Cayman Islands Country Profile - Asset Recovery Mechanisms

A. Criminal Asset Recovery

i. Tracing

Production Orders (Section 149 to Section 155)

Section 149 and 150 of the Proceeds of Crime Act (POCA) 2008 detail that a production order can be produced on application by a Constable to a Judge on the proviso that the requirements for producing an order are fulfilled. A production order is for the purpose of requiring the nominated person for which the order applies as being in possession or control of material to produce the material to an officer for him to take away or requiring a person to give an appropriate officer access to the material.

Within the period stated for the order, the application will need to include details of the following:

1. A person specified in the application is subject to a confiscation investigation or money laundering investigation; or
2. Property specified in the application is subject to a civil recovery investigation; and
   
3. The order is sought for purposes of investigation; and
   
4. The order is sought in relation to material, or material of description, specified in the application; and
5. A person specified in the application appears to be in possession or control of the material.

The standard period stated on the production order will be 7 days but is subject to the discretion of the judge if a shorter or longer time period is required. The order does not need to be served on the person under investigation. In addition, the Judge must be satisfied to grant an order of the following conditions:

• There are resonable grounds for suspecting that:

1. In the case of a confiscation investigation, the person of which is the subject of the investigation has benefited from his criminal conduct.
2. In the case of civil recovery investigation the property for which the application for the order including the subject to the investigation is recoverable property or associated property. (DEFINITIONS); and
3. In a money laundering investigation, the person whom the application for the order is made as the subject to the investigation has committed a money laundering offence.

• There are resonable grounds for believing that the person the order specifies as being in possession of the material is in fact in possession or control of the material.
• There are reasonable grounds for believing the material is of substantial value to the investigation.
• There are reasonable grounds that it is in the public interest for the material to be produced or for access to it to be given having regard to the benefit accruing to the investigation and the circumstances under which the person specified as appearing to be in possession or control of the material.

Should access to premises be required to obtain the materials, section 151 deals with the process of making an application to grant entry. This is delegated to an appropriate officer.

A production order cannot grant access to privileged and exclude material (Section 152). There are also some supplementary provisions in section 155 in relation to production orders to gain entry.

Search and Seizure (Sections 156 - Section 159)

Section 156 outlines that a search and seizure warrant is a warrant authorising an appropriate person to enter and search premises specified in the warrant. It also serves to seize and retain material found that will be of value to the investigation. Applications for the warrants must include:

• A statement that the person named is subject to a confiscation or money laundering investigation or that the property is subject to a civil action recovery.
• A statement that a warrant is sought in relation to the premises and materials specified in the application.

Requirements for the issue of a search and seizure warrant include that a production order has not been complied with and their are reasonable grounds to believe that the materials are on the premises and also that section 157 is satisfied. Section 157 outlines where no production order is issued.

Customer Information Orders (Section 166 - Section 172)

A Customer Information Order requires a financial institution to provide customer information as detailed in the application made by an approved officer and approved by a Judge. Section 167 defines what information that can be obtained and is whether the person holds or has held an account or accounts at a financial institution.

Detailed information that can be gathered includes: account number (s), person's full name, his date of birth, most recent and previous addresses, dates of account activity, any evidence obtained on his identity, information on any person that has held or holds accounts jointly, any other accounts to which he is a signatory. The Customer Information Order will also apply to any companies, Limited Liability Partnerships or similar bodies incorporated outside the Islands. Section 167 (3) details what information is covered under the Order for bodies incorporated outside the Islands.

A Court will issue a customer information order if it is satisfied there are reasonable grounds for suspecting that the person specified has benefited from criminal conduct, that it is in the public interest, it will be information of value to the investigation, in the case of civil investigation that the property is recoverable and the person owns the property, in the case of money laundering investigation that there are reasonable grounds to suspect the person has committed a money laundering offence. (Section 168)

Account Monitoring Orders (Section 173 - Section 179)

An account monitoring order is an order that a financial institution specified within the application shall provide account information relating to accounts singly or jointly as specified for at or by specified times stated in the order. (Section 173 (2)). Again this order is applied for an appropriate officer and approved by a Judge.

The application will state that the person specified in the application is subject to a confiscation or money laundering investigation, property specified in the apllication is subject to a civil recovery investigation and the property is held by the specified person, the order is made for the purposes of investigation, the order is sought against the specific financial institution named in the application.
The order cannot exceed a period of ninety days beginning with the date the order is made. (173 (3)).

