Asset forfeiture or asset seizure is a form of
confiscation
Confiscation (from the Latin ''confiscatio'' "to consign to the ''fiscus'', i.e. transfer to the treasury") is a legal form of seizure by a government or other public authority. The word is also used, popularly, of spoliation under legal forms, o ...
of
assets
In financial accountancy, financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value ...
by the
authorities. In the United States, it is a type of
criminal-justice financial obligation. It typically applies to the alleged proceeds or instruments of crime. This applies, but is not limited, to terrorist activities, drug-related crimes, and other criminal and even civil offenses. Some jurisdictions specifically use the term "confiscation" instead of
forfeiture. The alleged purpose of asset forfeiture is to disrupt criminal activity by confiscating assets that potentially could have been beneficial to the individual or organization.
Civil and criminal law
Legal systems distinguish between criminal and civil proceedings. Criminal prosecutions regulate crimes against society as a whole or against the government. Penalties for conviction of a violation of a criminal law typically include being sent to prison, jail or some other form of incarceration. Civil litigation involves disputes either between individuals or individuals and the government. At the conclusion of civil litigation one side can be ordered to pay money
amagesto the other side. Courts also have the authority to order one party to do or not do a specific thing in order to resolve civil disputes. Because of the potential for a loss of liberty, defendants in a criminal case will be provided an attorney at public expense if they are unable to pay for their own lawyer. The same is generally not true in civil cases although there are exceptions. In order for an individual to be found guilty of a crime the government has to provide proof beyond a reasonable doubt of the defendant's guilt. There are several standards of proof in a civil case, the most common is a preponderance of the evidence which is described as anything over fifty percent.
Civil asset forfeiture has been harshly criticized by
civil liberties
Civil liberties are guarantees and freedoms that governments commit not to abridge, either by constitution, legislation, or judicial interpretation, without due process. Though the scope of the term differs between countries, civil liberties may ...
advocates for its greatly reduced standards for conviction,
reverse onus A reverse onus clause is a provision within a statute that shifts the burden of proof onto the individual specified to disprove an element of the information. Typically, this particular provision concerns a shift in burden onto a defendant in eith ...
, and financial
conflicts of interests arising when the law enforcement agencies who decide whether or not to seize assets stand to keep those assets for themselves.
Canada
Part XII.2 of the
Criminal Code
A criminal code (or penal code) is a document that compiles all, or a significant amount of a particular jurisdiction's criminal law. Typically a criminal code will contain offences that are recognised in the jurisdiction, penalties that migh ...
, a federal statute, provides a national forfeiture régime for property arising from the commission of a designated offence (i.e. most
indictable offence
In many common law jurisdictions (e.g. England and Wales, Ireland, Canada, Hong Kong, India, Australia, New Zealand, Malaysia, Singapore), an indictable offence is an offence which can only be tried on an indictment after a preliminary hearing ...
s), subsequent to conviction. Provision is also made for the use of restraint and management orders to govern such property during the course of a criminal proceeding.
All provinces and territories except
Newfoundland and Labrador
Newfoundland and Labrador (; french: Terre-Neuve-et-Labrador; frequently abbreviated as NL) is the easternmost province of Canada, in the country's Atlantic region. The province comprises the island of Newfoundland and the continental region ...
,
Prince Edward Island
Prince Edward Island (PEI; ) is one of the thirteen Provinces and territories of Canada, provinces and territories of Canada. It is the smallest province in terms of land area and population, but the most densely populated. The island has seve ...
and
Yukon
Yukon (; ; formerly called Yukon Territory and also referred to as the Yukon) is the smallest and westernmost of Canada's three territories. It also is the second-least populated province or territory in Canada, with a population of 43,964 as ...
