Tag Archives: illicit enrichment

Guest Post: Illicit Enrichment Laws and the Presumption of Innocence

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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.

Continue reading →

Will the United States Please Admit It has an Illicit Enrichment Law

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United States officials have asserted for at least two decades that a law would make it a crime for a public servant to hold wealth he or she cannot show was honestly acquired would be unconstitutional. Officials say “illicit enrichment” laws reverse the burden of proof in a criminal trial, violate the presumption of innocence, and therefore infringe a criminal defendant’s right to a fair trial.  The State Department made the claim during negotiations for the 1997 Inter-American Convention Against Corruption; it surfaced most recently in a February 26 decision of the Ukrainian Constitutional Court where a majority cited the U.S. position in striking down Ukraine’s illicit enrichment statute.

The assertion is wrong. Or at best highly misleading.  Americans can be prosecuted for holding wealth greater than what their tax return shows they can afford. Like an illicit enrichment prosecution, a defendant in a tax evasion case who cannot produce evidence showing how the wealth was acquired risks conviction for a serious crime, one that today carries a fine of up to $100,000, imprisonment for five years, or both.

U.S. courts have developed a rich body of case law applying this American version of an illicit enrichment law that shows how prosecutors can convict defendants of living beyond their means without violating their fair trial rights. Prosecutors and courts in nations where illicit enrichment laws are recent additions to the statute books would find this jurisprudence instructive in obviating human rights concerns about their nations’ statute. If only they knew about it.

Would an authoritative American spokesperson please correctly state U.S. law? Or at least publicize the web site where U.S. illicit enrichment jurisprudence can be consulted? Continue reading →

G7 Hypocrisy on Illicit Enrichment Crimes

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Last month, I saw a news report about the international reaction to the Ukrainian Constitutional Court’s decision striking down Ukraine’s criminal offense of “illicit enrichment” as unconstitutional. For those unfamiliar with this topic, the crime of “illicit enrichment” makes it a criminal offense for a public official to realize a significant increase in his or her assets that the public official cannot reasonably explain. The crime of illicit enrichment is related to, but distinct from, civil asset forfeiture systems under which the government may seize—as presumptively the proceeds of unlawful activity—assets that the owner cannot reasonably explain. The main difference is that a civil forfeiture order results in the loss of assets, while a criminal offense can result in fines or incarceration, as well as the other collateral consequences of a criminal conviction. Some anticorruption activists support the criminalization of illicit enrichment on the grounds that it is often difficult or impossible to prove the underlying corruption offenses, but a substantial unexplained increase in a public official’s wealth is sufficient to prove that the official is corrupt. Critics warn that criminalizing illicit enrichment is incompatible with traditional notions of the presumption of innocence. (The UN Convention Against Corruption (UNCAC), perhaps unsurprisingly, fudges the issue, with UNCAC Article 20 calling on States Parties to “consider” adopting an illicit enrichment offense, “[s]ubject to [that country’s] constitution and the fundamental principles of its legal system.”)

In its decision last February 26, Ukraine’s Constitutional Court went with the critics, holding that the criminalization of illicit enrichment a criminal offense was an unconstitutional infringement on the presumption of innocence. This decision met with swift condemnation from the G7, which issued a joint statement with the World Bank declaring that the “recent elimination of the illicit enrichment offence from [Ukraine’s] criminal code is a serious setback in the fight against corruption” that has “weakened the impact of the whole anti-corruption architecture.” Illicit enrichment, the G7 and World Bank admonished, “is not a new offence. In 2010 there were more than 40 countries that criminalized illicit enrichment,” and “[c]ourts around the world have recognized that the criminalization of illicit enrichment is a powerful tool in the fight against corruption, while at the same time respecting fundamental human rights and constitutional principles such as [the] presumption of innocence[.]” The G7-World Bank joint statement closed by calling on Ukrainian authorities to “reinstat[e] criminal liability for illicit enrichment in line with UN, OECD, and [European Court of Human Rights] principles.”

Now, as a policy matter, I tend to agree with the G7-World Bank position here. I think that appropriately tailored and cabined illicit enrichment offenses can be useful tools, and (as others have also pointed out), it’s not true that such offenses have any inherent conflict with the presumption of innocence. Nonetheless, I found the letter an exercise in outrageous, condescending hypocrisy, one that the G7 countries in particular should be ashamed to have written. Continue reading →

Guest Post: U.S. Constitutional Principles Do Not Preclude Burden-Shifting or Illicit Enrichment Offenses

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Peter Leasure, Ph.D. candidate in criminology and criminal justice at the University of South Carolina, contributes the following guest post:

It is well known that corrupt kleptocrats often transfer enormous sums of money from their countries. As a result, there has been a growing emphasis on attempts to freeze, seize, and return stolen assets to their jurisdiction of origin. However, countries vary in the legal mechanisms they have to achieve these objectives. One common fixture of many of these legal mechanisms is the requirement that the assets (or the capital used to acquire them) be traced to a predicate offense. However, meeting this requirement can sometimes be difficult, which hinders asset recovery proceedings.

To address this problem, some jurisdictions, such as France, have adopted a burden-shifting approach. Under the relevant provisions of the French Criminal Code, officials have the burden to account for the lavish assets they have acquired once claims of corruption arise. A similar sort of burden-shifting takes place under so-called “illicit enrichment” or “unexplained wealth” statutes. Under such statutes, a government official can be criminally liable if the official has substantial assets that he or she cannot adequately explain. In other words, once the government proves that the corrupt official has assets grossly disproportionate to his or her official salary, the burden shifts to the defendant to prove that the assets have a legitimate origin. Many countries have adopted statutes of this sort. Moreover, some international anticorruption conventions, such as the Inter-American Convention Against Corruption (IACAC), expressly call for the adoption and enforcement of such laws.

The U.S. takes a different approach. The U.S. made this clear in filing a reservation to the IACAC’s illicit enrichment section (Article IX), in which it stated that the offense of illicit enrichment set forth in the convention “places the burden of proof on the defendant, which is inconsistent with the United States constitution and fundamental principles of the United States legal system.”

But is it always the case that the government bears the burden of proof in the U.S.? In fact, it is not. There are numerous examples of areas from U.S. criminal law where burdens are shifted from the government to the defendant. Continue reading →