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Emerging Trends in Asset Recovery

Gretta Fenner-Zinkernagel, Charles Monteith and Pedro Gomes Pereira

Street protests in the ‘Arab Spring’ countries have illustrated that public demand for recovering stolen assets has grown exponentially, as have expectations by concerned populations and governments. From a topic discussed in expert forums, it has thus become a topic of the people. The question is: Have practitioners and policy makers delivered on these expectations?
Clearly, since the ratification of the UN Convention against Corruption (UNCAC) ten years ago, much progress has been made in streamlining respective legal and institutional frameworks. On the other hand, we also find that practical successes on the ground remain few and far apart, and largely limited to a handful of countries.
This book asks why and, through the voice of renowned practitioners from a broad range of affected countries, analyses challenges that remain, identifies new stumbling blocks that have cropped up, and discusses practical solutions that are being tested with a view to overcoming these.
The book is published by the Basel Institute on Governance’s International Centre for Asset Recovery (ICAR).

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Major stumbling blocks 65

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Major stumbling blocks Part 1: Technical JASON SHARMAN Shell companies and asset recovery: Piercing the corporate veil One of the most common obstacles to tracing and recovering the pro- ceeds of large-scale corruption is the use of so-called shell companies to obscure the link between criminals and the money they have stolen. This chapter briefly reviews the nature and uses of shell companies in serious international corruption crimes and then makes some sugges- tions as how to respond to this challenge. It is important to emphasise that while this chapter looks at the illicit uses of shell companies, the large majority of shell companies are used for legal and legitimate purposes. What are shell companies? How is a shell company different from any other kind of company? First, these are privately owned companies, rather than being publicly listed on a stock exchange. More importantly, shell companies are not engaged in the production of any good or service. A partial exception is that the shell company may ostensibly be involved in the provision of some hard-to-verify service, like consultancy or marketing services, as an alibi to explain the receipt of corruption proceeds. But the main function of the shell company is its separate legal personality, as such companies are generally used to hold assets or bank accounts in a corporate name. In doing so, they obscure the name of the real person or people in control, referred to as the ‘beneficial owner’. When it comes to stolen wealth, the shell company...

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