“Confiscation of ill-gotten assets is an important factor in deciding whether a country is compliant with AML/CFT requirements”

Justice Buwaneka Aluwihare, Former Judge of the Supreme Court of Sri Lanka

From Mauritius’ AML/CFT evaluation to AI-assisted justice in Saudi Arabia and war-crimes prosecutions in Timor-Leste, Justice Buwaneka Aluwihare’s career opens an interesting window into how law is being applied and reshaped across jurisdictions. Speaking exclusively to Bizweek during a visit in Mauritius as an EU Global expert on AML/CFT, the former Acting Chief Justice of Sri Lanka explains that the forthcoming mutual evaluation exercise will test not only Mauritius’ laws, but their effectiveness in practice, particularly in the confiscation of ill-gotten assets. Drawing on three decades of experience, Justice Aluwihare also calls for continuous legal education at a time when AI and digitalisation are rapidly reshaping the legal profession and the administration of justice.

What brings you to Mauritius, and what do you hope to share with its legal and judicial community? 

At the moment, I am functioning as a short-term expert for EU Global on AML/CFT (Anti-Money Laundering and Countering the Financing of Terrorism), and Mauritius is one mission EU Global in engaged in. With them I have conducted training sessions both in Sri Lanka and in other jurisdictions, like in Bhutan. We are hoping to conduct one in Maldives Islands.

With the same objective, we are having a workshop for judicial officers of Mauritius. Mauritius will be undergoing a mutual evaluation next year which will be conducted by the Asia/Pacific Group on Money Laundering (APG), which is the FATF (Financial Action Task Force) regional body. It is important that Mauritius is ready to face the mutual evaluation and reach the required degree of compliance so that it comes out of the mutual evaluation with a high compliance rating. 

“What is critical in a money-laundering investigation is the speed (…) Once criminals get wind of what is happening, they can dissipate the assets, which may vanish.”

In that respect, it is very important that all the agencies related to the AML/CFT legal regime become acquainted with the required compliance standards. If there are deficiencies, they have to identify them and take necessary measures to overcome them and ensure that they are fully compliant when the mutual evaluation takes place next year.

The judiciary has a pivotal role to play because in the evaluation, they will not only check technical compliance. They will also seriously examine how effectively the legal framework is put into operation and how effective it is.

In assessing the effectiveness of the legal regime, they will look at the number of investigations conducted, the number of cases filed and the success rate, especially in relation to the confiscation of ill-gotten assets.

Most new judicial officers are still trying to learn and gain knowledge in AML/CFT. One reason is that it is a fairly new area. The other is that it is constantly evolving. The Financial Action Task Force, as the global watchdog, keeps adding new requirements which all jurisdictions are required to adhere to. It is therefore important for every jurisdiction to take note of these changes and keep abreast of developments in the AML/CFT legal regime.

According to you, is Mauritius ready to face the evaluators? 

I am not competent to answer the question of whether Mauritius is ready, but I would approach it in a different way.

Sri Lanka will be evaluated next month. At the moment, I am heading a Cabinet-appointed task force to monitor the relevant state agencies and ensure that they comply with the necessary requirements to face the mutual evaluation. During the past one and a half years, we have done a fair amount of work, primarily identifying deficiencies. Over that period, we have been taking necessary steps to rectify those deficiencies.

In that respect, what Mauritius must also do is to conduct an evaluation or assessment of each of the agencies that will be assessed by the APG during the evaluation. It must identify whether there are any deficiencies and, having identified them, take serious steps to ensure that those deficiencies are overcome before the evaluation.

Without knowing the extent of the deficiencies, I cannot make an assessment of Mauritius. But generally, I think that should be the approach of every jurisdiction if it wants to successfully face a mutual evaluation.

You have highlighted asset confiscation as a critical element of AML/CFT effectiveness. Why does the ability to identify, trace, and ultimately confiscate illicit assets matter so much in assessing a country’s performance?

One of the critical areas in countering money laundering and countering the financing of terrorism is to ensure that people who are engaged in those crimes do not benefit from the assets they gain. That is the most effective way of countering these crimes.

If you take the offence of money laundering, for example, it is always connected to another crime. Through those crimes, people acquire assets. So, as you can see, the whole idea of the anti-money laundering legal regime is to deprive those criminals of enjoying those assets.

“You may be surprised to hear that Saudi Arabia has used an AI process for maintenance cases without judges being involved in the process.”

That is the best way of controlling this. The best way of assessing whether the system is effective or not is to look at how far a jurisdiction is prepared and effective in pursuing those ill-gotten assets and ensuring that they are confiscated. That is why, for the FATF, confiscation of ill-gotten assets is a very critical area. It will be one of the important factors in deciding whether a country is compliant or not.

