Transparency International

This Anti-Corruption Helpdesk brief was produced in response to a query from one of Transparency International’s national chapters. The Anti-Corruption Helpdesk is operated by Transparency International and funded by the European Union

Query

What challenges exist in relation to the use of asset freezing sanction regimes to support anti-corruption investigations to seize and confiscate ill-gotten gains?

Summary

The imposition of asset freezing sanctions has the potential to be an effective first step in addressing large-scale corruption, and legal regimes to allow for this have been established in several jurisdictions. Discussions around sanctions and the recovery of stolen assets have become particularly prevalent following the 2022 Russian invasion of Ukraine. Several challenges exist in relation to the use of sanctions as an anti-corruption tool. Importantly, in most jurisdictions there is no legal or policy link between the political decision to impose sanctions and the opening of anti-corruption investigations by authorities.

This Helpdesk Answer only deals with sanctions that impose an asset freeze and does not relate to other forms of sanctions. It further only looks at those sanctions targeting individuals and specific entities and not those directed at whole or sectors of an economy or that freeze assets belonging to state agencies, such as foreign reserves of central banks.

Contents

  1. Introduction
  2. Overview of sanctions
  3. Legal basis for the application of sanctions
  4. Challenges with sanctions regimes as an anti-corruption tool
  5. Conclusions

Main points

  • Asset freezing sanctions are a potent tool which, when deployed correctly, can be used to fix potentially stolen assets in place and thereby grant law enforcement bodies sufficient time and powers to investigate the source of these assets.
  • However, in most jurisdictions that have announced asset freezing sanctions in the aftermath of the Russian invasion of Ukraine, the capacity or intention to use these measures to identify and ultimately confiscate assets deemed to be the proceeds of corruption remains unclear.
  • Experience with sanctions regimes imposed in the past has shown that - potentially as a result of this failure to follow up on sanctions with investigations into the source of these assets - jurisdictions imposing sanctions are also likely to face legal and political challenges to their efforts to confiscate these assets.

Authors

Jackson Oldfield, tihelpdesk@transparency.org

Reviewers

Maira Martini and Matthew Jenkins, Transparency Internationa

Date

20/05/2022

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