EU speeds up confiscation of criminal assets

It will soon be quicker and easier for EU member states to request that criminal assets be seized and confiscated under recently-adopted new rules.

It will soon be quicker and easier for EU member states to request that criminal assets be seized and confiscated under recently-adopted new rules.

Text agreed by the European Parliament’s Civil Liberties Committee recently introduces tighter deadlines, as well as a standard certificate to speed up procedures, and broaden the scope of the type of assets that can be seized or confiscated.

Members of Parliament want states which receive a freezing or confiscation order to be bound to execute it within 20 days to reduce the time criminals have to move their assets.

The deadline may, however, be postponed, in cases where a confiscation would hurt an ongoing criminal investigation.

Priority will be given to compensating victims, who will be first to receive compensation when the seized assets are distributed, the European Parliament said.

MEP’s further agreed that where confiscations worth more than €10,000 are concerned, any residual monies would be shared between the issuing and executing member state by 70 percent and 30 percent respectively.

The regulation is seen as a key tool to combat the financing of criminal activity, including terrorism, and was proposed by the European Commission in December 2016 as part of its Action Plan against terrorist financing.

This replaces two pieces of legislation and introduces measures such as a widened scope of recognition, so member states could carry out confiscations for each other even if the assets are not the direct proceeds of crime, or where assets belong to a third party even if there is no conviction, for instance if a suspect has fled.

Last December, the European Parliament and European Council reached political agreement on the Commission's proposal to further strengthen EU rules on anti-money laundering and counter terrorist financing, which made changes to the Fourth Anti-Money Laundering Directive.

These include improving the safeguards for financial transactions to and from high-risk third countries and enhancing the access of Financial Intelligence Units (FIUs) to information, including centralised bank account registers.

A report by Europol in September found that only 1.1 percent (€1.2 billion) of all criminal proceeds in the EU are ever confiscated.

The study also revealed that although the overall number of suspicious transaction reports (STRs) continues to increase, only around 10% of these reports are further investigated – a figure largely unchanged since 2006. Even where further investigated, the likelihood of successful asset recovery is low.

A freedom of information request by the BBC last November showed that assets totalling nearly £59m have been confiscated from criminals connected to the island of Jersey – a major offshore financial centre - over a decade.

In a related development, Members of European Parliament have urged states to track suspicious transactions and share intelligence more proactively to stop money flowing to terrorists.

They have called on the EU Council, Commission and External Action Service to:

·         step up proactive information exchange and coordination among financial institutions, law enforcement and intelligence agencies via a European counter-terrorism financial intelligence platform. This could be run by EUROPOL, and include a database of suspicious transactions,

·         draw up a list of individuals and entities operating under opaque regimes with high rates of suspicious transactions, and step up the monitoring of suspicious organisations engaged in illicit trade, smuggling, counterfeiting and fraudulent practices, and;

·         oblige banks to monitor pre-paid debit cards, to ensure that they can only be reloaded via bank transfers and personally identifiable accounts.

*The challenges and trends in fraud and asset recovery will be one of the issues discussed at an upcoming meeting of ICC FraudNet members in Mumbai, India in April. ICC FraudNet members have recovered billions of dollars for victims of some of the world's largest and most sophisticated global frauds. ICC FraudNet falls under the auspices of ICC Commercial Crime Services.