COMMISSION STAFF WORKING PAPER Accompanying document to theProposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND THE COUNCIL on the freezing and confiscation of proceeds of crime in the European UnionIMPACT ASSESSMENT
Date: 2012-03-12
Institutions: European Commission
Subjects: associated action for damages, confiscation of property, fight against crime, injunction, judicial cooperation in criminal matters in the EU, money laundering, mutual recognition principle, organised crime, seizure of goods

EUROPEAN COMMISSION 

Brussels, 12.3.2012  
SWD(2012) 31 final 

COMMISSION STAFF WORKING PAPER 

Accompanying document to the 

Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND THE 
COUNCIL  

on the freezing and confiscation of proceeds of crime in the European Union 

IMPACT ASSESSMENT 

{COM(2012) 85 final} 
{SWD(2012) 32 final} 

 
 
 
 
  
 
 
 
 
 
TABLE OF CONTENTS 

1. 

2. 

Introduction...................................................................................................................2 

Procedural issues and consultation of interested parties...............................................2 

2.1. 

Chronology of the Impact Assessment and results of consultations ............................2 

2.1.1.  Policy context ...............................................................................................................2 

2.1.2.  Organisation and timing ...............................................................................................2 

2.1.3.  Consultation of interested parties .................................................................................2 

2.2. 

Consultation of the Impact Assessment Board.............................................................2 

3. 

3.1. 

3.2. 

3.3. 

4. 

4.1. 

4.2. 

The recovery of criminal assets explained....................................................................2 

The asset recovery process ...........................................................................................2 

Fundamental questions of the asset confiscation and recovery process .......................2 

Asset recovery in the Member States and existing EU legal framework .....................2 

Problem definition ........................................................................................................2 

Insufficient recovery of criminal assets in the EU........................................................2 

Components of the problem..........................................................................................2 

4.2.1. 

Inadequate powers for confiscating criminal assets .....................................................2 

4.2.2. 

Inadequate powers for preserving criminal assets pending confiscation......................2 

4.2.3. 

Inadequate powers for enforcing confiscation orders between Member States 
(mutual recognition) .....................................................................................................2 

4.2.4.  Powers for confiscation, preservation and enforcement are underutilised ...................2 

4.2.5.  Member States lack tools to maximise social utility from recovered assets 

(Redistribution).............................................................................................................2 

4.3. 

4.4. 

How would the problem evolve, all things being equal?..............................................2 

The EU's right to act and subsidiarity...........................................................................2 

4.4.1.  Conferral of power........................................................................................................2 

4.4.2.  Legal basis  ...................................................................................................................2 

4.5. 

Fundamental rights .......................................................................................................2 

5. 

6. 

Policy objectives...........................................................................................................2 

Policy options ...............................................................................................................2 

6.1. 

Identification and screening of "policy actions"...........................................................2 

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6.2. 

6.3. 

Discarded policy actions...............................................................................................2 

Policy actions grouped into policy options...................................................................2 

6.3.1.  Policy option 1 – Status quo .........................................................................................2 

6.3.2.  Policy option 2 – Non-legislative option ......................................................................2 

6.3.3.  Policy option 3 – Minimal legislative option ...............................................................2 

6.3.4.  Policy option 4.1 – Maximal legislative option without mutual recognition ...............2 

6.3.5.  Policy option 4.2 – Maximal legislative option including mutual recognition ............2 

7. 

7.1. 

7.2. 

7.3. 

7.4. 

7.5. 

8. 

8.1. 

8.2. 

9. 

Analysis of the impacts of the policy options...............................................................2 

Analysis of Option 1 - Status Quo................................................................................2 

Analysis of Option 2 – Non-legislative option .............................................................2 

Analysis of Option 3 – Minimal legislative option ......................................................2 

Analysis of Option 4.1 - Maximal legislative option without mutual 
recognition ....................................................................................................................2 

Analysis of Option 4.2 - Maximal legislative option including mutual 
recognition ....................................................................................................................2 

Comparing the policy options.......................................................................................2 

Comparison of options and justification for choosing the preferred option .................2 

Proportionality and subsidiarity of the preferred option...............................................2 

Implementation, monitoring and Evaluation ................................................................2 

Annex 1  Summary of fieldwork of the external IA study........................................................47 

Annex 2  Confiscation statistics ................................................................................................49 

Annex 3  List of EU-level actions ...............................................................................................2 

Annex 4  Asset recovery in the UK...........................................................................................58 

Annex 5  EU27 profitability model ...........................................................................................72 

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COMMISSION STAFF WORKING PAPER 

Accompanying document to the 

Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND THE 
COUNCIL  

on the freezing and confiscation of proceeds of crime in the European Union 

IMPACT ASSESSMENT 

Disclaimer:  This  report  commits  only  the  European  Commission’s  services 
involved  in  its  preparation  and  does  not  prejudge  the  final  form  of  any 
decision to be taken by the Commission 

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1. 

 INTRODUCTION  

In order to disrupt organised crime activities it is essential  to deprive criminals of the 
proceeds  of  crime.  Organised  crime  groups  are  building  large-scale  international 
networks and amass substantial profits from various criminal activities. The proceeds of 
crime are laundered and re-injected into the legal economy.  

The confiscation and recovery of criminal assets is considered as a very effective way 
to  fight  organised  crime,  which  is  essentially  profit-driven.  Seizing  back  as  much  of 
these  profits  as  possible  aims  at  hampering  activities  of  criminal  organisations, 
deterring criminality and providing additional funds to invest back into law enforcement 
activities or other crime prevention initiatives.  

2. 

PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES  

2.1. 

Chronology of the Impact Assessment and results of consultations 

2.1.1.  Policy context 

As  an  effective  tool,  especially  in  the  fight  against  organised  crime,  confiscation  has 
been given strategic priority at EU level. The 2009 Stockholm Programme1 highlights 
the importance of identifying and seizing criminal assets more effectively and re-using 
them where appropriate.  

