EUROPEAN COMMISSION Brussels, 25.5.2022 COM(2022) 245 final 2022/0167(COD) Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on asset recovery and confiscation {SEC(2022) 245 final} - {SWD(2022) 245 final} - {SWD(2022) 246 final}



EXPLANATORY MEMORANDUM 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 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), 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”. The 2007 asset recovery offices Council Decision 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, 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. The European Parliament has called for enhanced asset recovery rules. 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. 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, together with a Communication towards a Directive on criminal penalties for the violation of Union restrictive measures, 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 and the United Nations Convention against Corruption (UNCAC), the Council of Europe Warsaw Convention 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, 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, 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. 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(4) 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. Provisions on the tracing and identification of assets (Chapter II, Articles 4 to 10) 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. 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(4) 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. Provisions on the management of assets (Chapter IV, Articles 19 to 21) 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(4) 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.

Provisions on safeguards (Chapter V, Articles 22 to 24) 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(4) 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. Provisions on the Asset Recovery Strategic Framework (Chapter VI, Articles 24 to 27) 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. Final provisions (Chapter VIII, Articles 30 to 37) 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). 2022/0167 (COD) Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

on asset recovery and confiscation THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty on the Functioning of the European Union, and in particular Article 82(2), Article 83(1) and (2) and Article 87(2) thereof, Having regard to the proposal from the European Commission, After transmission of the draft legislative act to the national parliaments, Having regard to the opinion of the European Economic and Social Committee, Acting in accordance with the ordinary legislative procedure, Whereas: (1)Europol’s 2021 Serious and Organised Crime Threat Assessment (SOCTA) highlighted the rising threat from organised crime and criminal infiltration. Driven by the large revenues generated by organised crime, which amount to at least EUR 139 billion every year, and which are increasingly laundered through a parallel underground financial system, the availability of such proceeds from criminal activities poses a significant threat to the integrity of the economy and society, eroding the rule of law and fundamental rights. The EU Strategy to tackle Organised Crime 2021-2025 aims at addressing these challenges by promoting cross-border cooperation, supporting effective investigations against criminal networks, eliminating proceeds from criminal activities, and making law enforcement and the judiciary fit for the digital age. (2)The main motive for cross-border organised crime, including high-risk criminal networks, is financial gain. Therefore, to tackle the serious threat posed by organised crime, competent authorities should be given the means to effectively trace and identify, freeze, confiscate and manage the instrumentalities and proceeds of crime and property that stems from criminal activities. (3)An effective asset recovery system requires the swift tracing and identification of instrumentalities and proceeds of crime, and property suspected to be of criminal origin. Such proceeds, instrumentalities, and property should be frozen in order to prevent its disappearance, following which it should be confiscated upon conclusion of criminal proceedings. An effective asset recovery system further requires the effective management of frozen and confiscated property to maintain its value for the State or for the restitution for victims. (4)The current Union legal framework on tracing and identification, freezing, confiscation and management of proceeds, instrumentalities and property, and on asset recovery offices, consists of Directive 2014/42/EU of the European Parliament and of the Council, Council Decision 2007/845/JHA and Council Framework Decision 2005/212/JHA. The Commission evaluated Directive 2014/42/EU and Council Decision 2007/845/JHA, concluding that the current framework has not fully achieved the policy objective of fighting organised crime through recovering its profits. (5)Therefore, the existing legal framework should be updated, so as to facilitate and ensure effective asset recovery and confiscation efforts across the Union. To that end, the Directive should lay down minimum rules on tracing and identification, freezing, confiscation and management of property within the framework of proceedings in criminal matters. In this context, proceedings in criminal matters is an autonomous concept of Union law interpreted by the Court of Justice of the European Union, notwithstanding the case law of the European Court of Human Rights. The term covers all types of freezing and confiscation orders issued following proceedings in relation to a criminal offence. It also covers other types of orders issued without a final conviction. Proceedings in criminal matters could also encompass criminal investigations by the police and other law enforcement authorities. It is necessary to reinforce the capacity of competent authorities to deprive criminals of the proceeds from criminal activities. For this purpose, rules should be laid down to strengthen asset tracing and identification, as well as freezing capabilities, to improve management of frozen and confiscated property, to strengthen the instruments to confiscate instrumentalities and proceeds of crime and property derived from criminal activities of criminal organisations, and to improve the overall efficiency of the asset recovery system. (6)Moreover, the adoption of unprecedented and far-reaching Union restrictive measures triggered by the Russian invasion into Ukraine revealed the need to step up efforts to ensure the effective implementation of both sectorial and individual Union restrictive measures across the Union. While not criminal in nature, nor requiring criminal conduct as a pre-condition for their imposition, Union restrictive measures also rely on freezing of funds (i.e. targeted financial sanctions) and sectorial measures, and