Explanatory Memorandum to COM(2022)245 - Asset recovery and confiscation - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2022)245 - Asset recovery and confiscation. |
|---|---|
| source | COM(2022)245  |
| date | 25-05-2022 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
Organised crime is one of the highest threats to the European Union’s security. The transnational reach of organised crime, its systematic use of violence and corruption, and its unprecedented degree of economic infiltration was exposed in the EncroChat, Sky ECC and AN0M 1 operations carried out in 2020-2021. On the basis of the follow-up investigations launched by Member States as well as Europol and Eurojust (more than 2,500 investigations from EncroChat only), national authorities have carried out more than 10,000 arrests, apprehended almost 250 tonnes of drugs, and seized more than EUR 600 million in cash as well as other assets, including hundreds of vehicles, vessels, aircraft and luxury articles.
Criminal organisations deploy sophisticated means to launder their vast revenues, which are estimated at least at EUR 139 billion every year [1] . As underlined in the EU Strategy to tackle Organised Crime (2021-2025) 2 , depriving criminals of these illicit profits is essential to disrupt the activities of criminal groups and to prevent their infiltration into the legal economy. As the main motive for organised crime is financial gain, asset recovery is a very effective mechanism to deter criminal activity. In order to ensure that crime does not pay, the Commission announced in its EU Strategy to tackle Organised Crime the intention to strengthen the rules on asset recovery and confiscation, taking into account the 2020 Commission report “Asset recovery and confiscation: Ensuring that crime does not pay” 3 .
The 2007 asset recovery offices Council Decision 4 requires Member States to set up asset recovery offices to facilitate the tracing and identification of the proceeds of crime, and establishes minimum requirements to facilitate their cooperation across borders. The 2014 Confiscation Directive 5 , partially replacing prior legislative instruments, sets minimum rules for the freezing, management, and confiscation of criminal assets. Despite this, Member States’ asset recovery systems are not well equipped to effectively address the complex modus operandi of criminal organisations. National authorities have limited capabilities to swiftly trace, identify and freeze assets, the inefficient management of frozen assets means they lose value before a decision on their confiscation is taken, and existing confiscation tools do not cover all high revenue-granting criminal markets and do not address the complex structures and methods of criminal organisations. The need to reinforce the EU asset recovery regime has long been recognised by EU Institutions. In June 2020, the Council called on the Commission to consider strengthening the legal framework on the management of property frozen and granting asset recovery offices additional powers, for instance to urgently freeze assets, and access to a set of public registers 6 . The European Parliament has called for enhanced asset recovery rules 7 . These calls complement the previous request by both co-legislators to analyse the feasibility of introducing further common rules on the confiscation of property deriving from criminal activities, also in the absence of a conviction 8 .
Therefore, the proposed Directive on asset recovery and confiscation shall strengthen the capabilities of competent authorities to identify, freeze and manage assets, and reinforce and extend confiscation capabilities so as to cover all relevant criminal activities carried out by organised crime groups, thereby enabling confiscation for all relevant assets. Lastly, the Directive shall improve the cooperation between all authorities involved in asset recovery and promote a more strategic approach to asset recovery through a greater commitment from these authorities to the achievement of common goals in this area.
Moreover, in response to Russia’s military aggression against Ukraine, the European Union has adopted restrictive measures against Russia and Belarus building on and expanding the restrictive measures initially established in March 2014 in response to the illegal annexation of Crimea and Sevastopol by Russia. These measures, adopted on the basis of Article 29 of the Treaty on European Union (TEU) and of Article 215 of the Treaty on the Functioning of the European Union (TFEU), include sectorial measures and individual measures in the form of asset freezes and restrictions on admission as well as anti-circumvention clauses, which prohibit knowing and intentional participation in activities that seek to circumvent these measures, and other obligations, in particular to report on steps taken to implement Union restrictive measures. To further counter the risk of violation of such measures, the Commission adopted on 25 May 2022 a proposal for a Council Decision on adding the violation of Union restrictive measures to the areas of crime laid down in Article 83(1) of the Treaty on the Functioning of the European Union 9 , together with a Communication towards a Directive on criminal penalties for the violation of Union restrictive measures 10 , to identify the violation of Union law on restrictive measures (violation of Union restrictive measures) as an area of particularly serious crime with a cross-border dimension. The Communication also outlines the possible content of a proposal for a Directive establishing minimum rules for the definition of criminal offences and penalties in this area of crime, which might follow if the Council is to adopt this proposal for a Council Decision after obtaining the consent of the European Parliament, and thereby extend the list of areas of crime where the Union can establish minimum rules concerning the definition of criminal offences and penalties. As a consequence, the proposed Directive, including not only rules on asset tracing and identification as well as asset management, but also rules on freezing and confiscation, should then also apply to the violation of Union restrictive measures, where such conduct constitutes a criminal offence as defined.
