Asset forfeiture is an important tool to dismantle criminal organizations. Asset forfeiture “takes the profit out of crime” by helping to eliminate the ability of the offender to command resources necessary to continue illegal activities. It took several decades for law/policy makers to realize the benefits of asset forfeiture.
Forfeiture laws have their genesis in the Biblical story of Moses when he tells the Israelites that God has decreed, "If an ox gores a man or a woman to death, then the ox shall surely be stoned, and its flesh shall not be eaten." -- Exodus 21:28. This declaration is thought to be the genesis of Western asset forfeiture law. Later, in 1215 A.D. the British nobles forced the King of England to sign the Magna Carta, because of excessive forfeitures/ fines by the King. As part of the agreement in signing the Magna Carta, King John (1199-1216) promised to return forfeited lands after a year and a day. Among other things, the document declares that fines cannot deprive a free man of his livelihood.
Civil forfeiture in the British Acts has been used as a method of stopping smuggling of contraband. The U.S. Congress had allowed the forfeiture of goods of importers trying to evade customs duties, as far back as in 1789. However, in our country the law for forfeiture of assets of smugglers was codified only in 1976 as the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act of 1976; in the case of drug traffickers, only in the late eighties.
Abuse of natural narcotic substances has been known to mankind for centuries. Even as late as in the 19th Century, opium was used for imperial designs. The forcible export of opium into China and consequent addiction to opium of the general populace of China became one of the important tools used by the colonial powers to not only to overpower, but also to dismember China. This is known to historians as cutting of the Chinese melon.Growing concern over abuse of psychotropic substances resulted in the Suppression Convention of 1936, which became the first international convention that addressed the problem of illicit traffic in narcotic drugs. It required the member states to make legislative provisions for severely punishing drug traffickers, particularly, by imprisonment or other penalties of deprivation of liberty.
A Convention on Psychotropic Substances then followed in 1971. A need was felt that unless the profits of drug traffickers are attacked it might not be possible to neutralize their illegal activities. The profit earned by them is laundered and with the money power in hand they indulge in subversive activities that aim at destabilizing legitimate political institutions. Thus every country has to be vigilant in order to protect themselves from drug traffickers. This emphasizes the need for establishing a system of control of drugs. It was realized that the problem of control of illicit trafficking in narcotic drugs is an international problem that requires intervention at the international level in order to combat it effectively. With the objective to establish and consolidate international cooperation in combating this problem, United Nation’s Convention against illicit trafficking in Narcotic drugs and psychotropic substances 1988 was adopted. This convention expands the scope of international legal control on drugs to include all aspects of illicit traffic in drugs that include money laundering and trade in precursor and essential chemicals that are used in manufacture of drugs of abuse.
Article 5 of the UN Convention, 1988 requires that every state shall take measures to identify, trace, and freeze or seize proceeds, property, instrumentalities or any other things in accordance with the domestic laws of the state. It further requires that the state empower its courts or competent authorities to order that bank, financial or other commercial records be made available or be seized. One of the important clauses is that the state, in accordance with its domestic law, shall dispose of proceeds of property confiscated. Confiscation includes forfeiture, which means the permanent deprivation of property by order of a court or of any other competent authority. These provisions also cover proceeds, which are transformed or converted into other property. If proceeds are intermingled with other property, the property up to the value of the intermingled proceeds shall be liable for confiscation. The onus of proof shall be on accused.
SAARC Convention on Narcotic Drugs and Psychotropic Substances, 1990 also adopted an approach similar to UN Convention of 1988.
To exercise statutory control over narcotic drugs, the NDPS Act, 1985 was enacted. Some of the suggestions of 1988 convention were adopted by the amendment of 1989. Through this amendment, Chapter VA was inserted in the Act of 1985. The idea behind inserting this chapter was make it possible to forfeit the assets of persons involved in illicit drug trade, such of those assets which have been derived by means of profit from illicit trade. But, since the provisions of Chapter VA were applicable only to persons who have been convicted under this Act or against whom a preventive detention order has been passed under PIT NDPS, it did not have an effective deterrent effect upon the persons involved in illicit trade, as conviction was made after a long legal battle in courts. In most of the cases they were free from the clutches of law as they were represented by a battery of top lawyers. To address this growing problem, the Act of 1985 was amended and an arrest clause was brought into chapter VA. By inserting this clause, now, every person who has been arrested or against whom a warrant of arrest has been is made is punishable under the provisions of chapter VA. To a large extent, this amendment has made the provisions of law more effective.
Forfeiture has been used, and is still being used as a tool in certain matters involving the collection of revenue. For example, forfeiture played a prominent role in enforcing tax laws at a time when the Govt. depended on customs duty for at least 80% of its tax revenue; seizing & forfeiting a ship for a customs violation was the only reasonable way of enforcing the nation’s revenue laws. Where the taxpayer defaults on payment of income tax, his property is forfeited, so that tax is recovered from him. But this forfeiture is limited to the extent of tax or duty owed by the taxpayer. The forfeiture under these two Acts, i.e., NDPSA and SAFEM(FOP)A, is more complete—the entire property of the offender is taken away from the offender, irrespective of the correlation between the volume of the offense vis-à-vis extent of the property.
