Seizure and Confiscation of Proceeds of Crime and International Cooperation Legislative framework

Seizure and Confiscation of Proceeds of Crime and

International Cooperation• Legislative framework

• Administrative and Judicial Cooperation in Turkish System• Case Study

• Role of Turkish Financial Intelligence Unit (MASAK)

Belgin AKSU ÇANGA

Finance Expert

MASAK

Ministry of FinanceFinancial Crimes Investigation

Board

Seminar on Asset Recovery Offices

14-15 December, 2011

Ankara

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Financial Crimes Investigation Board

• Established in 1996

• Administrative body, works under the Ministry of Finance

• Turkish financial intelligence unit

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Functions

• Policy and legislation

•Information collection, analysis and evaluation

•Investigation

•Supervision

•Coordination

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Money laundering offence in Turkish Law

Predicate offence Proceeds of crime Money laundering

an offence requiring a minimum penalty of six months or more imprisonment,

Proceeds obtained from the offence

• transfers abroad the proceeds obtained from the offence or

• processes such proceeds in various ways in order to conceal the illicit source of such proceeds or to give the impression that they have been legitimately acquired

• without participating in the commitment of the offence mentioned above purchases, acquires, possesses or uses the proceeds which is the subject of that offence knowing the nature of the proceeds

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Sanctions

• Imprisonment • 3-7 years for the acts set in p.1• 2-5 years for the acts set in p.2

• Judicial fine up to 20.000 days (100.-TL-2.000.000.-TL)

• Confiscation of goods and benefits (Turkish Penal Code, Articles 54-55)

Penalty of ML Offence

Aggravating Circumstances

In case ML offence is

• committed by a public officer or professional person• conducted in the course of the activities of an

organization established for the purpose of

committing an offence


Sanctions for Legal Persons

•Administrative Fine (10.000.-TL - 2.000.000.-TL) (Law Number 5326, Article 43/A)-(Amended by Law No. 5918 on 09.07.2009)

•Confiscation (Turkish Penal Code, Article 60)

•Cancellation of License (Turkish Penal Code, Article 60)


(Anti-Terror Law No 3713, Article 8)

Whoever knowingly and willfully provides with or collects fund for committing partially or fully terrorist crimes, shall be punished as a member of an organization. The perpetrator is punished in the same way even if the fund has not been used.

Terrorist Financing Offence

Sanctions

Turkish Penal Code No 5237, Article 314

Any person who becomes a member of the armed organisation shall be sentenced to a penalty of imprisonment for a term of five to ten years.

Turkish Penal Code No 5237, Articles 54-55

•Confiscation of goods •Confiscation of benefits

Penalty of TF Offence

Aggravating Circumstance (Anti-Terror Law, Article 8 / A)

•In case the perpetrator is a public officer and the crime is committed through the use of the office the imprisonment penalty is increased by half.


Sanctions for Legal Persons

•Administrative Fine (10.000 TL-2.000.000 TL) (Law Number 5326, Article 43/A) (Amended by Law No. 5918 on 09.07.2009)

•Confiscation (Turkish Penal Code, Article 60)

•Cancellation of License (Turkish Penal Code, Article 60)


Monitoring Money Flows

Republic of TurkeyMinistry of Finance


Disclosure to Customs Administration

• Passengers disclose fully and accurately on the request of Customs Administration

•An administrative fine with one tenth of the value carried and of the difference between the value carried and disclosed

respectively

•If the circumstance is considered as suspicious, it shall be conveyed to the MASAK



Issues regarding wire transfers

•Obliged parties are required to identify their customers when the amount of a single transaction or the total amount of multiple linked transactions is equal to or more than TRY 2.000 in wire transfers

•STR types in MASAK General Communiqué No: 6

•Banks and PTT are required to take measures to control of customer and to complete the missing information in wire transfer messages and documents and update them



Relationships with risky countries

• To pay special attention to business relationships and transactions in risky countries

• To obtain information about the purpose and the nature of the transactions

• To record the information



Money transfer information to MASAK

• Under Foreign Exchange Legislation, information of money transfers to abroad exceeding 50.000 USD and equivalent foreign exchange are reported to Turkish Central Bank (TCB) by banks and subsequently this information are conveyed to MASAK quarterly

•Daily EFT transactions are transmitted by banks to MASAK as cumulative data

Seizure

The measures related to seizure are specified in articles 123-134 of CPL in the section titled “Search and Seizure”.