Moreover, in order to facilitate the effective implementation of Union restrictive measures across Member States, the proposed Directive sets out provisions to enable the swift tracing and identification of property owned or controlled by persons or entities subject to such measures, including through cooperation with third countries, with a view to detect, prevent and investigate criminal offences related to the violation of Union restrictive measures.
• Consistency with existing provisions in the policy area
This proposal is embedded in the global fight against organised crime, corruption and money laundering. It implements the United Nations Convention on Organized Crime (UNTOC) and the Protocols thereto 11 and the United Nations Convention against Corruption (UNCAC) 12 , the Council of Europe Warsaw Convention 13 as well as Recommendation 4 of the Financial Action Task Force (FATF), all of which require the countries party to adopt measures to enable their competent authorities to freeze and confiscate proceeds and instrumentalities of crime.
It is also part of the broader efforts at EU level to combat serious and organised crime. In this context, it complements a set of legislative instruments harmonising the definition of offences and sanctions related to criminal activities, as well as other instruments aimed at preventing or combating related illicit activities such as counterfeiting, trafficking of cultural goods, tax crimes and forgery of administrative documents.
On the other hand, this proposal is consistent with and contributes to the effective implementation of the EU policy on security, which consists of a toolbox of non-legislative and legislative measures aimed at providing law enforcement and judicial authorities with the tools to prevent and combat a wide range of criminal activities, and to ensure a high level of security in the European Union, in particular through cross-border cooperation. This includes, in particular, Regulation (EU) 2018/1805 14 , which facilitates the mutual recognition of freezing and confiscation orders across the EU.
At the same time, the proposal contributes to and is consistent with the legal framework establishing Union restrictive measures, which aims at ensuring their comprehensive implementation across the Union and requires Member States to lay down the rules on penalties applicable to infringements of the relevant provisions.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
The Directive is based on Articles 82(2), 83(1) and (2) and Article 87(2) TFEU.
Measures concerning freezing and confiscation are covered by Article 83(1) TFEU, which allows the establishment of minimum rules concerning the definition of sanctions in the areas of particularly serious crime with a cross-border dimension for the crimes listed in this article. The scope of these measures is extended to offences carried out within the framework of criminal organisations, organised crime being a “eurocrime” within the meaning of Article 83(1) TFEU. This would also include violation of Union restrictive measures as harmonised at EU level. The inclusion of crimes which are either harmonised at EU level or where the related policy area is harmonised at EU level is also justified as the proposed measures on freezing and confiscation are essential to ensure the effective implementation of a Union policy in an area which has been subject to harmonisation measures and thereby covered by Article 83(2) TFEU. The measures aimed at improving the management of frozen and confiscated property are necessary to ensure the effective implementation of freezing and confiscation measures, and are ancillary requirements covered by Article 83 TFEU. This also applies to provisions that aim at developing a more comprehensive strategy towards asset recovery, coupled with cooperation mechanisms between authorities at national level and provisions that aim at ensuring that the competent authorities have the necessary resources to carry out their tasks.
Furthermore, measures on asset tracing and identification or cooperation between asset recovery offices and asset management offices with their counterparts in other Member States, also contribute to effective cross-border cooperation in relation to the prevention, detection and investigation of criminal offences. They are as such covered by Article 87(2) TFEU.
As the scope of Article 87 TFEU is not limited in terms of crimes covered, the above measures also apply to the violation of Union restrictive measures, to the extent that such violation constitutes a criminal offence as defined in national law, to the extent that they facilitate the prevention and detection of infringements of Union restrictive measures.
