GAB is pleased to welcome this guest post by Andrew Dornbierer of the Basel Institute on Governance, author of the recently released open-access book Illicit Enrichment: A Guide to Laws Targeting Unexplained Wealth.
Laws targeting illicit enrichment are increasingly prevalent. To date, at least 98 jurisdictions have some form of illicit enrichment law. While the design and scope of these laws vary—some are criminal laws that can be used to convict individuals who control assets disproportionate to their lawful income, while others are civil laws that allow governments to seize assets whose lawful origins cannot be adequately explained—the common characteristic of all illicit enrichment laws is that they do not require prosecutors to secure a conviction for the underlying criminal conduct that allegedly produced the illicit wealth. Rather, illicit enrichment laws only require that the government show that the person enjoyed an amount of wealth that cannot be explained by reference to their lawful sources of income.
This characteristic serves as the primary point of attack for many critics. They claim that by not requiring a state to prove criminal activity, illicit enrichment laws effectively reverse the burden of proof, requiring the targets of the enforcement action to prove their innocence. And some countries have resisted adopting illicit enrichment laws for this very reason. While the UN Convention Against Corruption includes a specific article recommending that state parties consider adopting illicit enrichment laws, during negotiations “many [national] delegations indicated that they faced serious difficulties, often of a constitutional nature, with the inclusion of the concept of the reversal of the burden of proof.” Similar concerns were raised during the drafting of the Inter-American Convention Against Corruption (IACAC), and while in the end this convention did include a provision calling on states parties to adopt illicit enrichment laws, the United States filed a particularly clear reservation to this provision when it joined, noting that because “[t]he offense of illicit enrichment … places the burden of proof on the defendant,” such an offense “is inconsistent with the United States Constitution and fundamental principles of the United States legal system.” And in Ukraine, in February 2019 the Constitutional Court of Ukraine invalidated the local illicit enrichment law on the basis that it was inconsistent with the presumption of innocence.
Is there any truth to the claim that illicit enrichment laws unfairly place a burden of proof on the defendant, and thus violate the presumption of innocence?
The short answer is no.
Indeed, in almost all countries where courts have examined the issue, the courts have concluded that illicit enrichment laws do not contravene the presumption of innocence. Take, for example, the reasoning of Argentina’s National Court of Criminal Cassation, which has repeatedly rejected the claim that Argentina’s illicit enrichment offense infringes on the presumption of innocence. The court has consistently explained that the burden of proof is never actually reversed in proceedings under the law, because the illicit enrichment offense is itself a crime of commission—the defendant has enriched him- or herself in an appreciable and unjustified manner—and not a crime of omission. As such, the prosecution retains the sole responsibility for proving the guilt of the accused, by proving beyond a reasonable doubt an appreciable enrichment in the defendant’s income that is not justified by his or her legitimate income. Consequently, the presumption of innocence is never actually impaired.
Courts in a number of other countries have taken a different path of reasoning when upholding illicit enrichment laws. In contrast to the Argentinian view, these courts conclude that burdens of proof are often reversed in proceedings under illicit enrichment laws, but have held that such a reversal is a reasonable, and reasonably narrow, exception to the presumption of innocence principle. Many lawyers (and others) may instinctively recoil at this idea. But in fact, both the European Court of Human Rights and the UK’s Privy Council have (in other contexts) upheld the view that the presumption of innocence is not an absolute right. Similarly, the United States Supreme Court has also held that rebuttable presumptions of fact, and the consequent burdens they impose, may be acceptable in specific circumstances. Two previous posts on this blog (see here and here) have noted this feature of U.S. law in critiquing as misguided the U.S. reservation to the IACAC, and another post cogently argued that the U.S already enforces the functional equivalent of an illicit enrichment offense through the tax laws.
The decision of the Hong Kong Court of Appeal upholding the local illicit enrichment offense is a nice illustration of this approach. Drawing on the European, UK, and US decisions noted above, the Hong Kong court held that:
- There are “exceptional situations in which it is possible compatibly with human rights to justify a degree of deviation from the normal principle that the prosecution must prove the accused’s guilt beyond reasonable doubt”;
- Establishing an “exceptional situation” may depend on whether the prosecutor still retains the responsibility for “proving the essential ingredients of the offence”; and
- If the exception requires “certain matters to be presumed until the contrary is shown, then it will be difficult to justify that presumption unless … it can at least be said with substantial assurance that the presumed fact is more likely than not to flow from the proved fact on which it is made to depend.”
