Confiscation Crime Proceeds EU

Freezing and confiscation of assets

Regulation (EU) 2018/1805 — mutual recognition of freezing orders and confiscation orders

It aims to facilitate the cross-border recovery of criminal assets and to lead to more efficient freezing and confiscation of funds from illicit origin in the EU.

The regulation forms part of the action plan developed by the European Commission to strengthen the fight against terrorist financing. It contributes to completing the security union by ensuring that criminals are deprived of their assets.

Scope

This regulation sets out the rules under which an EU country recognises and executes in its territory freezing orders* and confiscation orders* issued by another EU country in the context of proceedings in criminal matters.

Features

The regulation has the following key features.

The resolution of issues linked to the implementation of existing legal instruments by establishing a single regulation — covering both freezing orders and confiscation orders — that is directly applicable in the EU.
The general principle of mutual recognition, meaning that all judicial decisions in criminal matters taken in one EU country will normally be directly recognised and enforced by another EU country. There are only a limited number of reasons for non-recognition and non-execution.

Standard certificates and procedures to allow for quicker and more efficient freezing and confiscation actions.
A deadline of 45 days for the recognition of a confiscation order and, in urgent cases, a deadline of 48 hours for the recognition and 48 hours for the execution of freezing orders. Limits can be postponed under strict conditions.
Provisions to ensure that victims’ rights to compensation and restitution are respected in cross-border cases.

It will apply from 19 December 2020.

BACKGROUND

The regulation adds to legislation already in place on police and judicial cooperation on criminal matters within the EU, including:

the freezing and confiscation of instrumentalities and proceeds of crime,
the European investigation order directive,
the right to access a lawyer,
the right to information in a criminal proceeding,
the right to translation and interpretation in a criminal proceeding,
legal aid, and
the presumption of innocence.

Key Terms

Freezing order: a decision issued or validated by an issuing authority in order to prevent the destruction, transformation, removal, transfer or disposal of property which the authority wished to confiscate.
Confiscation order: a final penalty or measure, imposed by a court following proceedings in relation to a criminal offence, resulting in the final removal of property from a person or company.

Court orders freezing criminal assets or evidence — recognition abroad

Framework Decision 2003/577/JHA — executing freezing orders abroad

It establishes rules for the recognition and execution by an EU country of a freezing order issued by the judicial authority of another EU country in a criminal proceeding. It also covers the freezing of evidence.
It works alongside Framework Decision 2006/783/JHA on the mutual recognition of confiscation orders in depriving criminals of their assets even when they are held in another EU country.
From May 2017, the rules of this Framework Decision which deal with the freezing of evidence will be replaced by Directive 2014/41 regarding the European Investigation Order in criminal matters.

What is a freezing order?

It is a temporary order from a judicial authority to prevent criminals hiding, selling on or using property, documents or data in criminal activity.

This decision applies to freezing orders issued for the purpose of:

securing elements which could be used as evidence in a criminal proceeding, or
subsequent confiscation orders to permanently stop offenders from benefiting from their criminal conduct and prevent criminal property from being laundered or reinvested, potentially fuelling further criminality.

Offences

A number of serious offences do not require a check for double criminality – i.e. that the offence be a crime in both the EU country issuing the order (issuing country) and the one executing it (executing country). The offence must, however, be punishable in the issuing country by a jail sentence of a maximum period of at least three years. The offences include:

participation in a criminal organisation
terrorism
corruption and fraud
trafficking in human beings
racism
rape.

Recognition and execution

The judicial authority of the issuing country sends a certificate to the judicial authority of the executing country to request execution of the order. The executing country must:

recognise the order without further formality and take the necessary measures for its immediate execution;
observe the formalities and procedures set out by the issuing state in executing the freezing order, unless they are contrary to the fundamental principles of law in the executing state.