Moreover, the procedural safeguards provided in this Directive as well as the provision to ensure compensation for victims are covered by Article 82(2) TFEU.
• Subsidiarity (for non-exclusive competence)
Individual efforts of Member States to tackle organised crime are not sufficient to tackle the cross-border nature of organised crime groups, with 70% of criminal groups operating in the EU being active in more than three Member States 15 , and hiding and re-investing property derived from criminal activities across the EU’s internal market. Criminal groups employ a complex web of bank accounts and front companies across jurisdictions to disguise the audit trail and hide the source and ownership of funds, with criminals reportedly targeting Member States with weaker asset recovery systems 16 .
A renewed effort across the Union against the financial means of criminal organisations is therefore crucial for the effective recovery of instrumentalities and proceeds of crime. The proposed Directive will facilitate cross-border cooperation and contribute to a more effective fight against organised crime.
• Proportionality
In accordance with the principle of proportionality, as set out in Article 5 i TEU, the proposed Directive is limited to what is necessary and proportionate to implement a common minimum standard across the EU.
The proposal strengthens capabilities and tools to trace and identify, freeze, manage and confiscate illicit assets. While ensuring a sufficiently broad scope, the measures have a particular focus on illicit assets related to criminal activities carried out by organised crime. The proposal clarifies a number of obligations of a more general nature, thereby reducing differences in Member States that can be obstacles in cross-border cooperation and providing further legal clarity.
Furthermore, the impact of the proposed measures on Member States in terms of necessary resources and the need to adapt national frameworks is outweighed by the benefits provided by the improved capabilities of competent authorities to trace and identify, freeze, manage and confiscate illicit assets.
Moreover, the individual measures are limited to what is necessary and proportionate to the objectives of disrupting organised crime activities and depriving criminals of significant illicit gains. This is done, for example, by restricting the systematic launch of asset tracing investigations to offences likely to generate substantial economic benefits. This is also achieved by limiting confiscation possibilities in the absence of a conviction for a specific crime to crimes of serious nature and that are likely to generate substantial benefits. The overall proportionality is ensured by pairing different measures with strong safeguards.
• Choice of the instrument
The proposal takes the form of a Directive aimed at ensuring a common minimum standard for freezing and confiscation measures across Member States while at the same time strengthening common capabilities in terms of tracing, identification and management of property and facilitating cross-border cooperation against criminal proceeds. The choice of the legal instrument leaves sufficient flexibility to Member States to implement the common measures in accordance with national legal traditions and organisational settings.
The proposed Directive sets out provisions for asset recovery offices, currently regulated in the asset recovery offices Council Decision, as well as for confiscation aspects, regulated in the Confiscation Directive and in Council Framework Decision 2005/212/JHA on Confiscation of Crime-Related Proceeds, Instrumentalities and Property. The proposed Directive would replace Council Framework Decision 2005/212/JHA, the asset recovery offices Council Decision, and the Confiscation Directive, establishing common standards for asset tracing and identification, freezing, management, and confiscation in a single instrument. The combination of previously scattered obligations within one single instrument would ensure a more coherent and strategic approach to asset recovery and cooperation of all relevant actors within the asset recovery system.
• Regulatory Scrutiny Board
The impact assessment was submitted to the Regulatory Scrutiny Board on 2 February 2022. The Regulatory Scrutiny Board reviewed the draft impact assessment at its meeting of 2 March 2022 and delivered a positive opinion without reservations on 4 March 2022.
3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Ex-post evaluations/fitness checks of existing legislation
An evaluation was conducted to assess whether the current EU asset recovery system is still fit for purpose and to identify any shortcomings that could hamper the fight against organised crime. In line with the “evaluate first” principle, the evaluation assessed whether the originally envisaged results were achieved and identified the areas where a further improvement or update of existing legal instruments was needed.