should thus benefit from strengthened capabilities in the context of identification and tracing of property. For such purpose, rules should be established to enhance the effective identification and tracing of property owned or controlled by persons and entities subject to such restrictive measures, and to promote greater international cooperation of asset recovery offices with their counterparts in third countries. Measures related to freezing and confiscation under this Directive, notably those under Chapters III and IV, remain however limited to situations where property stems from criminal activities, such as the violation of Union restrictive measures. This Directive does not regulate the freezing of funds and economic resources under Union restrictive measures. (7)Measures aiming at increasing capabilities of tracing and identification of relevant property in relation to persons or entities subject to Union restrictive measures, as well as complementary measures to ensure that such property is not transferred or hidden to evade Union restrictive measures, contribute to the prevention and detection of possible violation of Union restrictive measures and enhanced cross-border cooperation in investigations into possible criminal offences. (8)The rules should facilitate cross-border cooperation by providing the competent authorities with the necessary powers and resources to respond in a swift and effective way to requests from authorities in other Member States. Provisions laying down rules on early tracing and identification, urgent action to freeze, or efficient management contribute to improving the possibilities for asset recovery across borders. Given the global nature of in particular organised crime, cooperation with third countries should also be strengthened. (9)Due to the poly-criminal nature of and the systemic and profit-oriented cooperation of criminal organisations involved in a wide range of illicit activities in different markets, an effective fight against organised crime requires that freezing and confiscation measures are available to cover the profits from all offences where organised crime groups are active in. These crimes include the areas of crime listed in Article 83(1), including the illicit trafficking in weapons, munitions and explosives as defined in the Protocol against the illicit manufacturing of and trafficking in firearms, their parts and components and ammunition, supplementing the United Nations Convention against transnational organized crime, to which the Union is party. In addition to the crimes listed in Article 83(1), the scope of the Directive should also cover all crimes that are harmonised at EU level, including frauds against the financial interests of the European Union in light of the increasing involvement of organised criminal groups in such crime area. The scope of the Directive should further include environmental crimes, which are a core business for organised criminal groups and are often connected to money laundering or concern waste and residues produced in the context of drug production and trafficking. The facilitation of unauthorized entry and residence constitute a core business for organised criminal groups and is typically connected to the trafficking in human beings. (10)Other crimes committed within the framework of a criminal organisation play a pivotal role in generating revenues and in enabling further crimes, including serious crimes with a cross-border nature. Such crimes should be included in the scope of the Directive to the extent to which they are committed within the framework of a criminal organisation. The counterfeiting and piracy of products is linked to money laundering and the forgery of documents, and threatens the functioning of the single market and fair competition. The illicit trafficking in cultural goods, including antiques and works of art, is often intertwined with money laundering and constitutes an important source of financing for organised criminal groups. Forgery of administrative documents and trafficking therein, including bank documents or identification documents, is a key enabling tool for money laundering, trafficking in human beings, or migrant smuggling, and should as such be covered in the scope of this Directive. Other crimes which are often carried out within the framework of an organised crime group include murder or grievous bodily harm, as well as the illicit trade in human organs and tissue, which are a source of revenue for organised crime groups in the context of contract killings, intimidation and trafficking in human beings. Similarly kidnapping, illegal restraint or hostage taking, as well as racketeering and extortion, are utilized either as source of revenue through the collection of ransom money or as intimidation tactics against adversaries. The crime of organised or armed robbery is one of the most common forms to generate profits for organised criminal groups, and it is often committed in conjunction with other crimes, in particular the trafficking in firearms. Similarly, the trafficking in stolen vehicles cannot only generate profits but also represents an enabling crime to provide for the necessary instrumentalities to carry out further offences. In addition, it is key to include tax crimes to the extent it is committed as part of a criminal organisation in the scope of the Directive, as this specific crime is an enabling source of profits, especially when operating in a cross-border context. Typical techniques employed to commit tax fraud or evasion consist of making use of cross-border corporate structures or similar arrangements to fraudulently obtain tax benefits and refunds, hide assets or profits, merge legal with illicit profits and assets or to transfer them to other entities abroad to disguise their origins or (beneficial) ownership. (11)[In order to ensure the effective implementation of Union restrictive measures, it is necessary to extend the scope of the Directive to the violation of Union restrictive measures]. (12)In order to capture property which might be transformed and transferred in order to conceal its origin, and in order to ensure harmonisation and clarity of definitions across the Union, property that can be subject to freezing and confiscation should be defined broadly. It should cover legal documents or instruments evidencing title or interest in property subject to freezing and confiscation including, for example, financial instruments, or documents that may give rise to creditor claims and are normally found in the possession of the person affected by the relevant procedures, as well as trusts. This Directive is without prejudice to the existing national procedures for keeping legal documents or instruments evidencing title or interest in property, as they are applied by the competent national authorities or public bodies in accordance with national law. The definition should cover all forms of property, including crypto assets.