The Justice and Home Affairs Council Conclusions on confiscation and asset recovery 
adopted in June 20102 aim at promoting a more coordinated approach between Member 
States  and  achieve  a  more  effective  and  widespread  confiscation  and  recovery  of 
criminal  assets.  They  call  on  the  Commission  to  consider  strengthening  the  legal 
framework in order to achieve more effective regimes for third party confiscation and 
extended  confiscation.  They  also  highlight  that  attention  should  be  focused  on  all 
phases  of  the  confiscation  and  asset  recovery  process  and  recommend  measures  to 
ensure  the  preservation  of  assets  during  the  confiscation  process  and  the  reuse  of 
confiscated assets. 
The Commission Communication "An Internal Security Strategy in Action"3 indicates 
that  the  Commission  will  propose  legislation  in  2011  to  strengthen  the  EU  legal 
framework  on  confiscation,  in  particular  to  allow  more  third  party  confiscation  and 
extended  confiscation  and  to  facilitate  mutual  recognition  of  non-conviction  based 
confiscation orders between Member States. 

The  Commission  Work  Programme  2011  includes  the  proposal  for  a  Directive  on  the 
confiscation and recovery of criminal assets as a strategic initiative which forms part of 
a  broader  package  on  the  "protection  of  the  licit  economy",  an  agenda  to  protect 

"An open and secure Europe serving and protecting the citizens", Council document 17024/09, 

1  
adopted by the European Council on 10/11 December 2009. 
2  
3  

Council document 7769/3/10. 
COM(2010) 673 of 22.11.2010. 

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Europe's  economy  which  is  closely  linked  to  the  EU  2020  Strategy.  This  package 
includes anti-corruption initiatives adopted in June 20114 and a Communication on an 
EU anti-fraud strategy5.   

The envisaged legislative proposal on the confiscation [correct terminology? Does not 
"recovery" include confiscation? Needs to be checked in the Directive as well. Indeed 
it does. When reference is made to the Directive, it is better to use "confiscation", 
as  the  Directive  mostly  covers  the  legal  proceedings.  The  asset  recovery  process 
also includes the asset tracing phase (eg national financial investigations, the work 
of  the  AROs)  and  the  disposal  phase  (eg  sale  of  an  asset  in  a  public  auction  or 
reuse of the asset for public purposes).]of criminal assets is also in line with the ten 
strategic  priorities  emphasised  by  the  Commission  in  its  Communication  on  the 
proceeds  of  crime  adopted  in  20086.  This  Communication  highlights  shortcomings  in 
the  EU  legal  framework  (lack  of  implementation,  lack  of  clarity  of  some  provisions, 
lack  of  coherence  between  existing  provisions)  and  proposes  to  amend  it.  It  further 
states that a revision would also allow to introduce new provisions in order to achieve a 
more coherent and comprehensive framework.  

This impact assessment serves as a basis for the above legal proposal. 

2.1.2.  Organisation and timing 

Work  on  the  impact  assessment  started  in  May  2010  with  the  launch  of  an  external 
study  to  support  the  preparation  of  the  Impact  Assessment7.  The  identification  and 
finalisation of problems, objectives, policy options and assessment of impacts presented 
in this report were informed by the study which was completed in March 2011. 

The  study  is  based  on  a  broad  consultation  of  practitioners  and  experts,  including 
interviews  with  some  national  contact  points  of  the  Camden  Asset  Recovery  Inter-
agency Network (CARIN)8, and a limited consultation of other stakeholders. The results 
of  these  consultations  are  discussed  below.  As  shown  by  their  position  in  negotiating 
the  JHA  Council  Conclusions,  Member  States  generally  agree  that  more  needs  to  be 
done on confiscation and asset recovery9. 

This  impact  assessment  is  also  based  on  the  conclusions  and  recommendations  of 
another external study10 [the study seems to have been removed from the link indicated 
in the footnote! Thanks ! We will ensure that both this study and the IA are posted 
online  before  the  proposal  is  published.]  entitled  "Assessing  the  effectiveness  of  EU 
Member  States'  practices  in  the  identification,  tracing,  freezing  and  confiscation  of 

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5  
6  
7  

8  

9  

10  

COM(2011) 307, 308 and 309 and C(2011) 3673 final of 6.6.2011. 
COM(2011) 376 final of 24.6.2011. 
"Proceeds of organised crime - Ensuring that 'crime does not pay'", COM (2008) 766 final. 
Framework Service Contract No JLS/2010/EVAL/FW/001/A1, Study for an Impact Assessment 
on a proposal for a new legal framework on the confiscation and recovery of criminal assets. 
From Austria, Bulgaria, Cyprus, Finland, France, Greece, Ireland, Italy, Luxembourg, Poland, 
Romania,  Slovakia,  Sweden,  UK.  CARIN  is  an  international  network  of  asset  recovery 
practitioners  which  has  Members  in  over 50  countries  and  jurisdictions.  CARIN  foresees one 
law enforcement and one judicial contact point per country 
However, during the discussions some delegations expressed the wish to have more information 
on certain issues, such as non-conviction based confiscation. 
Available at http://ec.europa.eu/home-affairs/policies/crime/crime_confiscation_en.htm  

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criminal assets", contracted by the Commission to Matrix Consultancy and finalised in 
2009.  This  study  analyses  Member  States'  practices  in  confiscation,  focusing  in 
particular on what has proven effective at national level with a view to promoting and 
exchanging  best  practices.  The  study  identified  several  obstacles  to  effective 
confiscation,  such  as  conflicting  legal  traditions,  resulting  in  the  lack  of  a  common 
approach to confiscation measures, difficulties in securing and maintaining assets, lack 
of  resources  and  training,  limited  cross-agency  contacts  and  a  lack  of  a  coherent  and 
comparable statistical system. 

Finally,  the  impact  assessment  is  based  on  the  implementation  reports  issued  by  the 
Commission  on  the  existing  EU  legal  acts  (see  infra,  Section  3.3).  The  reports  on 
Framework Decisions 2005/212/JHA11, 2003/577/JHA12 and 2006/783/JHA13 show that 
Member States have been slow in transposing them and that the relevant provision have 
been  often  implemented  in  an  incomplete  or  incorrect  way.  Only  Council  Decision 
2007/845/JHA seems to have been implemented in a moderately satisfactory way14. 

Statistics  on  confiscation  and  asset  recovery  activities  are  scarce  (Annex  2  contains 
most of the available data on assets recovered). Reliable data sources on the number of 
ongoing freezing and confiscation procedures (especially those to be executed in other 
Member States), the turnover of criminal organisations, the costs of judicial procedures 
or the administrative costs related to asset management or data collection activities are 
even scarcer. Therefore, the economic impacts of the foreseen actions are often difficult 
to quantify. 

