Proceeds from organised crime in Europe are estimated at around €110 billion annually, of which only 2% are frozen and 1% is confiscated. Freezing and confiscating criminal assets is an essential element of the fight against organised crime. 

Directive 2014/42/EU on the freezing and confiscation of instrumentalities and proceeds of crime in the European Union, adopted in 2014, has aimed to fill significant gaps hindering freezing and confiscation in cross-border cases, linked to criminal proceedings. The directive also institutes minimum standards on extended confiscation and third-party confiscation, and introduces a limited form of non-conviction based confiscation (NCBC) in relation to criminal proceedings (in cases where the suspect is permanently ill or has fled).

The directive only covers the 'eurocrimes' defined in Article 83 TFEU. However, confiscation maintains a broader scope applying to all offences punishable with imprisonment for at least one year. The directive also establishes safeguards for those targeted by freezing and confiscation measures and for victims of criminal offences. Other provisions concern the management of frozen and confiscated assets and the collection and transmission of statistical data. Directive 2014/42/EU does not apply to Denmark which remains bound by the 2005 framework decision.

A European Commission report published in June 2020 assesses the implementation of the 2014 Directive and the feasibility of introducing further common rules at EU level, particularly as regards non-conviction based confiscation. The Commission concluded that further measures on NCBC were feasible and would increase the levels of freezing and confiscation of proceeds of crime.

Under the priority ‘Promoting our European Way of Life’ of its 2021 Work Programme, the Commission announced its intention to revise the Directive on the freezing and confiscation of the proceeds of crime. The new legislative proposal was scheduled for the fourth quarter of 2021, but was postponed for the second quarter of 2022. On 9 March 2021, the Commission launched a public consultation on the Inception Impact Assessment (IIA) that closed on 6 April 2021.The IIA (and the public consultation) covers both the revision of Directive 2014/42/EU and of Council Decision 2007/845/JHA on national asset recovery offices (AROs), due to their close links. On 21 June 2021 the Commission launched a consultation on current problems and the future of EU asset recovery and confiscation, and on the evaluation of Directive 2014/42/EU and Council Decision 2007/845/JHA. The Consultation closed on 27 September 2021. It received 56 replies.

On 25 May 2022, the Commission adopted its proposal revising the 2014 Directive which also includes provisions on asset recovery offices. If adopted, the directive will replace 5 instruments, including Council Decision 2007/845/JHA and Directive 2014/42/EU. The proposed Directive on asset recovery and confiscation, based on Articles 82(2), 83(1) and (2) and 87(2) TFEU, aims therefore to gather in a single instrument the obligations on asset recovery and to institute a more strategic approach. Main provisions:

• Scope: wider than the 2014 directive, to cover the Eurocrimes, but also crimes which are harmonised at EU level or where the related policy area is harmonised - typically committed by organised crime groups (e.g. environmental crime, illicit trafficking in cultural goods etc.). It will also apply to the violation of Union restrictive measures provided the Council decides to add this to the Eurocrimes in Article 83(1) TFEU.
• Freezing and confiscation: AROs may take temporary urgent freezing measures until a freezing order is issued; Member States must enable both standard and value confiscation, following a final criminal conviction. The proposal provides for third party confiscation; extended confiscation (when the court is convinced the property of a convicted person derives from criminal activity, taking also into account cases of unexplained wealth),and extends the possibilities for non-conviction based confiscation. Thus, besides illness and absconding, NCBC can apply in situations such as the death of the suspected or accused person, immunity or amnesty, or expired time limits in national law, for offences with an imprisonment term of at least 4 years. Another possibility (in case other provisions cannot be applied) allows for the confiscation of frozen assets where the court is convinced they derive from criminal activities, by assessing all circumstances including unexplained wealth for offences punished with a prison term of 4 years. The proposal institutes safeguards for the affected persons.
• AROs and asset management offices: Member States must set up at least one asset recovery office and at least one one asset management office. The proposal describes the tasks of the AROs and includes obligations on the exchange of information between AROs, including time limits for responding to information requests, and provides for cooperation between AROs and relevant EU agencies and third countries. 
• Strategic framework: Member States must adopt a national strategy on asset recovery to be updated every 5 years and set up centralised registries with information on frozen, managed and confiscated assets. They must also collect relevant statistics and send them to the Commission annually. 
• Transposition deadline: within one year of entry into force.
• Commission reporting obligations: after 3 years from the entry into force a report on the implementation of the directive and after 5 years an evaluation report.

The directive will not apply to Denmark which remains bound by the 2007 Council decision. 

The proposal was referred to the European Parliament on 22 June 2022 and assigned to the Committee on Civil Liberties, Justice and Home Affairs (LIBE). The Committee on Legal Affairs (JURI) is set to provide an opinion. 

References:

• European Commission, 2021 Commission work programme, 19 October 2020.
• 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, p. 39–50.
• European Commission, Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on asset recovery and confiscation, COM/2022/245 final, 25 May 2022. 
• European Commission, Asset recovery and confiscation: Ensuring that crime does not pay, June 2020.
  
• European Commission, Analysis of non-conviction based confiscation measures in the European Union, Staff Working Document, April 2019.
• European Commission, Inception Impact Assessment: Fighting organised crime – freezing and confiscating the proceeds of crime, March 2021.
• European Commission, Consultation on current problems and the future of EU asset recovery and confiscation, and on the evaluation of Directive 2014/42/EU and Council Decision 2007/845/JHA
• European Parliament Legislative Observatory, Asset recovery and confiscation, 2022/0167(COD).

Further reading:

• European Parliament, EPRS, Mutual recognition of freezing and confiscation orders, Briefing, December 2018.
• European Commission, Study on freezing, confiscation and asset recovery : what works, what does not work : country chapters, 2022.

Authors: Carmen-Cristina Cîrlig, Members' Research Service, legislative-train@europarl.europa.eu