Non-recognition or non-execution

The executing state may refuse to recognise or execute the order if:

the certificate is not produced, is incomplete or manifestly does not correspond to the freezing order;
there is an immunity or privilege under the law of the executing state that makes it impossible to execute the freezing order;
it is instantly clear from the information provided in the certificate that any judicial assistance would infringe the legal principle that new proceedings cannot be brought if a final judgment has already been given for the same facts;
the act on which the freezing order is based is not an offence under the law of the executing state unless:
it is listed amongst the serious offences for which execution is automatic
it relates to taxes or duties, customs and exchange.

Postponing execution

Execution of the order may be postponed where:

it might damage an ongoing criminal investigation;
the property or evidence concerned have already been subjected to a freezing order in criminal proceedings;
the property is already subject to an order in another proceeding in the executing state. However, such an order must have priority over any future national freezing orders in criminal proceedings under national law.

Interested parties

EU countries must ensure that any interested party affected by the freezing order, including legitimate third parties, has access to legal remedies to protect their legitimate interests, without requiring the order to be suspended.

It entered into force on 2 August 2003. EU countries had to incorporate it into national law by 2 August 2005.

Acts

Council Framework Decision 2003/577/JHA of 22 July 2003 on the execution in the European Union of orders freezing property or evidence (OJ L 196, 2.8.2003, pp. 45–55)

Corrigendum to Council Framework Decision 2003/577/JHA of 22 July 2003 on the execution in the European Union of orders freezing property or evidence (OJ L 196, 2.8.2003) (OJ L 374, 27.12.2006, p. 20)

Council Framework Decision 2006/783/JHA of 6 October 2006 on the application of the principle of mutual recognition to confiscation orders (OJ L 328, 24.11.2006, pp. 59-78)

Report from the Commission based on Article 14 of the Council Framework Decision 2003/577/JHA of 22 July 2003 on the execution in the European Union of orders freezing property or evidence (COM(2008) 885 final of 22.12.2008)

Directive 2014/41/EU of the European Parliament and of the Council of 3 April 2014 regarding the European Investigation Order in criminal matters (OJ L 130, 1.5.2014, pp.1-36)

Freezing and confiscation of proceeds of crime

Directive 2014/42/EU on the freezing and confiscation of instrumentalities and proceeds of crime in the EU

It aims to make it easier for national authorities to confiscate and recover the proceeds* and instrumentalities* from crime in the EU.

Minimum Rules

It sets out minimum rules for freezing and subsequently confiscating the proceeds and instrumentalities of crime.

The criminal offences concerned are those in various EU laws listed in Article 3 of the Directive.

In addition to the confiscation (following a criminal conviction) of proceeds and instrumentalities, or to the confiscation of their value, Article 4 allows the confiscation of the proceeds of crime and instrumentalities in cases of the flight or illness of the person concerned (when it is impossible for the suspect or accused person to attend the criminal proceedings for a longer period of time, meaning that the proceedings cannot continue under normal conditions and a criminal conviction is not possible).

Article 5 sets out clearer rules on extended powers of confiscation, thus making confiscation easier when a judge is satisfied that the property in question has been obtained through other criminal activities by the convicted person.

Article 6 of the Directive enables confiscation where property has been transferred from the suspect to a third party, or directly acquired by a third party, who should have realised that it is a result of crime.

Under Article 10, EU countries must adequately manage frozen assets (for example by setting up Asset Management Offices), so that they do not lose economic value before they are eventually confiscated.

Ireland is taking part in the directive while the United Kingdom (1) and Denmark are not.

The directive entered into force on 19 May 2014. EU countries have to incorporate it into national law by 4 October 2016.

Act

Directive 2014/42/EU of the European Parliament and of the Council of 3 April 2014 on the freezing and confiscation of instrumentalities and proceeds of crime in the European Union (OJ L 127, 29.4.2014, pp. 39-50)

Successive amendments to Directive 2014/42/EU have been incorporated in the original text. This consolidated version is of documentary value only.