1. Why Transnational Asset Recovery?

As UNCAC and other anti-corruption conventions demonstrate, corruption is a vast and complex topic. Why, then, does our proposal focus on the recovery of assets that have been embezzled or misappropriated by public officials, which are often subject to money laundering and transfer to another national jurisdiction?Footnote ³⁰

As an initial matter, asset recovery forms a key part of the anti-corruption regime.Footnote ³¹ Chapter V of UNCAC designates the return of assets as a “fundamental principle” of the convention.Footnote ³² The inclusion of provisions on cross-border asset recovery has been widely hailed as “a major breakthrough in international law.”Footnote ³³ Asset recovery advances normative, strategic, and practical objectives of the international anti-corruption regime. It deprives perpetrators of the proceeds, property, and instrumentalities that could be used to engage in further corrupt acts, and it may enable the compensation of victims for the financial harm caused by perpetrators’ corrupt acts.Footnote ³⁴ Asset recovery may also act as a deterrent or a preventive measure.Footnote ³⁵

In addition, there is a global consensus on the wrongfulness of the underlying conduct and the need for return. UNCAC and other anti-corruption treaties require states parties to criminalize the embezzlement, misappropriation, and diversion of public funds, as well as money laundering.Footnote ³⁶ These acts are now proscribed in nearly all national criminal codes.Footnote ³⁷ There is also widespread agreement, reflected most clearly in UNCAC Article 57, that embezzled public assets remain the property of the state of origin even when an official has transferred them to another jurisdiction. From an international justice perspective, therefore, asset recovery facilitates the repatriation of stolen wealth to states that may have an “ownership” claim over the funds.Footnote ³⁸ Provided that certain conditions (discussed in detail below) are met, UNCAC mandates the return of such assets to the state of origin by the destination state.Footnote ³⁹

Recent developments have underscored the demand for new norms and processes to facilitate asset return. In 2022, for example, the United Nations High Commissioner for Human Rights published a set of Recommended Principles on Human Rights and Asset Recovery, which include best practices.Footnote ⁴⁰ Civil society groups have also advanced a number of proposals.Footnote ⁴¹ In addition, the UNCAC Review Mechanism is due to complete its second cycle of reviews in 2025, which focuses in part on asset recovery. The review will generate significant empirical data that could support efforts to adopt news norms or institutions.Footnote ⁴² Lastly, the ongoing armed conflict in Ukraine has highlighted the importance of stemming illicit financial flows across borders as well as the problematic role of destination countries, such as the United Kingdom, in facilitating the laundering of illicit Russian wealth.Footnote ⁴³

2. The Interests of State of Origin and Destination States in Asset Returns

The consensus in favor of returning stolen public assets reflects the common interests of states of origin and of destination states in facilitating asset recovery. However, the preferences of the two groups of states are not perfectly aligned. Each group approaches the topic from divergent normative perspectives and focuses on different practical considerations. The effectiveness of asset recovery efforts has been shaped and at times hindered by this distinctive configuration of state preferences, as this Section explains.

The overarching commonality of interests is revealed by the number of states of origin and destination states that have participated in asset returns over the past decade. In the late 2000s, only a handful of states—mostly OECD members—reported pursuing asset recovery cases.Footnote ⁴⁴ However, a recent report by the Stolen Asset Recovery Initiative (StAR) identified sixty-one countries in all regions of the world that were involved in at least one cross-border asset freeze, confiscation, or return of corruption proceeds between 2010 and 2021.Footnote ⁴⁵ The central take-away of the report is that “the ‘club’ of states pursuing cross-border asset recovery cases involving corruption proceeds is growing rapidly.”Footnote ⁴⁶

The terms governing the repatriation of embezzled and laundered assets are often set forth in bilateral or multilateral agreements, which typically take the form of memoranda of understanding (MoUs). In 2020, for example, Switzerland and Uzbekistan negotiated a framework agreement for the return of more than U.S. $130 million in previously confiscated assets related to criminal proceedings against the daughter of the former Uzbek president. In 2021, the United Kingdom repatriated to Nigeria £4.2 million stolen by a former state governor, and separately, it returned to Moldova £450,000 forfeited by the son of a former prime minister.Footnote ⁴⁷ These and other MoUs include a range of approaches to overcome the normative, institutional, and practical hurdles to asset return—issues that we discuss in greater detail below.

Governments have also collaborated on asset returns in multilateral fora. In 2017, for example, the United States and United Kingdom co-organized the Global Forum on Asset Recovery (GFAR), in partnership with the World Bank and United Nations Office on Drugs and Crime (UNODC), to discuss asset repatriation.Footnote ⁴⁸ The meeting produced ten principles for the disposition and transfer of confiscated stolen assetsFootnote ⁴⁹ and facilitated the conclusion of several return agreements.Footnote ⁵⁰

The policy pronouncements, laws, and practices of states of origin and destination countries reflect a general consensus in favor of asset recovery. Yet these sources also illustrate the divergence of preferences regarding the manner and modalities of return. For their part, states of origin have demanded asset returns with no strings attached. The African Union's Common Position on Asset Recovery, for example, emphasizes that “the recovery and return of African assets is therefore a top priority . . . as such recovered assets can be applied toward Africa's development agenda.”Footnote ⁵¹ States of origin strongly prefer the return of assets without restrictions on how the funds are spent, transparency requirements, or auditing of the funds’ dispersal.Footnote ⁵² For example, Nigeria and South Africa underscored their commitment to the “unconditional return” of stolen assets in their respective submissions in 2021 to different UN bodies concerned with corruption.Footnote ⁵³ The governments of these and other states of origin even go so far as to label conditions on asset returns as unacceptable infringements on their sovereignty.Footnote ⁵⁴

