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Fifth session of Working group 4 – Justice, freedom and security on topic: Following the way of money: Strengthening the mechanisms for financial investigation

The Fifth Session of WG 4 was titled “Following the way of money: Strengthening the mechanisms for financial investigation”. The Session took place in Tetovo, at the South East European University, on June 7, 2019. The Session was attended by about 30 participants from the Ministry of Interior, judges, prosecutors, university professors, NGO activists, journalists and interested citizens.

Opening the debate, the co-chair of WG 4, State Secretary in the Ministry of Interior, Magdalena Nestorovska, explained that this Session, alike all previous Sessions, identifies a topic that is of absolute priority in the road of the Country towards an EU membership. The Progress Report of the European Commission acknowledged the results achieved in the reform of the security structures. The report also noted the need to build on the operational capacities for financial investigations, such as the establishment of a special unit for this type of investigation.

The Session was greeted by the Rector of the South East European University, Academician Abdylmenaf Bexheti who spoke of the importance of the inclusiveness of the European integration process. In that sense, universities are suitable places and have the capacity to contribute to this strategic commitment. The corpus related to stability and security is an important element for economic development, which, if not provided, can lead to the exodus of the young population, an increasing phenomenon which is particularly worrying for our Country.

The Minister for Interior Affairs, Oliver Spasovski first reminded that the decisive and indiscriminate fight against organised crime and corruption is a priority of all democratic countries. Therefore, it is the focus of activities undertaken for prevention and fight against all forms of organised crime. Yet, to achieve this strategic objective, it does not suffice to effectively detect and prosecute perpetrators. It is equally important to effectively deprive the criminal from their criminally obtained property, as this gain is usually the most common motive and the criminals’ main driving force. In the past years, the need for conducting financial investigations has been recognised, along with investigations into organised crime and, accordingly, the need for building an efficient system that will provide concrete results. For that purpose, there are already organisational units in the Ministry, which, among other things, are also responsible for financial investigations. The Minister gave the example of the case of smuggling migrants from Macedonia and Albania to the USA and Canada. The Police detained nine individuals, and a financial investigation was conducted, which resulted in the freezing of 24 bank accounts of three legal entities and 53 bank accounts of four individuals.

All analysis confirms that for more efficient results, it is necessary to separate and have specialised units. This need arises from the complexity of the activities which themselves require appropriate expertise. There is also a need to develop a multidisciplinary, but also coordinated approach in the conduct of financial investigations, by strengthening the capacities not only of the Ministry of Interior Affairs, but also of the Public Prosecutor’s Office, the Customs Administration and the Financial Police. These goals are implemented in the Strategy for “Strengthening National Capacities for Financial Investigation and Property Confiscation” and its Action Plan. The Ministry has initiated some activities for the implementation of the Strategy, by amending the acts of the relevant State bodies for the creation of specialised units for conducting financial investigation.

Professor Blerim Reka began his address by underlining the importance of implementing the required standards of NATO and the EU. The Progress Report of the European Commission of 29 May 2019, is generally positive, but it should not be forgotten that it also contains a number of critical remarks, especially with regard to Chapters 23 and 24. In that sense, the confiscation of criminally gained property should be a strategic priority in the national fight against organised crime, terrorism and high-level corruption. At the moment the tools for freezing, managing and confiscating criminally gained funds and property lack efficiency. Which is why it is essential to focus on increasing the capacities and the methods for fighting financial crimes

The Co-Chair of the WG4 Ms Nestorovska, added that this was precisely why this topic was chosen for the fifth Session. Further, she added that the implementation of the challenges of Chapter 24 in the past have long been delayed due to a lack of political will.

Professor of the Faculty of Security Trpe Stojanovski, spoke about the importance of the international instruments for the efficient prosecution of financial crime. He stressed that North Macedonia has ratified all international Conventions in the field of organised crime, the fight against money laundering and financing of terrorism and the fight against corruption. The Country participates in the work of all interlocutors international organisations and institutions aimed at enhancing international co-operation in the fight against crime. It is also involved in self-assessment and assessment procedure designed to further align national legal systems with international standards, and to develop specific mechanisms for the exchange of information and cooperation. These activities unambiguously show the determination and political readiness to harmonise the national legislation with international documents. However, it is important to remember that while the EC Report indicate progress, it also underlines the Country’s inability to prove, prosecute and judge criminal offences of financial crime, including effectively confiscating criminally gained funds and property.

