Asset Tracing: Everything you need to know

The increase in economic crime, large scale fraud, and high value disputes, has seen a significant increase in litigation, both in the UK and overseas.

When considering bringing legal proceedings, particularly where there are substantial losses, a key consideration is the recovery of stolen funds, or obtaining a suitable settlement. In many cases, the stolen funds are gone; dissipated into various bank accounts, moved offshore, or turned into other tangible goods (such as property, vehicles, luxury goods, and so on).

Success in court is one thing; enforcing judgments, recovering stolen proceeds of crime, and managing jurisdictional issues are all key considerations to bringing litigation.

In many cases, understanding the asset position of an individual, or organisation, will be vital – this gives an understanding of the potential recovery, identifies potential challenges, and also may support any settlement proceedings.

In most cases, asset tracing is conducted in relation to large frauds and disputes, but also in criminal prosecutions, matrimonial cases, and other litigation. Identifying those assets is often challenging – investigators working closely with clients, lawyers and counsel, in a focussed and targeted way, will assist with identifying tangible assets in order to support litigation, and give the best chance of a successful outcome.

What is asset tracing?

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An asset is a broad term used to describe anything that has current or future economic value to an individual or business. Assets are often things (tangible or non-tangible) that you own and that you can sell or transfer for cash (although cash is also considered an asset in its own right).

In a tracing capacity, personal asset can include financial securities, company ownership, real estate, motor vehicles, jewellery, artwork, gold, silver, and even digital assets such as cryptocurrencies.

Asset tracing is a catch-all term used to describe the processes and techniques investigators use to locate assets that may have been legitimately appropriated (but need to be identified to assist litigation), or to identify stolen or misappropriated assets. These could belong to a corporate entity or a private individual.

As simple as it sounds on paper, it is far more difficult in practice.

Criminals go to great lengths to cover their tracks and frustrate efforts to track down stolen assets. This can be a forensic process, and involves a wide range of investigative techniques, access to specialist datasets, and multi-jurisdictional reach.

Asset tracing typically involves several steps including:

1) Identifying the asset - This stage can often include an investigation, analysing data, publicly available information, obtaining local filings, social media and open source analytics, human source enquiries and other overt enquiries, and in some cases covert investigation. Court applications to obtain additional information, such as disclosure orders on banks and other data holders, which can lead to identifying bank accounts, or other avenues to investigate. ‍

2) Securing the assets - Securing the assets to prevent them dissipating further is of paramount importance. Often this involves working closely with legal experts to obtain court orders for freezing bank account and seizing assets, thereby preventing transfer to other parties. This is the most effective way to secure assets and mitigate losses.

3) Recovering the assets - Finally the goal is recovery. With the assistance of specialist lawyers and sometimes law enforcement legal proceedings will commence with the aim of returning the assets to their rightful owner, or seizing and liquidating assets to recompense the claimant.

Asset tracing can be a complex process, requiring specialised expertise and resources. However, it can be a vital tool in supporting civil litigation, and recovering stolen funds or reaching a suitable settlement.

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When is it used?

Asset tracing is often used in litigation when a party believes that assets have been wrongfully taken, concealed, or transferred in an attempt to avoid legal obligations or judgments. This may include cases such as:

• Fraud: When a party has been defrauded, asset tracing can be used to identify the location of assets that have been misappropriated or concealed.

• Divorce: Asset tracing can be used in divorce cases to identify assets that have been hidden or transferred in an attempt to avoid equitable distribution.

• Bankruptcy: In bankruptcy cases, asset tracing can be used to identify assets that should be included in the bankruptcy estate.

• Intellectual Property Infringement: In cases of intellectual property infringement, asset tracing can be used to identify assets that may be used to satisfy a judgment or settlement.

• Breach of Contract: When a party has breached a contract, asset tracing can be used to identify assets that may be used to satisfy a judgment or settlement.

Of the 5,000 companies polled in a recent 2022 survey, 51% were the victim of fraud over the past two years. The average was six cases per company, totalling $42 billion in losses on top of damage to the brand, reputation, and market share. The top external perpetrators against organisations were hackers, organised crime, customers, and vendors/suppliers. Even global giants that make billions in annual revenue cannot afford to write-off such vast amounts of money.

There is nothing to stop small to medium-sized enterprises (SMEs) and high net worth individuals taking the same approach. However, you must consider whether it is financially viable to pursue the guilty party at the start of the investigation.

In many cases, complex and very high value corporate disputes often arise, and these are fiercely contested. Understanding the asset position of companies, shareholders and key personnel, can greatly assist in court proceedings.

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Why use professional asset tracing services?

