How to Seize a Billion Exploring Mechanisms to Recover the Proceeds of Kleptocracy

By Maria Nizzero

The imposition of sanctions against the ‘oligarchs’ following Russia’s invasion of Ukraine has triggered a policy conversation about the potential to move ‘from freeze to seize’: achieving permanent confiscation of assets that are currently temporarily frozen under sanctions. Acting against the oligarchs’ assets represents a way for the UK government to both reaffirm its intention to support Ukraine, and to show that the UK is no longer a haven for the proceeds of patronage, bribery or corruption. However, the UK’s asset recovery mechanisms have previously fallen short when dealing with the challenges related to seizing such proceeds, such as the difficult nature of investigating alleged historical criminality and corruption at the root of the wealth, the vast resources available to those who to manage to hide their assets and, if needed, to prove their licit origin, and the provenance of wealth in uncooperative jurisdictions. In addition, while the intention to move ‘from freeze to seize’ is high on the government’s agenda and has been reflected in several parliamentary debates and the Economic Crime Bill presented in September 2022, there are concerns that such political interest and pressure to act quickly should, however, come with proposals that do not undermine the UK’s status as a rule-of-law jurisdiction and a supporter of fundamental human rights. This paper explores alternative asset recovery mechanisms that could help respond to the immediate policy goal surrounding Russian-linked sanctioned assets and contribute to strengthening the broader asset recovery framework in the UK for the longer term. It sets out the current challenges related to confiscation of proceeds of grand corruption and explores the limitations of UK civil recovery mechanisms when seeking to tackle such proceeds. Given these challenges, the research looks at examples of three alternative mechanisms across four jurisdictions – Australia, Switzerland, Ireland and Italy – weighing their potential and limitations in relation to issues such as a lower standard of proof or reversed burden of proof, as well as reframing around ‘societal danger’, and their legal applicability in UK legislation. With these factors and the broader findings of the research in mind, this paper concludes with a set of recommendations for UK policymakers, which apply equally to the global debate, when thinking about reforming the country’s asset recovery mechanisms. While it does not intend to categorically push for one model to be adopted over others, as developing legislative mechanisms to facilitate the permanent confiscation of kleptocratic proceeds is a challenge that goes well beyond the UK,1 the paper suggests considering amendments to the current asset recovery mechanisms that take account of the social damage and national security interests affected by criminals, and kleptocrats in particular. This is a key gap in UK legislation, and these concepts need to both be included in asset recovery legislation and have full buy-in from the government and law enforcement. Alongside this, some adjustments to existing legislation to include certain elements, such as a full reverse burden of proof and, most importantly, appropriate resourcing of law enforcement, will improve the odds of recovering proceeds of crime in the UK.

SOC ACE Research Paper No. 16. Birmingham, UK: University of Birmingham.2023. 35p.