Territory, have also enacted statutes to provide for similar civil forfeiture régimes. These generally provide, on a
balance of probabilities
In a legal dispute, one party has the burden of proof to show that they are correct, while the other party had no such burden and is presumed to be correct. The burden of proof requires a party to produce evidence to establish the truth of facts ...
basis, for the seizure of property:
* Acquired from the results of unlawful activity
* Is likely to be used to engage in unlawful activity
The Supreme Court of Canada has upheld civil forfeiture laws as a valid exercise of the provincial government power over property and civil rights. The extent to which the ''Charter of Rights and Freedoms'' applies to civil forfeiture statutes is still under dispute. To the extent that such laws are applied for a "punitive" purpose, there is case law to suggest that the ''Charter'' applies. In cases where evidence has been obtained illegally, courts in Alberta and British Columbia have excluded such evidence.
European Union
In April 2014, the
European Parliament
The European Parliament (EP) is one of the legislative bodies of the European Union and one of its seven institutions. Together with the Council of the European Union (known as the Council and informally as the Council of Ministers), it adopts ...
and the
Council of the European Union
The Council of the European Union, often referred to in the treaties and other official documents simply as the Council, and informally known as the Council of Ministers, is the third of the seven Institutions of the European Union (EU) as ...
enacted
Directive 2014/42/EU on the freezing and confiscation of proceeds of crime in the
European Union
The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been des ...
. The directive allows the seizure and confiscation of property without a criminal conviction only under very specific circumstances.
Article 4 states:
# Member States shall take the necessary measures to enable the confiscation, either in whole or in part, of instrumentalities and proceeds or property the value of which corresponds to such instrumentalities or proceeds, subject to a final conviction for a criminal offence, which may also result from proceedings in absentia.
# Where confiscation on the basis of paragraph 1 is not possible, at least where such impossibility is the result of illness or absconding of the suspected or accused person, Member States shall take the necessary measures to enable the confiscation of instrumentalities and proceeds in cases where criminal proceedings have been initiated regarding a criminal offence which is liable to give rise, directly or indirectly, to economic benefit, and such proceedings could have led to a criminal conviction if the suspected or accused person had been able to stand trial.
United Kingdom
In the UK, asset forfeiture proceedings are initiated under the
Proceeds of Crime Act 2002
The Proceeds of Crime Act 2002 (c.29) (POCA) is an Act of the Parliament of the United Kingdom which provides for the confiscation or civil recovery of the proceeds from crime and contains the principal money laundering legislation in the U ...
. These fall into various types. Firstly there are confiscation proceedings. A confiscation order is a court order made in the
Crown Court
The Crown Court is the court of first instance of England and Wales responsible for hearing all Indictable offence, indictable offences, some Hybrid offence, either way offences and appeals lied to it by the Magistrates' court, magistrates' court ...
requiring a convicted defendant to pay a specified amount of money to the state by a specified date. Secondly, there are cash forfeiture proceedings, which take place (in England and Wales) in a
magistrates' court
A magistrates' court is a lower court where, in several jurisdictions, all criminal proceedings start. Also some civil matters may be dealt with here, such as family proceedings.
Courts
* Magistrates' court (England and Wales)
* Magistrate's Cour ...
with a right of appeal to the
Crown Court
The Crown Court is the court of first instance of England and Wales responsible for hearing all Indictable offence, indictable offences, some Hybrid offence, either way offences and appeals lied to it by the Magistrates' court, magistrates' court ...
, having been brought by either the police or customs. Thirdly, there are
civil recovery
Civil recovery is the method in some legal systems employed to recover the proceeds of crime, instead of, or in addition to, criminal.
Many retailers, or agents acting on their behalf, utilize civil recovery to recover the value of property (inclu ...
proceedings that are brought by the
National Crime Agency
The National Crime Agency (NCA) is a national law enforcement agency in the United Kingdom. It is the UK's lead agency against organised crime; human, weapon and drug trafficking; cybercrime; and economic crime that goes across regional and in ...
"NCA". Neither cash forfeiture proceedings nor proceedings for a civil recovery order require a prior criminal conviction.