You spent 30 years in Sri Lanka’s Attorney General’s Department before joining the Supreme Court. How did working as a prosecutor shape your approach as a judge? 

Well, having functioned as a prosecutor for 30 years, I had a mindset of ensuring that criminals are punished if they are guilty. But, as officers of the Attorney General’s Department, we play a balanced role. We do not persecute. We prosecute only if we are confident that the person has in fact had some complicity in a crime and there is evidence to establish it. We look at the investigation material objectively before deciding whether it warrants prosecution. So, even as a prosecutor, you are trained to look at things with a balanced mind.

Of course, as a judicial officer, it is a different approach altogether. Initially, I thought I might find it difficult to adjust, having had the mind of a prosecutor. But because of the training I had, I did not find it that difficult to listen to both sides and consider the merits of the case upon analysing the material produced before court by the contesting parties before arriving at a just decision.

In Timor-Leste, you prosecuted war-related crimes for the United Nations. What was the greatest challenge you encountered in bringing those cases to court? 

I think one of the greatest challenges we had at that time was the lack of cooperation we received from the Indonesian authorities. Our mandate was to ensure that people who committed heinous crimes, including crimes against humanity, were brought before the law. Going by the empirical material, there were several militia groups operating along with the Indonesian armed forces.

So, during the period that I functioned as a prosecutor, cooperation from the Indonesian side was not forthcoming. That was a huge challenge in ensuring that people who had committed those crimes were brought before the law.

You have also served as a visiting judge in Fiji. What did that experience teach you about how different legal systems handle similar problems?

I think that is a very interesting question. One thing I must say is that Sri Lanka and Fiji, and Mauritius for that matter, are all Commonwealth countries. The law in Fiji is common law, as it is in Sri Lanka. If you look at the legal principles, especially in the area of criminal law, apart from minor differences, the basic principles are the same. To that extent, adjusting to the Fijian criminal-law regime was not difficult for me.

I must, however, say that there were differences, and I learned a lot from the Fijian system and the way the judiciary functions there. Basically, the function of judges in the two countries is the same, but sometimes their procedures and the way they operate are slightly different.

It was therefore very good exposure for me to appreciate how another jurisdiction works.

You have taught the law of evidence. How should courts assess digital material whose origin or authenticity is disputed? 

That again is a very interesting question, because when it comes to digital evidence, you cannot always find the very author who fed the information into the system. So, there is the question of the credibility of digital material.

However, the admissibility of digital material and the law pertaining to it have evolved. There are checks and balances, and there are ways of checking the authenticity and accuracy of digital material.

The difference is that, unlike a normal document produced in court, where the court has the benefit of checking with the author the accuracy and veracity of its contents, that benefit is not afforded to the court in the same way with digital evidence. Digital data may have been fed into a system by a chain of people. That is the challenge.

Still, there are ways and means of checking the accuracy, but the process is much more difficult than admitting a normal document. When admitting digital evidence, it is important that judges draw their minds to checking the accuracy and authenticity of the digital material. It should be admitted only once the court is satisfied that the material has not been tampered with, and that no one had the opportunity to tamper with that evidence. Once the court is satisfied with that, it can admit the evidence and act on it.

Based on your work with Sri Lanka’s Financial Intelligence Unit, what makes cooperation between investigators, prosecutors and financial institutions effective? 

This is a critical question from the perspective of pursuing criminals involved in money laundering. What is critical in a money-laundering investigation is the speed. The reason is that you are chasing assets. Once criminals get wind of what is happening, they can dissipate the assets, which may vanish.

Close cooperation between all agencies is therefore critical to a successful investigation and prosecution of a money-laundering case. In that respect, close coordination is vital. On top of that, maintaining the confidentiality of those agencies is equally important.

Initially, when I started working with the FIU, that coordination was not there. Gradually, we had to develop coordination between the agencies. We encouraged various agencies to enter into MOUs, which made information-sharing much easier than going through formal channels. What is also very critical is joint and parallel investigations.

Recently, in Sri Lanka, there was an incident where people had been remitting money abroad on the basis of importing goods, but nothing had actually been imported. The matter was detected by Sri Lanka Customs. Soon after that, the police were brought in, the Inland Revenue – that is the department dealing with tax – was brought in, and we had a series of joint meetings to see how each agency could cooperate with the other. I can see that cooperation is working now, and it is very important.  

