Image: Pexels.
Law enforcement agencies are stepping up the pace in the race to investigate and recover assets acquired through corruption, fraud, tax evasion and money laundering – and now have a new Unexplained Wealth Orders legislative tool at their disposal to help with this.
The tool now compels owners of unexplained wealth to prove the wealth’s legitimate origin as oppose to the state having to prove its illegitimate origin.
To put it plainly, if you earn R3000 a month, and you suddenly acquire an SUV worth R400 000, the government can now confiscate that SUV, and ask you to prove how you got it. If it is a gift, you will have to provide compelling reasons why this was gifted to you and why you were so deserving of it.
The initiative is being piloted by a number of government departments, namely the National Prosecuting Authority (NPA), Directorate of Priority Crime Investigation (DPCI), Department of Justice (DOJ) and the South African Revenue Service (SARS), led by the Financial Intelligence Centre (FIC) and operating under the auspices of the Anti-Corruption Task Team (ACTT).
The law enforcement agencies will use existing asset recovery legislation to secure appropriate Unexplained Wealth Orders issued by the courts to confiscate unexplained wealth, which now enables the South African authorities to recover suspected ill-gotten gains.
The provision in the old asset recovery legislation that targets unexplained wealth required the State to prove that a defendant’s legitimate sources of income are not sufficient to justify assets that the defendant owns.
Now, with Unexplained Wealth Orders, the onus is put on the defendant to prove that the source of the funds for the unexplained wealth is legitimate and that the assets were not acquired from the proceeds of criminal activities.
ALSO READ: Cabinet approves bill to strengthen fight against money laundering
A court can, therefore, make an order to confiscate unexplained wealth on the basis that the wealth of a person or entity is disproportionate to the lawful income derived or declared by the person or entity, and that the defendant is unable to justify or explain how the wealth was lawfully acquired.
This approach will enable law enforcement agencies and SARS to act even in cases where such unlawful activity cannot be proven beyond reasonable doubt.
Internationally, the UK, Australia, Ireland, Mauritius and Kenya are examples of countries that have adopted the concept of Unexplained Wealth Orders as legislative tools and have successfully recovered such assets.
South Africa’s inter-agency initiative aims to strengthen and supplement the use of existing legal frameworks to preserve and forfeit assets by targeting unexplained wealth. The initiative seeks to determine whether existing legislation can be effectively used or if it should be augmented further with a standalone Unexplained Wealth Orders legislative framework.
NOW READ: SIU seizes R27 million property bought with lotto grant funding
It also aims to practically test how inter-agency cooperation can be operationally achieved to expand the limits of the current legislation by creating case law through court proceedings.
The initiative was started in November 2020 to test the feasibility of a Unexplained Wealth Orders asset recovery regime in South Africa under Chapter 6 of the Prevention of Organised Crime Act and through inter-agency collaboration. A project steering committee has been established and a task team was set up to conduct research and benchmarking and make recommendations on a way forward.
This will better enable South Africa to confiscate criminal proceeds in line with the Financial Action Task Force (FATF) recommendation in this regard.
Download our app and read this and other great stories on the move. Available for Android and iOS.
