MLATs are powerful weapons in financial crime combat, even for private sector

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Tuesday, February 14, 2012
Author: Brian Kindle

In the global effort against financial crime in all of its manifestations, there is a powerful tool that can provide substantial help to counter-financial crime professionals – in the public and private sectors, and they are called Mutual Legal Assistance Treaties, or MLATs.

Designed for government agencies to receive and provide assistance to their counterparts in other countries, these powerful bilateral weapons also have the potential to help private sector institutions, companies and individuals that have been victimized by financial crime in one way or another. Their one handicap is that they don’t win prizes for efficiency and speed.

Any financial criminal worth his salt does not target his victims or place his illicit assets all in one country. That’s the nature of big-time financial crime, especially with electronic communications and air travel having so shrunk the world over the past 30 years.

In 1974, the United States negotiated its first Mutual Legal Assistance Treaty with Switzerland, which played a role in locating and seizing the massive sums that organized crime families of the 1970s were generating from crimes on Main Street and Wall Street. The treaty also sought to facilitate the identification of the fronts and co-conspirators of Mafia dons and their lieutenants.

Since that time, the United States has signed more than 60 other MLATs with a wide array of countries large and small. Pronounced commonly as “M-Lats,” they are a vital weapon in the global assault on financial crime. They are useful for gathering evidence and intelligence, taking the testimony of witnesses, obtaining certified documents and achieving other things that would be difficult for the officials of one nation to obtain without the cooperation of the other country.

Private sector interests may get MLAT help
MLATs are designed for use by the government, but in many cases, prosecutors can be persuaded to include inquiries that may assist private sector victims and targets of financial criminals, as an “intended use” of the information received through a mutual legal assistance request. In some cases where a prosecutor is not inclined to cooperate with private sector victims, such as receivers, the private sector representatives of victims may be able to seek a court order compelling the prosecutor to invoke an MLAT in search of specific information.

There is even a provision in the US money laundering law that can give a receiver appointed by a federal judge the standing of a federal prosecutor for purposes of making mutual legal assistance requests. (Title 18, US Code Section 1956(b)(4)).

MLATs have specific benefits:

•    The treaty partners, meaning the signatory nations, have already agreed to assist each other in investigations
•    The scope of assistance to be provided is clearly defined by the treaty
•    The requested country bears the cost of the work entailed in the request, except for extraordinary expenses
•    It is designed to provide information that might not otherwise be available

As an example of how an MLAT can assist financial crime victims in locating and recovering property, Article 16 of the MLAT between the U.S. and the United Kingdom provides:
“The parties shall assist each other in proceedings involving the identification, tracing, freezing, seizure or forfeiture of the proceeds and instrumentalities of crime and in relation to proceedings involving the imposition of fines related to a criminal prosecution.”

Restrictions on use of MLAT information
Most MLATs include restrictions on the use of information they produce in the bilateral assistance. The MLA T between the US and France, for example, notes:
“This treaty is intended solely for mutual legal assistance between the [Contracting] States. The provisions of the Treaty shall not affect the exercise of rights otherwise available to private persons under the laws of the State presented with a claim based on such rights.”

The MLAT between the US and the United Kingdom has a similar restriction in Article 1:

“This Treaty is intended solely for mutual legal assistance between the Parties. The provisions… shall not give rise to a right on the part of any private person to obtain, suppress or exclude any evidence, or to impede the execution of a request.”

MLATs usually specify assistance provided
Most MLATs require the country that receives a request for assistance to take certain actions, such as:

•    Taking testimony or statements of persons
•    Providing documents, records and evidence
•    Service of documents on persons or organizations in the requested country
•    Locating or identifying persons
•    Executing requests for search and seizure
•    Identifying, seizing and tracing proceeds of crime

Gaining access to data produced by MLATs
There are several ways to gain access to information and data that an MLAT produces. Perhaps the simplest way is to work closely with a federal prosecutor. In submitting a mutual legal assistance request, the government can seek permission to share information with a court appointed receiver or other legal representative of victims, including financial institutions or other businesses, as well as other legitimate private sector interests.

Representatives of appropriate private sector interests, including financial crime victims, should advise the federal prosecutor of the information that a legal action to vindicate the rights or recover the assets of institutional or individual victims may require or benefit from. The prosecutor may be requested to include this information in the MLAT request, if it is appropriate under the terms of the treaty.

Another method by which to obtain multinational cooperation is more difficult and uncharted. That is, to seek appointment as a so-called “Patriot Act Federal Receiver,” under the aforementioned provision of the principal US money laundering law. This great tool, which requires the active cooperation of the US Department of Justice, still lies on the shelf unused, even though it was enacted as part of the USA Patriot Act in October 2001. It is a powerful weapon that gives the designated “Federal Receiver” the same authority and standing of a federal prosecutor and the power to invoke MLATs and other by national and multinational agreements.

Good planning, thinking ahead is crucial to MLAT success
It pays to think ahead when seeking information through a MLATs. The request should be drafted carefully so that it covers all the intended uses of the information.

Most treaties limit use of the provided information to the proceedings that are described in the treaty request.

The US-UK treaty provides that, “The Requested Party shall not use or disclose any information or evidence obtained under this treaty for any purposes other than for the proceedings stated in the request without the prior consent of the Requested Party.”

It is essential to focus on the intended use of information early, so that permission can be granted for the broadest use possible. A listing of all treaties of the United States, UK, France and other countries is found in the websites of the US Department of State, and the foreign ministries of most nations.

List of US MLAT Treaties

List of British MLAT Treaties

3 replies

Trackbacks & Pingbacks

  1. […] address the needs of cross-national cybercrime investigations, abilities are limited by the general Mutual Legal Assistance (MLAT) […]

  2. […] Die Antworten aus dem November dagegen haben laut Malmström alle Bedenken beseitigt. In einem Brief vom 8. November (hier) hatte Cohen beteuert, die US-Regierung habe seit Inkrafttreten der Vereinbarung keine von der Vereinbarung nicht gedeckten “Finanz-Zahlungsmeldungen” von SWIFT in der EU gesammelt und auch nur von Artikel 4 der Vereinbarung gedeckte Subpoenas gegen SWIFT erlassen. Es gebe noch einige andere Möglichkeiten für die US-Regierung, an SWIFT-formatierte Daten heranzukommen, etwa bei Transaktionen, die den Embargos gegen Iran oder Nordkorea zuwiderliefen sowie über bilaterale Vereinbarungen (Lesetipp zu letzterem). […]

  3. […] With bitcoin trading around $300 USD today, I think it’s getting pretty close to being taken a lot more seriously in this regard. It would not be hard for the Treasury to systematize the shutdown of all U.S. exchanges, and many foreign ones besides – the U.S. has a whole lot of MLATs. […]

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