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To begin with, DIY desktop research can only get you so far. Sifting through reams of open source data (such as Companies House records and social media platforms) can be a time-consuming and frustrating process. Professional investigators have a wide variety of datasets, allowing access to much larger pool of information, which can be analysed quickly.

Furthermore, in many cases fraudsters, or those seeking to evade detection, often hide or move their assets in an attempt to make these harder to identify and recover – put simply, these are not identifiable through basic open source searches, and so additional datasets and tools will be vital. In most asset tracing cases there is an international element, and so having investigators with a global outreach will assist with obtaining local filings and registries, to identify assets hidden in often opaque jurisdictions.

In many cases, fraudsters go to great lengths to hide their assets, and so covert investigation techniques can in some cases be vital to identifying further assets, or corroborating attribution to a particular individual. This requires careful consideration, to make sure this is cost effective, targeted, evidence is admissible, and also to ensure this adheres to the legislation in the relevant jurisdiction.

Speed is of the essence when it comes to asset tracing. The longer you wait to act, the more difficult it will be to locate your assets. Delays also give criminals more time to dispose of stolen assets – meaning that, even if you do locate them eventually, you will only be able to recover a percentage of the original value. Often this is why individuals and companies prefer using specialist investigators to trace assets as the delays that can arise from using public service or law enforcement can be detrimental to recovering assets.

In many cases the asset structure and attribution can be extremely complex – simplifying the results of these enquiries, and presenting the information in useful ways (such as mapping out corporate ownership structures, or producing a graphic representation of the movement of crypto assets) can be beneficial to assisting the court understand the key findings, and supporting successful legal applications.

Furthermore, using investigators with experience in supporting a wide range of litigation, will ensure that any material produced for the court is correctly and robustly obtained – they will also be able to produce witness statements or affidavits, and where needed can give evidence in court to support legal proceedings.

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Issues and concerns

Every case is unique, and every asset tracing investigation is also different. It can be difficult to predict at the outset of an investigation the nature, extent and complexity of an investigation, and the direction it will take. However, working closely with the client and the legal team will ensure that a clear and focussed strategy is taken, keeping costs to a minimum and identifying and minimising pitfalls and hurdles as they arise.

There are some important considerations, and limitations, to highlight and these should be borne in mind from the outset. This is not exhaustive, however these are common areas to be aware of when considering locating and recovering assets:

Jurisdiction

In most cases involving asset tracing, this involves multiple jurisdictions. Each country has its own rules and challenges – some are open and transparent, others deliberately opaque. For example, the amount of information available in the United Kingdom, and that of offshore countries, is vastly different.

Furthermore, countries vary considerably in their assistance to courts; for example, assets located in Russia would be unlikely to be recoverable. Careful consideration will be required from the outset of an investigation, to decide which jurisdictions to focus on.  

Hidden assets

In many cases, fraudsters, or individuals aware of impending litigation, take great care to move or conceal their assets. This can involve moving money into offshore accounts, purchasing property using company details, or keeping assets in the names of close family members. It should be highlighted that often hidden assets are beyond the reach of conventional enquiries, or even that of law enforcement.

Working closely with specialist lawyers, who are able to obtain court orders for additional disclosure, can be crucial to identifying additional information, however this can be a time consuming, and potentially costly process.

Personal data

Clients often wish to understand what funds an individual has in their bank account, or other specific personal information, such as pensions, trusts, and other financial arrangements. In most jurisdictions, this information is simply not available - to obtain this information without requisite court orders would, in most cases, be illegal. However, in some jurisdictions pertinent information (such as banks associated with an individual) can be obtained, or forensic accountancy on client’s accounts can identify the destination of stolen funds.

In many cases, close liaison with specialist lawyers, who can make court applications to obtain additional details, bank statements and freeze stolen funds, will be required. Understanding the limitations of an investigation, and also the possible routes available, is an important consideration.

Legality

This is closely linked with the above point, however all enquiries must of course be within the legal constraints of the relevant jurisdiction. Evidently, the law changes considerably depending on the country where an investigation is taking place – the best stance when considering litigation is to assume the legal position of the UK, and ensure investigations are conducted accordingly and to the highest standards of integrity and ethics. This also ensure the admissibility of key evidence, and that this can be relied upon in court.

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What does this process involve?

