The Expert Podcast

We recently attended an excellent presentation by the Association of Certified Fraud Examiners, of which we're a member, that had to do with asset tracing. It was called Asset Tracing: Finding the Truth Behind the Numbers, and while attending this refresher course, it was an excellent reminder to review with our viewers what is the difference between asset tracing and asset searching. Many times it seems like an asset search and asset tracing are the same thing, but there are some very significant differences between the two.

An asset search, which many people are familiar with, is a single point-in-time search of what are the assets at that moment. So, if we do an asset search for an individual—let's say that's a debtor in a judgment, maybe somebody who owes money from a lawsuit or an alleged fraud perpetrator—what you're going to do is you're going to find assets at that moment of what is held by the person. However, asset tracing goes back further. It finds out what the assets were in history.

Did they convey assets away? Did they have two million dollars in assets a year and a half ago, and now they have $200,000 in assets? Where did that flow of assets go? Tracing the flow of funds—tracing the assets—can also show the change in asset class. If the person or company changed their assets from cash to real estate, or maybe they changed their assets from corporate assets to digital currency or cryptocurrency, that might make a difference in what is recoverable to a debtor or to a creditor to get back money from a fraud or a scam.

For example, let's say that your creditor—somebody who owes you money—had $300,000 in assets in 2018, and you have a judgment against them for a million dollars. Well, if you follow those assets and they went to purchase real estate or purchase stocks or purchase other assets like crypto, and now the assets went up in value, you may be able to collect your judgment. On the other hand, if the person has taken assets and put them in other people's names, you may think you don't have collectible assets, but if you trace where those assets went, you may find that there's other third parties that you can recover from.

So asset tracing is taking that asset search and then flowing it backwards to find out where the value went, where the value increased, and if the debtor changed the class of assets from one type to another—for example, from cash to real estate or from real estate to vehicles, and so on. Tracing the history of assets can give you a lot more intel than just a static asset search, which is a place in time as of a certain date, as of a certain type of judgment.

If you have questions about asset searching or asset tracing, you can reach us at our website at activeintel.com.