2002] UKHL 2 (appeal taken from
Eng.).
xviii Prevention of Organised Crime Act 121 of 1998 § 38(2) (South Africa).
xix Willie Hofmeyr, The Effective Use of Asset Recovery, 39 Commonwealth Law Bulletin 1, 59, 63 (2013).
xx
Prevention of Organised Crime Act 121 of 1998 (South Africa)
xxi. Larissa Grey et al., Stolen Asset Recovery Initiative, Few and Far: The Hard Facts of Stolen Asset
Recovery (2014), at 51–53; Greenberg et al., Note v; Jean-Pierre Brun et al., World Bank & UNODC,
Asset Recovery Handbook: A Guide for Practitioners (2011),
https://star.worldbank.org/sites/star/files/Asset%20Recovery%20Handbook.pdf
xxii
See Tromme, M, Note iii