(13)In order to capture property which might be transformed and transferred in order to conceal its origin, and in order to ensure harmonisation and clarity of definitions across the Union, a broad definition of proceeds of crime should be provided for, to include the direct proceeds from criminal activity and all indirect benefits, including subsequent reinvestment or transformation of direct proceeds, in line with the definitions of Regulation (EU) 2018/1805 of the European Parliament and of the Council. Thus proceeds should include any property including that which has been transformed or converted, fully or in part, into other property, and that which has been intermingled with property acquired from legitimate sources, up to the assessed value of the intermingled proceeds. It should also include the income or other benefits derived from proceeds of crime, or from property into or with which such proceeds have been transformed, converted or intermingled. (14)In order to facilitate cross-border cooperation, the tracing and identification of property at an early stage of a criminal investigation is of essence to ensure the prompt identification of instrumentalities, proceeds, or property, which might be subsequently confiscated, including property related to criminal activities located in other jurisdictions. To ensure that financial investigations are sufficiently prioritised in all Member States, so to address a crime of cross-border nature, it is necessary to require competent authorities to launch asset tracing from the moment there is a suspicion of criminal activities that are likely to generate substantial economic benefits. (15)Investigations to trace and identify property should also be launched where necessary to prevent, detect or investigate criminal offences related to the violation of Union restrictive measures. For that purpose, asset recovery offices should be empowered to trace and identify property of persons or entities subject to targeted financial sanctions. Once property is identified asset recovery offices should have the power to temporarily freeze the property to ensure that property does not disappear. (16)Due to the transnational nature of finances used by organised criminal groups, information that can lead to the identification of instrumentalities and proceeds of crime and other property owned or controlled by criminals or by persons or entities subject to Union restrictive measures should be exchanged rapidly between the Member States. For that purpose, it is necessary to empower asset recovery offices to trace and identify property which might be subsequently confiscated, to ensure they have access to the necessary information under clear conditions, and to establish rules on swiftly exchanging information with each other, spontaneously or upon request. In urgent cases where there is a risk of dissipation of the property, replies to information should be done as soon as possible and not later than 8 hours. (17)In order to perform effective asset tracing investigations, and to swiftly respond to cross-border requests, asset recovery offices should have access to the information that allows them to establish the existence, ownership or control of property that may become object of a freezing or a confiscation order. Therefore, asset recovery offices should have access to the relevant data such as fiscal data, national citizenship and population registries, commercial databases and social security information. This should include law enforcement information in so far as data such as criminal records, vehicles stops, property searches and previous legal actions such as freezing and confiscation orders or seizures of cash can be of value to identify relevant property. Access to information should be subject to specific safeguards that prevent the misuse of the access rights. These safeguards should be without prejudice to Article 25 of Directive (EU) 2016/680 of the European Parliament and of the Council. The direct and immediate access to this information does not prevent Member States from making access subject to procedural safeguards as established under national law while taking due account of the need for asset recovery offices to be able to swiftly reply to cross-border requests. The implementation of the procedural safeguards for access to databases should not affect the ability of asset recovery offices to respond to requests from other Member States, especially in case of urgent requests. Access to relevant databases and registries under this Directive should complement access to bank account information pursuant to Directive (EU) 2019/1153 of the European Parliament and of the Council and to beneficial ownership information pursuant to Directive (EU) 2015/849 of the European Parliament and of the Council. (18)To ensure the security of the information shared between asset recovery offices, the use of the Secure Information Exchange Network Application (SIENA), managed by Europol in accordance with Regulation (EU) 2016/794 of the European Parliament and of the Council, should be mandatory for all communications among asset recovery offices under this Directive. Therefore, in order to be able to fulfil all the tasks assigned by this Directive, all asset recovery offices should be able to directly access SIENA. (19)Freezing and confiscation under this Directive are autonomous concepts, which should not prevent Member States from implementing this Directive using instruments which, in accordance with national law, would be considered as sanctions or other types of measures. (20)Confiscation leads to the final deprivation of property. However, preservation of property can be a prerequisite to confiscation and is often essential for the effective enforcement of a confiscation order. Property is preserved by means of freezing. In order to prevent the dissipation of property before a freezing order can be issued, the competent authorities in the Member States, including asset recovery offices, should be empowered to take immediate action in order to secure such property. (21)Given the limitation on the right to property imposed by freezing orders, such provisional measures should not be maintained longer than necessary to preserve the availability of the property with a view to possible subsequent confiscation. This may require a review by the national court in order to ensure that the purpose of preventing the dissipation of property remains valid. (22)Freezing measures should be without prejudice to the possibility for a specific property to be considered evidence throughout the proceedings, provided that it would ultimately be made available for effective execution of the confiscation order. In the context of criminal proceedings, property may also be frozen with a view to its possible subsequent restitution or in order to safeguard compensation for the damage caused by a criminal offence. (23)In addition to confiscation measures that allow authorities to deprive criminals of the proceeds or instrumentalities directly stemming from crimes, following a final conviction, it is necessary to enable confiscation of property of equivalent value to such proceeds or instrumentalities in order to capture property of equivalent value to the proceeds and instrumentalities of a crime, whenever it is impossible