Asset Tracing

Private asset recovery starts with the process to collect intelligence and evidence to trace the missing assets. Where fraud and criminal activities can be proven, mutual legal assistance in foreign jurisdictions might be needed. Bank failure, investment fraud and general loss of money these days involve a cross-border element that may require such international cooperation. To avoid that assets disappear without a trace, creditors should act rapidly.

Upon detection of obscured assets, redress is possible when confiscation is allowed by the court or as the wrongdoer freely renounces the assets. Since the latter rarely happens, legal avenues should be considered. To protect sovereignty and maintain legal certainty, fraud and crime may need distinct approaches in foreign jurisdictions. Failure to comply with the appropriate rules might delay the procedures and gives the wrongdoer the chance to move assets further out of control.

In a traditional setting, corporate entities are dissolved when assets are collected and realized, and the liabilities discharged. Insolvent companies have a mismatch between assets and liabilities and thus, creditors risk a write down of their claim.  In bank failure stakeholders mistakenly assume that banks are rescued with tax payer money. Even though systemically important financial institutions are considered too big to fail, most retail banks follow the ordinary winding up procedures resulting in ‘haircuts’ on deposits and investments.

Few creditors realize that they only have one chance to regain access to their assets. Once distribution by a liquidator takes place, further liabilities are discharged. Especially where the insolvency and liquidation procedures involve financial institutions and the claim relates to a deposit or investment, the stakes are high. Claimants therefore need to act within reasonable time to avoid misconceptions and disappointment.