APPENDIX 4
Supplementary memorandum submitted by
the Home Office
EVIDENCE FROM OTHER JURISDICTIONS TO BE USED
IN ASSETS RECOVERY AGENCY PROSECUTIONS OR CIVIL PROCEEDINGS
CONFISCATION INVESTIGATIONS
I should start by explaining that the Assets
Recovery Agency will not have a role in the investigation of criminal
offences or undertake prosecutions. Although four of the investigation
powers in Part 8 of the Bill will be available to law enforcement
agencies for the purpose of money laundering investigations (which
are criminal investigations), the Agency itself will only be able
to use them for confiscation and civil recovery investigations.
The Agency's power to obtain disclosure orders (the fifth power
provided by Part 8 of the Bill) will not be available to law enforcement
agencies and will therefore only be used for confiscation and
civil recovery investigations, and not for criminal investigations
into money laundering.
Insofar as the Chairman's questions relate to
criminal investigations or prosecutions by the Agency, therefore,
they reflect a misunderstanding of the Agency's role. We have
therefore interpreted the questions in Part A as relating to the
Agency's confiscation functions.
1. What arrangements have been, or will be,
put in place enabling the ARA to obtain documents from overseas
jurisdictions (eg establishing the beneficial ownership of an
overseas bank account or company or other assets) which can be
introduced as evidence in ARA prosecutions?
1.1 The UK is able to request information
from overseas jurisdictions for use as evidence in either criminal
or confiscation proceedings via mutual legal assistance (MLA)
channels. In domestic law this mechanism is governed by Section
3 of the Criminal Justice (International Co-operation) Act 1990,
under which a prosecutor may ask a judge to issue a letter of
request to a foreign jurisdiction seeking help in obtaining evidence.
Such letters are transmitted via the Secretary of State (in practice
the UK Central Authority located in the Home Office). It will
be open to the ARA to ask the Crown Prosecution Service to make
an application under the 1990 Act.
1.2 MLA is the formal process by which countries
assist each other with criminal investigations or proceedings.
MLA can be used for the purpose of confiscation investigations
or proceedings. MLA assistance can take many forms: forwarding
summonses, obtaining witness statements, gathering evidence, carrying
out searches and seizure of property, conducting complex investigations
etc. Thus, the UK can request another jurisdiction to obtain and
transfer to it documents relating to ownership of assets or businesses
located abroad which are suspected of representing the proceeds
of crime or which might be needed in order to satisfy a confiscation
order.
1.3 Much MLA between the UK and other countries
is covered by treaties and conventions. The 1959 Council of Europe
Convention on Mutual Assistance in Criminal Matters and its 1978
Additional Protocol govern our MLA relationship with European
states, setting out how assistance should be requested, and what
may be requested and provided. There are two new EU agreements,
which have not yet entered into force. These are the 2000 Convention
on Mutual Assistance between the Member States of the EU, and
its 2001 Protocol. When the Protocol comes into force, Member
States of the EU will be obliged upon receipt of a request from
another Member State, to provide banking information, including
lists of accounts held by a particular individual. The Protocol
specifies and limits the conditions which must be met in the request,
and Member States cannot apply additional discretion as to whether
to execute the request.
1.4 Also relevant are the 1990 Council of
Europe Convention on the Laundering, Search, Seizure and Confiscation
of the Proceeds from Crime, the 1988 UN Convention Against Drug
Trafficking and the recent (not yet ratified) UN Convention against
Transnational Organised Crime.
2. What is the specific legislation or treaty,
etc enabling the provision of beneficial ownership or other documents
by overseas jurisdictions for use in criminal proceedings by the
ARA (or to the UK Government Officer or agency acting on behalf
of the ARA?)
2.1 In the case of EU and Council of Europe
countries, the 1959 Convention enables them to assist the UK.
It refers in broad terms to processing evidence or transmitting
articles to be produced in evidence, records or documents. In
the case of Commonwealth countries, the Commonwealth Scheme for
Mutual Assistance governs the provision of assistance. Bilateral
treaties with some other countries, including Canada and the US,
contain similar arrangements. Some countries do not require the
existence of a treaty or convention in order to provide assistance,
and can do so under their domestic law.
3. Would the overseas jurisdiction have to
have a comparable criminal offence in their legislation before
they could obtain documents from the person or entity located
within their jurisdiction and then provide such documents to the
ARA for use in criminal proceedings?
3.1 Whether the overseas jurisdiction requires
a comparable criminal offence in its own domestic legislation
in order to provide such assistance will depend entirely on the'
law of each individual country. Most of our main MLA partners,
eg the EU and the US, do not require the existence of dual criminality
in order to provide assistance, although most do require dual
criminality if the request involves coercive measures such as
search and seizure orders.
4. Which jurisdictions within the EU would
be legally entitled to provide beneficial ownership or other documents
to the ARA for use in criminal proceedings?
4.1 All states that are parties to conventions
or agreements containing MLA provisions are required to have in
place a legal framework which enables them to comply with MLA
requests. However MLA agreements tend not to contain absolute
obligations: there tend to be restrictions and conditions, and
a level of judicial discretion. All EU Member States are required
to have and do have arrangements for providing MLA to other Member
States.
4.2 On receipt of a request from a competent
UK authority, the requested EU authority will assess whether it
meets the appropriate conditions under their domestic law and/or
the Convention in force. Assuming the request was complete, accurate
and formulated in accordance with the Convention, and that there
was no successful appeal, then any EU country should be able to
provide the requested assistance.