to locate such proceeds and instrumentalities. Member States are free to define the confiscation of property of equivalent value as subsidiary or alternative to direct confiscation, as appropriate in accordance with national law. (24)The practice by a suspected or accused person of transferring property or proceeds to a knowing third party with a view to avoiding confiscation is common and widespread. Acquisition by a third party refers to situations where, for example, property has been acquired, directly or indirectly, for example through an intermediary, by the third party from a suspected or accused person, including when the criminal offence has been committed on their behalf or for their benefit, and when an accused person does not have property that can be confiscated. Such confiscation should be possible in cases where it has been established that third parties knew or ought to have known that the purpose of the transfer or acquisition was to avoid confiscation, on the basis of concrete facts and circumstances, including that the transfer was carried out free of charge or in exchange for an amount significantly lower than the market value. The rules on third party confiscation should extend to both natural and legal persons, without prejudice to the right of third parties to be heard, including the right to claim ownership of the property concerned. In any event, the rights of bona fide third parties should not be affected. (25)Criminal organisations engage in a wide range of criminal activities. In order to effectively tackle organised criminal activities, there may be situations where it is appropriate that a criminal conviction for a criminal offence that is liable to give rise to economic benefits be followed by the confiscation not only of property associated with a specific crime, including proceeds of crime or its instrumentalities, but also of additional property which the court determines as being derived from criminal conduct. (26)Confiscation should also be possible where a court is satisfied that the instrumentalities, proceeds, or property in question is derived from criminal conduct but where a final conviction is not possible because of illness, absconding or death of the suspected or accused person, or because the suspected or accused person cannot be held liable because of immunity or amnesty as provided for under national law. The same should be possible where the time limits prescribed under national law have expired, where such time limits are not sufficiently long to allow for the effective investigation and prosecution of the relevant criminal offences. Confiscation in such cases should only be allowed where the national court is satisfied that all the elements of the offence are present. For reasons of proportionality, confiscating property without a prior conviction should be limited to cases of serious crimes. The right of the defendant to be made aware of the proceeding and to be represented by a lawyer should not be affected. (27)For the purposes of this Directive, illness should be understood to mean the inability of the suspected or accused person to attend the criminal proceedings for an extended period, as a result of which the proceedings cannot continue. (28)Due to the intrinsically opaque nature of organised crime, it is not always possible to link property derived from criminal activities to a specific criminal offence and confiscate such property. In such situations, confiscation should be possible under certain conditions including in particular: the property is frozen based on suspicion of crimes committed within the framework of a criminal organisation, these criminal offences are liable to give rise to substantial economic benefits and the court is satisfied that the frozen property is derived from criminal activities carried out within the framework of a criminal organisation. These conditions should ensure that confiscation of property not linked to a specific offence for which the owner has been convicted is limited to criminal activities of criminal organisations that are serious in nature and liable to generate substantial benefits. When determining whether the offences are liable to give rise to significant benefits, Member States should take into account all relevant circumstances of the offence, including whether the criminal activities were committed with the intention to generate regular substantial profits. While it should not be a precondition for the national court to be satisfied that a criminal offence has been committed, the court must be satisfied that the property in question is derived from criminal offences. When determining whether or not the property in question derived from criminal activities, the national courts should take into account all relevant circumstances of the case, including the fact that the property is substantially disproportionate to the lawful income of the owner. Member States should then require and award an effective possibility for the owner of the property to prove that the property in question derives from lawful activities. (29)To ensure that property that is or may become subject to a freezing or confiscation order maintains its economic value Member States should put in place effective management measures. Such measures should include a systematic assessment of how to best preserve and optimise the value of property before the adoption of freezing measures, also known as pre-seizure planning. (30)In circumstances where the property frozen is perishable, rapidly depreciating, or whose maintenance costs are disproportionate to its expected value at the time of confiscation, or that is too difficult to administer or is easily replaceable, Member States should allow for the sale of this property. Before taking such a decision, the owner of the property should have the right to be heard. Member States should consider the possibility to charge the costs of the management of frozen property to the beneficial owner, for instance in alternative to the ordering of an interlocutory sale, and in case of final conviction. These rules, including the possibility for the costs for the management of frozen property to be charged to the beneficial owner, 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. (31)Member States should set up asset management offices with the purpose of establishing specialised authorities tasked with the management of frozen and confiscated property in order to effectively manage the property frozen before confiscation and preserve its value, pending a final decision on the confiscation. Without prejudice to the Member States’ internal administrative structures, asset management offices should either be the sole authority managing frozen or confiscated property, or should provide support to decentralised actors according to national management set-ups, and support relevant authorities with pre-seizure planning. (32)This Directive respects the fundamental rights and observes the principles recognized by the Charter of Fundamental Rights of the European Union (‘the Charter’) and the European Convention for the Protection of Human Rights and Fundamental Freedoms (‘the ECHR’), as interpreted in the case-law of the European Court of Human Rights. This Directive should be implemented in accordance with those rights and principles.