In this context, the two evaluated legal instruments, the asset recovery offices Council Decision and the Confiscation Directive, have contributed to increasing cooperation between asset recovery offices, approximating the concepts of freezing and confiscation across Member States and increased freezing and confiscation rates to some extent. However, the evaluation concluded that challenges in the identification of assets remain and that the overall confiscation of proceeds of crime remains too low to significantly impact organised crime’s profits. Despite the improvement of various aspects of the asset recovery system after the adoption of the asset recovery offices Council Decision and of the Confiscation Directive, the problems identified prior to the adoption of the relevant acts (and in particular the Confiscation Directive) still persist to a large extent, together with a number of shortcomings affecting the Member States’ capacities to trace and identify, freeze, confiscate and manage illicit assets in an effective and efficient manner.
• Stakeholder consultations
In developing this proposal, the Commission has consulted a wide variety of stakeholders, including EU institutions and agencies, asset recovery offices, law enforcement authorities in the Member States, non-governmental organisations and civil society, as well as international organisations.
Stakeholders were consulted through a variety of means, including feedback for an inception impact assessment, stakeholder events, workshops, targeted consultations, public consultation, a study to support the impact assessment, semi-structured interviews and policy option workshops.
An inception impact assessment was published for feedback from 9 March 2021 to 6 April 2021. In total 13 responses from a variety of stakeholders were received.
Two stakeholder workshops were held with asset recovery offices representatives on 25 and 26 May 2021 and the Contact Committee of the Confiscation Directive on 1 and 2 June 2021. The objective of these workshops was to gain opinions in relation to the effectiveness, efficiency, relevance, coherence and EU added value of the Confiscation Directive and the asset recovery offices Council Decision. These workshops were followed by targeted consultations by way of written responses provided by the participants.
A public consultation was held from 21 June until 27 September 2021 in order to gather the views of citizens and stakeholders. As many as 50 responses were received. The replies underlined the importance of cross-border cooperation of law enforcement authorities in the fight against the proceeds of crime, and shed light on the obstacles to the effective identification, management and confiscation of proceeds of crime, such as the insufficient powers and access to data of asset recovery offices, as well as the limited scope of the Confiscation Directive. Additionally, the respondents were in favour of updating the legislative measures accordingly to address such problems.
Moreover, the Commission also commissioned a study to support the preparation of the impact assessment. The study was carried out by an external consultant between March 2021 and December 2021. The preparation of the study included desk research and almost 40 semi-structured interviews with stakeholders such as the European Union Agency for Law Enforcement Training (CEPOL), the European Union Agency for Law Enforcement Cooperation (Europol), the European Union Agency for Criminal Justice Cooperation (Eurojust), law enforcement authorities, asset recovery offices and Non-Governmental Organisations. Furthermore, it entailed targeted consultations in the form of written questionnaires to asset recovery offices and members of the Contact Committee of the Confiscation Directive in July 2021. Lastly, four additional workshops were held in September 2021 to gather the views of the stakeholders on the policy options and identify the potential impacts of the policy options.
• Impact assessment
The impact assessment that supported the development of this initiative explored different policy options to tackle the fact that the EU asset recovery system is not well equipped to effectively address the complex modus operandi criminal organisations. Besides the baseline scenario, which would entail no change over the current situation, the following options were analysed:
Option 1, consisting of non-legislative measures to support the exchange of experiences, knowledge and good practices among competent authorities with a view to strengthen asset recovery capabilities and understanding in relation to the various phases of asset recovery. These exchanges would be further enhanced through the development of appropriate EU guidance and, where appropriate, training to competent authorities.
Under Option 2, the measures would consist primarily of targeted amendments to the asset recovery offices Council Decision and Confiscation Directive in order to specify the scope of existing general requirements and reinforce their effectiveness. These measures would include requirements for Member States to adopt a national strategy on asset recovery and to ensure that the competent authorities have the necessary skills and resources. Furthermore, it would entail measures aimed at improving cross-border cooperation among asset recovery offices, including the access to databases and extended freezing powers.
Option 3 would contain, in addition to the measures envisaged in option 2, more detailed requirements for Member States for all phases of the recovery process. This would include obligations such as the systematic launch of financial investigations as well as specific requirements in asset management like pre-seizure planning, interlocutory sales and the establishment of specialised asset management offices. Moreover, the scope of the Confiscation Directive would be expanded to include a wider range of crimes: the current non-conviction based confiscation provision would be extended and an unexplained wealth confiscation model ensuring the confiscation of assets not linked to a specific crime would be introduced.