A Court will make the order if it is satisfied that there are reasonable grounds for suspecting the person has benefited from criminal conduct in the case of a confiscation investigation, property is recoverable and the person holds property in the case of a civil recovery investigation, that there are reasonable grounds that the person has committed a money laundering offence, that there are reasonable grounds to believe that the account information will be of value and in the public interest in the case of any investigation (Section 174).

Cash Seizure and Forfeiture (Section 114 - Section 120)

A customs officer or constable may seize cash if he has reasonable grounds to believe that it is recoverable property or intended by any person for use in unlawful conduct. Cash seized under section 114 may be detained initially for a period of 48 hours although this can be extended by an order made by a summary court for a period not exceeding three months from the date of the order and in the case of a further order not for a period exceeding two years based on the date of the first order.

The application for an order is made by the Collector of Customs or by a Constable and will be made based on the fact that there are reasonable grounds for suspecting the cash is recoverable property and that there are reasonable grounds for suspecting the cash is intended to be used in criminal conduct.

The summary court may order that cash be detained where the Attorney General has applied to the court for the cash to be detained while consideration is being given to the institution of proceedings for civil recovery under section 118 (forfeiture).

While any cash is detained under Section 115 a summary court may direct the release of the whole or any part of the cash if it is satisfied that the conditions for the detention of cash (Section 118) are no longer met.

The Attorney General can make an application for forfeiture of the cash while it is detained under Section 115 by way of submission to the summary court. (Section 118 - Forfeiture)

Section 61 details the guidelines of which money can be seized by the courts.

Where money is held in and account maintained by him with a bank or building society and a restrain order has effect in relation to the money, a confiscation order is made against the person by whom the money is held, a receiver has not been appointed in relation to the money and any period under Section 20 for payment of the amount under a confiscation order is ended, then a summary court may order the bank to pay the money to the clerk the court for the court on account of the amount payable under the confiscation order.

ii. Freezing

Restraint Order (Section 44 - Section 51)

A restraint order may be made by the Grand Court when proceedings have been instituted against the defendant in a foreign country, the proceedings have not concluded and either an external confiscation order has been in the proceedings or it appears to the Grand Court that there are reasonable grounds for thinking that such an order will be made. Schedule 5, 5(1).

A restraint order may also apply where the Grand Court is satisfied that proceedings will be instituted against the defendant in a foreign company.

A restraint order will under Schedule 5 (6) prohibit any person from dealing with any realisable property (subject to section 45). A restrain order applies where an application relates to an external confiscation order and in all other cases apply to realisable property whether the property is described in the restraint order or not and to realisable property being transferred to him after the making of the restrain order.

Applications from a Foreign Jurisdiction

A restraint order may be made on application to the Attorney General on behalf of the Government of a foreign country or in the case where an external confiscation order has been registered under section 187, by a receiver appointed under paragraph 9.

Where a restraint order is made a constable may seize the property for the purpose of preventing any realisable property from leaving the islands.

Application for restrain order (Schedule 5)

An application under 6 (5) must be accompanied by an affidavit by the appropriate authority of a foreign country deposing or specifying where proceedings have or will been instituted, the conduct the defendant is alleged to engage and grounds for believing the defendant engaged in that conduct.
It must also state where an external confiscation order has been made, the amount payable under the confiscation order. Where an external confiscation order has not been made, grounds for belief that the defendant derived benefit as a result of the conduct and that the amount to be realised is at least the stated amount. Further statements that are required are stated in under Schedule 5, paragraph 7.

Realisable Property (Section 75)

Realisable property is defined under Section 75 as any free property held by the defendant and any free property held by the recipient as a tainted gift.

Property is not realisable property if an order under section 30 of the Misuse of Drugs Law (2000 Revision) is in force in respect to the property. Schedule 5 details "realisable property" as in relation to an external confiscation order in respect of specified property, the property which is specified in the order; and in any other case as any property held by the defendant; and any property held by a person to whom the defendant has directly or indirectly made a gift caught by this law.

Tainted Gift (Section 70 - Section 74)

Regardless of whether the Court has decided that the defendant has a criminal lifestyle under Schedule 1 a gift is classified as tainted if it was made by the defendant after the relevant day or if it was a result of in connection with or as a result of criminal activity. (Section 70)

A gift is considered tainted if it was made before or after the commencement of the law and is applicable from the first day of the period of six years ending with the day when proceedings for the offence where started against the defendant or the earliest of the days if there are two or more offences.