2.1.3.  Consultation of interested parties 

Wide consultations and discussions with experts were carried out in the CARIN Plenary 
meeting (September 2010)  and in seven meetings of  the EU informal  Asset  Recovery 
Offices' Platform between 2009 and 2011. An expert meeting with Member States was 
held in October 2011. 

Confiscation  and  asset  recovery  issues  are  also  widely  discussed  between  experts. 
International  practitioners'  meetings15 and strategic seminars on confiscation and asset 

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13  

14  

15  

Report from  the Commission pursuant to Article 6 of the Council Framework Decision of 24 
February  2005  on  Confiscation  of  Crime-related  Proceeds,  Instrumentalities  and  Property 
(2005/212/JHA), COM(2007) 805. 
Report  from  the  Commission  based  on  Article  14  of  the  Council  Framework  Decision 
2003/577/JHA  of  22  July  2003  on  the  execution  in  the  European  Union  of  orders  freezing 
property or evidence, COM(2008) 885 final. 
Report  from  the  Commission  pursuant  to  Article  22  of  the  Council  Framework  Decision 
2006/783/JHA of 6 October 2006 on the application of the principle of  mutual recognition to 
confiscation orders, COM(2010) 428.   
Report  from  the  Commission  based  on  Article  8  of  the  Council  Decision  2007/845/JHA  of  6 
December 2007 concerning cooperation between Asset Recovery Offices of the Member States 
in the field of tracing and identification of proceeds from, or other property related to, crime, 
COM(2011) 176 of 12 April 2011. 
Such  as  the  meetings  of  the  CARIN  Network  or  of  the  informal  EU  Asset  Recovery  Offices 
Platform. 

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recovery16 are increasingly taking place. Practitioners consider that most of the policy 
actions  foreseen  are  best  practices  and  as  such  have  been  included  in  the 
recommendations issued by CARIN between 2005 and 2010.  

While  the  governments  of  the  Member  States  were  not  formally  consulted,  they 
expressed their position on these issues last year in the negotiations of the JHA Council 
Conclusions mentioned earlier. Although there was broad agreement on most issues, a 
few Member States held a more reserved position on non-conviction based confiscation 
(e.g. Romania due to constitutional issues). Conversely, on other issues (eg third party 
confiscation, asset management) Member States agreed that more should be done, but 
suggested  different  solutions  due  to  differences  in  their  legislation,  structures  and 
practices. 

Defence lawyers expressed concerns about the increased use of extended confiscation, 
non-conviction  based  confiscation  and  third  party  confiscation  due  to  fundamental 
rights  concerns  (possible  limitation  of  the  right  to  property  and  of  the  right  to  a  fair 
trial). 

No  open  Internet  consultation  was  carried  out,  as  confiscation  is  a  rather  specialised 
topic  where  limited  expertise  is  available  but  contacts  were  established  with  civil 
society,  notably  with  the  organisations  promoting  legality,  the  fight  against  organised 
crime and the protection of the victims of crime.17 These organisations fully supported 
the envisaged measures. 

During  recent  hearings  on  organised  crime  in  the  European  Parliament's  LIBE 
Committee, several Members of Parliament expressed a keen interest in strengthening 
the  EU  legislation  on  confiscation,  mainly  by  using  the  existing  Italian  legislation 
(probably the most far-reaching) as a model.  

The  internal  consultations  in  the  Commission  were  mainly  carried  out  through  the 
inter-service  group  (ISG)  on  confiscation  and  asset  recovery.  The  DGs  and  services 
represented  in  this  ISG  were  DG  HOME,  DG  JUSTICE,  OLAF,  DG  EEAS,  the 
Secretariat  General,  the  Legal  Service,  DG  MARKT,    DG  TAXUD  and  DG  ECFIN. 
Three meetings of the ISG took place in 2011 (i.e. on 16 February, 14 April and 4 May 
2011)  before  the  submission  of  this  impact  assessment  to  the  Impact  Assessment 
Board.  Another  meeting  of  the  ISG  was  held  on  30  June  2011  to  discuss  the  Impact 
Assessment  Board's  opinion.  The  ISG  members  were  in  principle  supportive  of  the 
main  issues  addressed  in  the  impact  assessment  and  their  comments  and  suggestions 
were considered during the drafting of this report.  

In  view  of  the  above,  minimum  standards  for  consultation  of  interested  parties  have 
been met in the preparation of this impact assessment. 

16  
17  

For example the CEART Seminar and the Eurojust Strategic Seminar held in 2010. 
For example the Commission services held several bilateral meetings with representatives of the 
FLARE (Freedom, Legality and Rights in Europe) Network and their associated networks 

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2.2. 

Consultation of the Impact Assessment Board 

The  Impact  Assessment  Board  (IAB)  reviewed  a  preliminary  version  of  this  impact 
assessment  and  delivered  its  opinion  on  10  June  2011.  The  recommendations  for 
improvement were accommodated in this revised version of the report. In particular, the 
following changes were made:  

• 

• 

• 

• 

• 

The problem requiring EU intervention has been explained more precisely.  

The  justification  for  the  preferred  option  has  been  strengthened,  in  order  to 
clarify  why  it  can  be  considered  proportionate  despite  fundamental  rights 
concerns.  

Stakeholder views have been presented earlier and in more detail in the report 
and the limited consultation has been acknowledged.  

Some cost element likely to arise from implementation has been indicated. 

The  objectives  of  the  initiative  have  been  clarified  to  enable  a  meaningful 
evaluation in the future.  

3. 

The recovery of criminal assets explained 

3.1. 

The asset recovery process 

Confiscation applies in principle to all crimes (or at least to most criminal activities in 
some  Member  States).  However,  in  practice  it  is  more  frequently  applied  to  serious 
cases involving organised crime. Typical examples are crimes generating huge income 
and  liquidity,  such  as  drug  trafficking.  The  proceeds  of  crime  are  then  converted  into 
assets  ranging  from  cash  held  in  bank  accounts  to  real  estate,  vehicles,  livestock, 
artworks, company shares, businesses, collector's items etc. State authorities should be 
able  to  expediently  identify  and  trace  such  assets,  freeze  them  and  manage  them 
properly once they have been frozen.  

Confiscation and recovery of criminal assets are two stages of a legal process whereby 
criminal  assets  (proceeds  or  instrumentalities  of  crime)  are  recovered  in  favour  of 
victims,  deprived  communities  or  the  state.  At  the  heart  of  this  process  lies  the 
determination  by  a  court  that  particular  assets  are  criminal  and,  thereby,  liable  to 
confiscation. This typically takes the form of a confiscation order. The full process is 
illustrated in the table below. 