Under Option 4, the measures would build upon those under Option 3, but the scope of the provisions would be extended to all crimes and entail more extensive requirements when it comes to the launch of investigations. Furthermore, more concrete conditions concerning urgent freezing orders and information exchange between asset recovery offices would be set out.
In light of the various economic, social and environmental impacts associated with each of the options, but also their value in terms of effectiveness, efficiency and proportionality, the impact assessment found that the preferred option was Option 3.
Measures under Option 1 can complement legislative changes, however, given that the problems identified resulted to a significant extent from the legislative framework, these would not have been sufficient to effectively overcome the identified problems. Option 2 would similarly contribute only to a limited extent to improving the current situation, as the few additional requirements compared to the status quo would only strengthen asset tracing and identification capabilities to some degree, would not be sufficient to ensure an efficient management of frozen assets, and would not capture all relevant criminal activities insofar as confiscation measures would remain limited in scope.
As regards Option 3, it was found that the measures concerning asset tracing and identification, and those to ensure the adoption of effective asset management mechanisms and confiscation models would improve the effectiveness of the asset recovery system to a significant extent. Despite the costs, these measures have been considered as efficient given the qualitative leap in the confiscation rate, and proportionate in relation to the administrative burden and interference with Member States’ organisational set-ups. In terms of fundamental rights, the impacts of Option 3 and in particular of the new confiscation model were found to be balanced against safeguards and the policy objective sought, given the scale of the problem.
In relation to Option 4, the expected gains in effectiveness were expected to be limited compared to the extra costs and the more significant interference with Member States’ freedom to organise national set-ups on asset recovery according to their choices and national preferences.
Following the positive opinion without reservations delivered by the Regulatory Scrutiny Board on 4 March 2022, the impact assessment was revised to strengthen the presentation and comparison of the policy options, including their costs, benefits, and impacts. The impact assessment was further revised to better reflect the views of different stakeholder and how the identified problems differ in the Member States. Finally, the revision outlines a first monitoring and evaluation programme of the envisaged proposal.
• Regulatory fitness and simplification
As per the Commission’s Regulatory Fitness and Performance Programme (REFIT), all initiatives aimed at changing existing EU legislation should aim to simplify and deliver stated policy objectives more efficiently (i.e. by reducing unnecessary regulatory costs). The analysis of impacts suggests that the measures set out in the proposed Directive are expected to have an impact in terms of burden on Member States which would be outweighed by the benefits.
To the extent that the provisions in the proposed Directive envisage a more strategic approach to asset recovery, provide for more effective tools for confiscating assets and ensure that competent authorities have the necessary resources, skills and powers, the Member States’ asset recovery systems as well as cross-border cooperation will become significantly more efficient.
The regulatory burden related to these measures will be more than offset by the benefits in terms of identifying, freezing and confiscating more illicit assets and maintaining or even maximising their value.
• Fundamental rights
All measures as provided for in this proposal respect fundamental rights and freedoms as enshrined in the Charter of Fundamental Rights of the European Union, and must be implemented accordingly. Any limitation on the exercise of such fundamental rights and freedoms is subject to the conditions set out in Article 52(1) of the Charter, namely that they be subject to the principle of proportionality with respect to the legitimate aim of genuinely meeting objectives of general interest recognised by the Union and protecting the rights and freedoms of others. Limitations must be provided for by law and respect the essence of the rights and freedoms set out in the Charter.
The interference of the proposed measures with fundamental rights (including in particular property rights) is justified by the need to effectively deprive criminals and in particular organised crime of their illicit assets, since these are both the main motivation for them to commit crime as well as the means for continuing and expanding their criminal activities. The proposed measures are limited to what is necessary to achieve that objective. The newly introduced confiscation model is justified by the inherent difficulties in linking assets to specific crimes where the owner is engaged in organised crime activities consisting of multiple criminal offences committed over a prolonged period of time. Finally, the respect of fundamental rights will be guaranteed by safeguards including effective remedies available to the person affected for all measures under the proposed Directive, including newly introduced requirements concerning interlocutory sales or the new confiscation model.
This proposal also ensures that the relevant EU data protection rules are applied when implementing the Directive.
4. BUDGETARY IMPLICATIONS
The proposal has no impact on the European Union budget.