5. Which of the 33 Tax Havens (ie jurisdictions
with secrecy provisions concerning bank accounts, ownership of
companies or other assets etc) included at pages 16 and 17 of
the OECD 2000 report "Towards Global tax Co-operation"
would be legally entitled to provide beneficial ownership or other
documents to the ARA for use in criminal proceedings? I enclose
a copy of the OECD list identifying the 33 Tax Havens.
5.1 We are researching this question and
I will write further as soon as possible.
6. If some, or all of the EU jurisdictions
and Tax Havens were not legally obliged to provide documents to
the ARA for use in criminal proceedings, how would the ARA be
able to obtain documentary evidence from those jurisdictions to
establish in court proceedings the nature, beneficial ownership
and economic value of overseas bank accounts or other assets located
in or controlled from those jurisdictions?
6.1 The UK could not obtain information
from countries which were unable to provide it under their domestic
law, and would have no redress if such a country was not a party
to a relevant convention or agreement.
7. If an EU jurisdiction or Tax Haven was
legally obliged to provide documents to the ARA for use in criminal
proceedings and did so but the ARA did not succeed in obtaining
a conviction in those criminal proceedings, or the totality of
evidence was such that it was not possible for the ARA to continue
or institute proceedings, would the ARA be able then to use the
documents in alternative civil proceedings?
7.1 Whether the foreign jurisdiction would
agree to the ARA using evidence that had been provided for confiscation
proceedings in civil recovery proceedings would be a matter for
the jurisdiction concerned. Experience shows that many foreign
jurisdictions are quite restrictive about alternative use of evidence
given via MLA. In relation to evidence obtained for use in criminal
proceedings, Section 3(7) of the 1990 Act requires that the consent
of the providing authority must be obtained for it to be used
for any purpose other than that originally specified.
CIVIL PROCEEDINGS
8. What arrangements have been, or will be,
put in place enabling the ARA to obtain documents from overseas
jurisdictions, which can be introduced as evidence in ARA civil
proceedings before the High Court or Court of Session (clause
248 of the Proceeds of Crime Bill) or before the Special Commissioners
when the Director of the ARA exercises general Revenue functions
(clause 320 of the Proceeds of Crime Bill)?
8.1 Exchange of evidence for use in civil
proceedings is governed by instruments such as the Hague Convention
of 18 March 1970 on the Taking of Evidence Abroad in Civil and
Commercial Matters and by a number of bilateral agreements. Some
states not covered by such instruments are sometimes prepared
to respond to requests for help in obtaining evidence from witnesses
in their jurisdiction for civil proceedings. It is not yet possible
to ascertain to what extent foreign states will regard the civil
recovery scheme as falling within the scope of civil judicial
co-operation, but at least some states may regard it as excluded.
8.2 Revenue information about specific persons
can only be exchanged between tax authorities under a legal instrument.
In this respect the UK is currently a party to the EU Mutual Assistance
Directive and over 100 bilateral Double Taxation Agreements.
8.3 Information disclosed under these instruments
can usually only be used for purposes and all instruments contain
provisions to protect taxpayers confidentiality. Broadly speaking,
the Inland Revenue is able to disclose information obtained under
these instruments in a hearing of the Special Commissioners.
8.4 It is envisaged that there will be a
Memorandum of Understanding between the Inland Revenue and ARA.
This is likely to contain guidance on the exchange of information
and evidence obtained under these international instruments.
9. What is the specific legislation or Treaty,
etc enabling the provision of documents by overseas jurisdictions
for use in civil proceedings by the ARA?
9.1 See previous section.
10. Would the overseas jurisdiction have to
have a comparable civil liability or other obligation in their
legislation before they could obtain documents from the person
or entity located within their jurisdiction and then provide such
documents to the ARA for use in civil proceedings?
10.1 As with criminal proceedings, this
is entirely a matter for the relevant domestic jurisdiction. Certain
countries may view the proceedings as an administrative matter—not
civil or criminal—and therefore outside the scope of the
relevant convention. This is an issue for their domestic law,
interpretation and judiciary.
10.2 The scope for judicial co-operation
in relation to civil recovery is hampered by the limited number
of states which have so far introduced this form of litigation.
The Performance and Innovation Unit Report—Recovering the
Proceeds of Crime (June 2000)—concluded that the UK should
publicise and implement the conclusions within that report to
share developing practice and set a higher international standard
in the attack on criminal assets. In G8 and other international
for a on crime reduction, the UK has drawn attention to the advantages
of civil recovery and it is hoped that other states will consider
introducing similar schemes in future.
11. Which jurisdictions within the EU and
which of the 33 Tax Havens listed in the Report would be legally
entitled to provide documents to the ARA for use in civil proceedings?
11.1 We do not have a definitive answer
to this question. As noted above, it is likely that at least some
states will regard civil recovery as falling outside the scope
of civil judicial co-operation.
12. If some or all of the EU jurisdictions
and Tax Havens were not legally obliged to provide documents to
the ARA for use in civil proceedings, how would the ARA be able
to obtain documentary evidence from those jurisdictions to establish
in High Court, Court of Session or Special Commissioners proceedings
the nature, beneficial ownership and economic value of overseas
assets located in or controlled from those jurisdictions?
12.1 In accordance with normal civil discovery
procedures, respondents in civil recovery proceedings will be
under an obligation to disclose relevant documents even if located
abroad.
Godfrey Stadlen
Financial Crime Team
24 May 2002
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