Figure 1: Steps in the asset confiscation and recovery process 

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1. Identification

Regardless of the nature of the confiscation order, criminal 
assets can only be confiscated once they are identified. 

2. Preservation 

It  takes  time  to  obtain  the  confiscation  order,  so  there 
must be mechanisms to preserve assets in the interim.  The 
typical  mechanisms  are  freezing  (for  bank  accounts  and 
real property) and seizure (for other moveable assets). 

3. Confiscation

The confiscation order makes it legally possible to recover 
criminal assets. 

4. Enforcement

Confiscation order is enforced against particular assets. [ 

5. Redistribution

Recovered  assets  may  be  returned  to  victims  or  deprived 
communities, or they may revert to the state. 

The first stage in the asset recovery process is the tracing and identification of assets. 
This phase involves law enforcement investigations (usually under the coordination of a 
prosecutor)  and  requires  substantial  financial  investigation  skills.  National  Asset 
Recovery Offices (AROs) play a key role in expediently providing information to other 
AROs on the assets located in their territory. 

After  criminal  assets  are  located  in  one  or  more  countries,  judicial  procedures  are 
needed to first freeze them and later to confiscate them. Following their freezing [what 
does seizure imply? LS suggested deleting this wording in Directive. In some national 
legislations  and  international  conventions  freezing  refers  only  to  the  money  on 
bank  account  and  real  estate,  while  seizure  refers  to  all  other  assets,  including 
cash.  The  EU  legislator  referred  only  to  freezing  orders  for  any  property  in  FD 
2003/577/JHA,  therefore  we  can  delete  "seizure"  in  the  IA],  assets  should  be 
properly  managed  between  the  time  when  they  are  frozen  and  the  time  when  a 
confiscation order is issued, so that their value is maintained. After a confiscation order 
is issued by a court, its execution is carried out. In principle assets become the property 
of the executing Member State, which may sell them or re-use them as appropriate.   

Each stage in the asset recovery process poses different challenges. For example, AROs 
should  have  the  necessary  resources  to  operate  effectively,  including  access  to  all 
relevant  information.  Prosecutors  and  judges  should  trust  the  legal  system  of  other 
Member  States  in  order  to  recognise  and  execute  foreign  freezing  and  confiscations 
orders.  Authorities  should  have  the  necessary  skills  and  expertise  to  manage  different 
assets as well as handle procedures in cross-border cases. Attention should be focused 
on ensuring effectiveness in all phases of the confiscation and asset recovery process. 

The challenges of the asset recovery process can therefore be summarised as follows: 

how to identify criminal assets; 
how to preserve these pending a confiscation order; 
how to obtain a confiscation order so that they can be recovered; and 
how to enforce these orders. 

These questions represent stages of an attrition process as explained in figure 2. 

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Figure 2: Stages of attrition 

Identification 

Preservation 

Confiscation order 

Enforcement 

All criminal assets 

Known 
criminal assets 

Assets available
to confiscate 

Assets 
available to recover 

Assets 
recovered 

3.2. 

Fundamental questions of the asset recovery process 

The  confiscation  process  is  complicated  in  practice  because  sophisticated  criminals 
attempt to conceal their illicit gains from investigators, taking whatever measures they 
can  to  put  assets  beyond  the  scope  of  confiscation  laws  or  enforcement  measures.  In 
response to this, newer confiscation tools have been introduced, such as: 

value  confiscation, so that assets of equivalent value can be confiscated where 
specific criminal assets are outside the reach of investigators; 
third party confiscation, so that assets can be confiscated from the third parties 
to whom they have been transferred; and 
mutual recognition of confiscation orders, so that assets can be more efficiently 
confiscated from other jurisdictions. 

These  tools  are  designed  to  make  it  easier  for  authorities  to  recover  criminal  assets. 
However, the key question is what assets should be deemed ‘criminal’ and, thus, liable 
to confiscation. The traditional approach of ordinary confiscation is to confiscate assets 
linked to a specific crime, following a criminal conviction for that crime. 

The availability of ordinary confiscation can never ensure the recovery of all criminal 
assets because authorities will not always be able to prove that assets are the proceeds 
of specific crimes. In some cases, a conviction will have been obtained for the relevant 
crime,  but  authorities  will  lack  evidence  that  particular  assets  are  in  fact  proceeds  of 
this  crime.  In  other  cases,  criminal  assets  will  go  unrecovered  because  there  is  no 
criminal conviction to serve as a basis for ordinary confiscation. Such cases consist of 
two  types:  i)  those  where  authorities  have  sufficient  evidence  but  a  case  cannot  be 
brought  because  it  is  time-barred  or  because  the  defendant  is  too  ill,  has  died  or 
absconded, lacks legal capacity (e.g. is a minor or of unsound mind), or has immunity 

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from  prosecution  or  amnesty;  and  ii)  those  situations  in  which  authorities  have 
insufficient evidence to obtain a criminal conviction.  This typology of criminal assets 
is  illustrated  in  Figure  3.  Type  1  assets  are  those  amenable  to  ordinary  confiscation 
proceedings;  type  2  assets  are  those  not  so  amenable  due  to  barriers  to  prosecution; 
type 3 assets are those not so amenable due to insufficient evidence; type 4 assets are 
those not so amenable for both of these reasons. 

Figure 3: Typology of criminal assets 

Sufficient 
evidence to 
prosecute  
[2] 

[1] 

[4] 

No other 
barriers to 
prosecution 
[3] 

Yet  here  too  there  have  been  legal  developments  in  favour  of  the  state  powers. 
Examples include: 

extended  confiscation,  in  which  a  criminal  conviction  is  followed  by  the 
confiscation  not  only  of  assets  associated  with  the  specific  crime,  but  of 
additional  assets  which  the  court  determines  are  the  proceeds  of  other, 
unspecified crimes; 
non-conviction  based  confiscation,  in  which  civil,  administrative  or  criminal 
procedure applies to recover illicit assets; and 
extended  criminalisation,  which  involves  defining  non-traditional  crimes,  with 
the result that more assets are liable to confiscation. 

