In civil fraud cases, asset tracing can help claimants locate hidden assets and claim what is owed to them.
Often in lots of cases, it can seem like assets are gone forever. r, at least, have been concealed at the centre of an infinite maze. However, when started at the earliest possible opportunity asset tracing can help identify missing funds.
What is asset tracing?
Asset tracing is an effective method of locating, identifying, and freezing assets through a formal investigation, usually involving specialist legal finance professionals. It’s often used to recover unpaid debts or locate undisclosed assets as part of a debt recovery process.
Have you ever heard someone say: “Follow the money”? Well, that’s precisely what asset tracing is.
It is used to follow a series of transactions that move an asset from its origin point to its final destination or place of concealment. Successful asset tracing can be used to enforce a judgment award in the courts or negotiate a settlement out of court.
Here’s how Deloitte put it:
Asset recovery is all about moving quickly. If steps are not put in place early, the prospect of finding the money, even if you can trace it, gets more uncertain as each day passes.
What are traceable assets?
Traceable assets are physical or digital objects that can be tracked throughout their lifecycle.
They can be physical items such as products, equipment, machinery, and vehicles. However, traceable assets can also be digital items such as documents and intellectual property.
What are the benefits of asset tracing?
Money laundering is almost always associated with asset tracing, that is the person or company that is hiding assets is doing so to keep the assets out of the hands of someone who is looking to retrieve them.
Globalisation has facilitated the movement of goods throughout the world, and assets are no different. Each jurisdiction where assets are held has its own laws and local regulations. This means sophisticated criminals can use complex strategies to hide stolen assets.
However, no matter how hard someone has tried to conceal asserts, expert asset tracers can uncover a series of interlinked transactions, the use of shell companies, and corporate and trust structures to hide money and assets.
Who can use asset tracing?
Asset tracing can be used by anyone from individuals to corporates.
It is typically used by large multinationals that have been the victims of fraud or threat to support an ongoing litigation case or to help launch one from scratch.
Additionally, SMEs and high-net-worth individuals may also use asset tracing if they believe it is financially feasible to do so – the costs and resources needed to pursue assets must be less than the value of the assets recovered or the compensation claimed as a result of successful litigation. Otherwise, the value claimed by tracing will be outweighed by its costs.
It’s worth remembering too that the full amount won’t always be recoverable, so if there’s only a small amount of breathing space between the costs and the return, it’s worth considering writing off your losses.
When can asset tracing help?
Asset tracing can be used in many different scenarios to:
Uncover the true asset position of parties in contract disputes
Enforce arbitration awards around the globe
Recover assets following litigation, arbitration, and banking collapse
Uncover complex money laundering and fraud
Bring the embezzlement and misappropriation of public funds to light and hold perpetrators to justice
Uncover concealed funds in divorce proceedings – when one partner suspects the other of hiding assets
As due diligence when considering a new business arrangement
Bringing criminals to justice and preventing a pattern where they defraud multiple future victims.
Asset tracing strategies
It’s important to note that to be successful, asset tracing needs to begin as soon as possible. We cannot overemphasise the importance of speed, and expertise as the two most important elements of ensuring successful asset tracing and recovery process.
The faster experts can act, the more likely assets can be traced and recovered.
Initially, investigators will need to determine how the fraud happened if any details are known.
Learning the following is a good start:
How was the fraud committed
Who is involved and where are they located?
Identify the location of the assets if possible
Establish whether any assets have been sold and how much money was generated from their sale.
Of course, you may be thinking ‘But, we don’t know this information, that’s why I need help!”.
In that case, forensic experts can use an array of sophisticated financial tools to locate where the money has gone.
What is a banker's trust order in asset tracing?
Bankers trust orders enable you, as the defrauded company or individual, to trace the misappropriated funds through bank accounts. They can be obtained from the High Court, however they’re given quite rarely.
They can be used to prevent freezing injunctions, which is another type of court order that prevents a party from dealing with or disposing of its assets.
Banker's trust orders can be relatively easily obtained if there is already clear evidence of fraud. However, in most cases, an expert legal team will be needed to convince the court the order will be genuinely useful in recovering the assets.
This court instrument can be essential in locating funds before they are further obscured.
The following can be produced via a banker's trust order:
Account balances
Cheques
Payment slips
Money transfers
There are some prerequisites to applying for a banker's trust order. The applicant must disclose if an ongoing internal or criminal investigation is underway, additionally, the court is more likely to grant the order if the applicant can narrow down the request to specific bank accounts or periods.
Speed is of the essence, the quicker the order is granted the quicker the banks can respond, and the less time the individuals involved can further dissipate their assets.
What is a passport order in asset tracing?
A passport order obligates a defendant to surrender their passport and other forms of travel documents. Like a banker's trust order, it is a form of court order that can be obtained, in this instance if it is believed that the suspect of fraud will attempt to flee to avoid court proceedings.
What is the difference between asset tracing and following?
If you’ve heard the term asset following be not careful to confuse it with asset tracing, they are distinct terms.
Asset following only relates to investigating where an asset has gone. Asset tracing is a more complete process that involves investigating whether the asset has been sold, traded, exchanged for another asset, or obfuscated through money laundering.
Tracing means following the asset’s value, not necessarily following the actual object (if there is a physical object involved).
For example, if a billionaire businessperson is defrauded out of a luxury watch by a dealer, who then transfers it to another dealer. In this case, the watch has not been exchanged or substituted for another asset, but its movement has been followed.
However, if the same billionaire is defrauded for the same watch by a dealer who exchanges it with another dealer for a similar model, this becomes an asset tracing issue as the asset has been exchanged.
Is it possible to trace assets overseas?
Yes, however, this is a much more difficult and involved process. It may require the collaboration of several professionals.
These can include:
International tracing agents
Forensic accountants
Process servers
Corporate intelligence specialists
Investigative journalists
Technology experts
How long does asset tracing take?
Asset tracing can be a lengthy and complex process, especially when there are a lot of assets involved, and the case crosses international borders among other complicating factors.
In short, the length of time an asset tracing case will take to conclude depends on the complexity of the case.
The process will speed up if any court orders are granted. Hiring an asset tracing solicitor is always advised too. Getting the right support and guidance through the asset tracing process is essential to ensuring that the process is carried out as efficiently as possible.
How does asset recovery work?
Asset recovery is the final puzzle piece in the asset tracing process. Swift asset tracing is essential for asset recovery.
Before you undertake any sort of recovery action, you need to know exactly what is available to recover. An asset tracing specialist can work seamlessly within your legal team to identify all available assets that have been identified. We will also identify assets that may become losses, if possible, we’ll attempt to identify other routes of recovery for these assets.
We’ll leave no stone unturned in recovering your assets, exploring a variety of recovery strategies from forensic accounting to deep web research and the use of financial technologies.