(33)Freezing and confiscation orders substantially affect the rights of suspected and accused persons, and in specific cases of third parties who are not being prosecuted. The Directive should provide for specific safeguards and judicial remedies in order to guarantee the protection of their fundamental rights in the implementation of this Directive in line with the right to a fair trial, the right to an effective remedy and the presumption of innocence as enshrined in Articles 47 and 48 of the Charter of Fundamental Rights of the European Union. (34)Freezing, confiscation, and interlocutory sales orders should be communicated to the affected party without delay. The purpose of communicating those orders is, inter alia, to allow the affected person to challenge them before a court. Therefore, such communications should, as a general rule, indicate the reason or reasons for the order concerned. The affected party should have the effective possibility to challenge the freezing, confiscation, and interlocutory sales orders. In the case of confiscation orders where all elements of the criminal offence are present but a criminal conviction is impossible, the defendant should have a possibility to be heard before the adoption of the order. The same possibility should be provided for the owner affected by an order to sell the property before confiscation. (35)When implementing this Directive, and in order to ensure the proportionality of confiscation measures, Member States should provide that confiscation of property is not ordered to the extent it would be disproportionate to the offence in question. Furthermore, Member States should provide for the possibility that, in exceptional circumstances, confiscation is not ordered, insofar as it would, in accordance with national law, represent undue hardship for the affected person, on the basis of the circumstances of the respective individual case which should be decisive. Such exceptional circumstances should be limited to cases where it would put the person concerned in a situation in which it would be very difficult for the affected person to survive and the circumstances of the respective individual case should be decisive. (36)This Directive should be implemented without prejudice to Directive 2010/64/EU of the European Parliament and of the Council, Directive 2012/13/EU of the European Parliament and of the Council, Directive 2012/29/EU of the European Parliament and of the Council, Directive 2013/48/EU of the European Parliament and of the Council, Directive (EU) 2016/343/EU of the European Parliament and of the Council, Directive 2016/800/EU of the European Parliament and of the Council and Directive (EU) 2016/1919 of the European Parliament and of the Council . (37)It is particularly important that the protection of personal data, in accordance with Union law, is ensured in connection to processing of data under this Directive. To that aim, the rules of this Directive should be aligned with Directive (EU) 2016/680. In particular, it should be specified that any personal data exchanged by Asset Recovery Offices is to remain limited to the categories of data listed in Section B point 2, of Annex II to Regulation (EU) 2016/794 of the European Parliament and of the Council. Directive (EU) 2016/680 of the European Parliament and of the Council applies to the processing of personal data by national competent authorities, notably asset recovery offices, for the purposes of this Directive. (38)It is particularly important that the protection of personal data, in accordance with Union law, is ensured in connection to all exchanges of information under this Directive. To that aim, insofar as the processing of personal data for the purposes of the prevention, investigation, detection or prosecution of criminal offences or the execution of criminal penalties is concerned, data protection rules as set out in Directive (EU) 2016/680 are applicable in relation to measures taken under this Directive. Where relevant, notably having regard to the processing of personal data by asset management offices for the purpose of the management of property, the data protection rules set out in Regulation (EU) 2016/679 of the European Parliament and of the Council are applicable. (39)An effective recovery system requires concerted efforts of a wide range of authorities, from law enforcement, including customs authorities, tax authorities and tax recovery authorities to the extent that they are competent for asset recovery, asset recovery offices, judicial authorities and asset management authorities, including asset management offices. In order to ensure coordinated action by all competent authorities, it is necessary to establish a more strategic approach to asset recovery and promote a greater cooperation between the relevant authorities, and to obtain a clear overview of the results of asset recovery. For this purpose, Member States should adopt and regularly review a national strategy on asset recovery to guide actions in relation to financial investigations, freezing and confiscation, management as well as final disposal of the relevant instrumentalities, proceeds, or property. Furthermore, Member States should provide competent authorities with the necessary resources to be able to fulfil their tasks effectively. Competent authorities should be understood as the authorities entrusted with the carrying out of the tasks as outlined under this Directive and according to national set-ups. (40)In order to evaluate the effectiveness and efficiency of the asset recovery, asset management and confiscation framework, it is necessary to collect and publish a comparable set of statistical data on freezing, management and confiscation of property. (41)To ensure consistent approaches among Member States in the collection of statistics, the power to adopt acts in accordance with Article 290 of the TFEU should be delegated to the Commission to supplement this Directive by adopting more detailed rules on the information to be collected and the methodology for the collection of the statistics. (42)It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States' experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts. (43)To provide a more comprehensive overview of the action taken to freeze and confiscate, Member States should establish a central register of frozen, managed and confiscated instrumentalities, proceeds, or property, and collect the necessary statistics on the implementation