Nevertheless, the economic benefits and political salience of recovering purloined public funds have induced many states of origin to negotiate agreements with destination countries that include a variety of substantive and procedural restrictions on asset returns. This dynamic—vociferous support by origin states for a hardline “no conditions” policy in multilateral venues, paired with deviations from that position in specific cases—has parallels in other areas of international law. In the context of international investment law, for example, developing countries’ common position about the limited protection owed to foreign investment has been eroded by the bilateral bargaining power of industrialized countries.Footnote ⁵⁵

The interests of destination states are also nuanced, but in a different way. These countries do not actively encourage the deposit of embezzled or laundered assets in their jurisdictions. Because money laundering is detrimental to the integrity of a state's financial system, most destination states have an incentive to prevent such deposits. Destination states require banks and other financial intermediaries to “know their customers” and to report suspicious activity to prevent transfers of illicit funds. However, implementation and enforcement of anti-money laundering laws and regulations is variable and often inadequate, with the result that money laundering occurs even in highly regulated financial centers, such as New York, London, and Zurich.Footnote ⁵⁶

Even if enforcement is imperfect, destination states generally have no desire to retain embezzled funds that enter their respective financial systems. The willingness of destination countries to repatriate is demonstrated by the creation of domestic programs to freeze or seize and confiscate embezzled foreign assets. Destination countries including Canada, France, Luxembourg, Switzerland, the United Kingdom, and the United States have established such programs.Footnote ⁵⁷ Destination states will generally freeze, seize, and confiscate embezzled funds if the relevant legal requirements are met.Footnote ⁵⁸ However, most destination countries have robust property protections and high evidentiary standards for the confiscation of assets based on a criminal conviction.Footnote ⁵⁹ As a result, destination states’ pursuit of stolen assets is not always successful.Footnote ⁶⁰ Another practical difficulty in the recovery of assets has been a narrow focus by states on criminal forfeiture, as opposed to non-conviction based forfeiture mechanisms.Footnote ⁶¹

Once assets have been seized and are available for return, a primary concern of destination states is ensuring that the funds are not again subject to corruption.Footnote ⁶² This concern is reflected in MoUs that include commitments as to how and to whom money is distributed, for what purpose, and whether the funds are subject to external monitoring. For example, the United States, Jersey, and Nigeria agreed in 2020 that over $300 million in assets stolen by former president Sani Abacha would be returned to Nigeria to help finance specific infrastructure projects.Footnote ⁶³ The United States adopted a different approach with regards to assets recovered in a civil forfeiture settlement with Teodoro Nguema Obiang Mangue, the son of the president of Equatorial Guinea. It gave $19.25 million of the funds to the United Nations for the purchase and distribution of COVID-19 vaccines in Equatorial Guinea, thereby benefiting the state while bypassing the national government.Footnote ⁶⁴

The foregoing examination of the preferences of origin and destination states highlights the need for a flexible mechanism that could help to resolve normative and practical differences between the two groups of countries. While both groups, in principle, share a common interest in asset return, their interests are not entirely aligned. States of origin prefer to avoid any conditions on return or at least limit those conditions, while destination states seek to prevent the re-corruption of returned funds. Negotiation over these issues continues to pose significant challenges for the asset recovery process.

1. Customizability

Customizability describes the full spectrum of potential choices available to states when creating a new international institution. These choices can often be quite expansive. They include the substantive functions or services that the body will carry out (such as convening meetings, gathering information, or identifying best practices); how it is created and structured (including its legal basis, financing, and whether it has a permanent secretariat and staff); and its relationship to treaties and institutions in the same issue area (for example, whether it is housed within an existing organization or is a freestanding body, and the extent to which its activities overlap with those performed by other bodies). Customizability is not limited to informal international bodies. However, the range of choices is broader for informal mechanisms, including non-binding, temporary, or lower-cost options that are generally unavailable for more formal organizations.

An extensive literature on rational design has examined decisions about how international institutions are structured.Footnote ⁹⁵ This literature has investigated whether certain features—such as membership, scope, centralization, control, and flexibility—correspond to different cooperation problems that states face, including enforcement and distribution, the number of actors, and different types of uncertainty.Footnote ⁹⁶ Our conception of customizability draws inspiration from the rational design framework, but differs from it in several important ways.

First, rational design literature has a fairly narrow conception of flexibility. It focuses on the micro-level decisions that states make when negotiating legally binding commitments, such as escape clauses and renegotiation provisions, to anticipate and respond to various types of future uncertainty.Footnote ⁹⁷ This overlooks the fact that states have a much wider array of choices when creating a new institution, including whether to found it on a non-binding instrument or make its services or functions available upon request.

Second, rational design studies tend to view each institution as a freestanding entity whose delegated powers operate in isolation from other international bodies. Customizability, in contrast, foregrounds the relational aspects of new international mechanisms, in particular how informal institutions interact with pre-existing treaties and organizations in the same issue area whose mandates may be overlapping or potentially duplicative.

Third, rational design scholars seek to explain the structure of international institutions already in existence rather than those that could be established in the future. This creates a risk of “driving with the rear view mirror,”Footnote ⁹⁸ that is, seeking to understand how institutions are designed by examining, after the fact, the fit between articulated objectives and achievements. At that later vantage point, however, it may be difficult to reconstruct the options that the creators considered.Footnote ⁹⁹ In contrast, customizability's ex ante perspective foregrounds the spectrum of potential choices to address gaps or shortcomings in existing organizations and treaties, and the tradeoffs among them.

2. Selectability

Selectability relates to the particular functions or services that states request once a new international institution is operational. At this later vantage point, the institution's delegated authority has already been fixed (although it may later be expanded) and attention shifts to which of the body's activities are activated and in what circumstances. Selectability is an attribute of flexibility because it allows a state to engage with only those functions or services that it views as beneficial. Selectability also recognizes that individual countries or groups of states may have variable preferences among these activities and that their preferences may change over time.

