South America: New four-country framework for sharing seized assets
Thursday, May 9, 2019 at 8:08AM
Shirin Ahlhauser in Asset Forfeiture, MERCOSUR

At the end of last year four Latin American countries signed a multilateral framework agreement regarding the disposition of confiscated property resulting from crimes linked to transnational organized crime, significantly advancing the discourse on asset sharing. It signals the political willingness to develop international legal frameworks around asset sharing and the necessity of it.

The South American trade bloc, MERCOSUR, includes Argentina, Brazil, Paraguay, and Uruguay. The MERCOSUR countries signed the Framework Agreement for the Disposition of Forfeited Assets for Transnational Organized Crime in the MERCOSUR (MERCOSUR Framework Agreement) in December of 2018. Specific steps were laid out by this agreement, describing procedures for how to deal with seized assets as well as the sharing of assets covered by the agreement.

Under Article 7, where there has been cooperation in the confiscation of assets, negotiation regarding the distribution of the assets is mandatory. The state requesting the return of assets and the state in whose jurisdiction the asset recovery took place are required to negotiate and agree as to the percentage of confiscated assets in each case that will be distributed, taking into account the cooperation provided as well as:

a. The nature and importance of the assets;
b. The complexity and importance of the cooperation; [and]
c. The incidence of the cooperation provided in the resolution of the case.

Disputes between parties regarding “interpretation, application, or non-compliance” of the provisions of the agreement are resolved through the MERCOSUR dispute resolution system.

The MERCOSUR Framework Agreement also places special emphasis on safeguarding the rights of good-faith third parties and compensation for damage to victims.

The agreement hasn’t been translated into English, but is available in Spanish here.

A lack of international agreements or national legislation on the process for asset return or sharing creates a lack of certainty. This may put a chill on willingness to expend state resources in the asset recovery process; a country with limited financial resources may not want to engage in a costly investigation relating to asset recovery without the guarantee of at least negotiations for support. The MERCOSUR Framework Agreement is an important advancement in addressing this concern.

However, it is limited to certain organized crimes. Additionally, many proceeds of crime are recovered through settlements. It is possible that a government would argue that a settlement was not a “confiscation.” Legal language for the definition of “proceeds of crime” should be harmonized.

As the MERCOSUR Framework Agreement is put into action, other countries and multilateral organizations can use it as a model for cooperation and legislation. They can also take advantage expanding the scope of the crimes addressed and revisiting the definition of “proceeds of crime” to create more robust tools for fighting corruption through asset recovery and sharing.

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Shirin Ahlhauser, pictured above, is an attorney admitted to practice in Washington, D.C. She works as a Legal Consultant (Sanctions) in the World Bank’s Office of Suspension and Debarment. The findings, interpretations and conclusions expressed herein are those of the author and do not necessarily reflect the views of the World Bank Group, its board of directors or the governments they represent.

Article originally appeared on The FCPA Blog (http://www.fcpablog.com/).
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