Asset tracing is the process used to trace and recover assets which have been wrongly taken from an individual or entity. This service is in increasing demand because of the rate of globalization and the growth of e-commerce. However, asset tracing is not an activity in which just anyone can succeed . If you have been defrauded and want to recover your assets, you need to get specialists involved as they have the know-how of the procedures necessary for the safe recovery of your asset. Your asset recovery needs could be multifaceted – corporate theft or fraud, an indebted supplier that has gone into insolvency or simply requiring a fair appraisal of a spouse’s assets pursuant to a divorce. These instances may require the services of forensic accountants to help you trace and recover your entitlements.
It is impossible to recover assets until you have first located them. Stolen assets may have been sold, transferred to another person, exchanged, spent or moved across borders. Assets which can be traced include cash, shares, bank accounts, real estate, movable possessions such as pieces of jewelry, yachts, cars, and airplanes. Locating these assets is a highly specialized line of work. It takes a strong legal and financial commitment to successfully untangle the web of transactions involved from the origin to the current destination.
The entire process is time-consuming, unpredictable, complicated, and potentially expensive. Although individuals and companies may be tempted to trace their assets themselves, it is an extremely risky route and may cost more in the long run. The greatest challenge will be in legal compliance, especially if the assets have moved across borders. Only experts have the wherewithal to deal with the legal systems of various countries. It is better to let seasoned professionals with global reach handle the mandatory and legitimate steps necessary to identify, freeze, and recover discovered misappropriated assets.
There’s also the serious temptation to underestimate the sophistication of the strategies that can be used to disguise or disseminate assets. However, when you acknowledge that criminals have a way of being one step ahead of conventional methods, then you will understand why the difference between assets that are dissipated and those that are recovered may be the involvement of an independent, third-party agency. By all means, weigh the cost of hiring professionals for asset tracing against the potential benefits and you will find out one option provides a higher possibility of success.
In most cases, a fraudster expects you to do something – and they prepare for what they believe you can do. This is why fraudsters are hardly caught red-handed with assets. Some of the questions an asset tracing intelligence team try to answer include:
- What other assets does the fraudster have?
- What are those assets?
- In what jurisdiction(s) are they located?
- What is their ownership structure?
- How liquid are the assets?
- What are the chances of asset recovery?
The responses to these would determine whether or not the person or company involved should proceed with litigation. If litigation is chosen, a way must be determined to protect the assets from dissipation in the meantime- possibly by obtaining a freezing injunction or reaching a settlement.
What Are Traceable Assets?
The fundamental purpose of asset tracing is to obtain crucial information that can benefit the client who wants to recover their assets. There are various ways to obtain such information. The first step for asset recovery is to be sure the assets still exist. Of course, they still exist even if they have been transferred or exchanged. Judicial assistance for asset tracing includes examining company register, land registry, register of non-profit organizations, vehicle registration register, register of bank accounts, company records, criminal records, court records, tax records, immigration records, border crossing, and customs records, among others.
Where publicly accessible information proves insufficient , private investigation- which usually includes physical surveillance- becomes indispensable as it helps to achieve more precise results. This is especially useful in cases where assets are hidden with a network of third parties and foreign jurisdictions. Asset tracing is important to ensure a fraud victim can connect that fraud to the specific assets they believe are the proceeds of the wrongdoing. Tracing will unveil the techniques used by a perpetrator to find out where assets are to recover them for their rightful owner.
Asset tracing is rarely a walk in the park. Those who want to recover their assets must do everything by the book. If there’s any violation of the approved legal and investigative approach, it can mar the entire process. This is why a DIY approach is not likely to work for asset tracing. Handing it over to experts maximizes your chances of success.
Why Act Quickly
Speed and expertise are vital for successful asset tracing and recovery. Every second count and cannot be overemphasized. Immediately you decide on asset tracing, select the team of choice, and provide the necessary resources to get them to work. Any delay in decision-making or action-taking can lead to an unpleasant outcome.
The first step of asset tracing is to establish the exact circumstances of the fraud. This exercise aims to:
- Gain a full insight into how the fraud was perpetrated
- Identify all the individuals and parties involved
- Identify the location and jurisdiction of all the parties involved
- Establish the location of the fraudulently-acquired assets
- Determine the state of the assets
Knowing the facts surrounding the fraud will help to determine the most appropriate legal action to take. It is important to quickly move when tracing misappropriated assets and funds. Passport orders and bankers trust orders also help to trace assets faster.
If there is evidence that the defendant may abscond the country to avoid proceedings, the team tracing the asset can obtain a court order requiring the defendant to submit their passports and travel documentation. This way, it becomes impossible for them to legitimately leave the jurisdiction concerned.
Bankers Trust Orders
Bankers trust orders help the defrauded party to trace funds via bank accounts. This order provides an effective way to monitor any potential freezing injunction. However, it is not easy to obtain bankers trust orders except there are obvious signs of fraud. Individuals seeking bankers trust orders would need legal teams that can make strong representations and persuade the court that the orders will provide genuine assistance in locating, preserving or retrieving assets that are the subject of a claim. Since speed is vital to identify the whereabouts of the misappropriated funds or assets and reduce the risk of dissipation, bankers’ trust order becomes even more important as it can lead to all relevant documents produced by the bank: account balances, payment slips, cheques, and records of any money transfers. Just ensure you obtain the order through the right steps.
To apply for a banker’s trust order, the applicant would have to disclose whether the alleged fraud is undergoing any internal or criminal investigations. Note that the court will be more willing to permit an order if the applicant has narrowed their request down to specific bank accounts and/or a certain period.
The Difference between Tracing and Following
There is more to asset tracing than following. Following an asset involves investigating to see the final destination of that particular asset while asset tracing involves investigating and identifying where and how the original asset has been traded, sold, or exchanged for another asset. Asset tracing has more to do with the value of an asset than the asset itself, since the worth of the original asset may still be found in a substituted asset.
For instance, if A is defrauded out of a diamond wristwatch by B, who then transfers it to C, A can follow the wristwatch into the hands of C. The wristwatch has not been substituted or exchanged for another asset so A has only followed his asset.
But if A is defrauded out of his diamond wristwatch by B, who then exchanges it with C for a gold necklace, it becomes a tracing issue because the original asset has been swapped for another product. The wristwatch can be followed into the hands of C and the product for which it was swapped, the gold necklace, can be traced to B.
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