5. OTHER ELEMENTS
• Implementation plans and monitoring, evaluation and reporting arrangements
The implementation of the proposed Directive will be reviewed by 3 years after its entry into force, after which the Commission will submit a report to the European Parliament and to the Council. This report will assess the extent to which the Member States have taken the necessary measures to comply with the Directive. A report assessing the impact and added value of the Directive will be submitted by the Commission to the European Parliament and to the Council by five years after the entry into force of the Directive.
• Detailed explanation of the specific provisions of the proposal
This proposal for a Directive is structured in eight chapters:
General provisions on asset recovery and confiscation (Chapter I, Articles 1 to 3).
Article 1 sets out the subject matter, namely to establish minimum rules on the tracing and identification, freezing, confiscation and management of property in criminal matters and to facilitate the implementation of Union restrictive measures where necessary to prevent, detect or investigate criminal offences related to the violation of such measures.
Article 2 defines the scope by listing the criminal offences to which the rules set out in this Directive should apply. This list includes the crimes listed in Article 83 TFEU and the crimes that are harmonised at EU level. Furthermore, the article on the scope includes a number of crimes that are typically carried out by organised crime groups. In addition, it includes offences related to the violation of Union restrictive measures. For the purposes of tracing and identification of property, offences punishable by a maximum imprisonment term of at least one year are covered.
Article 3 defines the key terms used in the asset recovery process, retaining the definitions currently included in the Confiscation Directive and adding new definitions for instance in relation to tracing investigations as well as the notion of “targeted financial sanctions” and “Union restrictive measures”. References to the term “asset” are to be understood in a non-technical manner. For the purposes of provisions on the tracing and identification, freezing, confiscation and management of property within the framework of proceedings in criminal matters the terms “proceeds”, “instrumentalities”, and “property” are used and defined.
Contents
- Provisions on the tracing and identification of assets (Chapter II, Articles 4 to 10)
- Provisions on the management of assets (Chapter IV, Articles 19 to 21)
- Provisions on safeguards (Chapter V, Articles 22 to 24)
- Provisions on the Asset Recovery Strategic Framework (Chapter VI, Articles 24 to 27)
- Provisions on the cooperation between asset recovery offices and EU bodies, Agencies and third countries (Chapter VII, Articles 28 and 29)
- Final provisions (Chapter VIII, Articles 30 to 37)
The provisions in Chapter II are based on Article 87(2) TFEU. As such, the provisions aim at the tracing and identification of property in criminal matters as well as at facilitating the implementation of Union restrictive measures where necessary to prevent, detect or investigate criminal offences related to the violation of such measures.
Article 4 requires Member States to ensure asset tracing investigations with a view to facilitate cross-border cooperation, in particular whenever there is a suspicion that a criminal offence may lead to substantial economic profits and in order to prevent, detect or investigate the violation of Union restrictive measures.
Article 5 sets out the obligation for Member States to establish at least one asset recovery office, in line with the current asset recovery offices Council Decision. In addition to the current rules, this provision sets out the specific tasks of the asset recovery offices, including the exchange of information with other asset recovery offices in other Member States also in the context of preventing, detecting and investigating the violation of Union restrictive measures. This article also provides the asset recovery offices with the task of tracing and identification of property of persons and entities subject to Union restrictive measures. In this context, asset recovery offices would also have the power to take immediate action to temporarily freeze the property in question.
Article 6 sets out the information that Member States should make directly accessible to the asset recovery offices in order to ensure a swift reaction to the information requests from other Member States, an aspect not regulated in the asset recovery offices’ Council Decision.
Article 7 provides specific safeguards in relation to access to information. This provision aims at ensuring that national authorities access the information on a need-to-know basis within necessary security and confidentiality rules.
Article 8 establishes a monitoring framework for access to information by the competent national authorities. The objective of this provision is to prevent any misconduct or inadequate access to information.
Article 9 regulates the exchange of information among asset recovery offices, both spontaneously and upon request, providing further details in comparison with the asset recovery offices Council Decision, including by setting out the purposes of such exchanges, the minimum information to be included in cross-border requests, the channel for exchanging information (SIENA) and grounds for refusal.
