Chapter 16

Proceeds of crime requests

Introduction

16.1Over the last 30 years, there has been a global effort to eliminate the funding of crime and its financial benefits. Countries have developed a variety of different mechanisms to confiscate the proceeds of crime and instruments of crime. Proceeds of crime are the financial rewards of criminal offending. Instruments of crime are items like boats or houses that are used to commit crimes.

16.2These confiscation mechanisms operate at a domestic level. However, it is increasingly easy for financial and property transactions to take place across national borders, and therefore, international cooperation is needed.

16.3In 2009, New Zealand enacted the Criminal Proceeds (Recovery) Act 2009 (CPRA) to create a new domestic confiscation regime. The Mutual Assistance in Criminal Matters Act 1992 (MACMA) was also amended to create a new regime for giving effect to foreign orders concerning proceeds and instruments of crime.

16.4In this chapter, we examine the relationship between CPRA and MACMA, and we consider whether these Acts align to provide an effective and appropriate regime for enforcing foreign orders. We begin by discussing the legislation and also look at New Zealand’s existing international obligations in this area. The chapter then shifts to examine the four stages of the confiscation process to assess whether New Zealand is providing appropriate and effective international assistance.

16.5We find that the current regime is deficient. Firstly, there are technical problems because the language in the statutes is not aligned. Secondly, there are significant gaps in the legislation, particularly in relation to sharing confiscated assets with foreign countries.

Terminology

16.6Countries will variously describe mechanisms to confiscate proceeds and instruments of crime as involving identifying, tracing, freezing, restraining, seizing, forfeiting, confiscating, or disposing of the relevant assets. All of these terms have technical legal meanings, which differ slightly in different jurisdictions. In practice, however, they describe the following four-stage process:

• The investigation stage: Law enforcement authorities identify potential proceeds and instruments of crime, which the authorities then trace or monitor.
• The restraining stage: Law enforcement authorities obtain a court order to stop the assets from being dissipated. This may be called a restraining, freezing, or seizing order. The order does not permanently transfer ownership of the assets, but it prevents any further transactions until a court determines the status of the assets.
• The forfeiting (confiscation) stage: A court determines whether the assets actually are proceeds or instruments of crime. If so, the court may order that ownership of the assets be transferred to the country.
• The disposal stage: The country decides what to do with the assets by, for instance, paying court costs, placing the assets in a dedicated fund, or sharing the assets with others – possibly victims or foreign countries.