Author: Ministry of the Interior, Ministry of Finance, Ministry of Justice Deadlines – performance indicators:
30 June 2013 (Ministry of the Interior and Ministry of Finance) – Provide for cooperation of joint ad hoc teams consisting of representatives of law enforcement authorities and tax administrators, focusing on the fight with serious financial crime, and inform the Government about the course and results of the cooperation and propose further measures. 31 March 2014 (Ministry of the Interior and Ministry of Justice, in cooperation Ministry of Finance) – Present to the Government an analysis of options for specific allocation of removed proceeds of crime and for financial motivation for law enforcement authorities in the form of a percentage transferred to the budget of the service/prosecutor’s office/court, which participated in the identification, seizure and removal of the proceeds of crime.
31 March 2014 (Ministry of Justice and Ministry of Finance) – Present an analysis of the issue and a draft concept for creation of a new mechanism (outside criminal law) to remove
assets arising or very probably arising from crime including assessing the feasibility of a possible application of the concept of equity returns.
30 September 2014 (Ministry of Finance) – on the basis of the analysis approved by the Government present the Government with a proposal for the regulation to be used in the situations of evident discrepancy between the taxpayer’s income as reported in his/her tax return and the taxpayer’s actual property or lifestyle.
Anticorruption effect: Consistent prosecution of identified cases of corruption, including removal of illegally acquired assets, discourage persons potentially inclining to corruption. Strengthen motivation to reveal corruption by law enforcement authorities.
Reasoning:
Options for removing assets arising from illegitimate sources using non-penal means Following up the task No. 4.4 of The Government Anti-Corruption Strategy for 2011 and 2012, the Government was presented for discussion an Analysis of Available Non-Penal Means to Remove Proceeds of Crime. The Government acknowledged the analysis by its resolution No. 153 of 14 March 2012 (with regard to Tasks Nos. 1, 3 and 4).
Removing assets acquired illegally is an efficient response to organized crime, which is very often accompanied by corruption. Where it is not possible to demonstrate in the criminal proceedings that certain property arises from crime, but this is highly probable and the holder of the property cannot explain in a credible way how he/she acquired the property, other than penal ways for removing such assets should be looked for. Such removal should be conducted using a tax administration tool or civil-law means for removing so-called UFO profits, i.e. profits from unidentified sources. The property is acquired illegally, but it is held by persons whose criminal activities were either never exposed or never investigated or whose criminal activities were investigated, but traces to the proceeds of crime were extinct, or the property is held by persons who were not proved guilty of criminal activities, or by persons who did not commit themselves any criminal activities. A missing demonstrable link between the property and committed criminal activities is a characteristic feature in such cases. Opponents of non-penal means to remove UFO profits consider such tools as a breakthrough in the presumption of innocence. A partial shift of the burden of proof could be a solution; that, however, applies only to demonstrating the scope of assets, if a person is not able to demonstrate the origin of extensive property or property, which is evidently connected to criminal activities. Such property would be confiscated or taxed considerably.
A wider shift of the burden of proof to the finally sentenced taxpayer could be a measure, which can be taken into account in this context. Such a shift of the burden of proof would be in the form of obligation to explain in detail one’s property for several years back so as to confirm that the tax according to the tax return is correct. A contemplated breakthrough in the period for tax assessment (similarly to the cases of final sentence for a tax crime) is, however, a follow-up measure to be discussed by professionals; i.e. the option to assess tax for an already precluded tax period, in which the income should have been taxed. However, both measures should respect the principle of prohibition of true retroactivity. Also, it is necessary to take into account the principle of legal certainty, which follows up the course of time. Respecting this principle is the reason for existence of preclusion periods; a breakthrough in preclusion periods should be justified by a higher public interest, which must outweigh the individual’s interests protected by the constitution.
Stipulation of the option of specific allocation of removed proceeds of crime and financial motivation for law enforcement authorities in the form of a percentage transferred to the budget of the service/prosecutor’s office/court, which participated in the identification, seizure and removal of the proceeds of crime
This task (the second one) was highlighted many times at CEPOL international workshops as a measure, which can provide for sufficient activities and cooperation of the three stages of law enforcement authorities during identification of the proceeds of crime, proposing confiscation thereof and subsequent confiscation thereof.
Currently, the assets, which are acquired by the state because its law enforcement authorities manage to identify and subsequently remove such assets as proceeds of crime, are included in the state budget without specific allocation. The issue of specific allocation of such assets has been discussed for a long time, and especially recently during preparation of the new act pertaining to victims of crime. Foreign models, which use assets acquired in this way, mostly include the option that such assets can be given to various funds to help victims of crime; the practice that part of the assets goes to law enforcement authorities is not sporadic either. Such assets should be used to improve the fight with crime generating proceeds, especially in the form of purchases of IT and SW and development of information systems. In practice, this model proves to be highly motivating, especially where the allocated percentage goes directly to the service/prosecutor’s office/court which contributed to the identification/removal of the proceeds of crime.
As mentioned above, the Police of the Czech Republic managed to make the seizure of proceeds of crime considerably more efficient. In addition to methodological and other activities, this development is partially due also to the support by police managers, which is, however, preconditioned into certain extent also by the fact that The Government Anti- Corruption Strategy for 2011 and 2012 stipulated as one of the tasks the obligation to reflect results of the seizure of proceeds of crime in the financial remuneration of management of every service.
This assumption, however, did not come true; by itself, this measure is significant only for the Police of the Czech Republic, and it would not impact at all on the other law enforcement authorities. On the other hand, the specific allocation and inclusion of removed assets in the budgets of all law enforcement authorities would be strong motivation also for prosecutors and, especially, for judges, because options for motivation of judges are very limited with regard to their independent position.
Therefore, it is necessary to prepare an analysis of options (which requires adequate statistical outputs as regards removed values; such analysis should include at least four other evaluation periods) how the Czech Republic should use the assets acquired from the removed proceeds of crime, including an analysis of several foreign models, taking into account especially the option to use the assets for motivation of law enforcement authorities so as to maintain and develop activities in this field.