Article 10 sets out the time limits to respond to information requests, without modifying the deadlines set in the asset recovery offices Council Decision, which refers to the deadlines of the Council Framework Decision 2006/960/JHA 17 . This provision regulates two scenarios, namely normal requests that should be responded to within seven days and urgent requests that should be dealt with within eight hours.
Provisions on the freezing and confiscation of assets (Chapter III, Articles 11 to 18).
The provisions on freezing and confiscation are based on Article 83 TFEU. As such, the provisions in Chapter III shall apply to criminal offences under the scope of Article 2(1), 2(2), 2(3) and 2 i of this Directive but not to freezing under Union restrictive measures.
Article 11 requires Member States to take the necessary measures to ensure that illicit assets can be frozen quickly and, where necessary, with immediate effect to avoid their dissipation. These measures include – in addition to the measures set out in the Confiscation Directive - the possibility for asset recovery offices to take temporary urgent freezing measures until a formal freezing order can be issued. This article also provides for a specific safeguard establishing that the freezing order shall remain in place only for as long as necessary and that the property should be returned immediately if it is not confiscated.
Article 12 requires Member States to enable the confiscation of instrumentalities and proceeds of crime following a final conviction and to enable the confiscation of property of equivalent value to the proceeds of crime (“standard and value confiscation” as provided for under existing EU rules).
Article 13 requires Member States to enable the confiscation of properties transferred by the accused or suspected person to a third party for the purpose of avoiding confiscation (“third party confiscation” as provided for under the Confiscation Directive). Such confiscation is only justified where the third party knew or ought to have known that the transfer of the property was made for that purpose. The provisions set out circumstances that are relevant in making this assessment.
Article 14 requires Member States to enable the confiscation of property of a convicted person when the national court of a Member State is convinced that that the property derives from a criminal activity (“extended confiscation”). In its assessment, the national court should take into consideration all circumstances of the case, including the fact that the value of the property is disproportionate to the lawful income of the convicted person. Compared to the Confiscation Directive, this possibility should be available for all crimes within the scope of the Directive.
Article 15 requires Member States to provide for the possibility of confiscation where all the evidence for a criminal offence is present, but a conviction is not possible due to a limited number of circumstances. These circumstances include, in addition to illness and absconding (already included in the Confiscation Directive), the death of the suspected or accused person, as well as immunity or amnesty, or the fact that the time limits prescribed by national law expired. The scope in terms of offences is limited to those with a maximum imprisonment term of at least 4 years.
Article 16 introduces a new confiscation possibility where assets are frozen based on suspicion of involvement in organised crime activities and where a confiscation under other provisions of the Directive is not possible. It should allow for the confiscation of assets only where the national court is convinced that the assets in question derive from criminal activities. This finding must be based on a comprehensive assessment of all the circumstances of the case, including if the value of the property is disproportionate to the lawful income of the owner. The scope in terms of offences is limited to those with a maximum imprisonment term of at least 4 years.
Article 17 requires Member States to ensure post-conviction asset tracing investigations to ensure the effective enforcement of a confiscation order. Moreover, this article requires Member States to consider the use of confiscated properties for public or social purposes. Both provisions are based on relevant provisions in the Confiscation Directive.
Article 18 aims at ensuring that the right to compensation for victims is not affected by the confiscation measures, similar to the relevant provision in the Confiscation Directive.
The provisions on management are based on Article 83 TFEU. As such, the provisions in Chapter IV shall apply to the criminal offences under the scope of Article 2(1), 2(2), 2(3) and 2 i of this Directive but not to freezing under Union restrictive measures.
Article 19 requires Member States to ensure that frozen or confiscated assets are managed efficiently until their disposal. Further clarifying the scope of this general requirement (similar to the relevant provision in the Confiscation Directive), the objective of this provision is to preserve the value of the properties and minimise management costs. To achieve this objective, Member States are required to carry out a preliminary assessment of the costs that will be incurred in managing the properties (“pre-seizure planning”).