In accordance with the article 123 of CPL, the asset values which are considered to be useful as evidence or to be constituted the subject of confiscation shall be seized.

Law No. 5271

Seizure and Confiscation of Proceeds of Crime

Article 17 of the Law No. 5549 broadens the scope of Article 128 CPL for seizure of assets by extending it to money laundering and financing terror.

Accordingly;

In cases where there is strong suspicion that the offences of money laundering and financing terror are committed, the asset values may be seized in accordance with the procedure in article 128 of Criminal Procedure Law No. 5271. Law No.5549 &

5271


According to Article 128 of CPL,Seizure decision in accordance with this Article shall only be given by judge.

On the other hand

According to the Article 17 of 5549,Public Prosecutor shall also give seizure decision in case of any delays giving rise to inconvenience.

The seizure applied without the judicial decision is submitted for the approval of the judge on duty at the latest in twenty-four hours.

The judge shall decide on whether it will be approved or not at the latest in twenty-four hours. The decision of Public Prosecutor’s Office shall be invalid in case of non-approval.

Law No.5549 & 5271


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Confiscation

•Confiscation of goods

• Confiscation of benefits


“Confiscation of goods” and “confiscation of benefits” are established in Articles 54 and 55 of the TCL.

- “Confiscation of goods” (Art. 54 of TCL)

- “Confiscation of benefits” (Art. 55 of TCL)

Both include provisions for confiscation based on value.

Law No.5237


Confiscation of goods (Art. 54 of TCL)

• Goods used in committing a deliberate offence or allocated for committing an offence or derived from an offence

• Goods prepared for use in commission of an offence

• Goods whose production, disposition, usage, transportation, purchase and sale constitute a crime

Law No.5237


Confiscation of benefits (Art. 55 of TCL)

The material benefits,

• obtained from committing a crime, • constituting the subject of the crime or• provided for committing the crime,

• along with the economic proceeds obtained by

the holding or conversion of them,

shall be confiscated.

Law No.5237


Regulation Regarding the Investigation of Laundering Offence

Article 11MASAK or examiners may request for seizure

on asset under Article 17 of the AML Law in cases where there is strong suspicion that money laundering offence is committed.

Only MASAK may request for seizure on asset under Article 17 of the AML Law in cases where there is strong suspicion that terrorist financing offence is committed.

Role of MASAK in Seizure

Administrative Cooperation

MASAK is authorized;

• to carry out international affairs,

• to exchange views and information for the subjects in the sphere of its duties

• to exchange information and documents with counterparts in foreign countries,

• to sign memorandum of understanding.

Law No. 5549 art.19/l-m


• MASAK has been a member of Egmont Group since 1998.

• MASAK exchanges information with FIUs through the Egmont Secure Web and MOUs.

Administrative Cooperation through Egmont Group


International Information Exchange Statistics (2010)

Requested from MASAK Requested by MASAK

Number of countries

Number of requests

Number of countries

Number of requests

43 188 27 63

Memorandum of Understandings (MoUs) Signed by MASAK

Finland Portugal

Mongolia Croatia

Albania Romania

Norway Senegal

Georgia South Korea

Indonesia Sweden

Japan Syria

Jordan Canada

Luxemburg Ukraine

Turkish Republic of Northern Cyprus

United Kingdom

Monaco Belarus

Afghanistan Macedonia

Bosnia Herzegovina Australia

Judicial Cooperation

Mutual Legal Assistance (MLA)

Fulfillment of legal assistance requests on the basis of thebilateral and multilateral agreements

Lack of bilateral or multilateral agreement and reciprocity rule

Major International Conventions to which Turkey is a party

European Convention on Mutual Assistance in Criminal

Matters

Additional Protocol to European Convention on Mutual Assistance in Criminal Matters

European Convention on the International Validity of Criminal Judgments

Since The Additional Protocol of the European Convention on Mutual Assistance in Criminal Matters includes legal assistance on financial crimes, mutual legal assistance requests are not rejected for the reason that the offence is of a fiscal nature.