The court thus reasoned that Hong Kong’s illicit enrichment law still required the state to prove the essential ingredients (that is, that the assets under a person’s control are disproportionate to that person’s lawful sources of income), and that once the prosecutor established this fact, it was not unreasonable to adopt a rebuttable presumption that the assets derived from unlawful sources, thus shifting the burden to the defendant to prove otherwise. Consequently, the court held that reversed burden was acceptable and did not impair the presumption of innocence. High courts in other jurisdictions (including, among others, India, Pakistan, and Malawi) have adopted similar reasoning.
The one counter-example in which a high court rejected an illicit enrichment law as inconsistent with the presumption of innocence, as noted above, is Ukraine. But the credibility of that decision, and the quality of its legal analysis, are highly questionable. Indeed, Ukraine’s National Anti-Corruption Bureau plausibly contended that the judgment had been politically motivated, and, following further controversial decisions from the same court, the country is now experiencing a constitutional crisis.
Although most of the discussion above, and most of the controversy over illicit enrichment laws, has focused on criminal illicit enrichment offenses, similar debates have arisen in the context of civil illicit enrichment laws. The presumption of innocence does not apply in the civil context, but nevertheless some have challenged laws requiring that the owner of assets explain the legitimate source of their wealth to avoid forfeiture, on the grounds that this is an unfair burden. But such claims have also been regularly rejected, as courts in jurisdictions as diverse as Kenya and Australia have reasoned that the owner of assets are in a particularly good position to know the source of those assets, and should be able to establish this without any great difficulty.
In sum, with the single and controversial exception of Ukraine, whenever a criminal or civil illicit enrichment law has been challenged on the grounds that it unfairly reverses the burden of proof or impairs the presumption of innocence, the challenge has not succeeded. Of course, this doesn’t mean that there is no reason to be concerned about this aspect of these laws. Illicit enrichment laws are certainly a novel approach to recovering proceeds of crime, and it is important to continually question whether a newly drafted illicit enrichment law has gone too far. Nonetheless, the simplistic idea that illicit enrichment laws violate the presumption of innocence is a canard, and one that courts around the world have rightly and consistently rejected.
Thanks for the post. It is good to see a nuanced discussion of this topic. I was curious in your thoughts on a couple of points. Surely the Argentine approach – i.e. the prosecution still needs to show your assets exceed your lawful income, so nothing to see here – is form over substance. The prosecution might bear the burden of proof in a formal sense, but as there is no social harm in owning unexplained wealth per se, it is clear that this offence is a legal artifice created to penalise the defendant for some other offences that presumably gave rise to the unexplained wealth. So to say that the presumption of innocence is not engaged because one has to prove the elements of that sui generis offence, is not all that convincing. If we then accept that an illicit enrichment offence is actually incompatible with the presumption of innocence, the question is whether the latter is absolute or can be qualified in some circumstances, which seems to be the view that the Hong Kong court took. So it would seem to me that the summary of where we stand is yes, the illicit enrichment is incompatible with the presumption of innocence but no, that does not mean it can never be introduced in any country as a matter of sound policy. Would you agree with that?
Thank you for your comment Anton. From the outset I’d like to point out that the Argentine position is not unique. Similar views have also been taken by courts in both Uganda and Lithuania (see for example the ruling of Lithuania’s Constitutional Court in Case no. 14/2015-1/2016-2/2016-14/2016-15/2016). While I would tend to agree with you on some points (I also generally prefer the interpretation of Hong Kong (and others)) I think it all comes down to a matter of perception. If a court is comfortable with viewing an act of illicit enrichment as a unique (and potentially harmful) offence in itself – under which a person can be punished if it is proven by the state that (1) they enjoyed an amount of wealth, and (2) that this amount of wealth cannot possibly have been derived from lawful sources of income – then it would be much easier for that court to understand and agree with the Argentine view. In such a scenario, the illicit enrichment offence is a crime of commission – the act of amassing unjustifiable wealth – and a criminal act in itself. And providing that it is clearly the prosecutor’s sole responsibility to prove both these points above, the presumption of innocence is never impaired. So, is it possible to view the act of amassing unjustifiable wealth as an offence in itself? There is already an inherent obligation for all citizens in most countries to declare wealth and list sources of income each year through the tax system (or face legal consequences), and when viewed in this context, the fact that proof of the two points above leads to legal culpability doesn’t seem like such an anomaly. When further viewed in the context of corruption – particularly where public officials voluntarily take responsibility over public finances – then it potentially even easier to understand that the unique act of amassing unjustifiable wealth can be seen as a criminal act in itself.
Thanks Andrew. To your tax point, I note the discussion of similarities between criminal illicit enrichment provisions and tax offences in your book; really interesting!