Council and European Parliament agree on rules on freezing and confiscating criminal money

Spanish presidency and European Parliament negotiators have reached a political agreement on an EU law on asset recovery and confiscation. The new directive sets out EU-wide minimum rules on the tracing, identification, freezing, confiscation and management of criminal property. It will boost member states’ capacities to fight organised crime.

The directive will apply to a wide range of crimes, such as organised crime, terrorism, trafficking in human beings and drug trafficking. It also comes with obligations for member states to ensure that the authorities involved in tracing, freezing and managing criminal money have qualified staff and appropriate financial, technical and technological resources.

Violation of restrictive measures

The proposed rules will also apply to the violation of sanctions once a still pending directive on the definition of criminal offences and penalties for the violation of EU restrictive measures has been adopted. As a result, people and companies profiting from circumventing sanctions will see their yields being seized in the same way as those of traffickers in human beings or drug cartels.

More powerful asset recovery offices

Member states will be required to reinforce asset recovery offices, whose role will be to facilitate cross-border cooperation in relation to asset tracing investigations.

The asset recovery offices will also be tasked with tracing and identifying criminal money, in support of asset tracing investigations carried out by national authorities and the European Public Prosecutor’s Office. They will also carry out tracing and confiscation tasks for proceeds that are the subject of a freezing or confiscation order issued by a body in another member state.

In order to enable the asset recovery offices to perform their tasks, member states’ governments will have to make sure to give them access to the relevant national databases and registers. In some cases, access should be immediate and direct.

Freezing and confiscation

According to the text agreed on today, member states need to take measures to enable the freezing of property in order to ensure an eventual confiscation and to ensure, in the event of a final conviction, the confiscation of instrumentalities and proceeds stemming from a criminal offence.

However, member states will not only be obliged to ensure the confiscation of criminal money. They will also have to adopt rules which allow them to confiscate property of a value corresponding to the criminal yield.

Where criminal assets or property of equal value are transferred to a third party, it must also be possible to confiscate them, but only if the third party knew or should have known that the purpose of the transfer or acquisition was to avoid confiscation.

In some cases, the confiscation of criminal profits will also become possible where criminal proceedings have been initiated but cannot be continued.

Confiscation of unexplained wealth

In a first for many member states, a new rule on the confiscation of unexplained wealth will, under certain conditions, allow the confiscation of property identified in the context of an investigation in relation to criminal offences, provided that a national court is satisfied that the identified property is derived from criminal activities committed within the framework of a criminal organisation and that those activities give rise to substantial economic benefit. The agreement pays special attention to procedural safeguards.

Asset management

Member states will be required to designate authorities (asset management offices) to manage the frozen or confiscated property, either through direct management or through the provision of support and expertise to other bodies responsible for the management of frozen and confiscated property. Member states will also be required to enable the sale of frozen property, even before final confiscation, under certain conditions – for instance, if the property is perishable.

Next steps

Today’s agreement will need to be endorsed by member states’ representatives within the Council (Coreper). If approved, the text will have to go through the formal adoption process in both the Council and the European Parliament.

Background

According to Europol data, criminal organisations amass revenues which are estimated to amount to at least €139 billion every year.

Despite the existence of a number of EU laws on the tracing and confiscation of illegal assets, in 2020, the Council called on the Commission to strengthen the legal framework. The European Parliament also asked for stronger asset recovery rules. The draft directive was proposed on 25 May 2022.