Taking the Profit Out of Crime

Gao ID: 112833 July 23, 1980

Prior to 1970, forfeiture of illicitly acquired assets and property was nonexistent in this country. At that time, two statutes were enacted with the intent to combat organized crime's infiltration into commercial enterprises and to destroy its economic base by providing the Government with criminal forfeiture authority. The Government's record in obtaining asset forfeitures is not good. Compared to the profits realized, these forfeitures have amounted to little more than operating expenses. The illicit profits themselves and the assets acquired with them have remained virtually untouched. A lack of rudimentary information needed to manage the forfeiture effort has resulted in problems that extend across the investigative, prosecutive, and legal areas. Improvement is needed in the conduct of financial investigations of sufficient scope to obtain not only long-term incarcerations, but also forfeiture of derivative proceeds. Various foreign and U.S. laws hamper greater use of forfeiture authorizations by restricting investigator's access to valuable financial information. Criminals are employing sophisticated techniques to "launder" illicitly derived profits through overseas banks. The Government has tried to breach the cover that foreign banking laws provide through agreements with foreign countries. The present tax law provides no means for the Internal Revenue Service to disclose on the initiative information it obtains from taxpayers concerning the commission of nontax crimes. While GAO agreed with the basic thrust of proposed legislation to revise the disclosure statute, it believed the legislation could be further refined to authorize a more effective disclosure mechanism and to improve the balance between privacy and law enforcement concerns. Several questions on the forfeiture authorizations now emerging through case law have been raised which suggest a need for an examination of the adequacy of these statutes in the organized crime context. Four recurring and significant areas of concern have been identified as the following: the precise scope of the forfeiture authorizations; confusion over the degree to which assets must be traced to their illicit origin; the status of assets subject to forfeiture which have been transferred before forfeiture can be accomplished; and the procedures which must be followed to accomplish a criminal forfeiture. Thus, attacking criminal profits and incarceration offer the best opportunity of combating criminals.

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