Defined in this way, flexibility bears some resemblance to variable geometry, plurilateral commitments, and à la carte multilateralism. In international trade, these terms describe arrangements in which a subset of states agree to commitments governing specific trade-related topics.Footnote ¹⁰⁰ Similar approaches exist in other issue areas. In international criminal law, for example, state parties to the Rome Statute are free to recognize (or not) the ICC's jurisdiction over the crime of aggression and, if so, with certain limitations. In the human rights context, member countries of a UN or regional treaty can decide whether to ratify an optional protocol or optional declaration committing to additional rights protections or delegating additional functions to an international court or monitoring body.

Selectability differs from these concepts in at least two respects. First, variable geometry focuses on a decision by a group of states to accept international legal obligations that bind them on an ongoing basis. In contrast, selectability, as we define it, involves the ad hoc decision by one or more states to request an institution's assistance with addressing a particular legal problem or resolving a specific dispute. The state or states making such requests do so on a voluntary basis. They are not undertaking any binding or non-binding international commitments, although such commitments may be one outcome of the institution's facilitative efforts.

Second, plurilateral agreements are generally limited in subject matter. Selectability, in contrast, encompasses a wide ranges of services or functions that states can select on an individual basis or mix and match as needed. In addition, whereas variable geometry arrangements are housed under the umbrella of an existing multilateral organization or treaty, an institution characterized by selectability could either be linked to such entities or established as a freestanding body.

A few international institutions illustrate how selectability operates in practice. The most relevant example is the Permanent Court of Arbitration (PCA), established in 1899 following the first Hague Peace Conference to promote the “friendly settlement of international disputes.”Footnote ¹⁰¹ In addition to providing numerous services relating to international arbitration, the PCA has evolved to offer an exceptionally broad range of other functions.Footnote ¹⁰² These include creating fact-finding commissions, supervising mass claims processes, providing mediation and conciliation services, and drafting rules and recommendations concerning environmental law disputes.Footnote ¹⁰³ The PCA's dispute settlement services can also be accessed by a wide range of actors, including “any combination of states, international organizations, and private entities.”Footnote ¹⁰⁴

Another example is the Advisory Centre on World Trade Organization (WTO) Law.Footnote ¹⁰⁵ The Centre, which is economically and politically independent of the WTO, was created in 2001 to address concerns that developing and least developed country members of that organization lacked the legal expertise and financial means to participate meaningfully in the global trade regime. The Centre offers a variety of services to these states upon request, including assisting in WTO dispute settlement proceedings, issuing advisory opinions, and training government lawyers.Footnote ¹⁰⁶ We discuss the distinctive manner in which the Centre is funded and staffed in great detail below.

* * * *

The transnational asset recovery mechanism that we now analyze has high degrees of both customizability and flexibility. Although there is no precise model for such a body, this is not an impediment to our proposal. The growing number and diversity of informal and flexible institutions reveals that states have considerable experience in tailoring such bodies to their needs and circumstances. Our proposal offers a range of options for states to consider—both when creating the mechanism and after it is operational—that we believe will facilitate the return of stolen public assets, thus contributing to ongoing anti-corruption efforts in international law.

1. Convening Meetings and Conferences

The proposed mechanism could convene bilateral or multilateral meetings or conferences concerning asset recovery and provide organizational or administrative support for such events convened by other actors. Bilateral meetings between origin and destination states may facilitate the negotiation of agreements concerning the return and disposal of confiscated assets. For example, at the 2017 GFAR, discussed above, over eighty bilateral and multilateral meetings were reportedly held between a few key destination states (Switzerland, the United Kingdom, and the United States) and a four states of origin (Nigeria, Sri Lanka, Tunisia, and Ukraine).Footnote ¹¹⁷ The large number of meetings held at this standalone conference suggests that there may be a demand for a mechanism that could facilitate such exchanges on an ad hoc or continuing basis and for a larger group of origin and destination states.

The proposed mechanism could also convene multilateral meetings for specific purposes, such as to facilitate information sharing among practitioners, exchange best practices, or to advance normative development in the asset recovery field. Within UNCAC, regular meetings of the Conference of States Parties and its subsidiary body, the Working Group on Asset Recovery, serve as fora for exchanging information and best practices concerning asset recovery. To date, however, normative development has not been a significant feature of their work.Footnote ¹¹⁸ In addition, the meetings of the UNCAC Review Mechanism and the Working Group on Asset Recovery have not been open to meaningful participation by civil society organizations active in the anti-corruption field,Footnote ¹¹⁹ notwithstanding the fact that UNCAC provides a basis for such participation.Footnote ¹²⁰ In contrast, conferences and meetings hosted by the mechanism could include both states and non-state actors.

2. Information Collection and Publication

The proposed mechanism could gather and publish a wide range of information about asset recovery. This would include domestic asset recovery laws and regulations, mutual legal assistance treaties, written agreements providing for the return and disposal of recovered assets, and other information about asset recovery cases.

The collection and publication of MoUs and other agreements could be especially valuable given that many such agreements have not been published, are difficult to find, or are not available in a central location. The publication of these MoUs would promote the availability of information that could be useful to other states engaged in asset return negotiations. It could also allow practitioners and researchers to determine which agreements have not been made publicly available. This, in turn, could facilitate freedom of information requests and other efforts geared toward the release of unpublished agreements. The mechanism could also encourage states to publish such MoUs, preferably in their entirety but if necessary with redactions of confidential or sensitive information.