A request for assistance shall include:

o The authority making the requesto The object of and the reason for the requesto Where possible, the identity and the nationality of the person concernedo Where necessary, the name and address of the person to be servedo A description of the criminal matter including a summary of the facts and, if applicable, offences and penalties

concerned

CASE STUDY (AVATAR)

Subject of the Judicial Cooperation

“Letter of Request” of Jersey Attorney General has been sent to Turkish Ministry of Justice

The attorney General seeks to confiscate £120 million from Person X

Turkish Ministry of Justice requested from MASAK to make an investigation regarding the case stated in the “Letter of Request” of Jersey Attorney General

MASAK has completed its investigation and sent the report to Ministry of Justice

Subject of the Case

•Person X and his illegal activities

•3.000 kg cocaine was imported into Europe from Venezuella in 1991-1992 by Person X

•In 1997, he was convicted in Holland of running an organised crime syndicate that imported 317 kg cocaine

•In 1997 he was also convicted of the killing of a Turkish inmate in prison-he was released from prison in June 2007

•In July 2007 he directed the importation of £1 million cannabis into Jersey from Holland

•He was arrested in July 2007 and convicted of that crime in October 2009

Links To Turkey

•Person X opened an account at a Currency Excange Bureau in the UK.

•£20 million was laundered through this account between 1994-1996.

•$ 5.7 million and DEM 2.1 million was sent to the accounts of Person Y (19 years old) held in Switzerland.

•Accounts of Person Y were only kept open for nine months and also received money transfers from Turkish institutions and banks.

Analysis-Criminal Records and MASAK Databases

• Some close relatives of Person Y have been convicted of drug trafficking for 5-20 years imprisonment

• Some close relatives of Person Y were the subject of 4 money laundering cases which predicate offences were drug trafficking-(No conviction)

• Big amount of money transferred to Person Y from different persons

• Persons transferred money to the accounts of Person Y were the workers of different companies such as:

• textile companies, •transportation companies, • jewellery,

Assessment and Conclusion

• Person Y was only 19 years old in 1994 and had no business activities

• Persons transferred money to Person Y were just the workers of different companies

•Father and uncle of Person Y were convicted of drug trafficking several times in 1990s

•Father and uncle of Person Y together with the persons transferred money his accounts were subjects of money laundering cases

As a conclusion: It is obvious that these money transfers were related to the drug trafficking activities of father and uncle of Person Y and Person X

The Asset Recovery Process

Asset Recovery

Asset Recovery

Asset Recovery

Tracing

Identification

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Proactive sharing of intelligence with law enforcement and prosecutors

Provision of ancillary intelligenceHaving Expertise in financial sectors,

products and mattersPersonal contacts and networks with

domestic and international institutions (public or private, financial or non financial)

Having the ability to institute an administrative freeze

The Roles of FIU’s in Asset Recovery Process

Task of ARO

To facilitate tracing and identification of proceeds of crime subject to decision of blocking, seizure and confiscation

To have the authority of access to databases

To have the authority of obtaining information including financial one from relevant real and legal persons

To have the authority of conducting joint investigations with other authorised units

To be a central unit

Main Functions of the ARO

To facilitate tracing of criminal assets

To participate in confiscation procedures

Ensure sound management of seized assets

To serve as a central contact point for financial intelligence and confiscation efforts at the international level


To collect relevant statistics on asset freezes and confiscations

To be in charge of seizing criminal proceeds

To serve as a focal point for international requests statistical record-keeping and training


EVALUATION OF THE FUNCTIONS OF MASAK AND ASSET RECOVERY OFFICE

ARO MASAK

Asset Recovery Office MASAK is unigue financial intelligence unit.

