Last June 2021, the Supreme Court of Justice (the “SCJN”) carried out the study of the Action of Unconstitutionality 100/2019 filed by the National Human Rights Commission (the “CNDH”), on September 9, 2019, against various provisions of the National Law on Asset Forfeiture (the “Law”), in force since August 10, 2019.
What the CNDH sought by promoting the Action of Unconstitutionality against several provisions of the Law, was to adjust the same to the applicable constitutional and conventional system, and thus guarantee the observance of human and fundamental rights related thereto, contributing to consolidate and preserve the Rule of Law.
The SCJN, in its revision, although invalidated some of the challenged provisions of the Law, the rest still subsist and will remain in force.
In this sense, it is important to take into consideration that the findings of unconstitutionality determined by the SCJN will not have retroactive effects to previous ongoing court proceedings and will take effect upon notification of the corresponding sentence resolutions to the Federal Congress, which has not occurred as of this date and it is expected that will take a couple of months to be notified.
UNCONSTITUTIONALITY OF CONCEPTS OF THE NATIONAL LAW ON ASSET FORFEITURE BY THE SUPREME COURT OF JUSTICE
On the other hand, it should be noted that in accordance with the Twelfth Transitory Article of the Law, in August 2020, the Attorney General had to undertake a public call for the review of the constitutional and legal system in the matter of asset forfeiture, that will aim the identification, discussion and formulation of constitutional and Law reforms, for its optimal operation, which is still pending to be carried out.
Generally speaking, the resolutions adopted by the SCJN with respect to the Action of Unconstitutionality of the Law clarify that (i) asset forfeiture only applies in connection with assets whose legitimate origin cannot be proven, element that refers punctually to the origin of the assets and not to their use or destination, as established in the Law; (ii) the action of asset forfeiture proceeds with respect to criminal conducts set forth in federal, general and local laws; (iii) the action of asset forfeiture under no circumstances has unlimited statute of limitations; (iv) the District Attorney may not access databases of other authorities, nor order the securing of assets as a provisional measure, without a court order; and (v) the cause for the early sale of assets by the authority under the argument that the disposal was necessary due to the “nature of the asset” is removed, since such circumstance was ambiguous and generated uncertainty as to the assets that fell into such category.
Additionally, another important provision invalidated by the SCJN is one of the elements for the proceeding of the asset forfeiture action, consisting of the owner´s knowledge (at present or that should have had) of the destination of the asset to the illegal act. The above is invalidated because it was considered that such element distorted and exceeded the constitutional legal system.
Finally, regarding the requirements to assume that an acquisition was made in good faith, it was necessary to prove, among other things, (a) the incapability of the purchaser to know that the asset subject to forfeiture action was used as instrument, object or product of an illegal act or to hide or mix assets resulting from the illegal act; and (b) in the event of having learned of the unlawful use of the asset, to have prevented or given a timely notice to the competent authority, elements that are invalidated and will no longer be required to prove good faith.
Regarding the controversial provisions of the Law that did not undergo any modifications and are still in force, note following: (i) the judge may order as a provisional measure, even prior to the filing of a court proceeding, the securing of the property subject to asset forfeiture, with the intention of guaranteeing the conservation of such assets, and the impossibility of the defendant or affected individual to offer any bond in order to lift the measure; (ii)the non-opposability of the banking, exchange, stock exchange, or tax secrecy, within the asset forfeiture proceedings in any of its stages; (iii) the possibility that in the event of a judgment declaring the asset forfeiture, the judge may also declare the extinction of other rights, whether principal or accessory, if it is proven that the owner knew of the cause that gave rise to the action; and (iv) the capability of an early sale of the asset, under certain circumstances (other than its nature), during the process of asset forfeiture, prior to the issuance of the final judgement.
The following is an analysis of the resolutions of the SCJN in connection with the Action of Unconstitutionality of the Law:
- The Law defines asset forfeiture as the loss of rights that a person has, in relation to patrimonial assets where legitimate origin cannot be proven, particularly those that are instrument, subject or product of illicit acts, declared by judgement of judicial authority, without any payment or compensation to its owner or to the relevant individual that, for any circumstance, possesses or holds such assets. Likewise, under the Law, legitimate origin was defined as “the origin or lawful obtaining of the assets, or the lawful use or destination of the assets linked to the illicit act”, in this sense, the SCJN invalidates the second part of such term, considering that the Constitution, when stating that the asset forfeiture action shall be applicable with respect to assets where legitimate origin cannot be proven, refers only to the origin of such assets and not to their use or destination (Article 2, section XIV).
- It determinó puntualmente que, los delitos por hechos de corrupción, el encubrimiento, los delitos cometidos por servidores públicos, el robo de vehículos, y recursos de procedencia ilícita (conocido también como lavado de dinero), por los que, entre otros hechos ilícitos, puede proceder la extinción de dominio, se refieren tanto al fuero federal como al local, toda vez que la Ley, originalmente, únicamente remitía a la legislación penal federal (Artículo 1, fracción V, incisos f, g, h, i y j).