The above demonstrates that the following three questions need to be addressed when 
designing the asset recovery process: 

•  what  assets  should  be  liable  to  confiscation  (i.e.  how  to  delineate  between  assets 

which are, and are not, ‘criminal’);  

•  how to confiscate and recover these assets; and 
•  what to do with the recovered assets. 

The  asset  recovery  process  must  also  be  designed  in  such  a  way  that  it  meets 
fundamental rights concerns. 

3.3. 

Asset recovery in the Member States and existing EU legal framework 

Within the EU, each Member State’s asset confiscation laws have evolved organically 
in response to domestic imperatives and, more recently, an EU legal framework. By the 

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time  the  EU  began  to  act  in  2001  some  Member  States  had  potent  asset  confiscation 
regimes, whilst others did not18. 

The  current  EU  legal  framework  consists  of  four  Council  Framework  Decisions  (FD) 
and one Council Decision:  

•  Framework  Decision  2001/500/JHA,  which  obliges  Member  States  to  enable 
confiscation,  to  allow  value  confiscation  where  the  direct  proceeds  of  crime 
cannot  be  seized  and  to  ensure  that  requests  from  other  Member  States  are 
treated with the same priority as domestic proceedings 

•  Framework  Decision  2005/212/JHA,  which  harmonises  confiscation  laws. 
Ordinary  confiscation,  including  value  confiscation,  must  be  available  for  all 
crimes  punishable  by  1  year  imprisonment.  Extended  confiscation  must  be 
available for certain serious offences, when "committed within the framework of 
a criminal organisation"; 

•  Framework  Decision  2003/577/JHA,  which  requires  mutual  recognition  of 
freezing orders for a long list of crimes punishable by 3 years imprisonment, or 
if the ‘dual criminality’ principle is satisfied (i.e. for any offence punishable in 
both countries); and 

•  Framework  Decision  2006/783/JHA,  which  mirrors  these  provisions  for  the 

mutual recognition of confiscation orders. 

•  Council  Decision  2007/845/JHA  on 

the  exchange  of 

information  and 

cooperation between Asset Recovery Offices. 

Each  of  these  instruments  was  passed  unanimously  by  the  Council,  exercising  broad 
powers under Title VI of the Treaty on European Union. The context was in each case 
the fight against organised crime but, with the exception of the provisions on extended 
confiscation, the EU legal framework is not limited to organised criminal activity.   

4. 

Problem definition 

4.1. 

Insufficient recovery of criminal assets in the EU 

The  problem  addressed  by  this  impact  assessment  is  the  insufficient  recovery  of 
criminal assets in the EU. To date, estimates of money lost to organised crime in the 
Member  States,  as  well  as  data  on  success  in  asset  recovery,  remain  patchy.  Some 
recent  reports  and  unofficial  sources  estimate  the  annual  proceeds  from  organised 
crime  in  some  Member  States  as  very  high19.  Even  considering  a  fraction  of  the 
estimated  amounts  as  more  credible,  the  figures  provide  a  striking  contrast  with  the 

18  

19  

For  example,  substantial  differences  exist  between  the  national  regimes  for  third  party 
confiscation  and  extended  confiscation.  Non-conviction  based  confiscation  is  heavily  used  in 
Ireland,  the  United  Kingdom  and  other  countries,  but  is  not  used  in  Romania  (property  is 
presumed  to  be  of  licit  origin  and  confiscation  based  on  a  burden  of  proof  of  balance  of 
probabilities may be perceived as problematic). France introduced a new crime for "possession 
of unjustified assets" (in case of evident links with organised crime activities) which does not 
exist in other Member States. 
In  Italy  the  proceeds  of  organised  crime  laundered    in  2011  were  estimated  at    €  150  billion 
(Bank of Italy, 2011). 

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amounts  recovered  annually  in  the  Union20.  Although  only  some  Member  States 
maintain  statistics  on  the  amounts  recovered  annually  from  crime,  at  present  the 
number of freezing and confiscation procedures in the EU and the amounts recovered 
from organised crime seem modest if compared to the estimated revenues of organised 
criminal groups.  

In  the  UK  an  official  estimate  in  2006  put  organised  criminal  revenue  at  £15bn  per 
annum.21  Meanwhile,  the  UK’s  Joint  Asset  Recovery  Database  (JARD)  recorded 
approximately £125m worth of recoveries that year (see Annex 6)22.  In Italy, organised 
criminal revenues were estimated at €150bn pe r year and the costs of corruption at 50-
60  bn  per  year23,  eclipsing  the  amounts  recovered  and  returned  annually  to  the  state 
(including to communities via social reuse programmes) (see Annex 2). Data from the 
UK  and  Italy  therefore  indicates  that  a  low  proportion  of  criminal  assets  are 
recovered. Moreover, comparing data on an annual basis (the value of assets recovered 
versus criminal turnover) is in fact a conservative approach, as it ignores unrecovered 
amounts from previous years which remain recoverable.   

Although reliable data sources are indeed scarce24, the value of assets recovered in the 
EU can be considered insufficient, especially if compared to the estimated revenues of 
organised criminal groups or to the number of criminal convictions decided by courts 
for serious crimes. 

Organised  crime  activities  are  often  transnational  in  nature  and  the  assets  of  criminal 
groups  are  increasingly  invested  in  other  Member  States25.  A  good  example  is  the 
recent  operation  "Shovel",  described  in  Box  1,  which  shows  the  ramification  of 
criminal  activities  and  that  important  means  need  to  be  deployed  to  fight  them 
successfully. 

Box 1 – Operation "Shovel": 

The operation "Shovel" (2010) was conducted by the Spanish authorities in collaboration with 
the  UK,  Ireland  and  Belgium  and with  the assistance of Europol.  The  targeted  criminal  group 
led by Irish and UK criminals was involved in drug and weapons trafficking, money laundering, 
forgery  of  documents  and  murders.  Over  700  police  officers  were  deployed  in  many  Member 
States  on  the  day  of  the  operation  (more  than  145  persons  and  100  companies  were  under 
control).  "Shovel"  resulted  in  38  arrests  (24  in  Spain  including  two  lawyers  who  facilitated 
money laundering operations, 12 in the UK, 1 in Ireland and 1 in Bulgaria) and in the freezing 
of 60 luxury properties on the ”Costa del Sol” and 25 Luxury cars. 180 bank accounts were also 

