The urgent draft law on economic efficiency and the promotion of employment, which entered the first debate in the plenary session of the National Assembly, brings with it the reform of the Law on confiscation of property – which is in force in Ecuador from 2021. This reform was highlighted by the President of the Republic himself, Daniel Noboa Azín, who believes that he is promoting the Law on the Seizure of Domains.

The Ambassador of the United States of America, Michael Fitzpatrick, made statements these days in which he pointed to the penetration of organized crime and forms of money and property laundering through football clubs and even certain media in Ecuador. At that time, the diplomat advocated for the adoption of a law on confiscation of property.

In response, President Nobo said that “the drug trade has 500 creative ways to launder money” and that as a government, he will prevent them by strengthening the Financial and Economic Analysis Unit (UAFE) and “promoting the Asset Forfeiture Law that we introduced.” within the emergency economic law.” He also said that he proposed stricter controls in the Tax Administration (SRI) and a real list of agricultural land and weapons in the state.

However, according to lawyers and tax experts, only one article of the law is mentioned in the reform. This reform does not generate a significant strengthening of the law, but only a clarification of the tax issue.

The fact is that the first-instance report of the proposed law included an amendment that points to: Article 58 – In Article 53, add the text in the last paragraph: “Conviction or its entry does not extinguish. for this reason, the tax liability that may arise in relation to property whose ownership ceases.”

In this sense, reference is made to the fact that after a judgment has been passed that continues with the termination of ownership of assets that will pass to the state, whoever owns them will continue to pay the appropriate taxes for those assets.

According to Pablo Guevara, partner at Andersen (tax consulting), the asset forfeiture reform does not represent any change, as it ratifies what is already stated in Article 37 of the Tax Code. This article establishes the grounds for extinguishing the tax debt. This is not a domain takedown issue. Currently, if the property is seized, the tax debt is not discharged to the person who owned the property. “It confirms once again that it was already planned,” he says.

For Napoleón Santamaría, a tax lawyer, the proposed article does not contribute to improving the treatment of these cases. He explains that asset forfeiture is a tool that focuses on cutting off the economic resources of those who have committed money laundering. “The idea is that the proceeds of crime don’t stay in the hands of criminals,” he says. The Domain Seizure Act discourages such practices. However, for this to happen, two conditions must be met: that justice acts quickly and that there is no fear in the sentencing of judges.

The idea then is that the person being prosecuted for this criminal offense is immediately confiscated and that these resources are managed by the state until the moment of the verdict, when they become the property of the state. If it is found that he is innocent, the property is returned to him with interest and compensation for damages.

Remember that even though the law was passed by the Assembly in 2021, Correismo crippled the norm, arguing that he could not proceed with pre-sentence forfeitures because of the presumption of innocence. Furthermore, he comments that this law needs judges without fear to impose a sentence. This means that there is the possibility of faceless judges (present but with their faces covered), absent judges (who are not at the place of trial, but technologically connected), and even judges from the Embassy, ​​who dispense justice anywhere. the world to protect its integrity.

At the same time, on December 11, SRI and UAFE undertook to exchange information in order to detect possible irregularities, such as tax fraud crimes, the subjects reported in a press release. The text states that DSI will provide technical assistance for the fulfillment of tax obligations. While UAFE will strengthen training for the delivery of reports on economic activities.