asset recovery - hong kong perspective

Asset Recovery -Hong Kong PerspectiveAsset Recovery -Hong Kong Perspective

Sudhir GIDWANIChief InvestigatorIndependent Commission Against CorruptionHong Kong Special Administrative Region, China

Sudhir GIDWANIChief InvestigatorIndependent Commission Against CorruptionHong Kong Special Administrative Region, China

Asset Recovery WorkshopAsset Recovery Workshop

4th IAACA Seminar, Dalian

International financial and

banking system

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Technological advances

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Quick transfer of funds

Strategy

• Tracing of Assets

• Restraint

• Seizure

• Confiscation

Problems in Tracing Assets

• Gatekeepers (bankers, corporate service providers, trust companies, lawyers, accountants)

• Shell corporations

• Off-shore companies

• Identification of beneficial ownership

ICAC, Hong Kong

• Committed and qualified investigators

• Forensic Accounting Group

• Computer Forensic Group

• Proceeds of Crime Section

Restraint and Confiscation Proceedings in Hong Kong

• Prevention of Bribery Ordinance (POBO)

• Organized and Serious Crime Ordinance (OSCO)

• Drug Trafficking (Recovery of Proceeds) Ordinance

POBO

• Provides for restraint

• No provision for confiscation except for Chief Executive or prescribed officer being in control of pecuniary resources or property disproportionate to official emoluments

• Restitution Orders (civil in nature)

OSCO

• Restraint and Confiscation of proceeds of crime

• Organized and serious crimes

• Specified offences (Schedule 1 & Schedule 2)

• Corruption Offences are specified in Schedule 2

Restraint Order

• Facilitates future confiscation of proceeds of crime

• Purpose

Preserves and prevents dissipation of assets

Victim

• Government does not compete with the victim of crime

• Ascertain stance of the victim

• Restraint order not made for facilitating civil claim of a victim

Conditions to be Fulfilled

• Proceedings have been instituted

• Proceedings have not been concluded

• Defendants benefited from the crime

• Proceeds of crime ≥ HK$100,000

Property that can be Restrained

• Property held by the defendant

• Property held by a person as a gift from the defendant

• Property subject to the effective control of the defendant

Disclosure Order

• Disclosure on oath

• Income and assets

• Held in Hong Kong or elsewhere

• Held in his name or on his behalf by some other person

• Information can’t be used for investigation or criminal proceedings

Confiscation Order

• Upon conviction of the defendant

• Before sentence

• Can also be made if the defendant has absconded or died

• Fixes period for defendant to pay

• States term of imprisonment if any amount not paid

Case Study 1

‘D1’

‘D2’‘Offeror’

‘Offeror’(Corporate Client)

‘D1’ & ‘D2”(Bank Executives)

5 bottles of wine (HK$14,500)

Loan(HK$2.7 billio

n)

‘Offeror’

HK$3.3 million

watch (HK$33,000)

HK$2.5 million

Case Study 2

• Fraudulent trading in derivative warrants

• Dummy a/c’s set up to trade

• Profit generated from fraudulent trading distributed in cash amongst syndicate members

• Proceeds of crime HK$145.7 million

Case Study 2 (cont’d)

• Cash deposits in bank accounts, safe deposit boxes, real estate and shares

• HK$127 million assets restrained

• HK$110.4 million ordered to be confiscated

• Enforcement pending due to appeal proceedings

Conclusion

• Ill gotten gains must be returned to the rightful owner

• Deterrent effect

• States must co-operate and provide assistance to each other

• Message: No safe haven to park proceeds of crime

Thank You

www.icac.org.hk