20  
21  
22  

23  
24  

25  

For example in 2009 €189m were recovered in the UK and €60m in the Netherlands. 
Home Office (2006), referred to in the 2010 Organised Crime Threat Assessment. 
This figure is likely to underestimate the proportion of criminal wealth recovered, because i) it 
is net of expenses paid to private receivers, ii) it does not include amounts recovered in favour 
of victims and iii) for non-financial assets it records values realised at auction, which may be 
less  than  values  reported  stolen.  Even  so,  the  data  suggests  that  the  vast  majority  of  criminal 
wealth  goes  unrecovered,  especially  given  that  the  £15bn  estimate  relates  only  to  organised 
crime.   
Respectively by the Bank of Italy and the Italian Court of Auditors. 
Annex  2  contains  some  statistics  on  the  value  of  assets recovered, but  there  is  scarce data  on 
organised criminal turnover against which to compare them. 
Justice and Home Affairs Council Conclusions on confiscation and asset recovery of June 2010, 
Council document 7769/3/10. For similar statements see also the Executive Summary of the EU 
Organised Crime Threat Assessment 2011 and the Eurojust Annual Report 2010. 

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frozen. 

Pursuing  assets  located  abroad  is  invariably  more  problematic,  due  to  the  increased 
difficulties in tracing them and to legal obstacles in obtaining evidence and executing 
freezing  or  confiscation  orders.  Table  1  lists  examples  of  assets  confiscated  in  cross-
border cases with the assistance of Eurojust in 2010.  

Table 1: Examples of asset confiscation in cross-border cases 

Member State 

Assets subject to confiscation with Eurojust's assistance 

Belgium 

Bulgaria 

Germany 

Ireland 

Spain  

Italy 

Two boats to be confiscated in Spain.  

€37,000 cash and real estate  property confiscated in the UK 

€100,000,000 confiscat ed in a large tax fraud case involving coordinated 
searches in 15 countries 

Substantial amounts of property confiscated in Spain and Ireland 

Five  cases  involving  confiscation  of 
€1,000,000, €23,000, and €9,000,000  

€112,000,000, 

€17,000,000, 

Provisional confiscation in the Netherlands of €400,0 00. Freezing of 800 
kg of counterfeit products in 10 countries. Freezing of a luxury watch in 
Germany.  Freezing  of  300  kg  of  cocaine  in  Belgium,  Spain,  Italy  and 
Czech Republic. Freezing of documents related to the registration of 100 
vehicles  in  Germany.  Freezing  of  700  kg  of  hashish,  one  pc,  mobile 
telephones and documents in France, Spain and the UK. Freezing of one 
server in Austria.  

France 

Property and vehicles in Italy, one ship and the freezing of 1,400 kg of 
cocaine. 

Sweden 

€1,685,800 confiscated in Sweden and a ship in another country 

UK 

All  property  and  money  of  a  main  suspect  (including  a  house,  a 
speedboat  and  money  with  a  total  value  in  excess  of  €1,200,000). 
Several luxury vehicles in Spain. 

Moreover,  the  penetration  of  organised  crime  into  the  licit  economy,  even  if  it  takes 
place  in  a  single  Member  State,  affects  the  functioning  of  the  whole  EU  Internal 
Market,  not  only  of  that  country.    Even  when  managing  licit  businesses,  organised 
crime  groups  often  support  these  activities  with  the  recourse  to  intimidation  and 
corruption,  thus  altering  competition  and  the  smooth  functioning  of  the  Internal 
Market. The resulting loss of revenues affects both national and EU financial interests, 
even when it takes place in only one Member State. 

The aims of asset recovery are realised not only when criminals are deprived of their 
ill-gotten gains, but when these are redistributed effectively. In particular, the impact of 
asset  confiscation  upon  public  confidence  in  the  criminal  justice  system  may  be 
enhanced  through  redistribution  and  restorative  justice.    [reuse  wording.  Yes,  but  not 
advocating reuse for social nor public purposes. ] 

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Although asset recovery is a popular concept with a basis in international law26, EU law 
and  Member  State  laws,  these  laws  remain  underdeveloped  and  underutilised.  It  is 
unlikely  that  any  Member  State  confiscates  a  significant  proportion  of  criminal  assets 
and, accordingly, it is unlikely that the laws themselves are achieving their stated aim. 

4.2. 

Components of the problem  

There  are  essentially  three  problems  in  relation  to  the  EU  legislative  framework:  its 
incomplete or late transposition, the existence of diverging national provisions and the 
low utilisation of confiscation in practice. The most plausible underlying reason for the 
late  or  incomplete  transposition  of  the  existing  legislation  is  the  workload  of  the 
responsible national authorities. This seems demonstrated by the somewhat surprising 
fact that transposition of the EU acquis has been slow or partial also in countries (eg 
Italy  and  the  UK)  where  fighting  organised  crime  through  confiscation  is  a  well-
established priority at national level and where national legislation is well developed. 
For  example  the  Commission  implementation  report  on  the  EU  rules  on  extended 
confiscation (FD 2005/212/JHA) showed that most Member States are slow in putting 
in  place  measures  to  allow  more  widespread  confiscation,  with  only  16  of  them 
transposing in full or partially by end 2007. The situation has slightly improved since 
the report, but transposition is not yet complete today 

However,  this  is  not  only  a  case  of  incomplete  transposition.  The  lack  of  clarity  of 
some EU provisions has resulted in a different (and often diverging) transposition into 
national law, further widening the differences in the national legislations. One example 
is  the  notion  of  extended  confiscation,  which  requires  Member  States  to  choose 
between three alternative criteria for extended confiscation, or to adopt two or all three 
of them cumulatively. As a result, the mutual recognition of orders based on extended 
confiscation  is  problematic.  Due  to  the  lack  of  coherence  between  provisions  in  the 
2005 and 2006 Framework Decisions, a Member State can refuse to execute an order 
issued in another Member State if the two countries have not chosen the same criteria. 
Moreover,  as  highlighted  in  the  Commission  implementation  reports,  Member  States 
have  often  added  conditions  (for  example  additional  grounds  for  refusing  the  mutual 
recognition  of  confiscation  orders)  which  further  limit  the  effectiveness  of  the  EU 
provisions.  

