EU proposes "Asset Recovery Offices" to help coordinate forfeitures
by Bruce Zagaris
European Union member states would set up national Asset Recovery Offices to centralize confiscation of criminal proceeds and coordinate seizure efforts across borders, under a broad-ranging plan to strengthen Europe's forfeiture infrastructure proposed by the European Commission in November.
The Commission's proposals, which took the form of a "communication" that has not yet been introduced as specific legislation, would be a major step toward upgrading the policy importance of confiscation and would transform both the administrative machinery and legal framework of forfeiture throughout the European Union (EU).
The proposed Asset Recovery Offices would be in charge of seizing criminal proceeds and serve as a focal point for international requests, statistical record-keeping and training. In time, EU members would use uniform terminology, concepts and forms.
The offices would be much like the Financial Intelligence Units (FIUs) that countries have created to centralize and harmonize anti-money laundering and counter-terrorism finance efforts. The FIUs coordinate their activities informally under the Egmont Group of 108 member states.
New legal powers also considered
In addition to the new offices, the European Commission is eyeing substantive legal reforms that would include:
- a new legal mechanism to authorize confiscation even without prior criminal conviction. That would translate Recommendation 13 of the multinational Financial Action Task Force (FATF) -- an influential anti-money laundering organization based in Paris -- into EU law.
- a new criminal offense for owning "unjustified" assets. That would enable law enforcement to seize the proceeds of crime in cases where assets are disproportionate to the owner's declared income and she or he has habitual contacts with known criminals.
- authorizing mandatory confiscation after conviction for certain serious offenses that organized criminal groups rely on for substantial profits.
The November communication from the Commission also recommends a number of new procedures to strengthen coordination among EU member states on confiscation.
National "Asset Recovery Offices" proposed
The new Asset Recovery Offices (AROs) are intended to facilitate tracing of criminal assets, participate in confiscation procedures, ensure sound management of seized assets, and serve as a central contact point for confiscation efforts at the national level. At present, such offices do not exist in all EU members; those that do exist differ widely in structure, powers and practices.
The Commission foresees each ARO having a multidisciplinary structure comprising law enforcement, the judiciary, welfare, customs and other relevant services. Those entities must be able to exercise their usual powers and share information within the ARO without being bound by professional secrecy. The AROs would be the central points of contact for all requests for assistance from other countries. They would also collect relevant statistics on asset freezes and confiscations.
After AROs are designated or established by EU members, their activities should be coordinated to ensure an efficient exchange of intelligence on the location and ownership of criminals' assets. The Commission suggests assigning this coordinating role to Europol, whose Criminal Assets Bureau has had considerable success in assisting financial investigators.
Confiscation without conviction
In explaining the proposal to authorize confiscation even in the absence of criminal convictions, the Commission offered three scenarios to illustrate when such action might be appropriate:
(1) Law enforcement suspects that the assets are criminal proceeds because they are disproportionate to the declared income of their owner and he or she has had habitual contacts with known criminals. The prosecutor could bring a forfeiture case in civil court based on the likelihood that the assets derive from the proceeds of crime. The alleged criminal would have to prove their origin was legitimate.
(2) The person suspected of certain serious crimes is dead, a fugitive for a certain period of time or otherwise not available for prosecution.
(3) Customs authorities already detain amounts greater than 10,000 euros, which travelers must declare upon entering or leaving the EU, if they suspect someone of violating the European Commission's Regulation of Cash Contracts. If they then want to confiscate those assets (as the proceeds, for instance, of tax evasion), they may obtain a court order.
'Unjustified' assets and mandatory forfeiture
A second substantive legal change the commission is considering would create a new criminal offense for owning "unjustified" assets. That would enable authorities to attack the proceeds of crime in cases where assets are disproportionate to the declared income of their owner, who is known to have habitual contacts with criminals. This charge would be brought in criminal court, with the prosecution having the burden of proof.
A third substantive reform would make confiscation mandatory following conviction for certain serious offenses from which organized criminal groups derive substantial profits. The list of offenses would be specified in a subsequent framework directive.
To enhance international cooperation, the commission suggested replacing provisions of the 2001 Protocol to the Convention on Mutual Assistance in Criminal Matters with a new legal framework intended to bolster the requirement that EU members, in their handling of international confiscation, provide details of bank accounts and banking operations of identified persons and not allow bank secrecy rules to stop them from furnishing help.
The Commission criticizes existing European legal instruments for not adequately supporting close international cooperation on confiscation issues between the EU and non-member countries. The commission recommends the EU seek more proactive cooperation with third countries, notably by promoting asset-sharing agreements, including those related to value confiscation, and dissemination of best practices, such as those mentioned in the FATF's Recommendation 38 and its interpretive note and in the 2005 Council of Europe Convention.
Greater recognition of forfeiture's importance
The November communication suggests that the European Commission has grasped the importance of asset confiscation and recovery and is moving as expeditiously as legally possible to act.
Because the EU consists of 27 members and its own foreign policy, it can speak with one voice in international organizations, such as the International Monetary Fund/World Bank, the United Nations, the Organization for Economic Community and Development (OECD), and the Council of Europe.
The Commission's communication, unlike a directive, is not binding and requires additional action from the EU before it can take effect. Nevertheless, the communication is based on several framework directives, and its goal is to help transpose and implement existing law. Hence, it is likely that EU members will eventually follow the communication.
The communication correctly identifies the need for each country to have an agency, such as an ARO, as a clearinghouse for forfeiture activities and a central participant in international collaborations. However, action outside the EU on international cooperation will require leadership from other major actors, such as the U.S. and the World Bank Group.