of the relevant measures. Centralised registries of frozen and confiscated instrumentalities, proceeds, or property should be established at national level for the purpose of facilitating the management of the specific file. The aim of establishing centralised registries is to assist all the relevant authorities responsible for the recovery of criminal property with an accessible record of the property which is frozen, confiscated, or under management, from the moment it is frozen until it is returned to the owner or it is disposed of. Information entered in the registries should be retained only for as long as it is necessary for the purposes of management of the specific case, or for the purposes of gathering statistical data collection. For case management purposes, it should not be kept for longer than after the final disposal of the property following a confiscation order, or after its return to the owner in case of acquittal. Access to the information recorded in the centralised registries should be given only to authorities responsible for the recovery of criminal property, such as asset recovery offices, asset management offices, national courts or otherwise appointed authorities according to national dispositions. (44)Organised criminal groups operate across borders and increasingly acquire property in Member States other than those in which they are based and in third countries. Given the transnational dimension of organised crime, international cooperation is of the essence to recover the profits and confiscate the financial assets that allow criminals to operate. Member States should therefore ensure that both asset recovery and asset management offices cooperate closely with their counterparts in third countries to trace, identify and manage instrumentalities and proceeds, or property which may become or is the object of a freezing or confiscation order within the framework of proceedings in criminal matters. Moreover, for the effective implementation of Union restrictive measures, it is of paramount importance for asset recovery offices to cooperate with their counterparts in third countries where necessary to prevent, detect or investigate criminal offences related to the violation of Union restrictive measures. In that regard, Member States should ensure that asset recovery offices establish working arrangements with their counterparts in those third countries with which there is an operational cooperation agreement in place that allows for the exchange of operational personal data with Europol or Eurojust. (45)Asset recovery offices should also closely cooperate with EU bodies and agencies, including Europol, Eurojust and the European Public Prosecutor’s Office, in accordance with their respective mandates, insofar as it is necessary to trace and identify property within the cross-border investigations supported by Europol and Eurojust or within the investigations undertaken by the European Public Prosecutor’s Office. Asset recovery offices should also cooperate with Europol and Eurojust, in accordance with their respective mandates, insofar as it is necessary to trace and identify property to prevent, detect or investigate criminal offences related to the violation of Union restrictive measures. (46)In order to ensure that there is a common understanding and minimum standards for asset tracing and identification, freezing and management, this Directive should lay down minimum rules for the relevant measures as well as related safeguards. The adoption of minimum rules does not prevent Member States from granting more extensive powers to asset recovery offices or to asset management offices, or to provide for additional safeguards under national law, provided that such national measures and provisions do not undermine the objective of this Directive. (47)Since the objective of this Directive, namely facilitating confiscation of property in criminal matters, cannot be sufficiently achieved by the Member States but can rather be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union (TEU). In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve that objective. (48)As this Directive provides for a comprehensive set of rules, which would overlap with already existing legal instruments, it should replace Council Joint Action 98/699/JHA, Council Framework Decision 2001/500/JHA, Framework Decision 2005/212/JHA, Decision 2007/845/JHA, and Directive 2014/42/EU with regard to the Member States bound by this Directive. (49)In accordance with Articles 1 and 2 of Protocol No 22 on the position of Denmark annexed to the Treaty on European Union and to the Treaty of the Functioning of the European Union, Denmark is not taking part in the adoption of this Directive and is not bound by it or subject to its application. (50)[In accordance with Article 3 of Protocol No 21 on the position of the United Kingdom and Ireland in respect of the area of freedom, security and justice, annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union, Ireland has notified its wish to take part in the adoption and application of this Directive.] [or] [In accordance with Articles 1 and 2 of Protocol No 21 on the position of the United Kingdom and Ireland in respect of the area of freedom, security and justice, annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union, and without prejudice to Article 4 of that Protocol, Ireland is not taking part in the adoption of this Directive and is not bound by it or subject to its application.] (51)The European Data Protection Supervisor was consulted in accordance with Article 42 of Regulation (EU) 2018/1725 and delivered an opinion on XX/XX/20XX.

HAVE ADOPTED THIS DIRECTIVE: CHAPTER I