These  problems  are  compounded  by  a  low  implementation  in  practice  (under-
utilisation)  of  confiscation,  as  evidenced  by  the  gap  between  the  estimated  size  of 
criminal  profits  in  a  country  and  the  amounts  confiscated,  or  by  the  gap  between 
criminal  convictions  and  number  of  cases  when  they  have  been  followed  up  with 
effective confiscation. The inadequate implementation in practice of the EU legislation 
may be due to different reasons depending on the stakeholders involved. For example, 
practitioners requesting the execution of orders in other Member States find the ad hoc 
request  forms  unclear  and  difficult  to  use.  Law  enforcement  officers  and  prosecutors 

26  

For example the Council of Europe Convention on laundering, search, seizure and confiscation 
of the proceeds of crime and on the financing of terrorism (CETS 198), which to date has been 
signed by 20 EU Member States and the European Union, and ratified by 12 Member States. 
The  United  Nations  Convention  against  Corruption  (UNCAC),  which  has  been  signed  and 
ratified  by  almost  all  EU  Member  States  and  the  European  Union,  has  a  Section  on  asset 
recovery. 

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may  perceive  asset  tracing  and  confiscation  as  a  drain  of  scarce  and  expensive 
resources (financial investigators) that does not always entail tangible results (hence the 
importance  to  inform  widely  on  the  profitability  of  confiscation).  Among  the  judges 
there may be some "cultural" resistance to apply confiscation widely, as it is perceived 
as  an  additional  punishment  on  an  already  convicted  person.  Bearing  in  mind  the 
challenges  encountered  during  the  different  stages  of  the  asset  recovery  process,  the 
problem of the insufficient recovery of criminal assets in the EU can be broken down 
into components. These are discussed in more detail below. 

4.2.1. 

Inadequate powers for confiscating criminal assets 

The  national  confiscation  systems  in  the  Member  States  differ  substantially.  As 
organised  criminal  groups  operate  without  borders  and  increasingly  acquire  assets  in 
other  Member  States,  there  is  greater  need  for  both  harmonised  substantive  law 
provisions and effective mutual recognition procedures in order to enforce freezing and 
confiscation orders in other Member States.  

The  EU  legislation  described  above  harmonises  only  some  provisions  on  the  national 
confiscation  systems.  For  example,  while  it  is  common  practice  for  suspected  or 
investigated  persons  to  transfer  their  assets  to  a  knowing  third  party  with  a  view  to 
avoid confiscation, there are no provisions at EU level on third party confiscation. Also, 
the current EU legal framework only applies to criminal proceedings and the issuance 
of confiscation orders generally requires a criminal conviction. On the other hand, some 
Member States apply also non-conviction based systems to deprive criminals of illicit 
profits, which are not provided for at EU level.  

The  limited  EU  legal  framework  in  place  presents  shortcomings.  As  it  consists  of  a 
series of measures proposed by Member States over time, it is not sufficiently coherent 
and  consistent.  It  ultimately  provides  relatively  little  harmonisation  and  offers  wide 
discretionality to the Member States in its implementation. Moreover, some provisions 
have been implemented poorly or in a diverging way.   

There  are  also  indications  (eg  from  expert  reports  within  the  framework  of  technical 
assistance projects financed by the Union or by Member States) that legal inadequacies 
and  political/structural  problems  in  a  few  Member  States  may  be  so  significant  that 
they  largely  prevent  the  use  of  confiscation  and  asset  recovery  against  high-ranking 
organised criminals. While these shortcomings mainly relate to extended confiscation 
(which exists in EU legislation since 2005), even obtaining ordinary confiscation seems 
somewhat  problematic  in  these  countries,  as  demonstrated  by  the  low  number  of 
confiscation cases and the modest amounts recovered every year.  

For  the  reasons  above,  a  complete  and  correct  implementation  of  the  existing  legal 
framework would not be sufficient to address the problem of the insufficient recovery 
of  criminal  assets  in  the  Union.  Many  national  provisions  are  not  harmonised  at  EU 
level and the Member States exercise their powers in a very different way. A summary 
description of the provisions and the shortcomings existing in each Member State, as 
well as the potential impact of the proposed measures is provided in Table 5 (infra). 

Box 2 – Examples of differences in the Member States' national provisions 

On  the  scope  of  the  targeted  assets,  Member  States  currently  employ  varying  definitions  of 

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criminal "proceeds" (as this term is currently undefined within the EU legal framework). As a 
result, the indirect proceeds of crime cannot always be confiscated.  

On the question whether particular assets are proceeds, most Member States employ a criminal 
standard of proof (high in some countries, such as Germany) while others, such as the United 
Kingdom, use a civil standard of proof which facilitates confiscation.  

On  the  timing  for  the  confiscation  procedure,  in  many  Member  States,  the  opportunity  to 
confiscate  criminal  assets  ends  when  criminal  proceedings  are  finalised.  This  encourages 
criminals to try to conceal assets for the duration of the criminal proceedings, so that the assets 
which "resurface" after its conclusions cannot be confiscated. This can also cause authorities to 
rush  financial  investigations  (with  the  risk  of  missing  some  assets)  in  order  to  conform  to 
timetables imposed by criminal procedure.  

On  the  existing  barriers  to  prosecution,  the  EU  legal  framework  contains  no  mandatory 
provision  for  the  confiscation  of  assets  which  cannot  be  confiscated  because  criminal 
proceedings are not allowed to be brought despite sufficient evidence. The assets believed to be 
criminal even though there is insufficient evidence to obtain the criminal conviction are covered 
by Framework Decision 2005/212/JHA in a limited and complicated way.  

Another  relevant  barrier  is  that  in  some  Member  States  it  is  impossible  to  confiscate  criminal 
assets  where  a  conviction  cannot  be  obtained  (eg  because  the  suspect  has  died,  fled  the 
jurisdiction, is unable to stand trial due to mental illness, has immunity from prosecution, etc).  

Finally,  confiscation  from  third-parties  is  an  entirely  optional  aspect  of  the  existing  EU  legal 
framework. Some national confiscation regimes do not apply to assets which have been passed 
on  to  third  parties.  Others  do,  but  require  proof  of  mala  fides  even  where  the  third  party  is  a 
relative or close associate who has received for less than market value. 

These  differences  in  legislation  often  become  barriers  to  the  mutual  recognition  of 
freezing and confiscation orders between Member States. It is widely recognised that a 
minimum level of harmonisation should exist in order to facilitate mutual recognition. 
An increased level of harmonisation is therefore needed in this area, in order to ensure 
in each Member State a minimum level of protection from criminal infiltration in the 
legal  economy  (through  the  acquisition  of  assets)  and  facilitating  the  mutual 
recognition of freezing and confiscation orders in other Member States. 