In Scotland, confiscation proceedings are initiated by the
procurator fiscal or
Lord Advocate
, body =
, insignia = Crest of the Kingdom of Scotland.svg
, insigniasize = 110px
, image = File:Official Portrait of Dorothy Bain QC.png
, incumbent = Dorothy Bain KC
, incumbentsince = 22 June 2021
, appointer = Monarch on the advice ...
through a
sheriff court or
High Court of Justiciary
The High Court of Justiciary is the supreme criminal court in Scotland. The High Court is both a trial court and a court of appeal. As a trial court, the High Court sits on circuit at Parliament House or in the adjacent former Sheriff Cou ...
. Cash forfeiture and civil recovery are brought by the Civil Recovery Unit of the
Scottish Government in a sheriff court, with appeals to the
Court of Session
The Court of Session is the supreme civil court of Scotland and constitutes part of the College of Justice; the supreme criminal court of Scotland is the High Court of Justiciary. The Court of Session sits in Parliament House in Edinburgh ...
.
United Nations Convention against Corruption
To facilitate international cooperation in confiscation, the
United Nations Convention against Corruption encourages state parties to consider taking the necessary measures to allow confiscation of the proceeds of corruption without a criminal conviction in cases in which the offender cannot be prosecuted by reason of death, flight or absence or in other appropriate cases.
[Proposal for a Directive of the European Parliament and of the Council on the freezing and confiscation of proceeds of crime in the European Union]
(COM/2012/085) at EUR-Lex
Eur-Lex (stylized EUR-Lex) is an official website of European Union law and other public documents of the European Union (EU), published in 24 official languages of the EU. The Official Journal (OJ) of the European Union is also published on EUR- ...
United States
There are two types of forfeiture (confiscation) cases, criminal and civil. Approximately half of all forfeiture cases practiced today are civil, although many of those are filed in parallel to a related criminal case. In civil forfeiture cases, the US government
sues the item of property, not the person; the owner is effectively a third-party
claimant
A plaintiff ( Π in legal shorthand) is the party who initiates a lawsuit (also known as an ''action'') before a court. By doing so, the plaintiff seeks a legal remedy. If this search is successful, the court will issue judgment in favor of the ...
. The burden is on the government to establish that the property is subject to forfeiture by a "preponderance of the evidence." If it is successful, the owner may yet prevail by establishing an "innocent owner" defense.
Federal civil forfeiture cases usually start with a seizure of property followed by the mailing of a notice of seizure from the seizing agency (generally the
DEA
The Drug Enforcement Administration (DEA; ) is a United States federal law enforcement agency under the U.S. Department of Justice tasked with combating drug trafficking and distribution within the U.S. It is the lead agency for domestic en ...
or
FBI
The Federal Bureau of Investigation (FBI) is the domestic Intelligence agency, intelligence and Security agency, security service of the United States and its principal Federal law enforcement in the United States, federal law enforcement age ...
) to the owner. The owner then has 35 days to file a claim with the seizing agency. The owner must file this claim to later protect his property in court. Once the claim is filed with the agency, the
U.S. Attorney
United States attorneys are officials of the U.S. Department of Justice who serve as the chief federal law enforcement officers in each of the 94 U.S. federal judicial districts. Each U.S. attorney serves as the United States' chief federal ...
has 90 days to review the claim and to file a civil complaint in U.S. District Court. The owner then has 35 days to file a judicial claim in court asserting his ownership interest. Within 21 days of filing the judicial claim, the owner must also file an answer denying the allegations in the complaint. Once done, the forfeiture case is fully litigated in court.
In civil cases, the owner need not be judged guilty of any crime; it is possible for the government to prevail by proving that someone other than the owner used the property to commit a crime (this claim seems outdated and as such would be contradicted by the "innocent owner" defense). In contrast, criminal forfeiture is usually carried out in a sentence following a conviction and is a punitive act against the offender.