Heightened accessibility of existing asset recovery agreements could also encourage greater transparency in the future by helping to normalize the publication of asset recovery agreements as standard practice. Such a transparency-promoting function would be in keeping with Article 13 of UNCAC, which requires states parties to facilitate the “active participation of individuals and groups outside the public sector . . . in the prevention of and the fight against corruption . . .,” including through effective access to information.Footnote ¹²¹

Several existing anti-corruption entities already collect, synthesize, and publish information about the implementation of UNCAC in general and asset recovery cases in particular. However, these efforts leave substantial room for improvement. For example, both the UNODC and StAR gather and publish information concerning asset recovery. UNODC maintains a platform known as TRACK (Tools and Resources for Anti-Corruption Knowledge), which assembles existing resources on the implementation of the convention, organized according to the structure of the treaty and by theme.Footnote ¹²² TRACK also hosts a Legal Library which provides some information about implementing legislation in most, but not all, UNCAC states parties.Footnote ¹²³ The information contained in the Legal Library is neither complete nor up-to-date. In addition, although StAR, a joint initiative of the World Bank and UNODC, previously maintained an Asset Recovery Watch Database with information about ongoing and completed asset recovery efforts,Footnote ¹²⁴ in recent years this database has been “temporarily disabled.”Footnote ¹²⁵

3. Technical Assistance and Capacity Building

The proposed mechanism could also support incipient or ongoing asset recovery efforts by providing technical assistance to states and by helping to build their domestic capacity. UNCAC addresses these issues, but does not create an entity that facilitates or centralizes such assistance. The convention requires states parties to train their own officials and to provide technical assistance to other parties, namely developing countries. However, these obligations are vague and leave much room for interpretation.Footnote ¹²⁶ Moreover, the demand for technical assistance is very high and growing. The UNCAC review cycles have given rise to thousands of requests by states parties for technical assistance with respect to the chapters on prevention, criminalization and enforcement, international cooperation, and asset recovery.Footnote ¹²⁷ The large number of outstanding requests suggests a strong need for an institution that could facilitate providing such assistance.Footnote ¹²⁸

The proposed mechanism could temporarily assign its officials to work with states of origin in government ministries engaged in efforts to recover the proceeds of corruption. Officials seconded to these ministries could, for example, provide assistance with respect to preventing the transfer of proceeds of corruption (including through anti-money laundering measures) as well as detecting and freezing such proceeds. Technical assistance could also take the form of training in drafting mutual legal assistance (MLA) agreements, and assistance with preparing MLA requests pursuant to those agreements and to UNCAC itself.

The successful completion of MLA requests by states of origin has special legal significance under UNCAC. As explained above, the absence of a successful request can make a return of stolen assets discretionary rather than mandatory. The need for technical assistance in this area is recognized and facilitated in the legislation of one major destination state, Switzerland. The Swiss Foreign Illicit Assets Act (2015) provides that the Swiss government may provide a country of origin with technical assistance in the form of training, legal advice, and the secondment of experts.Footnote ¹²⁹ The envisaged transnational mechanism could institutionalize support for such technical assistance among a larger number of states, regardless of any pre-existing bilateral relationship between the state of origin and the destination state.

Technical assistance could also take the form of direct support by officials of the mechanism in the investigation and prosecution of corruption offenses, especially in states of origin. Even where the political will exists for anti-corruption investigations and prosecutions, such efforts may be thwarted by the legal and practical difficulties of obtaining and analyzing evidence, including complex financial documentation. Because of the inherently cross-border character of large-scale corruption cases that give rise to asset recovery efforts, MLA requests may often be necessary to obtain such evidence. Sending the mechanism's experienced investigators and prosecutors to states of origin would also facilitate both the enforcement of domestic anti-corruption laws and the eventual recovery of stolen assets.Footnote ¹³⁰

The mandates of several existing anti-corruption bodies include technical assistance, but the extent to which such help is actually provided appears to be limited. While StAR reportedly assists a number of countries each year, the details of such assistance have not been made public and appear to be on a small-scale.Footnote ¹³¹ The International Centre for Asset Recovery (ICAR), which is part of the Basel Institute on Governance, a Swiss non-profit organization,Footnote ¹³² provides training programs and help with specific asset recovery cases in countries with low levels of expertise, including assistance with intelligence gathering and analysis, asset tracing, investigation and prosecution strategies, and mutual legal assistance. However, it appears that ICAR's provision of technical assistance is also on a relatively limited scale.Footnote ¹³³

4. Mediation

The mechanism could provide mediation services for states that encounter difficulties in negotiating or implementing agreements to return confiscated assets. Mediation may be useful where the return of assets is not mandated under UNCAC. The assistance of a mediator could be especially appropriate in cases where a significant power imbalance exists between requested and requesting states. Even when both states stand on relatively equal footing, asset returns often raise a host of issues in which legal, political, policy, and economic factors should be taken into account. Mediation could help to resolve such interdependent issues.

While parties to asset recovery proceedings are the most likely to use mediation services to facilitate returns, mediation might also be useful at an earlier stage in the process when parties are engaged in asset identification, tracing, freezing, or confiscation. Mediation could also be relied upon at a later stage if a disagreement relating to the interpretation or application of a MoU arises after assets have been returned. For example, a mediator could assist the parties in resolving disagreements about the recipients and uses of returned assets, as well as monitoring mechanisms and the inclusion of civil society.

Mediation could also be useful in the context of foreign bribery prosecutions. When a prosecuting state enters into non-trial resolutions with corporations or individuals, the settlement often involves multi-million dollar payments to the government that include disgorgement of profits, interest on those profits, legal costs, and criminal fines (among other remedies). Frictions can arise regarding which of these funds should be eligible for return to states of origin as well as how the funds should be allocated when a foreign bribery case involves multiple states. Mediation could help resolve these often contentious issues.

In order to facilitate mediation, the mechanism could maintain a list of qualified individuals who possess a high level of competence in anti-corruption law, asset recovery law, or non-legal aspects of asset recovery. This list could include government officials, although these individuals would serve in their individual capacities, and not as state representatives. High-level staff of the mechanism who possess the requisite expertise might also serve as mediators.

