Asset Recovery - Legal & Regulatory Frameworks

To enable effective asset recovery to take place it is essential that countries establish sound legal and regulatory frameworks.

Any regulatory framework should oblige financial, professional and other institutions to introduce systems to ensure that there is proper identification of their clients (Due Diligence or Know Your Client principle); that all suspicious financial activity is reported in a timely fashion; that full and accurate records are kept of all financial dealings and that the staff are trained in implementing such measures to ensure that they are effective.

Such a framework, combined with measures including the application of prevention policies and practices, the limitation to bank secrecy laws, the establishment of bodies to regulate, licence, supervise and monitor and enforce those policies and practices, the application of codes of conduct promoting transparency and accountability in the management of financial transactions together with high accounting and auditing standards, will help to towards prevent money-laundering.

An article published by Peter Warrack in the July 2006 edition of ACAMS Today (Association of Certified Anti-Money Laundering Specialists) put forward a definition for enhanced due diligence as follows -

"A rigorous and robust process of investigation over and above (KYC) procedures, that seeks with reasonable assurance to verify and validate the customer's identity; understand and test the customer's profile, business and account activity; identify relevant adverse information and risk assess the potential for money laundering and / or terrorist financing to support actionable decisions to mitigate against financial, regulatory and reputational risk and ensure regulatory compliance."

To support such a regulatory framework, criminal laws are necessary to deter money-laundering and to enable any breaches to be prosecuted successfully. Additionally, legislation to provide for the tracing, freezing, seizure, confiscation and repatriation of assets will be required.