Regulating Illicit Enrichment to Combat International Corruption

Kleptocracy is typically invisible in the countries where it is deeply rooted. Corrupt elites develop sophisticated methods of gradually siphoning off corrupt funds, masking their responsibility in order to stay in power. However, in countries where corrupt funds rest - countries with stable currencies and reliable rule of law – corrupt funds often transform into flashy, highly visible assets like yachts and mansions. These highly visible assets demonstrate the impunity corrupt elites possess abroad. The international legal system favors property rights and typically assumes that property is legally acquired– an extension of “innocent unless proven guilty.” International asset recovery is thereby disfavored, particularly where corrupt elites can manipulate their legal system to legitimize their ill-gotten gains. Even when a corrupt regime falls – opening the doors to reform – deposed rulers are unlikely to face accountability. This paper seeks to explain variable success rates of countries attempting international asset recovery, in order understand how the international community can make the asset recovery process more just, swift, and equitable. Part I outlines legal reforms aimed at supporting international asset recovery, with an ultimate focus on burden shifting through illicit enrichment laws. Part III introduces the methodology, relying on the recent World Bank Stolen Assets Recovery (StAR) Initiative Asset Recovery Watch (ARW) dataset to assess the relationship between legal reform and international asset recovery. Part IV walks through this novel analysis to explain victim states’ variable efforts to initiate international asset recovery. Section A analyzes the ARW dataset using a multiple logistic regression and identifies a strong correlation between asset recovery efforts and both illicit enrichment laws and GDP. Section B reconciles these quantitative findings with qualitative, on-the-ground studies of illicit enrichment laws. Part V finally offers recommendations for future legal reforms and further use of the ARW data.