At present, mediation is not a feature of international asset recovery instruments or bodies. UNCAC includes a dispute settlement provision that refers to negotiation, arbitration, or adjudication before the International Court of Justice (ICJ), but it does not mention mediation. To date, only one case has been referred to the ICJ under the convention's compromissory clause: Request Relating to the Return of Property in Criminal Proceedings (Equatorial Guinea v. France).Footnote ¹³⁴ This recently filed proceeding appears to involve a situation in which the return of confiscated assets is discretionary rather than mandatory.Footnote ¹³⁵ At the merits stage (should the case proceed that far), the ICJ will have limited competence to address the broader policy issues implicated by such discretionary asset returns. Mediation, rather than binding adjudication, would thus appear to be a more effective and less costly way to resolve the dispute between France and Equatorial Guinea.

5. Monitoring of Returned Funds

The mechanism could facilitate the monitoring of returns, with the aim of ensuring that the funds are not re-corrupted or used for purposes other than those agreed by the parties. The available MoUs on asset return suggest that monitoring or auditing is common, even though UNCAC omits any mention of such accountability mechanisms.Footnote ¹³⁶ Monitoring may entail a periodic review of the disposal of returned funds, an assessment of whether the expenditures accord with the agreed uses of funds, and the preparation and publication of written reports. Monitoring bodies may be comprised of government officials of the state of origin and external actors, such as members of civil society or officials from international organizations such as development banks.

The proposed mechanism could provide various forms of assistance to give effect to the monitoring provisions in asset return agreements. It could, for example, embed its staff in an existing monitoring body or maintain a list of available experts to play such a role. Because monitoring involves auditing the entity tasked with the disposal of the funds, it would be appropriate for these individuals to have a background in accountancy or the other types of expertise mentioned above. The mechanism could also develop protocols and best practices to guide the work of other monitoring entities. At present, monitoring bodies do not appear to benefit from such institutional support, although the World Bank has been involved in some monitoring.Footnote ¹³⁷

6. Applicable Law and Norm Development

Several functions that the mechanism could perform raise issues concerning applicable law and the development of new legal norms. Such issues could arise, for example, if the body were to offer legal or technical support regarding the implementation of anti-corruption treaties and the drafting of MLA agreements or if it were to offer mediation services to states negotiating asset return agreements.

In these contexts, UNCAC's asset recovery chapter provides an important legal backdrop. Given the convention's nearly universal membership and the hard-fought compromises it embodies, both origin and destination states are highly unlikely to deviate from that chapter where the treaty requires particular conduct. As explained above, however, UNCAC Article 57, which governs the return of assets, makes return mandatory only in a narrow set of circumstances. For the vast majority of cases in which return is discretionary, states are free to negotiate a customized return agreement that sets out the applicable laws or norms for the purposes of that return. In addition to facilitating the negotiation of such agreements as part of its technical assistance and mediation services, the mechanism could be asked to help resolve disputes relating to the agreements, which, in turn, might involve interpreting its provisions.

The experience that the mechanism would gain from these activities could deepen its expertise and ultimately facilitate the development of new international norms on asset recovery, thereby helping to close gaps in UNCAC and other anti-corruption treaties. These gaps are extensive and go well beyond the question of whether to impose conditions on the use and monitoring of returned assets. For example, UNCAC Article 54, which regulates freezing, seizure, and confiscation, does not require early, proactive measures by states parties, although the Working Group on Asset Recovery now considers such measures to be good practices.Footnote ¹³⁸ In addition, the convention does not adequately address whether and under what conditions prosecuting states should return proceeds from the resolution of foreign bribery prosecutions or which types of remedies are appropriate. Given the large sums often involved in foreign bribery prosecutions, this could be an important area for future norm development.

Efforts to address these issues have made only limited progress in the more formal existing institutions of the international anti-corruption regime. For example, although the mandate of the Working Group on Asset Recovery allows it to produce normative guidance, norm development has not been a significant feature of its work. The Working Group has not generated any norms on transnational asset returns and cannot be expected to do so until after the UNCAC Review Mechanism completes its second review phase in 2025. There also have been initiatives by states, civil society, and international organizations operating outside of the UNCAC framework to supplement existing treaty rules. The GFAR Principles for Disposition and Transfer of Confiscated Stolen Assets in Corruption Cases, discussed above, are a prominent example of a state-led effort to highlight the importance of cooperation, transparency, inclusiveness, and accountability in asset return.Footnote ¹³⁹ However, the principles lack detail and cannot be regarded as the final word on this subject.

The proposed mechanism would provide an additional venue for consolidating and potentially expanding these norm development initiatives. Working with actors across the international anti-corruption regime, the mechanism could assist with the drafting of best practices or non-binding principles that provide guidance to states engaged in asset recovery. These soft law standards might eventually provide a foundation for negotiating a new protocol to UNCAC that would codify these norms.

7. Escrow Account

The maintenance of an escrow account for confiscated funds, as well as funds related to non-trial resolutions in foreign bribery cases, would be the one of the mechanism's most novel and innovative functions. When a destination state confiscates assets, the liquidated proceeds are typically absorbed by the treasury of that state or another government account.Footnote ¹⁴⁰ The destination state retains the assets while it and the state of origin negotiate their return. The proposed mechanism would create another approach. After confiscating the assets (and liquidating them if necessary), the destination state would transfer the proceeds to an escrow account held by the transnational mechanism, where they would remain until the assets are returned to the state of origin. In the case of non-trial resolutions in foreign bribery cases, the escrow account could potentially be used to hold disgorged profits, interest on those profits, or criminal fines.