Money laundering is not simple. There are professional money launderers and syndicates who help people involved in criminal activity. Suppose someone is involved in the illicit drug trade. They do not have the knowledge or the time required to hide the ill-gotten proceeds. There are professional money launderers who would advise them on how to hide the money without leaving a trace. Because of that, it is very important that investigators always keep abreast of what is happening in that area.

You chair a task force monitoring public institutions’ compliance with anti-money laundering and counter-terrorist financing requirements. Where do institutions most often struggle to put the rules into practice?

Well, it is a difficult question to answer because under the task force, at the moment, there are 21 institutions. The compliance requirements of each institution are not the same. If you take law enforcement, their level of compliance must be very high because they play a critical role in countering money laundering. 

As opposed to that, take the Registrar of Companies. Their involvement is much less. From the money-laundering perspective, what they are required to do is maintain a beneficial ownership register and keep records of other information they are statutorily required to maintain. You cannot compare the compliance of one agency with another because the degree of compliance required and their involvement in the chain are different.

What the task force did was to identify the role each agency was required to play, check whether there were deficiencies in relation to that role, and provide them with action plans and timelines.

We said, for example, that a particular matter needed to be complied with in a particular time frame. What we planned was that, when we reached the mutual evaluation, all the agencies would be compliant.

How can a country measure whether its anti-money laundering system is producing results, beyond passing laws and issuing guidance?

That is an important question. There is a mechanism. It is called the National Risk Assessment. So, you carry out the assessment and look at the vulnerabilities of the sectors. 

Based on those vulnerabilities, the risk posed by each sector can be identified. To measure effectiveness, if you find that a particular sector is vulnerable and the risk is very high, you need to check whether that sector has sufficient resources and whether it is acting effectively on a risk-based measurement. If the risk is low, even with a lack of resources or minimum resources, it may not pose a threat. That is basically how you measure how effectively anti-money laundering laws are working.

Sri Lanka conducted a risk assessment this year, and drugs came on top. The second was trade-based money laundering. Bribery was high earlier, but now it has come down quite a lot. That is an indication that the government is giving more resources and taking measures to counter that issue.

As a former member of Sri Lanka’s Judicial Service Commission, what safeguards matter most for judicial independence and public confidence? 

Judicial independence is constitutionally protected. So, even as a member of the Judicial Service Commission, we would never check the accuracy of a judgment. We allowed judges to operate independently. JSC never checks whether a judgment is correct or wrong. That is up to the appellate process.

To that extent, the Judicial Service Commission does not interfere with the day-to-day functioning of judges when they are performing their judicial functions. It deals with discipline. The judiciary has to be a very disciplined sector, because if the judiciary loses credibility in the eyes of the public, it will have a serious impact.

The main task of the Judicial Service Commission is to ensure that judges act with propriety and conduct themselves as judicial officers. As far as their judicial functions are concerned, it does not look at the merits of their work.

Looking across your work as prosecutor, judge and now bank chairman, what change would you most like to see in the training of the next generation of legal professionals? 

I think that in the legal profession, laws are evolving very fast, especially in the area of AI, environment, technology and IT, which are all rapidly developing areas. In my view, in improving the legal profession, there should be a focus on training lawyers in those areas.

 I would also like to see the degree of professionalism among legal professionals raised. It is not basically a matter of getting people out of law school and enrolling them as lawyers. There should be compulsory continuous legal education. That should be made compulsory because sometimes what lawyers do is, after they graduate, they start their legal practice and never bother to keep up with developments in the law.

If you are going to maintain a high standard in the legal profession, if lawyers are not keen on engaging voluntarily, at least through compulsion, that knowledge must be imparted to them. There should be continuous legal education for lawyers. That is not happening in Sri Lanka at the moment, but the Bar Association is taking initiatives to have seminars and webinars to train lawyers. At present, however, that is on a voluntary basis rather than through compulsion.

Artificial intelligence is already entering areas of law and dispute resolution. Could AI eventually assist, or even replace, some aspects of judicial decision-making, and what would that mean for courts?

There is a real possibility. Even now, it has already been deployed in certain countries. You may be surprised to hear that Saudi Arabia has used an AI process for maintenance cases without judges being involved in the process. I saw a presentation made by the Saudi Arabian authorities. There were no physical hearings involved. You only have to place your submissions, and the system generates the result. There is one appeal, and if you are dissatisfied, you can challenge it on limited grounds.

I saw this about five years ago at a seminar. The Saudi Arabian authorities made a presentation and showed us how the system was working. They said the accuracy rate was over 99 per cent because the appellate body overturned less than one per cent of decisions.

If it is happening in the area of maintenance applications, I am sure it can be applied to other areas, including in resolving commercial disputes. If there are disputes between two contracting parties, they can place their submissions into the system and then the system can produce a decision.