The
United States Marshals Service
The United States Marshals Service (USMS) is a federal law enforcement agency in the United States. The USMS is a bureau within the U.S. Department of Justice, operating under the direction of the Attorney General, but serves as the enforceme ...
is responsible for managing and disposing of properties seized and forfeited by Department of Justice agencies. It currently manages around $2.4 billion worth of property. The United States Treasury Department is responsible for managing and disposing of properties seized by Treasury agencies. The goal of both programs is to maximize the net return from seized property by selling at
auction
An auction is usually a process of buying and selling goods or services by offering them up for bids, taking bids, and then selling the item to the highest bidder or buying the item from the lowest bidder. Some exceptions to this definition ex ...
s and to the private sector and then using the property and proceeds to repay victims of crime and, if any funds remain after compensating victims, for law enforcement purposes.
History
Congress has incrementally expanded the government's authority to disrupt and dismantle criminal enterprises and their money-laundering activities since the early 1970s. They have done this by enacting various anti-money-laundering and forfeiture laws such as the
RICO Act
The Racketeer Influenced and Corrupt Organizations (RICO) Act is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization.
RICO was e ...
of 1970 and the
USA Patriot Act
The USA PATRIOT Act (commonly known as the Patriot Act) was a landmark Act of Congress, Act of the United States Congress, signed into law by President of the United States, President George W. Bush. The formal name of the statute is the Uniti ...
of 2001. The concepts of asset forfeiture goes back thousands of years and has been recorded throughout history on many occasions.
["In Depth: Where the Money Goes: Forfeiture proceeds buy small luxuries, but no slush". Chris D Edoardo & A.D. Hopk. ''Las Vegas Review–Journal''. Las Vegas, Nevada. 1 Apr 2001. p. 27A.]
In 2015 a number of criminal justice reformers, including
Koch family foundations
The Koch family foundations are a group of charitable foundations in the United States associated with the family of Fred C. Koch. The most prominent of these are the Charles Koch Foundation and the David H. Koch Charitable Foundation, created ...
and the
ACLU
The American Civil Liberties Union (ACLU) is a nonprofit organization founded in 1920 "to defend and preserve the individual rights and liberties guaranteed to every person in this country by the Constitution and laws of the United States". T ...
, announced plans to reduce asset forfeiture in the United States due to the disproportionate penalty it places on low-income alleged wrongdoers. The forfeiture of private property often results in the deprivation of the majority of a person's wealth.
Forfeiture of terrorist finances
It is difficult for authorities to track, confiscate, and disrupt terrorist-organization finances because they may come from a variety of sources—such as other countries, supporting sympathizers, crime, or legal businesses. Terrorist groups can profit from many crimes—such as black mail, robbery, extortion, fraud, drug trafficking, etc. If discovered and proven terrorist assets, authorities can confiscate property to disrupt terrorist activities. Understanding what constitutes 'terrorist property' is important, because these offenses are widely defined by the 2000 Act as;"
# Property or money that is likely to be used for the purposes of terrorism (including any resources of an organization)
# Proceeds of the commission of acts of terrorism
# Proceeds of acts actually carried out for the purposes of terrorism."
["The Confiscation, Forfeiture and Disruption of Terrorist Finances". Bell, R.E.. ''Journal of Money Laundering Control''. 7.2 (Autumn 2003): 105–25.]
The 2000 Act brought a new system for the forfeiture of terrorist cash. This was modeled on the UK's drug-trafficking cash-seizure process and allowed for the seizure of cash for 48 hours by a constable, customs officer or immigration officer if reasonable grounds were found for suspecting that it was intended to be used for terrorism or was terrorist property. An officer who seized the assets or cash could apply to a magistrates' court for an order authorizing its continued detention to give time for further investigation into where it came from. If the magistrates' court is generally satisfied on the balance of probabilities that the cash was intended to be used for the purposes of terrorism or was terrorist property, then it could make a forfeiture order.