Given that the return of confiscated assets may often be the subject of difficult, politically sensitive negotiations, such assets should arguably be held in the escrow account of a neutral third party such as the transnational mechanism until a resolution is achieved. An escrow account could also help to address concerns raised by some states of origin and civil society groups that destination countries stand to benefit financially from confiscated assets, and thus have little incentive to negotiate for their return in a timely or satisfactory manner. If confiscated assets were routinely transferred by destination states to such an escrow account, the transnational mechanism could play an important role in reducing the perception that destination states are, in effect, profiting by confiscating the proceeds of corruption. Even in the absence of routine transfers, individual destination countries could make a showing of good faith by transferring funds to the escrow account, thereby facilitating negotiations for their eventual return.

UNCAC does not provide for the creation of an escrow account, although it does reference a “United Nations funding mechanism” that receives voluntary contributions to provide technical assistance to developing states and countries with economies in transition.Footnote ¹⁴¹ In practice, this funding mechanism has taken the form of the UN Crime Prevention and Criminal Justice Fund (CPCJF), which pre-dates UNCAC and also receives funds for the implementation of UNTOC. The extent of the contributions to the CPCJF for technical assistance remains unclear, but in recent years it has funded relatively small projects to promote the implementation of UNCAC.Footnote ¹⁴² Given the limited scope of these initiatives, the prospect of housing an escrow account within the CPCJF appears unlikely, at least in the near term.

An escrow account would test the limits of domestic legislation in many UNCAC states parties. If the proposed mechanism were to maintain a standing escrow account, many states would likely need to enact legislation to authorize the government to transfer proceeds to that account. In some states, however, the executive might be able to authorize such transfers on an ad hoc basis without the enactment of new legislation. The diversity of state practice in this area provides another justification for the selectable character of the proposed mechanism.

The creation of an escrow account would represent a major innovation in the area of transnational asset recovery, but it would not be unprecedented in public international law. A significant number of international institutions have created escrow accounts, including international tribunals that maintain such accounts to facilitate compensation at the conclusion of proceedings.Footnote ¹⁴³ Escrow accounts have also been maintained by various entities responsible for mass compensation programs.Footnote ¹⁴⁴ Given the large sums involved in many asset recovery cases, and the degree of controversy that surrounds returns, the asset recovery field is arguably ready for the creation of such an escrow account.

1. Legal Basis

All international institutions require some legal basis for their existence. A common approach is to establish such bodies when negotiating multilateral treaties that set forth new substantive legal obligations. The UNCAC Review Mechanism is a prominent example in the anti-corruption context. International bodies can also be created or given additional authority in protocols or amendments to such treaties. The activities that such bodies can perform are often specified in detail in these instruments. This need not be the case, however. The services of the UN secretary-general, for example, have evolved through practice to include a range of selectable services not expressly indicated in the UN Charter. These include good offices, mediation, facilitation, and arbitration.Footnote ¹⁴⁵

A very different pathway would involve a soft law or ad hoc arrangement. The recent turn to non-binding norms and softer institutions, discussed in Part III, underscores the advantages of informality and flexibility for a policy domain, such as the international anti-corruption regime, that is already comprised of several formal international organizations and binding multilateral treaties.Footnote ¹⁴⁶ The Financial Action Task Force (FATF) is a prominent example.Footnote ¹⁴⁷ The FATF was established in 1989 by the Group of Seven (G7) on the basis of a succession of temporary mandates that have a political rather than a legal character.Footnote ¹⁴⁸ It has since become a global standard setter of anti-money laundering norms. The FATF's most recent mandate, adopted in 2019, provides that it is not intended to create any rights or obligations, unlike the constitutive instruments of formal international organizations.Footnote ¹⁴⁹

When choosing the legal basis for a transnational asset recovery mechanism, time is an important consideration. Negotiating a new multilateral treaty or a protocol to UNCAC is likely to require several years at least, which would be followed by a slow and uncertain state-by-state ratification process.Footnote ¹⁵⁰ It may also be difficult for states to agree on the mechanism's substantive functions and services, especially given the controversies involved in negotiating UNCAC's asset recovery chapter. Agreement might be easier to achieve in regional anti-corruption treaties due to their smaller number of states parties. However, the parties to those conventions consist mainly of either states of origin or destination countries (but not both), and the treaties lack significant provisions on asset recovery. These issues would likely complicate and extend the negotiations.

A non-binding, ad hoc approach, in contrast, could enable a group of like-minded states to create a transnational mechanism more quickly to provide “proof of concept” to countries that are skeptical of its benefits. Such a body would ideally be supported by a few key destination countries as well as several states of origin, even if their governments did not select any of the mechanism's services in the short term. Backing from both groups of countries would be easier to achieve if the mechanism were given a limited temporal and subject matter mandate,Footnote ¹⁵¹ or if the assistance it provides were limited to the less novel functions analyzed above. If the mechanism were to achieve a few early and well-publicized successes in these areas, this might provide additional support among states for expanding its competences or establishing the body on a permanent basis.

2. Affiliation

Our proposal also raises issues about the mechanism's affiliation. If, for example, the body were established by states parties to UNCAC, it would logically be housed within the UNODC, whose Secretariat also serves UNCAC. The mechanism could instead be located within other multilateral organizations that include an anti-corruption mandate, such as the OECD. Alternatively, the institution could be created as a freestanding body with no formal connection to any existing organization or treaty. We consider these options below, exploring their respective benefits and disadvantages.Footnote ¹⁵²

UNCAC provides the authority for establishing the institution we propose. The convention's Conference of States Parties can create “any appropriate mechanism or body to assist in the effective implementation of” the treaty and “acquir[e] the necessary knowledge of the measures taken by States Parties in implementing this Convention and the difficulties encountered by them in doing so . . . .”Footnote ¹⁵³ This text, which provided the legal basis for the UNCAC Review Mechanism,Footnote ¹⁵⁴ could support either creating a new transnational asset recovery institution or expanding or transforming the Review Mechanism's mandate to encompass the asset recovery functions and services described above.Footnote ¹⁵⁵

Whether the political will exists for these alternatives is uncertain. Treaty monitoring is common in other areas of international law but relatively unusual for transnational criminal law conventions. The UNCAC Review Mechanism is “the exception rather than the norm” for such treaties.Footnote ¹⁵⁶ On the other hand, the mechanism's selectability feature means that its functions and services would be available to states as desired, unlike existing peer review processes.

