The urgency of an asset forfeiture law
The confiscation of proceeds of crime law is an important part of the measures to eradicate corruption in Indonesia. Recovery of state financial losses due to corrupt practices will restore public rights and trust. In addition, it will be seen as a progressive step compared to other formal mechanisms.
The legal construction for asset forfeiture has actually been carried out by Indonesia, through the ratification of two international conventions, namely, Law 6/2006 on the ratification of the International Convention for the Suppression of the Financing of Terrorism and Law 7/2006 on the ratification of the 2003 United Nations Convention against Corruption (UNCAC).
Even though they are not sufficient to be used as a legal basis for seizure of proceeds of crime, they must be followed up on with regulations that are compatible with applicable laws in Indonesia. Furthermore, both laws address aspects of terrorism crimes and international relations in regard to recovery of corruptly-obtained assets. Of course, they have a strategic meaning, especially in responding to the increasingly massive practices of corruption that transcend national borders. International cooperation has become a necessity to mitigate this extraordinary crime, with a wide range of corrosive effects on society.
The asset forfeiture law will definitely play a major role in eradicating corruption because it has legal instruments that can break through the complexity of the conventional law enforcement process, especially with regard to corruption on the one hand and the legal paradigm of corruption eradication on the other, one example being court-ordered compensation payment for graft convicts, failing which one will have to serve prison term, which does not really deter would-be perpetrators. This also applies to confiscation of assets owned by graft convicts as stipulated in Article 18 of Law 31/1999 on eradication of the criminal act of corruption (see also the academic text of the 2015 Confiscation of Proceeds of Crime Bill). Whereas, as we all know very well, corruption offenders have a hundred and one ways of hiding, obfuscating and transferring the proceeds of crime to their relatives or people in their closest circle.
With regard to law enforcement, corruption is more often than not a complex crime involving those in power. Efforts to recovery state financial losses are faced with the fact that prosecuting cases of corruption requires a highly detailed body of evidence. Thus, proving that a corrupt practice has taken place can take quite some time. This allows the accused to move or hide their ill-gotten wealth. Not to mention the added complication when the perpetrators are deceased. What will happen to the proceeds of a crime? It is exactly these complexities that must be tackled, through solid legal instruments aimed at recovering corruptly-gained assets.
The more complex the handling of corruption, the more legal instruments are needed. The asset forfeiture bill provides a way to address the aforementioned complexities. Future regulation must allow for asset seizure to compensate for state losses incurred, without having to first impose criminal liability on the offenders.
This paradigm is important because the law is no longer limited to pursuing the perpetrators, but also their illegally-gained assets. Transparency International (TI) defines asset recovery as the legal process through which a country, government and/or its citizens recover the resources and other assets that were stolen through corruption from another jurisdiction. More broadly, The Financial Action Task Force (FATF) defines asset recovery as the return or repatriation of illicit proceeds, where those proceeds are located in foreign countries. Asset recovery comprises three stages: (1) tracing, identifying and finding the assets; (2) confiscating and freezing the assets; and (3) recovering and returning the assets to their rightful owners.
Nevertheless, in practice, the confiscation of proceeds of corruption is quite insignificant and is incommensurate with the wealth derived from it. According to the 2011 report by the Stolen Asset Recovery Initiative, a joint program launched by the World Bank and the United Nations which seeks to build international collaboration to recover assets gained from corruption, only US$5 billion worth of stolen assets were confiscated in the 15 years prior to the publication of the report. Data from Europol, which helps EU law enforcement agencies fight serious international crimes including money laundering, also shows that only 2 percent of proceeds from crime were frozen, of which 1 percent were in the EU. This is not even close to the value of suspicious transactions estimated to range between 0.7 to 2.8 percent of the EU GDP every year. By the same token, only 26 percent of the total proceeds of crime could be recovered in the UK in the 2011- 13 period, according to Transparency International. These figures reflect a global reality that must be properly addressed through regulations, in the form of international conventions and more robust legal instruments in each country.
In the Indonesian context, the asset forfeiture bill has three main substances: (1) unexplained wealth confiscatable by the state. An individual can be said to own unexplained wealth if the value of their wealth is greater than the value of their lawfully acquired wealth, which gives rise to suspicion of ill-gotten wealth.
Second, the procedural law for asset seizure with the legal framework of “state versus property” (in rem) which is the opposite of the “state versus perpetrators of crime” (in personam) used in criminal law. The in rem concept also provides protection for third parties in good faith, related to assets against which the forfeiture application is submitted.