Article 20 requires Member States to provide for the possibility to transfer or sell frozen assets before the confiscation order is issued (“interlocutory sale”). The provision further specifies the scope of this general obligation (as set out in the Confiscation Directive), requiring interlocutory sales to be undertaken in certain circumstances to avoid the loss of value of property, or that management costs become disproportionate. This requirement is subject to a number of safeguards to protect the legitimate interests of the affected person. These safeguards include, in addition to the general safeguards, the right to be heard before the interlocutory sale decision is taken. These rules apply to property identified in the context of the implementation of Union restrictive measures to the extent that they have been frozen in relation to criminal charges, such as violation of Union restrictive measures. In addition, Article 20 includes the possibility to charge the costs for the management of frozen assets to the beneficial owner.
Article 21 requires Member States to establish at least one asset management office, and sets out the tasks for asset management offices in a more precise manner compared to the relevant provisions in the Confiscation Directive.
The provisions on safeguards are based on Article 82(2) TFEU. As such, the provisions in Chapter V shall apply to the criminal offences under the scope of Article 2(1), 2(2), 2(3) and 2 i of this Directive.
Safeguards under this section are broadly based on the current provisions in the Confiscation Directive, while providing further clarifications increasing the effectiveness of the safeguards and updating the safeguards to the new data protection rules.
Article 22 aims to ensure that affected persons are informed of the freezing and confiscation measures adopted including the reasons for their adoption.
Article 23 sets out more specific requirements ensuring that effective legal remedies against measures taken on the basis of the provisions of this Directive are available. This includes also the right of access to a lawyer.
Most provisions under this section are new, aiming at ensuring that the overall asset recovery and confiscation process is more effective.
Article 24 requires Member States to adopt a national strategy on asset recovery and to update it every five years. The national strategy should be a tool for Member States to set out measures to enhance the efforts of national authorities involved in the asset recovery process, ensure and facilitate cooperation and coordination and to measure progress. For that purpose, the strategy should set out objectives, needs in terms of resources (including training) as well as cooperation mechanisms between the relevant national authorities.
Article 25 requires Member States to ensure that in particular asset recovery offices and asset management offices have the necessary resources to carry out their tasks.
Article 26 requires Member States to set up a centralised registry containing relevant information on frozen, managed, and confiscated assets. Asset recovery offices, asset management offices, as well as other authorities tasked with the tracing and identification or management of assets should be able to access this registry.
Article 27 requires Member States to collect statistical data on the measures taken on the basis of this Directive and to communicate such data to the Commission on an annual basis. Reliable and complete statistical data is essential for a proper assessment of the effectiveness of measures adopted under this Directive. The article empowers the Commission, where necessary, to adopt delegated acts on the information to be collected and methodology.
Provisions on the cooperation between asset recovery offices and EU bodies, Agencies and third countries (Chapter VII, Articles 28 and 29)
Provisions on cooperation are new and reflect the aim to provide for a comprehensive legal framework covering all relevant aspects of asset recovery.
Article 28 aims at ensuring cooperation between asset recovery offices and the European Public Prosecutor’s Office, Europol and Eurojust, for the purpose of facilitating the tracing and identification of property that may be subject to confiscation. The article also provides that asset recovery offices will need to cooperate with Europol and Eurojust where necessary to prevent, detect or investigate offences related to the violation of the Union restrictive measures.
Article 29 aims at ensuring cooperation between asset recovery offices as well as asset management offices and their counterparts in third countries. Cooperation between asset recovery offices extends to situations where necessary to prevent, detect or investigate offences related to the violation of Union restrictive measures.
This section deals with a number of legal and technical issues. Firstly, it confers to the Commission the power to adopt delegated acts subject to conditions laid down in the article (Article 30). Secondly, it requires Member States to communicate to the Commission the designated competent authorities as well as relevant contact points pursuant to Article 5 and Article 21 of this Directive (Article 31). Moreover, this chapter includes a provision on the transposition into national law (Article 32) and provides for the obligation for the Commission to report to the European Parliament and the Council on the implementation as well as subsequent evaluation of this Directive (Article 33). It clarifies the relationship to other legal instruments (Article 34) and provides for the replacement of five existing legal acts (Article 35); only Denmark would remain bound by the asset recovery offices Council Decision to ensure that cooperation with Danish asset recovery offices will continue to be governed by the relevant EU acquis. Finally, this section includes rules on the entry into force (Article 36) and the addressees (Article 37).