Under Law No: 5549, it has the following functions:

•Policy and legislation

•Information collection, analysis and evaluation

•Investigation

•Supervision

•Coordination

Functions of the ARO Authorities of the MASAK

Having access to all related databases such as land registry, company registry, motor vehicles, convictions, tax, police and financial institutions records in order to identify and trace the proceeds of crime

Access system

Law No: 5549

Article 9 – By the Presidency, an access system may be established to the data processing systems of the public institutions and organizations, and institutions and organizations in the nature of public bodies which keep records regarding to economic activities, wealth items, tax liabilities, census information and illegal activities in accordance with their laws or activities within the principles and procedures defined together by the Ministry and competent authorities of related Ministry and institutions and organizations in the nature of public bodies.


To have the authority of obtaining information including financial one from relevant real and legal persons

Law No: 5549

Providing information and documentsArticle 7 – (1) When requested by Presidency or examiners, public institutions and organizations, natural and legal persons, and unincorporated organizations shall provide all kinds of information, documents and related records in every type of environment, all information and passwords necessary for fully and accurately accessing to or retrieving these records, and render necessary convenience.

Duties and Powers of the Presidency

Law No: 5549

Article 19 1/j

…

j) To request all kinds of information and documents from public institutions and organizations, natural and legal persons, and unincorporated organizations.

…


To have the authority of conducting joint investigations with other authorised units


Law No: 5549

Article: 19 1/f-g

…

f) To request for examination from law enforcement and other relevant units in their fields, when required during the evaluation period.

g) To carry out or to have carried out examinations on the subject matters of this Law.

…


To facilitate tracing and identification of proceeds of crime

Under the authority of Law No: 5549, MASAK can obtain any information of public registration, tax liability, assets and illegal activities

(Law No: 5549 ,Article 7, 9 and 19/ı(j)


To conduct effective cooperation with other FIUs and judicial authorities


Law No: 5549

Article 19 h/m

…h) To examine the cases conveyed from Public Prosecutors and to fulfill the requests relating to the determination of money laundering offence.

m) To exchange information and documents with counterparts in foreign countries, to sign memorandum of understanding that is not in the nature of an international agreement for this purpose.

The CoE Convention on laundering, search, seizure andconfiscation of the proceeds from crime and on the

financing of terrorism (Warsaw 16 May 2005)

Article 14- Postponement of domestic suspicious transactions“The FIUs or, if appropriate, other competent authorities or bodies should be able to postpone a domestic suspicious transaction.”

Article 47- International cooperation for postponement of transactions

“The FIU shouıld have the authority to postpone a suspicious transaction at the request of a foreign FIU.”

Postponement of Suspicious Transactions

The CoE Convention on laundering, search, seizure andconfiscation of the proceeds from crime and on the

financing of terrorism (Warsaw 16 May 2005)Article 33- Central Authority“ The Parties shall designate a central authority which

shall be responsible for sending and answering requests, the execution of such requests or the transmission of them to the authorities competent for their execution.”

Article 46- Co-operation between FIUs “Parties shall indicate the unit which is an FIU

within the meaning of this article.”

Central Authority

Financial research that will be conducted for the decisions on freezing of assets to be taken by the Assessment Commission shall be performed by MASAK

MASAK shall be responsible for executing the decision on freezing of assets

MASAK shall have the authority to give permission for the management of the frozen assets to designated person or persons

DRAFT LAW ON THE PREVENTION OF THE FINANCING OF TERRORISM

MASAK may audit; - whether persons or entities who hold assets act in compliance with the decision of freezing or not,-whether the frozen assets are managed in compliance with this Law or not.

Secretariat services of the Assessment Commission shall be performed by MASAK

DRAFT LAW ON THE PREVENTION OF THE FINANCING OF TERRORISM

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Thank you for your attention

Belgin AKSU ÇANGAFinance Expert

MASAK

[email protected] Tel:+90 312 415 37 90

Documents

Seizure and Confiscation of Proceeds of Crime and International Cooperation Legislative framework