The battle for reclaiming assets is daunting and requires an expert team, strategy, persistence – and luck

In recent years, parties in dispute across the world have beaten a path to London. The High Court of Justice and the London Court of International Arbitration have witnessed a number of battles between Russian oligarchs, alongside myriad complex economic disputes involving entities from all over the world.

But the battle does not end when a decision is handed down – the successful party faces the issue of enforcement of financial redress. This is particularly daunting when assets may be scattered across multiple jurisdictions, when disputes carry overtones of deception or when they relate to obvious fraud.

It takes a brave lawyer who advises a client to embark on an open asset tracing exercise when not armed with tangible prospects of recovery.

At this stage, it is therefore time to call the experts. Cross-border asset tracing requires a combination of specialist legal knowledge, an understanding of just what is possible in multiple jurisdictions, and investigative skills to uncover the trail of funds or type and location of other assets. 

In short, it is not a place for the inexperienced lawyer to dabble. The path is rocky and a huge amount of time and cost may be incurred before being tripped up by unforeseen legal barriers or a simple failure to identify adequate assets.

Following the trail

Knowing where to look to identify assets from court filings, credit reporting, property websites and planning applications is vital. In the UK, property ownership is recorded at the Land Registry and accessible online.

There are similar registers in many countries, but not all are as straightforward to negotiate. In France, for example, applications for property information are made directly to the local town hall.

Fraudsters can be predictable types when it comes to spending. You are perceived as small time unless you own classic cars, a boat or a plane and usually a combination of all three. Details of ownership of each of these are publicly available in numerous countries. 

For instance, an experienced investigator seeking aircraft in Australia, residential properties in Portugal or ships in Saudi Arabia will find registers to help with each of these tasks. In the case of ships and aircraft, it may be possible to trace movements from location to location using legitimate online databases.

Corporate structures and offshore trusts are used habitually to shield assets, so unpicking structures connected to the fraudster and mapping them out is important to identify asset-bearing entities and potentially connected parties. 

Corporate filings can tell you the value of the company, the particulars of its major assets and the identity of directors and shareholders. Forensic accountants can often identify irregular issues in published financial statements that suggest links to other entities or individuals – all of which can then be pursued.

Filings by the US Securities and Exchange Commission (SEC) in particular require a significant level of disclosure and may expose links that would otherwise not be apparent. In a recent case of a Chinese national, a disclosure within an SEC filing of a company revealed that he was a major shareholder and sole beneficiary of a British Virgin Islands trust with known assets in excess of $100m (£62m). 

The usefulness of corporate filings does vary. While many countries require a high level of disclosure, and hold public registers of directors, this is not the case in other jurisdictions where there is little information available without formal country level co-operation or a court order.  

Forms of relief

There are direct routes to obtain valuable information about assets through the UK courts. Such forms of relief vary outside of the UK and add to the allure of London as a jurisdiction to launch an action.  

In the UK, the Insolvency Act (complimented by the Companies Acts) provides fantastic powers to liquidators and administrators to aid recovery without the need to evidence fraud, making insolvency proceedings against the target an attractive tactic to aid enforcement. 

Local country insolvency proceedings will be recognised by the courts in many jurisdictions worldwide, increasing the attraction. 

A so-called Norwich Pharmacal order can be used to mandate a bank receiving stolen funds to disclose information about the account and the subsequent movement of the funds, leading the investigator to other accounts in relation to which further orders can be obtained. In this way, we can follow the money from one account to the next, across borders.

In the case of fraud, a judge may be persuaded to grant a freezing order over the assets of an individual or corporate, in the UK and worldwide. This relies on the legal and investigation teams assembling a compelling package of evidence to persuade the judge that there is a case to answer and a real prospect of assets being dissipated and put out of reach of the claimant.  

The order can compel its subject to disclose all assets, including value and location, up to the value of the claim and precludes them from dealing with or disposing of them. In addition, it can compel its subject or other relevant parties, such as banks or companies, to disclose information or documents.  

Patience is a virtue

The hunt for assets is not straightforward. It is an iterative process and each step will provide the investigative team with multiple leads to follow, each of which will need to be tested in the search for assets.

Many of these will lead to dead ends such as offshore trusts, which can be the ultimate shareholder of a company with limited requirements to disclose the beneficiaries.

But the outlook is one of increased transparency as a result of regulation intended to support tracing of terrorist financing and tracking down proceeds of tax evasion.   

Asset tracing and recovery remains a laborious and complex process – navigating criminal and civil legislation across borders is not for the uninitiated. But with the right team, strategy and persistence – and a little luck – the returns will justify the effort to ensure that crime doesn't pay.

Maryam Kennedy is a government sector partner and Jonathan Brown is a forensic insolvency director in EY's fraud investigation and dispute services department.