9 April 2014, by Maud Perdriel Vaissiere.
On 14 March 2014, the European Union (EU) adopted a new Directive on the freezing and confiscation of proceeds of crime which aims to make it easier for national authorities in EU countries to confiscate ill-gotten gains made by criminals.
The Directive is welcome as to date, in most EU countries (just as elsewhere in the world), the burden of proof that is imposed on enforcement authorities seeking the confiscation of criminal assets is so heavy that, in practice, it amounts to granting criminals with a pass for enjoying their ill-gotten gains in total impunity.
In fact, in most jurisdictions, criminal confiscation can only occur where a conviction has been secured against the defendant. Confiscation orders are usually issued as part of sentencing following conviction at trial and usually the only assets subject to such orders are those that represent the proceeds of the criminal offence for which the offender was duly convicted. In other words, prosecuting authorities need to prove that assets were obtained through or derived from this particular offence (the so-called “paper trail” challenge). If one of these two conditions is lacking, the whole confiscation process falls through. Indeed, no confiscation order can be made if the accused manages to prove that the assets were not derived from this criminal act but another one – for example for which no conviction can be made for a host of reasons such as limitations of the time period or lack of sufficient evidence to meet the high-level standard of proof that applies in criminal matters. No confiscation order can be made either, if no conviction can be secured against the defendant – for example because he enjoys immunity or because he doesn’t appear before the trial court. It is therefore no big surprise that of the hundreds of trillions of dollars of illicit money, that are being laundered globally every year, so little has been recovered!
How does the EU Directive change the rules?
First, it facilitates the confiscation of proceeds of crime in cases where the accused does not appear before a trial court (Article 4). In other words, from now on, the absconding of the accused should not prevent enforcement authorities within the EU from getting his/her ill-gotten gains confiscated!
The directive also provides for extended powers of confiscation (Article 5) by providing for the confiscation of assets belonging to a convicted person that are not (or not proven to be) directly linked to the offence for which he/she has been convicted. Such a confiscation is based on the presumption that their origin is unlawful considering, among other facts, the discrepancy between the assets and the known sources of income of the convicted person.
These two provisions are laudable and explicitly echo the commitments taken by States Parties to the UNCAC during the last Conference of States Parties in Panama in relation to the confiscation of assets of corrupt origin in one of its resolutions: “Urges Member States consistent with chapter V, to ensure that they have adequate laws and mechanisms in place to prosecute those involved in acts of corruption, to detect the illegal acquisition and transfer of assets derived from corruption and to ensure that there are suitable mechanisms in place — conviction and, where appropriate, non-conviction-based — to recover through confiscation the identified proceeds of corruption, and that such laws and mechanisms are vigorously enforced” (Resolution 5/3. Facilitating international cooperation in asset recovery; op.clause n°2)
However, it is unfortunate that the EU Directive did not go as far as calling on Member States to introduce non-conviction based confiscation (NCB). Also known as civil forfeiture or in rem proceedings, NCB actions are brought against the property itself rather than the person who owns/controls it and allows the confiscation of illegal property without requiring prior criminal conviction of the offender. NCB offers several advantages since it is available in situations where criminal confiscation is not, and applies a lower standard of proof. This confiscation tool has been recently used by the US Department of Justice (DoJ) in relation to the assets that Teodoro Nguema Obiang – the son of the president of Equatorial Guinea, an oil-rich West African country, and government minister – has amassed in the United States.
By depriving corrupt actors and other criminals of the proceeds of their crime, confiscation tools such as those envisioned by the EU Directive or provided for by the US have a powerful deterrent effect: if confiscation is rendered more likely, those criminals will probably be less tempted to engage in illegal activities since there will be no more incentive to do so in the first place.
UNCAC States Parties should take concrete measures to live up to the action points adopted in Panama. In the meantime, EU member states should adopt without delay the necessary domestic provisions to comply with the new directive.
About Maud Perdriel Vaissiere
Maud Perdriel Vaissiere is the UNCAC Coalition Advisor on Asset Recovery.
- United States Department of Justice, “Department of Justice Seeks to Recover More Than $70.8 Million in Proceeds of Corruption from Government Minister of Equatorial Guinea” (October 25, 2011)