A key advantage of formally associating the new mechanism with UNCAC would be coordination with existing UNCAC bodies working on asset return issues. These include, most notably, the Open-Ended Intergovernmental Working Group on Asset Recovery. Since its creation by the Conference of States Parties in 2006 shortly after UNCAC's entry into force, the Working Group has emphasized three tasks: “(a) developing cumulative knowledge; (b) building confidence and trust between requesting and requested States; and (c) technical assistance, training and capacity-building.”Footnote ¹⁵⁷ However, a 2022 report suggests that the Working Group has made slow progress during the last fifteen years, focusing on awareness raising, promotional efforts, and generalized calls for cooperation and dialogue. The report does not refer to any concrete examples of asset returns, nor does it mention any of the MoUs referenced in this Article. The Working Group's normative development efforts have also been limited, resulting in a brief set of non-binding guidelines on the management of seized, frozen, and confiscated assets in a domestic rather than a transnational context.Footnote ¹⁵⁸

The Working Group's cautious approach could be a benefit or an impediment to linking the mechanism to UNCAC. On the one hand, it could ground the new body in political reality, reflecting states parties’ limited appetite for bolder asset recovery efforts. Yet, circumspection is already built into the mechanism's task-specific design. Situating the mechanism in a milieu that is overly restrained may inhibit the new body from offering creative solutions to more challenging or contentious issues—such as monitoring of returned assets—even where governments seek out such assistance.

The OECD provides a second potential institutional home for the mechanism. The OECD serves as the forum for the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the OECD Anti-Bribery Convention)—a significant and influential anti-bribery treaty aimed at individuals and firms engaged in cross-border commerce.Footnote ¹⁵⁹ The convention has entered into force for all thirty-eight OECD members as well as six non-members. The organization is also home to the OECD Working Group on Bribery, which monitors and reviews implementation and enforcement of the convention. Unlike the UNCAC Review Mechanism, the Working Group's reports can be quite critical of states parties. The Working Group also develops recommendations and guidance that complement and further develop the convention.

An advantage of locating the mechanism within the OECD is that the organization has a relatively small membership that includes most major destination states that might use the mechanism to return assets. This could help build support among destination countries. The OECD could also be useful in ensuring that the mechanism's procedures are aligned with destination states’ national asset confiscation and return laws. In addition, the organization's relatively small size might allow negotiations to proceed more rapidly than in the context of UNCAC and UNODC. Over time, the OECD Working Group on Bribery might use its influence to encourage states parties to the OECD Anti-Bribery Convention to work with the mechanism to return more assets to states of origin, which might include not only the proceeds of embezzlement and but also funds received from foreign bribery prosecutions in national courts.

The primary disadvantages of the OECD as a venue are its lack of expertise in asset recovery and its potential to favor the interests of destination countries. The OECD Anti-Bribery Convention does not address asset recovery. In addition, because many prominent destination states are OECD members, there may be a concern that the proposed mechanism would be biased against states of origin. However, the OECD's membership also includes states that might seek the return of assets, and their participation could mitigate this concern. For example, several government officials in Colombia engaged in corrupt dealings with Odebrecht, a Brazilian construction firm, which later resolved bribery charges through a non-trial resolution with the United States, Brazil, and Switzerland.Footnote ¹⁶⁰ If similar cases arose in the future, then an injured OECD member could seek the return of assets associated with foreign bribery prosecutions.

A third approach would be to create a freestanding transnational mechanism not formally linked to any existing treaty or international organization in the anti-corruption regime. Such detached bodies have arisen in at least two circumstances. The first is when a group of likeminded countries seeks to jumpstart cooperation in a particular issue area, especially when earlier initiatives in the same policy space have fizzled. The decision of twenty-three states to move forward with the General Agreement on Tariffs and Trade (GATT) following the failure to establish the International Trade Organization is among the most well-known examples.Footnote ¹⁶¹

Freestanding international bodies also arise when existing organizations respond poorly to new challenges. For instance, trenchant criticisms of the World Health Organization's slow and inadequate efforts to combat HIV-AIDS, the Ebola outbreak in West Africa, and the COVID-19 pandemic led to the creation of new and more flexible multi-stakeholder initiatives, such as the Joint United Nations Programme on HIV/AIDS and the Global Alliance for Vaccines and Immunization.Footnote ¹⁶² The climate change regime has similarly seen the rapid growth of new “organizational forms—from informal intergovernmental institutions to transgovernmental networks and private transnational regulatory organizations. . . .”Footnote ¹⁶³ As discussed in Part III, such bodies benefit from “flexibility and low entry costs, which allow them to enter ‘niches’ with limited resource competition.”Footnote ¹⁶⁴ They are also more open to participation and influence by non-state actors. However, a freestanding body would lack the advantages of a formal organization, including privileges and immunities for itself and its staff as well as recognition and observer status in other intergovernmental organizations.Footnote ¹⁶⁵

These examples suggest several reasons to create a freestanding transborder asset recovery mechanism. Decoupling the mechanism from existing anti-corruption treaties and organizations may be appealing if the main proponents are a subset of UNCAC members whose preferences for a more robust approach to asset recovery exceed those of states parties as a whole. A freestanding body could also be attractive if a small number of countries (likely destination states) provide the lion's share of financing for the body—a possibility we consider below. Lastly, a bespoke mechanism would likely be preferable if the body were to give a prominent role to civil society. As explained above, states parties to UNCAC have been wary of expanding the role of civil society organizations in treaty monitoring.

