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Law enforcement agencies to pilot new legislative tool targeting unexplained wealth

Law enforcement agencies will pilot a new legislative tool targeting unexplained wealth. Stock photo.
Law enforcement agencies will pilot a new legislative tool targeting unexplained wealth. Stock photo.
Image: 123RF/Olivier Le Moal

Government departments together with law enforcement agencies are piloting an initiative expected to bring a more cost-effective, faster and easier approach to investigating and recovering assets acquired through suspected unlawful activities such as corruption, fraud, tax evasion and money laundering.

In a joint statement the National Prosecuting Authority, Directorate of Priority Crime Investigation (Hawks), department of justice and the SA Revenue Service (Sars), led by the Financial Intelligence Centre and operating under the auspices of the Anti-Corruption Task Team, said they are collaborating on the joint project to deprive those who support their lifestyles with ill-gotten gains from their unexplained wealth.

“This will better enable SA to confiscate criminal proceeds in line with the Financial Action Task Force recommendation in this regard.  The law enforcement agencies will use existing asset-recovery legislation to secure appropriate orders issued by our courts to confiscate unexplained wealth, thereby enabling the authorities to recover suspected ill-gotten gains,” reads the statement.

The organisations said the provision in the existing asset-recovery legislation that targets unexplained wealth is a legislative tool that requires the state to prove a defendant’s legitimate sources of income are not sufficient to justify assets the defendant owns.

“This puts the onus on the defendant to prove the source of the funds for the assets owned is legitimate and the assets were not acquired from the proceeds of criminal activities. A court can therefore make an order to confiscate unexplained wealth on the basis the wealth of a person or entity is disproportionate to the lawful income derived or declared by the person or entity and the defendant is unable to justify or explain how the wealth was lawfully acquired,” reads the statement.

The new approach will enable law enforcement agencies and Sars to act even in cases where such unlawful activity cannot be proven beyond a reasonable doubt.

The organisations said the UK, Australia, Ireland, Mauritius and Kenya are examples of countries that have adopted the concept of unexplained wealth orders (UWOs) as legislative tools and have successfully recovered assets.

With this inter-agency initiative, the organisations aim to strengthen and supplement the use of existing legal frameworks to preserve and forfeit assets by targeting unexplained wealth.

They said the initiative seeks to determine whether existing legislation can be effectively used or if it should be augmented further with a stand-alone UWO legislative framework.

The initiative also aims to practically test how inter-agency co-operation can be operationally achieved to expand the limits of the current legislation by creating case law through court proceedings.

The initiative was started in November 2020 to test the feasibility of a UWO asset recovery regime in SA under Chapter 6 of the Prevention of Organised Crime Act and through inter-agency collaboration.

A project steering committee has been established and a task team was set up to conduct research and benchmarking and make recommendations on a way forward.

So far the participating agencies said they have entered into an inter-agency memorandum of agreement to formalise their collaboration and the practical implementation of the initiative in the cases to be selected and to regulate the confidentiality of information to be shared among the agencies.

The organisations said preparatory activities for the next phase are in progress to select an appropriate case to test the existing provisions that target unexplained wealth in the courts.

“The Organisation for Economic Cooperation and Development has expressed keen interest and supports the outcomes of the project as a means to deepen inter-agency collaboration and combat unlawful activities such as corruption, fraud, tax evasion, money laundering and illicit financial flows.”

TimesLIVE


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