The foreign expert Pavel Horkaj gave a very useful and detailed presentation of the Slovak experience in dealing with financial crime. He stressed that the set of laws on criminal investigations, including financial ones, is not much changed, but what has changed is the different approach that has led to increased results. Thus, during each criminal investigation, a financial investigation is initiated, and the main point is the confiscation of criminally gained funds and property. In this regard, the authorities can achieve a total destruction of the criminals’ potential for further criminal activities.

Mr Horkaj presented a number of real cases from his financial investigations. He stated that the easiest methods are used in illegal car trafficking, which is most commonly associated with Ukraine. Then there is the problem of where to storage the confiscated vehicles. They require large warehouse space, that is not always easy to secure. A special interest aroused the case where a criminal, a young 22-year-old, transferred ownership of the property to a third person. A quick and detailed investigation procedure, which also extended abroad, found that on the basis of fictitious lottery profits in England, cash was deposited in Hungary, and hence transferred to Slovakia for the purchase of property in the amount of EUR 1,500,000 that were subject of additional investments with EUR 1 000 000. Immovable property, vehicles, bank accounts and all other property have been confiscated. Concluding his presentation, Mr Horkaj stressed that small countries should especially focus on financial investigations of illegal income and the accumulation of assets that can be used to corrupt institutions and jeopardise the rule of law and the legal order.

What followed was a sincere and very substantive debate. Judge Vesna Dimishkova from the Primary Court Skopje 1, Department for organised crime and corruption, opened the discussion. She pointed out that when it comes to prosecuting persons associated with high corruption there is a small number of effective verdicts in our Country. In part this is due to the lack of communication between the different relevant institutions that are dealing with this type of crime. It often happens that the Police will carry out an action, but the case will be blocked or sabotaged by another institutions. As a major problem, she identified the speed of investigating and the speed of gathering legal evidence.

These cases usually involve very specific crimes because unlawfully acquired funds move very fast and change from one person to another, or are transformed into another capital. Such punishable acts, except for the verdict of the perpetrator, should be followed by the measure of seizure of the illegally acquired property, and for that, it is essential to have solid record of the assets. In addition, it is usually the case that the verdicts for these cases result in only the freezing of property, and rarely proceed with confiscation of that property. This has to change, if we want effective fight against high and organised crime.

Following, the discussion continued with the address of the representative of the Special Public Prosecutor’s Office, Lile Stefanova. According to her, in this Country the legal framework for regulating this phenomenon is solid. The problem is not the laws, but rather in the criminal procedure, i.e., in the manner in which these investigations are conducted. Each crime results in some kind of gain for the criminal. That gain, whether material or not is usually the main motive for the crime. The Prosecutor welcomed the new initiative to separate financial investigations from other investigations. Pointing to the Prosecution’s work, she stressed that the Prosecutor must be an active participant in the investigative proceedings, and not be turned into an observer that await someone else to provide the evidence. According to her, all participants in the investigation, including the prosecutors, should have continuous trainings for the new forms of financial criminals because this economic sector is progressing and developing at enormous speed.

Jane Shilev, head of the Sector for Financial Crime, addressed lack of cooperation between institutions. He stressed that the success of financial investigations is dependant on proper cooperation and communication between all relevant institutions. He also spoke of the failure to establish a National Intelligence Database.

Ljiljana Zivkovic Davitkova, the representative of the Customs Administration, as the last speaker first stated that she found this Session very useful. She underlined that it is necessary to increase the presence and the active role of Public Prosecutors at the border crossings, especially when there is an arrest for a serios crime. The experience of the Custom Administration was also that there is a lack of cooperation between the different institutions, and Ms Davitkova also urged that this has to change in the future.

As a conclusion, the President of the Convention Prof. Dr Mileva Gjurovska, and professor Trpe Stojanovski stressed that what this Session showed is that the most urgent issues in this area are the strengthening of the national capacities in the management of financial investigations in accordance with the recommendations from Chapter 24. In this Session, the relevant participants from State institutions, prosecutors, judges, university professors, representatives of NGOs engaged in the field of security and the expert from Slovakia, all made significant contributions. In the open floor debate, there was also discussion about the public’s perception and opinion regarding the financial investigations.

In accordance with the established practice of the Convention, there was discussion of the draft Recommendations. The debate was indeed extensive, and each Recommendation was analysed in detail. Given the time constrains, and because the debate continued well past the end time for the Session, it was agreed that the final version of the Recommendations will be draft separately and communicated with all participants via email.