Use of forfeited assets
The assets that are forfeited for criminal and civil offenses are used "to put more cops on the street," according to former United States President George H. W. Bush. The assets are dispersed among the law enforcement community for things such as paying the attorneys involved in the forfeiture case, police vehicles, meth-lab clean up, and other equipment and furniture.
Notable forfeitures
* In 1965, the
United States Supreme Court
The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that involve a point o ...
overturned the seizure of a vehicle by the
Government of Pennsylvania
The Government of the Commonwealth of Pennsylvania is the governmental structure of the Commonwealth of Pennsylvania as established by the Pennsylvania Constitution. It is composed of three branches: executive, legislative and judicial. The capi ...
in ''
One 1958 Plymouth Sedan v. Pennsylvania
''One 1958 Plymouth Sedan v. Pennsylvania'', 380 U.S. 693 (1965), was a Supreme Court of the United States case handed down in 1965. The Court ruled that civil forfeiture could not apply where the Evidence (law), evidence used to invoke the forfei ...
'' seized using illegally obtained evidence.
* In 1996, the Supreme Court in ''
Bennis v. Michigan
''Bennis v. Michigan'', 516 U.S. 442 (1996), was a decision by the United States Supreme Court, which held that the innocent owner defense is not constitutionally mandated by Fourteenth Amendment Due Process in cases of civil forfeiture.
Backgr ...
'' upheld the seizure of a vehicle as contraband, despite the owner's use of the
innocent owner defense
An innocent owner defense is a concept in United States law providing for an affirmative defense that applies when an owner claims innocence of a crime and so the property should not be forfeited. It is defined in section 983(d) of title 18 of ...
.
* ''
USA v. $124,700
''United States of America v. $124,700 in U.S. Currency'', 458 F.3d 822 ( 8th Cir. 2006), was a decision of the United States Court of Appeals for the Eighth Circuit that was handed down on August 18, 2006.
The form of the styling of this case ...
'' August 18, 2006 case from the Eighth Circuit Court on civil forfeiture of $124,700
* After the
Madoff investment scandal
The Madoff investment scandal was a major case of stock and securities fraud discovered in late 2008. In December of that year, Bernie Madoff, the former NASDAQ chairman and founder of the Wall Street firm Bernard L. Madoff Investment Securities ...
had surfaced, Bernard Madoff was ordered to forfeit $170 billion, although it is believed that he did not have anywhere close to that amount. His wife, Ruth, although not charged, agreed to forfeit about $80 million in assets.
* In 2009,
Lloyds Bank
Lloyds Bank plc is a British retail banking, retail and commercial bank with branches across England and Wales. It has traditionally been considered one of the "Big Four (banking), Big Four" clearing house (finance), clearing banks. Lloyds B ...
forfeited $350 million in connection with violations of the
International Emergency Economic Powers Act
The International Emergency Economic Powers Act (IEEPA), Title II of , is a United States federal law authorizing the president to regulate international commerce after declaring a national emergency in response to any unusual and extraordinary t ...
(IEEPA) (falsified outgoing wire transfers to persons on U.S. sanctions lists).
* In 2009,
Credit Suisse
Credit Suisse Group AG is a global investment bank and financial services firm founded and based in Switzerland. Headquartered in Zürich, it maintains offices in all major financial centers around the world and is one of the nine global " ...
, a Swiss corporation, forfeited $536 million in connection with violations of IEEPA.
* In 2010, Barclays Bank forfeited $298 million in connection with violations of the IEEPA and the
Trading with the Enemy Act
Trading with the Enemy Act is a stock short title used for legislation in the United Kingdom and the United States relating to trading with the enemy.
''Trading with the Enemy Acts'' is also a generic name for a class of legislation generally pas ...
.
* In 2010,
ABN Amro Bank
ABN or abn may refer to:
Companies
* ABN AMRO Group, a Dutch bank group
* ABN AMRO, sometimes referred to as "ABN" in shorthand, is a Dutch state-owned bank
* Algemene Bank Nederland, a now-defunct Dutch bank
Radio, news and television organizat ...
forfeited $500 million in connection with violations of the IEEPA and the Trading with the Enemy Act.