No case is the same, however the goal of asset tracing rarely changes: to identify, freeze, and reclaim the stolen assets – while also exposing illegal activity. Although each case requires a bespoke and layered approach, this normally includes the following phases:

Document review and analysis

To assist the asset tracing investigation, careful review of material in the possession of the client will provide indicators of potential assets. This can include:

• Forensic accountancy – analysing bank statements and key transactions, to identify the destination of stolen funds. This can identify jurisdictions where further enquiries can be conducted, and support court applications.
• Digital forensics and E-discovery – in the digital age, there is a wealth of information online – reviewing emails, communications, and searching the client’s data for additional evidence of where assets may be located.
• Witness enquiries – identifying and speaking with individuals with personal knowledge of the subject will give valuable information about the potential location of assets attributable to the subject. If needed, witness statements can be obtained to support court proceedings.
• Disclosure review and court orders – as outlined below, working closely with specialist lawyers to obtain court orders can result in additional information being obtained, such as KYC information held by banks, bank statements or other data. Reviewing this material can identify other lines of enquiry and additional assets being identified.

Desktop research

Using open and closed source datasets to build an asset profile of an individual or organisation is a vital part of an asset tracing. Much of this information is publicly available, however in many cases it is knowing where to look. This will identify tangible assets, and build an asset profile of the subject. This can include:

• Open and closed source research, including deep web searches, to understand more about the entity or individual, and give leads as to potential assets and jurisdictions.
• UK based credit and consented databases, to identify current and historic properties, corroborated by Land Registry searches.
• Corporate records searches, to identify directorships and shareholdings. Financial analysis of associated companies can identify attributable funds and linked assets owned by the companies.
• Mainstream and local media searches; this identifies additional information and can give clues as to other assets and wealth.
• Social media analytics – reviewing the profiles of the subject, and more frequently close family, can give key evidence of other assets – this can include photos of premises, holiday homes, luxury vehicles, yachts, and other tangible wealth.
• Cryptocurrency tracking and tracing, identifying where stolen crypto-assets have been ‘cashed out’, allowing funds to be frozen and additional information to be disclosed.
• Checks on sanctions, enforcement, Politically Exposed Person (PEP), and other watchlists, to identify litigation and other pertinent information, such as associated companies in offshore jurisdictions.
  

In-region enquiries

In many cases, additional enquiries are required in overseas jurisdictions, often because this information is simply not available through desktop research. An extensive network of operatives around the world will allow bespoke enquiries to be conducted in each relevant jurisdiction. Each country is different, and the availability of information varies, however this would generally consist of:

• Investigators can conduct discreet enquiries, such as obtaining copies of corporate files, property registers, local language searches to identify additional information, and obtaining any other pertinent filings (such as litigation, and banking information) where legally available.
• Investigators may also meet with human sources, identifying and speaking with individuals with personal knowledge of the subject or entity. This helps them identify where assets may be intentionally hidden, which can be corroborated through further conventional research.
• Additional enquiries can be conducted, either overtly or covertly, to obtain additional information – examples include discreet site visits to key locations, to identify other assets such as luxury vehicles.

Covert investigation

In some cases, fraudsters and individuals have a very small footprint, have hidden their assets extremely well, or additional corroboration may be required to prove jurisdiction or to corroborate ownership of an asset. In some cases, targeted and specific covert investigation can assist hugely. The exact methodology will vary greatly, however it is vital to ensures these adhere both to local laws, and also the strictest standards required in the UK. Examples of this can include:

• Deploy surveillance and covert tactics to identify individuals, locations, and physical assets.
• Utilise covert tracking equipment, supported by surveillance, to trace stolen commodities or high valued stock.
• Deploy mobile surveillance on key individuals, to identify locations of note, corroborate ownership of properties, and assist with identifying further assets.
• Utilise a network of local and trusted operatives that have capacity to conduct discrete enquiries globally and across a multitude of jurisdictions.

Legal avenues and recovery

Ultimately, the intention is to support a successful litigation; by identifying assets this allows instructed lawyers to freeze and recover proceeds of crime, or seize assets in enforcement. Support during litigation is vital, and examples include:

• Liaison with specialist lawyers to apply for orders that could provide further lines of enquiry along with facilitating in the freezing and seizing of assets, producing expert evidence where required.
• Utilise forensic accountants to analyse accounts and financial documents that are received, to understand where stolen funds are located.
• Locate key individuals, such as witnesses and defendants, to support obtaining additional evidence or service of papers.
• Support legal action against the individuals or entities responsible for theft or misappropriation of assets, either civil or criminal.

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When considering whether to bring litigation, understanding the asset position of the defendant is often crucial – having material assets to freeze, seize and recover is vital in achieving a successful outcome, either via the courts or a settlement agreement.

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At AnotherDay, we have extensive experience in locating tangible assets, often in opaque jurisdictions, and work closely with specialist lawyers and counsel to give the best chance of success. Starting from even the smallest amount of information, the tools we have at our disposal, coupled with our expertise in investigating, enables us to successfully trace assets and bring those responsible to justice. Contact our team today to find out how we can help you.