Management Receivers (Section 52 - Section 60)

The Court, upon the application of the Attorney General may order a management receivership in respect to any realisable property to which a restraint order applies. The Court can empower the receiver to take possession of the property, manage and deal with the property, start continue or defend any legal proceedings, to realise property to meet the receivers remuneration and expenses or realise the property as the court may specify.

iii. Confiscation/Forfeiture (Sections 15 - Sections 22, Schedule 5)

The confiscation provisions are detailed in Part III of the POCA 2008. Section 15 commences that a confiscation order can be made by the court or summary court if the defendant is convicted of an offence or offences in proceedings before the Court. Alternatively a confiscation order can also be made if the Attorney General asks the Court to proceed under this section or the court believes it is appropriate to do so.

The conditions of a confiscation order that must be satisfied by the court or summary court include: satisfaction that the defendant has a criminal lifestyle, whether the defendant has benefited from general criminal conduct and whereit decides the defendant does not have a criminal lifestyle whether he has benefited from his criminal conduct.

When considering to make a confiscation order the court or summary court may take into account any information that has been placed before it showing that a victim of the offence to which proceedings relate has instituted or intends to institute civil proceedings against the defendant in respect to loss, injury or damage sustained in connection with the offence. This will be decided on the balance of probabilities.

Section 17 assists in deciding whether the defendant has benefited from his conduct. Factors such as where the defendant has conducted himself in a way that constitutes criminal conduct.

Payment Due Dates (Section 20)

Section 20 indicates that payment will be made on the date the confiscation order is made or where more time is required a period may be specified to accommodate payment terms but not exceed a specified period of six months. The specified period may be extended on application highlighting exceptional circumstances. The extended period will not exceed a time period of 12 months.

What sum is due?

Section 21 indicates when an amount is not paid on time, interest will be applied at the rate of that applying to a civil judgement debt.

Discharge of Order (Section 36)

A discharge of a confiscation order will be granted under the following conditions:

• Where a Court has made a confiscation order under section 15 as applied by section 37;
• The defendant is later tried for the offence or offenses concerned and acquitted on all counts; and
• He applies to the court for a discharge order.

In calculating the defendants benefit any property under a recovery order (Section 96) or a forfeiture order (Section 118) shall not be taken into account.

Realisation of Property (Schedule 5)

Where an external confiscation order has been registered in the Grand Court under section 188 the Grand Court may on the application to the Attorney General exercise powers such as:

• Making a Garnishee Order as if the sum were due to the Crow in pursuance of a judgement or order of the Grand Court in respect to an amount payable under a confiscation order. This amount is payable to the Grand Court;
• Appoint a receiver in respect of realisable property;
• Empower a receiver to take possession of property under direction of the Court;
• Order any person having possession of the property to give possession to any such receiver;
• Empower any receiver to realise any realisable property under the direction of the Court;
• Order any person holding an interest in realisable property to make such payment to the receiver in respect to any beneficial interest held by the defendant or in the case if it is considered a gift the court may extinguish any interest in the property.

iv. Repatriation

b. Civil Asset Forfeiture (Part IV, Section 77 to Section 132)

Part IV (Section 77 to Section 132) of the POCA Act 2008 details the procedure involved in Civil Recovery of the Proceeds of Unlawful Conduct.

Civil Recovery provisions enable the Attorney General to recovery in civil proceeding property which is or represents property that has been obtained through unlawful conduct or cash which has been obtained through unlawful conduct or which is intended to be used in unlawful conduct to be forfeited before a summary court.

Proceedings for a recovery order may be taken by the Attorney General in the Grand Court against any person whom the Attorney General thinks holds recoverable property. The powers in this part are exercisable whether or not proceedings have been brought for an offence connected with the property.

c. Civil Law suits

Civil action to recover assets from the Cayman Islands is available to a victim or state pursuing proceeds of crime.

An alternative recourse also used in the past, involved obtaining restraint orders once the MLAT requirements were met and later the discontinuation of those proceedings in favor of allowing the victim to file its own civil recovery action in the Cayman Islands. This was done for instance where ArcherDanielMidlands, the giant United States food processor/ manufacturer, was victim of an invoicing fraud carried out by one of its senior executives. He had set up companies in the Cayman Islands and used them to issue several millions of dollars of false invoices to ADM for purchases which he never made on its behalf. That money, which was initially restrained through an MLAT request because there were criminal investigations was eventually returned when ADM's civil action succeeded.