Jargon buster – freezing and confiscating assets
Choose your words carefully
This post explains the meaning of technical words used by legal people for asset recovery, the way courts recover the proceeds of crime from people and return them to victims of crime and society in general. It is intended to help English speakers understand what their news is saying and to help journalists use the right words.
Generally speaking the police seize or freeze assets and then the courts confiscate them. The courts have the final say on the right to property, which, when you think about it, is why courts were invented. In every country, the police can seize assets, meaning they physically take them away and store them somewhere until the courts have made a decision. If they can’t seize things, like houses and bank accounts, they ask the court to make an order to prevent assets being sold or otherwise dissipated. As usual the English and the French do it differently, which means that the global language of confiscation is divided between the Anglo-Saxons and followers of the Napoleonic code. This is because English and European colonisers imposed their legal codes wherever they went. The key difference is that English-speaking courts restrain people from dealing with objects. The French courts freeze and confiscate objects directly.
Asset recovery is the umbrella term used for all the other terms. The world talks about international confiscation in the English language, so the confusion starts at a global level with the World Bank. When they say asset recovery they are only talking about the proceeds of corruption, ignoring all the other crimes that generate dirty money.
Freezing assets – England (and English-speaking countries)
A person accused of a crime is restrained from dealing with their assets. Good practice is for this to be done at the same time as an arrest to prevent the dissipation of the assets. The police obtain a Restraint Order from a court and serve it on the specified person, they then serve a copy of the order on the holder of the specified person’s asset. Lots of people control assets for other people – bankers, harbourmasters, the Land Registrar (cadastre) and so on. In this way the asset is frozen, so that no-one can dispose of it without referring to the court; if they do they are in contempt of the court. The court may allow the specified person to live in restrained house or drive a restrained car, the specified person just cannot dispose of it.
Once a person is convicted, the court can confiscate their assets. In English-speaking countries the court adds up the value of the assets and imposes a debt of the same value. To be clear, a Confiscation Order doesn’t confiscate anything, it is up to the defendant to dispose of the assets and settle the debt. The defendant has the expense and hassle of doing this.
Freezing assets – France (and all countries with the Napoleonic Code)
A person accused of a crime has their property listed and the items on that list are frozen. The controller of each item of property is informed exactly as above and the penalty for disposal is also the same.
Every country uses its local language in its own courts. For international purposes, they translate into English using whatever the dictionary suggests. Consequently, some news reports, especially in Eastern Europe use the word sequestrate for freeze or restrain.
Once a person is convicted the Court bailiff disposes of the assets. This administrative burden has become so heavy that many countries have created an Asset Management Office. Good practice is for the proceeds of crime to be recycled for the public good.
Sanctions
Sanctions are a method or temporarily seizing, freezing, restraining or sequestrating assets from ‘designated’ people. The north Americans have used them a lot, over the last fifty years against south Americans and now, because of the invasion of Ukraine everyone is using them against the Russians (and vice versa).
The key difference is that there is no permanent procedure similar to confiscation. Assets are temporarily put under a court order and if the order is broken a penalty can be imposed for the breach of the order. The world is now grappling with what to do with the assets on a permanent basis. It’s not going to be easy. Fascinating research[1] by the Royal United Services Institute showed that very few assets, possessed by South American drug-lords who had been ‘sanctioned’, had ever been confiscated. Instead, after several decades the designated persons were de-listed. The research did not reveal what happened to the assets.
Non-conviction based confiscation
Many countries are able to confiscate the proceeds of crime without convicting anyone. This litigation is against the asset not the person. About half the countries in the European Union, and many English-speaking countries around the world, can confiscate assets in criminal cases where the defendant is not available for trial because they have absconded, died or are too ill for a trial.
In some English-speaking countries, there is the ability to initiate litigation against an asset believed to be the proceeds of crime, where there is insufficient evidence to convict a person. This was called ‘civil recovery’ because the litigation was in civil rather than criminal courts, the term (and the procedure itself) is quite unusual, but I have included it for completeness
Forfeiture
The term forfeiture applies where a person has contravened a law and they are in possession of an asset which a court decides should be forfeit. It is not a punishment (although it might feel like it)! Examples include: instruments used to commit a crime like vehicles, mobile phones, and tools; items that are illegal to possess like drugs and weapons; cash above certain prescribed limits when crossing a frontier or connected with crime.
Finally
I was looking for a quote to illustrate the potential for confusion that this article has tried to address and was amused to find a quotation that manages to confuse penalties, asset recovery, bad behaviour and the public good all in one list. This quote is attributed to Rush Limbaugh, who was a political commentator in America:
“They [the Government] fine, they penalize, they tax, they confiscate, they jail, they bully to get what they want.”
For clarity, people who break the law are fined, penalized, or jailed. Confiscation is not a fine or a penalty, it restores the financial status quo following a crime, so that a penalty can be imposed on those who have broken the law. Bullying is bad behaviour that governments shouldn’t be doing at all. Finally, governments collect tax for the public good, it makes no sense to include it in this list of bad stuff at all.
My point is that some people are on a different moral page and clarifying jargon will not help them because they see the world differently.
Summary table
[1] Haenlein C., Erskine S., Glantz E., and Keatinge T. (2022) Targeted Sanctions and Organised Crime, Impact and lessons for future sanctions use. Occasional paper. Royal United Services Institute