GENERAL PROVISIONS Article 1 Subject matter 1. This Directive establishes minimum rules on the tracing and identification, freezing, confiscation, and management of property within the framework of proceedings in criminal matters. 2. This Directive also establishes rules to facilitate the effective implementation of Union restrictive measures and the subsequent recovery of related property where necessary to prevent, detect or investigate criminal offences related to the violation of Union restrictive measures. Article 2 Scope 1. This Directive shall apply to the following criminal offences: (a) participation in a criminal organisation, as defined in Council Framework Decision 2008/841/JHA; (b) terrorism, as defined in Directive (EU) 2017/541 of the European Parliament and of the Council; (c) trafficking in human beings, as defined in Directive 2011/36/EU of the European Parliament and of the Council; (d) sexual exploitation of children and child pornography, as defined in Directive 2011/93/EU of the European Parliament and of the Council; (e) illicit trafficking in narcotic drugs and psychotropic substances, as defined in Council Framework Decision 2004/757/JHA ; (f) corruption, as defined in the Convention drawn up on the basis of Article K.3(2)(c) of the Treaty on European Union on the fight against corruption involving officials of the European Communities or officials of the Member States of the European Union and in the Council Framework Decision 2003/568/JHA; (g) money laundering, as defined in Directive (EU) 2018/1673 of the European Parliament and of the Council; (h) forgery of means of payment, as defined in Directive (EU) 2019/713 of the European Parliament and of the Council; (i) counterfeiting currency, including the euro, as defined in Directive 2014/62/EU of the European Parliament and of the Council; (j) computer-related crime, as defined in Directive 2013/40/EU of the European Parliament and of the Council ;

(k) illicit trafficking in weapons, munitions and explosives, as defined in the Protocol against the illicit manufacturing of and trafficking in firearms, their parts and components and ammunition, supplementing the United Nations Convention against transnational organized crime; (l) fraud, including fraud and other criminal offences affecting the Union's financial interests as defined in Directive (EU) 2017/1371 of the European Parliament and of the Council; (m) environmental crime, including illicit trafficking in endangered animal species and in endangered plant species and varieties as defined in in Directive 2008/99/EC of the European Parliament and of the Council, as well as offences related to ship pollution as defined in Directive 2005/35/EC as amended by Directive 2009/123/EC; (n) facilitation of unauthorised entry and residence, as defined in Council Framework Decision 2002/946/JHA, and Council Directive 2002/90/EC; 2. This Directive shall apply to the following offences to the extent that the offence is committed within the framework of a criminal organisation: (a) counterfeiting and piracy of products; (b) illicit trafficking in cultural goods, including antiques and works of art; (c) forgery of administrative documents and trafficking therein; (d) murder or grievous bodily injury; (e) illicit trade in human organs and tissue; (f) kidnapping, illegal restraint or hostage-taking; (g) organised or armed robbery; (h) racketeering and extortion; (i) trafficking in stolen vehicles; (j) tax crimes relating to direct taxes and indirect taxes and as defined in the national law of the Member States, which are punishable by deprivation of liberty or a detention order of at least one year. 3. [This Directive shall apply to the violation of Union restrictive measures as defined in the Directive of the European Parliament and of the Council]. 4. This Directive shall apply to any other criminal offences set out in other Union legal acts if they provide specifically that this Directive applies to the criminal offences defined therein. 5. The provisions on tracing and identification of instrumentalities and proceeds, or property in Chapter II shall apply to all criminal offences as defined in national law which are punishable by deprivation of liberty or a detention order of at least one year. Article 3 Definitions

For the purpose of this Directive, the following definitions apply: (1) ‘proceeds’ means any economic advantage derived directly or indirectly from a criminal offence consisting of any form of property, and including any subsequent reinvestment or transformation of direct proceeds and any valuable benefits; (2) ‘property’ means property of any description, whether corporeal or incorporeal, movable or immovable, and legal documents or instruments evidencing title or interest in such property; (3) ‘instrumentalities’ means any property used or intended to be used, in any manner, wholly or partially, to commit a criminal offence; (4) ‘tracing and identification’ means any investigation by competent authorities to determine instrumentalities, proceeds, or property that may be derived from criminal activities; (5) ‘freezing’ means the temporary prohibition of the transfer, destruction, conversion, disposal or movement of property or temporarily assuming custody or control of property; (6) ‘confiscation’ means a final deprivation of property ordered by a court in relation to a criminal offence; (7) ‘SIENA’ means the secure information exchange network application, managed by Europol, aimed at facilitating the exchange of information between Member States and Europol; (8) ‘criminal organisation’ means a criminal organisation as defined in Article 1 of the Council Framework Decision 2008/841/JHA; (9) ‘victim’ means a victim as defined in Article 2(1), point (a), of Directive 2012/29/EU of the European Parliament and of the Council, as well as a legal person, as defined in national law, that has suffered harm as a result of any of the offences within the scope of this Directive; (10) ‘beneficial owner’ means a beneficial owner as defined in Article 3, point (6), of Directive 2015/849/EU; (11) ‘Union restrictive measures’ means measures adopted on the basis of Article 29 of the Treaty on European Union and Article 215 of the Treaty on the Functioning of the European Union; (12) ‘targeted financial sanctions’ means specific Union restrictive measures directed against certain persons or entities adopted on the basis of Article 29 of the Treaty on European Union and Article 215 of the Treaty on the Functioning of the European Union; CHAPTER II tracing and identification Article 4 Asset tracing investigations 1. To facilitate cross-border cooperation, Member States shall take measures to enable the swift tracing and identification of instrumentalities and proceeds, or property which may become or is the object of a freezing or confiscation order in the course of criminal proceedings. 2. Asset tracing investigations pursuant to paragraph 1 shall be carried out immediately by competent authorities whenever an investigation is initiated in relation to a criminal offence which is likely to give rise to substantial economic benefit, or where necessary to prevent, detect or investigate criminal offences related to the violation of Union restrictive measures.