- The second paragraph of Article 5 is invalidated, in the provision that establishes “The information obtained by the District Attorney for the preparation of the asset forfeiture action, will be strictly reserved until it is presented before the judicial authority”. The foregoing, because it totally prohibited access to the information obtained by the District Attorney for the preparation of the asset forfeiture action before it was filed with the judicial authority, and it was considered an overinclusive measure that violated the human right of access to information and the principle of maximum publicity.
- With respect to Article 7, which established that the asset forfeiture action would proceed, among others, (i) on those “assets of lawful origin used to conceal other assets of unlawful origin, or materially or legally mixed with assets of unlawful origin”, the characteristic "of lawful origin" (section II) is invalidated; and (ii) on "assets of lawful origin, which value is equivalent to any of the assets subject to asset forfeiture, when it is not possible to locate, identify, seize, secure or material seizure, and in which case the value is equivalent to any of the assets described in the preceding sections", the entire section (section IV) is invalidated. The foregoing because such provisions were clearly in violation of Article 22 of the Constitution, which expressly provides that asset forfeiture action proceeds only against patrimonial assets where the legitimate origin cannot be proven.
- Likewise, Article 7, section V, states that the action is applicable with respect to assets used for the commission of illegal acts by a third party, "if the owner had knowledge thereof and did not notify the authority by any means or did not performed any action to prevent it". In this sense, such portion of the Law is invalidated, since it is deemed that the Constitution does not require evidencing such subjective element, in order to consider that the action may proceed with respect to such asset.
- n terms of the Law, in order for the asset forfeiture action to proceed, the following elements must be present: (i) the existence of an illicit act; (ii) the existence of an asset of illicit origin or destination; (iii) the link between the two previous elements; and (iv) the owner's knowledge of the destination of the asset to the illicit act, or of the fact that it is the product of an illicit act. In this regard, the SCJN invalidates the subjective element of the knowledge that the owner has or should have had of the destination of the asset for the commission of the illicit act, provided in Article 9, paragraph IV, of the Law, since the Constitution does not require evidencing of such element, and the rule then exceeded the constitutional system. Likewise, and under the assumption that the same defect was found in other provisions of the Law, Articles 126, fourth paragraph, and 214, first paragraph, in the sections referring to the subjective element of the knowledge of the owner for the proceeding of the asset forfeiture action are invalidated by extension.
- The Law established the imprescriptibility of the action in the case of assets of unlawful origin, provision that the SCJN invalidated since it noted that from the analysis of the legislative process it was not the will of the constituent to allow that such action did not had a statute of limitations, and such aspect could not be left to the will of the legislator. Furthermore, it considered that such provision did not pass the proportionality test (Article 11, first paragraph).
- ticle 15 of the Law provided a presumption of good faith in the acquisition and destination of the assets, with respect to which, the SCJN recognized the validity only of the presumption of good faith in the acquisition of the assets as an element to determine their lawful origin, but invalidated the presumption of good faith with respect to the destination of the assets, since it considered that it was intended to take as a basis for the validity of the action, the destination of the assets and not their unlawful origin, as required by Article 22 of the Constitution. Additionally, sections V and VI of said article were invalidated, which established that in order to presume good faith, it was necessary to prove, among other things, (a) the incapability of knowledge by the defendant or affected party that the property subject to asset forfeiture action was used as an instrument, object or product of the illicit act or to cover-up or mix assets resulting from the illicit act; and (b) in the event of having learned of the unlawful use of the property owned, to have prevented or given timely notice to the competent authority.
- Regarding the procedure, the following provisions of the Law are modified:
- (i) The Law allowed the District Attorney, in case of urgency or other duly grounded need, to adopt as a provisional measure the securing of assets subject to asset forfeiture, a power that the SCJN considered to be violating of the right to judicial protection, in addition to the fact that it did not pass a proportionality test, since the legislator could have opted for less harmful measures to guarantee the effectiveness of the action without the need to dispense the prior judicial control, therefore such power is invalidated (Article 173, second paragraph).
- The District Attorney was empowered to access, in cases of urgency, information contained in databases without prior judicial authorization, provision that is invalidated as a violation of the right to the protection of personal data set forth in Articles 6 and 16 of the Constitution, since the measure was not necessary to achieve the purposes intended by the legislator (Article 190).
- (iii) The Law provided for the possibility of carrying out the early sale of the assets subject to forfeiture process, among other cases, when the disposal was necessary due to the "nature of the asset". This assumption is invalidated as it is deemed a violation of the principle of legal certainty, for not establishing with precision the specific characteristic of the nature of an asset that would make an anticipated sale necessary (Article 228, paragraph a).