As can be seen from the above, the philosophy behind forfeiture has been to punish the persons who are responsible for causing damage to the society and its citizens. Forfeiture has a demonstrative as well as a deterrent effect on other drug offenders and smugglers, who continue to amass wealth through their illegal activities and harm the society and the nation. The law makes it possible to forfeit not only the properties of the drug offenders themselves but also the properties of many of his family members. Certain safeguards have been prescribed in the law. Properties purchased more than six years back and properties whose source of purchase can be explained to be legal are out of purview of forfeiture proceedings.
We all know that levy of fine or even imprisonment is very often viewed by the offender as a mere cost of business, which puts no impediment to his going back to the way of life he knows best, the minute he is out of jail. It is a well-known fact that for drug traffickers and organized crime groups, monetary gain is the primary motive while carrying out their criminal activities, unlike terrorist groups who usually have non-financial goals, such as publicity, dissemination of ideology, political legitimacy, and political influence, which obviously cannot function without money. For this reason, it would appear obvious that depriving the drug offender of his property, his assets, would be the logical conclusion of any enforcement activity. This would ensure that the offender has no corpus to fund his business any further. All other punishment including fine and imprisonment can be viewed as a mere rap on his knuckles, after which he can reestablish himself with the help of the wealth which had escaped the eye of law. Depriving him of his properties, however, strikes at the jugular vein of the criminal, because he cannot enjoy the proceeds of his crime.
By using this important tool of forfeiture, criminals can be deprived of their ill-gotten wealth. Not only this, the entire criminal organization is liable to be dismantled, if there are no funds to sustain it. Asset forfeiture works in the following ways:
By taking away the tools and instruments used by criminals to perpetuate their crime, such as forfeiture of vehicles, making it difficult for them to operate
By taking away their capital so that they can not invest in their criminal activity any further.
It acts as a deterrence which ensures that the criminals are prevented from going back to their core illegal activities
Asset forfeiture is very useful in providing crucial evidence, which can nail the criminal. Al Capone, the dreaded Chicago gangster, was not caught by the police for all the law he broke, all the murders he committed, but ultimately only through a financial investigation. The evidence collected during the financial investigation was used by the police to nail him for his criminal activities.
Forfeiture can act as an intelligence input against the criminal. By detailing his property, we would be able to find out the extent/ breadth of his network. Asset forfeiture will ensure that there will be no funds with the criminal to continue his illegal operation, opulent life style, even leave him with funds to take care of his legal expenses.
The extent to which drug offenders use their money is instructive. In certain countries, Governments are formed and removed only through the money power these criminal gangs have. This is a disturbing phenomenon in the area of terrorists and terror related income. The rise of the “narco-guerrilla” alliance that has developed between the criminal drug organizations and the anti-democratic insurgent groups is very alarming, in that it seeks to destroy the very foundations of independent sovereign countries, such as Columbia, to cite the example of only one country. The three anti democracy organizations operating in Columbia, have been identified as terrorist organizations by a U.S. Department of State’s October 2001 report on Foreign Terrorist Organizations. These terrorist organizations receive about $300 million from drug sales annually, and this is a conservative estimate. These organizations rely on the illegal drug trade for anywhere between 40 to 70 percent of its income. Initially, in the mid-1990’s, the guerrillas provided protection for the drug crops, “taxed” a share of the profits in order to buy arms and war supplies, and let the syndicates keep the bulk of the revenues. What began as a marriage of convenience between the criminal drug organizations and the guerrillas, however, has now become a partnership dominated by the insurgents. These insurgent groups have survived and can afford to wage a relentless war with the elected regime only because of the fact that they are flushed with funds from drug trade.
Globalization has immense potential to improve standards of living worldwide. But globalization has shrunk the world for criminals also. The terrorist attacks of September 11, 2001, on World Trade Towers in New York City have added urgency and intensity to a robust process against the financing of crime that had already been set underway by international agencies. Asset forfeiture, thus, has assumed renewed significance, because the linkages between drug money and money laundering cannot be denied. Closer home, in our own country, one important source of income of the Mumbai underworld is drug money. The recent cocaine haul in Delhi –bound for Jammu and Kashmir –has the city’s intelligence network working overtime: cocaine has never been intercepted in Delhi before.
In these days of the World Wide Web and the Internet, the world has shrunk. Where we could afford to be insular, we have now to take into account whatever happens not only in our vicinity, but also in any corner of the world. India is positioned between two large areas of drug producing countries, on the West the golden crescent of Pakistan, Afghanistan, Iran, and on the East the golden triangle of Burma, Laos and Thailand. We are extremely vulnerable and cannot remain untouched by the happenings in these regions.