Article 5 Asset recovery offices 1. Each Member State shall set up at least one asset recovery office to facilitate cross-border cooperation in relation to asset tracing investigations. 2. Asset recovery offices shall have the following tasks: (a) trace and identify instrumentalities, proceeds, or property whenever necessary to support other competent national authorities responsible for asset tracing investigations pursuant to Article 4; (b) trace and identify instrumentalities, proceeds, or property which may become or is the object of a freezing or confiscation order issued by another Member State; (c) cooperate and exchange information with other Member States’ asset recovery offices in the tracing and identification of instrumentalities and proceeds, or property which may become or is the object of a freezing or confiscation order; (d) exchange information with other asset recovery offices in the Member States related to the effective implementation of Union restrictive measures where necessary to prevent, detect or investigate criminal offences. 3. Asset recovery offices shall be empowered to trace and identify property of persons and entities subject to EU targeted financial sanctions where necessary to prevent, detect or investigate criminal offences. To that effect, they shall cooperate with asset recovery offices and other relevant competent authorities in other Member States and exchange relevant information. 4. Member States shall enable asset recovery offices to take immediate action pursuant to Article 11 paragraph 2 where necessary to prevent, detect or investigate criminal offences related to the violation of Union restrictive measures. Article 11 paragraph 5 shall apply mutatis mutandis. Article 6 Access to information 1. For the purposes of performing the tasks referred to in Article 5, Member States shall ensure that asset recovery offices have immediate and direct access to the following information to the extent that information is necessary for the tracing and identification of proceeds, instrumentalities, and property: (a) fiscal data, including data held by tax and revenue authorities; (b) national real estate registers or electronic data retrieval systems and land and cadastral registers; (c) national citizenship and population registers of natural persons; (d) national motor vehicles, aircraft and watercraft registers; (e) commercial databases, including business and company registers; (f) national social security registers; (g) relevant information which is held by authorities competent for preventing, detecting, investigating or prosecuting criminal offences.

2. Where the information referred to in paragraph 1 is not stored in databases or registers, Member States shall take the necessary measures to ensure that asset recovery offices can swiftly obtain that information by other means. 3. The direct and immediate access to the information referred to in paragraph 1 shall be without prejudice to the procedural safeguards established under national law. Article 7 Conditions for access to information by asset recovery offices 1. Access to information pursuant to Article 6 shall be performed only where necessary on a case-by-case basis by the staff specifically designated and authorised to access the information referred to in Article 6. 2. Member States shall ensure that staff of the asset recovery offices comply with the rules on confidentiality and professional secrecy as provided for under applicable national law. Member States shall also ensure that staff of asset recovery offices have the necessary specialised skills and abilities to perform their roles effectively. 3. Member States shall ensure that appropriate technical and organisational measures are in place to ensure the security of the data in order for asset recovery offices to access and search the information referred to in Article 6. Article 8 Monitoring access and searches by asset recovery offices 1. Without prejudice to Article 25 of Directive 2016/680, Member States shall ensure that the authorities holding the information referred to in Article 6 keep logs of all access and search activities by asset recovery offices in accordance with this Directive. The logs shall contain the following: (a) the national file reference; (b) the date and time of the query or search; (c) the type of data used to launch the query or search; (d) the unique identifier of the results of the query or search; (e) the name of the asset recovery office consulting the registry; (f) the unique user identifier of the official who made the query or performed the search. 2. The logs referred to in paragraph 1 may be used only for data protection monitoring, including checking the lawfulness of data processing, and for ensuring data security and integrity. The logs shall be protected by appropriate measures against unauthorised access and erased five years after their creation. If, however, they are required for monitoring procedures that are ongoing, they shall be erased once the monitoring procedures no longer require the logs. Article 9 Exchange of information 1. Member States shall take the necessary measures to ensure that their asset recovery offices provide, upon request from an asset recovery office of another Member State, any information that is necessary for the performance of their tasks pursuant to Article 5. The categories of personal data that can be provided are those listed in Section B, point 2 of Annex II to Regulation (EU) 2016/794.

Any personal data to be provided shall be determined on a case-by-case basis, in light of what is necessary for the performance of the tasks pursuant to Article 5. 2. When making a request pursuant to paragraph 1, the requesting asset recovery office shall specify as precisely as possible the following: (a) the object of the request; (b) the reasons for the request, including the relevance of the information requested for the tracing and identification of the property; (c) the nature of the proceedings; (d) the type of criminal offence for which the request is made; (e) the link of the proceedings to the requested Member State; (f) details on the property targeted or sought, such as bank accounts, real estate, vehicles, vessels, aircraft, companies and other high value items; (g) and/or the natural or legal persons presumed to be involved, such as names, addresses, dates and places of birth, date of registration, shareholders, headquarters; (h) where applicable, reasons for the urgency of the request. 3. Member States shall take the necessary measures to enable that their asset asset recovery offices exchange information with asset recovery offices of other Member States, without a request to that effect, whenever they are aware of information on instrumentalities, proceeds, or property that they consider necessary for the performance of the tasks of the asset recovery offices pursuant to Article 5. When providing such information, asset recovery offices shall set out the reasons why the information exchanged is considered necessary. 4. Member States shall ensure that the information provided by asset recovery offices pursuant to paragraphs 1, 2 and 3 can be presented as evidence before a national court of a Member State, in accordance with procedures in national law. 5. Member States shall ensure that asset recovery offices have direct access to SIENA and use the SIENA system for exchanging information pursuant to this Article. 6. Asset recovery offices may refuse to provide information to the requesting asset recovery office if there are factual reasons to assume that the provision of information would: (a) harm the fundamental national security interests of the requested Member State; (b) jeopardise an ongoing investigation, or a criminal intelligence operation, or pose an imminent threat to the life or physical integrity of a person. 7. Member States shall take the necessary measures to ensure that reasons are given for refusals to provide information. Refusals shall only affect the part of the requested information to which the r