* In 2013, an appellate court overruled the
civil forfeiture of Motel Caswell by Boston-area federal prosecutors in ''United States v. 434 Main Street'', Tewksbury, Mass. Despite a number of previous drug crimes committed on the property by outside parties, the
ruled that the "resolution of the crime problem should not be to simply take
he owner's
He or HE may refer to:
Language
* He (pronoun), an English pronoun
* He (kana), the romanization of the Japanese kana へ
* He (letter), the fifth letter of many Semitic alphabets
* He (Cyrillic), a letter of the Cyrillic script called ''He'' in ...
Property."
* On April 17, 2014, the State of Texas seized the
YFZ Ranch
The YFZ Ranch, or Yearning for Zion Ranch, was a Fundamentalist Church of Jesus Christ of Latter-Day Saints (FLDS) community of as many as 700 people, located near Eldorado in Schleicher County, Texas, United States. In April 2014, the State o ...
, a one time
Fundamentalist Church of Jesus Christ of Latter-Day Saints
The Fundamentalist Church of Jesus Christ of Latter-Day Saints (FLDS Church) is a religious sect of the fundamentalist Mormon denominations whose members practice polygamy. The fundamentalist Mormon movement emerged in the early 20th century, ...
(FLDS) community that housed as many as 700 people when it was
raided by Texas on March 29, 2008.
Under Texas law, authorities can seize property that was used to commit or facilitate certain criminal conduct.
See also
*
United Nations Convention against Corruption
*
Amercement
An amercement is a financial penalty in English law, common during the Middle Ages, imposed either by the court or by peers. The noun "amercement" lately derives from the verb to amerce, thus: the king amerces his subject, who offended some law. T ...
*
Asset freezing
Asset freezing is a form of interim or interlocutory injunction which prevents a defendant to an action from dealing with or dissipating its assets so as to frustrate a potential judgment. It is widely recognised in other common law jurisdictio ...
* ''
Bennis v. Michigan
''Bennis v. Michigan'', 516 U.S. 442 (1996), was a decision by the United States Supreme Court, which held that the innocent owner defense is not constitutionally mandated by Fourteenth Amendment Due Process in cases of civil forfeiture.
Backgr ...
''
*
Eminent domain
Eminent domain (United States, Philippines), land acquisition (India, Malaysia, Singapore), compulsory purchase/acquisition (Australia, New Zealand, Ireland, United Kingdom), resumption (Hong Kong, Uganda), resumption/compulsory acquisition (Austr ...
*
Equitable sharing
*
Forfeiture Endangers American Rights
*
Nebraska v. One 1970 2-Door Sedan Rambler (Gremlin)
''Nebraska v. One 1970 2-Door Sedan Rambler (Gremlin)'' 191 Neb. 462, 215 N.W.2d 849 (1974) is a Nebraska Supreme Court civil forfeiture case. It was brought by the American state of Nebraska to seize a Rambler Gremlin on the sole grounds it ...
*
Operation Protect Our Children
Operation Protect Our Children (also called Operation Save Our Children) was a 2011 joint operation by U.S. Immigration and Customs Enforcement, and the U.S. Department of Justice's Child Exploitation and Obscenity Section and Asset Forfeiture and ...
*
United States v Schooner Peggy (1801)
References
Further reading
*
* {{cite magazine, last=Stillman , first= Sarah , author-link=Sarah Stillman , title=The Use and Abuse of Civil Forfeiture , magazine=The New Yorker , year=2013 , url= http://www.newyorker.com/reporting/2013/08/12/130812fa_fact_stillman?currentPage=all
External links
Introduction to forfeiture laws– Legal Information Institute,
Cornell University
Cornell University is a private statutory land-grant research university based in Ithaca, New York. It is a member of the Ivy League. Founded in 1865 by Ezra Cornell and Andrew Dickson White, Cornell was founded with the intention to teach an ...