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World Bank Study
cifically by banks that have clients in the logging, plywood, timber, and pulp and paper industries.59 Another measure would be for a country to go beyond the international standards and expand the implementation of KYC and reporting obligations to any business or profession that is at risk to being misused for the laundering of the proceeds of illegal logging in its jurisdiction. The prosecution of money-laundering offenses also allows the scarce law enforcement resources to be targeted on those areas where they will have the strongest effect. Because of their international aspect, these prosecutions facilitate cross-border cooperation—a key component in investigating and prosecuting illegal logging offenders. Timber illegally harvested in one country will often be processed in another, and moneys earned from its sale will often be invested abroad as well. The FATF urges countries to recognize crimes commi ed in another country as predicate crimes if they would have been such under their own money-laundering laws.60 Thus, the fact that the predicate crime of timber theft may have occurred in Country A would not prevent Country B from prosecuting any laundering of the proceeds of the theft occurring within its jurisdiction. Finally, confiscation laws allow the state to dispossess criminals of the illegal proceeds (property generated from the commission of the illegal activity)61 and instrumentalities (assets that have facilitated the commission of the criminal activity) of their crime. Confiscation, unlike a penalty or a fine, is a measure that can be pursued before, during, or after criminal prosecution. Generally, the proceeds in question will first be frozen to prevent dissipation during the investigation and prosecution of the case. At the appropriate time, the court determines whether there is sufficient evidence that the assets in question constitute the proceeds of a crime. If so, it orders their confiscation. If not, the assets are returned to the defendant along with (depending on the country and the system in place) legal costs incurred in the course of the confiscation proceeding. In the illegal logging context, confiscation laws allow the state to obtain possession of the illegally harvested timber itself, as well as any other property linked directly or indirectly to the criminal activity. In cases where the actual proceeds or instrumentalities of a crime are no longer available or cannot be located, confiscation laws may also have the advantage of permitting seizure of assets of equivalent value held by the criminal—even if they are of legal origin. This is called “value confiscation.” Value confiscation is particularly useful where the proceeds and instrumentalities of crime are commingled with legitimate assets. In addition, some countries have implemented measures enabling the state to confiscate assets outside of a criminal conviction. This is called “non-conviction based asset forfeiture” (NCB). NCB allows for assets to be frozen and confiscated not only before, during, or after a criminal proceeding, but also if there is no criminal proceeding or even if the defendant is acqui ed. NCB is a proceeding against the property (in rem) and not against the person.62
59. Setiono 2005. 60. FATF 40+9 Recommendations, Recommendation 1. 61. Article 2 of UNCAC defines proceeds as “any property derived from or obtained, directly or indirectly, through the commission of an offence.” Property is defined as “assets of every kind, whether corporeal or incorporeal, movable or immovable, tangible or intangible, and legal documents or instruments evidencing title to or interest in such assets.” 62. Refer to Greenberg et al. 2009 for further information about NCB.