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This Emerging Insights paper assesses different mechanisms from which the UK can learn to allow for the return of proceeds of corruption.
The return of assets stolen by kleptocrats and corrupt officials is an essential aspect of the global fight against corruption. However, the data shows that the amount of assets returned by destination countries to countries of origin represents only a minimal fraction of the total amount of proceeds lost to corruption. Furthermore, even when corruption is identified, asset return proves to be a challenge when the confiscated proceeds belong to a country whose government officials would likely misappropriate them again. International standards strongly encourage assets to be returned to their state of origin or prior legitimate owners, but often leave the process of how to do so to the discretion of the destination country.
As one of the main destinations of choice for ill-gotten gains, the UK, over the past few years, has asserted its ambition to increase the amount of assets it returns to its legitimate owners. At present, however, it still faces considerable challenges with regard to choosing the right return mechanisms that would ensure enough decision-making freedom to the origin country without allowing the assets to fall back into a cycle of corruption.
By looking at asset return practices adopted by different destination countries, this paper assesses mechanisms from which the UK can learn to allow for the return of proceeds of corruption. In particular, the paper considers both direct and indirect mechanisms, the latter being intended as asset return practices that include the active participation of third parties instead of governments in the asset return process. It also seeks to explore in what circumstances the UK should choose indirect over direct return mechanisms.
What emerges in this paper is that there is no one-size-fits-all return mechanism and that policymakers need to consider the peculiarities of each case to inform the end-use of the assets. However, while the authorities of the origin country should always have the first word in assessing the modalities of return on the basis of the origin country’s political, economic and judicial context, authorities from destination countries should also provide a clearer structure surrounding processes, timeframes and selection criteria for stakeholders’ involvement in order to help obviate some of the major challenges to returning the proceeds of corruption.
Dr Maria Nizzero
Centre for Financial Crime and Security Studies