To be sure, a freestanding body would not operate in isolation. As a new addition to an already dense policy space, there would be important benefits to learning from and cooperating with existing anti-corruption institutions. Such interactions would also help to avoid unnecessary duplication of effort and fragmentation of international norms. Yet, a body that is formally decoupled from these institutions may be able to chart a more independent course, enhancing interstate cooperation relating to asset returns beyond what existing bodies have accomplished.

3. Funding and Staffing

Customizability and selectability are also relevant to the funding and staffing of the transnational asset recovery mechanism. We anticipate that the institution would begin modestly in response to requests from states for specific types of assistance and (hopefully) prove its value over time. The mechanism would therefore need sufficient funds to carry out the functions and services that states initially delegate to it, and to hire or contract with individuals who have the requisite legal and technical expertise to respond to their requests. Yet, funding and staffing choices should also allow sufficient flexibility for the body to shift focus if circumstances require.

Most international organizations are funded from three sources: assessed contributions (dues paid by member states); self-funding (such as fees for services or interest on loans); and donations (from member and non-member states and the private sector).Footnote ¹⁶⁶ The precise mix of financing varies considerably across organizations. The individuals who carry out the institutions’ activities are also highly diverse. They include permanent staff, outside consultants, employees seconded from governments, and gratis personnel provided “‘for free’ by member states, international organizations or NGOs.”Footnote ¹⁶⁷

Customizing the funding and staffing of the asset recovery mechanism from among these options raises a number of challenges. For example, financing the body from a special contribution from UNCAC states parties may face opposition. The UNCAC Review Mechanism and Secretariat are funded by the regular UN budget,Footnote ¹⁶⁸ and governments may be skeptical of allocating additional resources to a new and untested body that some of them may never use. For similar reasons, there would likely be resistance to hiring a large staff, especially on a permanent basis. Yet, it would be equally problematic to expect states seeking assistance from the mechanism to pay for all of the costs of its services, especially less well-resourced countries in the Global South. Nor would it make sense to defer hiring any personnel or contracting with outside experts until after the mechanism receives its first request for assistance.

One way to address these challenges would be for a core group of founding donor states—likely industrialized countries that include key destination states—to make voluntary financial contributions to provide a “startup fund” for the mechanism to begin operations. These funds would enable the body to hire a small cadre of permanent staff whose initial tasks could include canvassing states and civil society organizations about the types of services that are needed and identifying lawyers, financial analysts, and other anti-corruption experts to provide those services. Additional funding could be provided by modest annual dues from members (if states must become members of the mechanism to access its services) or fees from states that seek its assistance (if the mechanism is open to all UNCAC states parties, for example). Both charges could be scaled to a country's level of economic development or capacity to pay. The permanent staff could remain quite small, even if the mechanism were to expand its functions, if the body were to rely primarily on consultants or outside experts to provide the services that states request.

The funding and staffing of the Advisory Centre on WTO Law (ACWL)—an international institution introduced in the discussion of selectability in Part III—offers a potential model for the asset recovery mechanism. As previously noted, the Centre has a tripartite mandate: to assist least developed countries in WTO dispute settlement proceedings; to provide legal advice when requested; and to train government lawyers on WTO law. Since its creation in 2001, the ACWL has provided legal support to developing and least developed countries in sixty-eight different WTO disputes. It has issued more than 3,100 advisory opinions on global trade law and conducted numerous seminars and training sessions.Footnote ¹⁶⁹ The Centre is viewed highly favorably by client states, according to annual surveys,Footnote ¹⁷⁰ and its achievements have been cited as a model for creating a similar legal assistance mechanism for investment treaties and investor-state dispute settlement.Footnote ¹⁷¹

The bulk of the funding for the ACWL comes from its twelve developed country members, each of which has contributed at least U.S. $1 million toward its operations.Footnote ¹⁷² The Centre's annual budget is comprised of “revenues from the Centre's endowment fund, the fees for services rendered by the Centre and any voluntary contributions made by governments, international organisations or private sponsors.”Footnote ¹⁷³ Both developed and developing country members (but not least developed states) contribute to the endowment fund, the latter contributions varying with each country's share of world trade and income per capita.Footnote ¹⁷⁴ The ACWL also charges hourly fees to governments that utilize its services. These fees are significantly lower than those of commercial law firms and are set on a sliding scale depending on a state's development status.

The Centre's organizational structure is comprised of a General Assembly of member state representatives, a six-person Management Board, and an executive director. A small permanent staff consists of a dozen full-time lawyers, three office administrators, and four lawyers temporarily seconded from developing country governments.Footnote ¹⁷⁵ The Centre hires external experts for complex WTO disputes and legal opinions, paying for their services from a Technical Expertise Trust Fund financed by voluntary contributions from developed country members.Footnote ¹⁷⁶

The ACWL assists only certain states—developing and least developed WTO members—and provides a relatively limited set of services—legal assistance relating to international trade law and WTO dispute settlement. The transnational asset recovery mechanism would be more capacious, both in terms of its client states and the functions it would perform. It would thus be necessary to adapt the ACWL's funding and staffing choices to the mechanism's distinctive activities and institutional structure.

For example, the sliding scale of fees charged to client states could reflect the fact that the mechanism would be available to (and hopefully used by) both industrialized and developing counties, and that some of its services would require more time, expense, or expertise than others. The mechanism might also seek to avoid the financial challenges that the ACWL has faced.Footnote ¹⁷⁷ For example, if wealthier destination states regularly seek the mechanism's services, their fees could provide a steady source of funds. An additional source of revenue might be generated from the interest on funds deposited by destination countries in the mechanism's escrow account (if one is created) pending the negotiation of a return agreement with the state of origin.Footnote ¹⁷⁸ Although developing countries have strongly resisted imposing conditions on the repatriation of embezzled funds, such opposition may diminish if the interest on those funds is paid to an international body that facilitates asset returns to those same countries. This is especially true if the interest would otherwise be retained by destination states.