4.2.2. 

Inadequate powers for preserving criminal assets pending confiscation 

The  EU  legislation  does  not  contain  harmonised  provisions  on  preservation  of  assets 
and does not cover the management of seized assets pending the confiscation procedure, 
which is addressed exclusively by national provisions. 

On asset preservation, while all confiscation regimes are supported by freezing powers, 
in a minority of cases these do not apply to all assets liable to confiscation (eg not to 
assets  in  the  possession  of  third  parties  or  assets  representing  equivalent  value). 
Moreover,  Member  States  do  not  always  have  in  place  appropriate  mechanisms  to 
ensure  that  assets  in  danger  of  being  hidden  or  transferred  out  of  the  jurisdiction  are 
able to be immediately frozen/seized while the request for judicial freezing is pending.  

On  asset  management,  in  many  Member  States,  assets  are  managed  by  agents  (court 
officials, prosecutors, and police) involved in the criminal proceeding. In some cases, 
they lack even basic powers to realise seized assets which are liable to decline in value 
(even  where  requested  to  do  so  by  the  affected  person).  More  generally,  while  a  few 

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Member  States  have  established  dedicated  centralised  structures,  in  most  Member 
States expertise in managing complex assets is lacking and the management of assets is 
not  centralised.  This  shortcoming  directly  affects  the  stages  of  attrition  described  in 
Figure 2. In some cases the spread between the value of the assets frozen or seized in 
view of confiscation and the value of the assets recovered at the end of the confiscation 
procedure is quite significant. 

Box 3 – Examples on the risks in managing different assets 

While cash and financial products do not create particular management issues, the management 
of  perishable  goods  or  of  vehicles  has  provoked  in  some  instances  substantial  loss  of  value. 
Even  managing  real  estate  can  be  problematic.  Assets  frozen  when  the  real  estate  market  is 
booming  may  lose substantial value if they are auctioned at the  moment when the market has 
declined. Other items which could risk losing value between the freezing and the confiscation 
are artwork and livestock (eg race horses). 

4.2.3. 

Inadequate powers for enforcing confiscation orders between Member States 
(mutual recognition) 

The enforcement of freezing and confiscation orders is generally not problematic in a 
national context. Problems arise more often when enforcing in a Member State an order 
issued by a judge in another Member State. The existing EU legal framework seeks to 
address  the  cross-border  aspects  of  confiscation  through  provisions  on  minimum 
harmonisation and mutual recognition. However, at present the EU legal framework is 
insufficient,  not  completely  transposed,  not  correctly  transposed  and  in  a  few  cases 
lacks coherence27. 

27  

Some  EU  legal  provisions  are  not  well  coordinated.  For  example  Framework  Decision 
2005/212/JHA establishes alternative criteria for extended confiscation as follows: i) A court is 
convinced that the property is derived from criminal activities of the convicted person prior to 
conviction; ii) A court is convinced that the property is derived from similar criminal activities 
of the convicted person prior to conviction; iii) The value of the property is disproportionate to 
the lawful income of the convicted person and the court is convinced that the property derives 
from  criminal  activity.  The  Framework  Decision  leaves  Member  States  with  the  option  to 
transpose one, two or all three criteria. This provision is not coordinated with the provisions on 
the  grounds  for  refusal  of  mutual  recognition  of  confiscation  orders  laid  down  in  Framework 
Decision 2006/783/JHA. As a result the scope for mutual recognition of confiscation orders is 
restricted. The authorities in one Member State are obliged to execute confiscation orders issued 
by another Member State only if these orders are based on the same alternative criteria applied 
in the Member State receiving the order. 

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Box  4  Examples  of  problems  with  the  mutual  recognition  of  freezing  and  confiscation  orders 
between Member States 

Framework  Decisions  (FD)  2003/577/JHA  (freezing  orders)  and  2006/783/JHA  (confiscation 
orders) establish a mechanism whereby the judicial authority issuing an order to be enforced in 
another  Member  State  can  send  it  directly  to  the  judicial  authority  in  that  country  which  is 
competent  to  execute  it,  by  filling  in  a  specific  certificate.  This  mechanism  derogates  from 
mutual  legal  assistance  procedures,  under  which  such  orders  should  be  sent  to  Central 
Authorities in each Member State. However, the full benefits of the swifter procedure provided 
in the FDs may not be fully reaped. 

The  lack  of  transposition  or  the  partial  transposition  by  some  Member  States  of  the  existing 
mutual  recognition  obligations  significantly  hampers  the  enforcement  of  freezing  and 
confiscation  orders  in  other  Member  States.  The  report  issued  by  the  Commission  on  FD 
2003/577/JHA  shows  significant  delays  in  the  transposition,  with  only  19  Member  States 
transposing  this  FD  fully  or  partially  by  December  2008.  Even  today  transposition  is  still  not 
satisfactory, with four Member States not having transposed. The implementation report issued 
by the Commission on FD 2006/783/JHA shows that only 13 Member States transposed this FD 
fully or partially. Again, today the situation has marginally improved but is not yet satisfactory. 

Regrettably,  the  legal  framework  is  not  only  incompletely  transposed.  Its  provisions  are 
sometimes transposed into national law in a diverging way. FD 2003/577/JHA emphasises that 
the  national  legislations  show  numerous  omissions  or  misinterpretations.  The  report  on  FD 
2006/783/JHA highlights that almost all Member States included additional grounds to refuse the 
mutual recognition of confiscation orders issued in other Member States.  

Again,  a  complete  and  correct  implementation  of  the  existing  legal  framework  would  not  be 
sufficient,  as  some  EU  legal  provisions  are  not  well  coordinated.  Footnote  27  describes  the 
negative impact on mutual recognition of the three alternative criteria for extended confiscation 
in Framework Decision 2005/212/JHA and the provisions on the grounds for refusal of mutual 
recognition of confiscation orders laid down in Framework Decision 2006/783/JHA.  

The existing FDs on  mutual recognition are also limited in scope. Extended confiscation is not 
supported by FD 2003/577/JHA, whilst FD 2006/783/JHA supports extended confiscation only 
in  a  limited  way.  Neither  requires  mutual  recognition  of  non-conviction  based  confiscation 
orders. These limitations handicap the ability of Member States to combat organised crime. This 
is especially true for non-conviction based confiscation, as the alternative mutual legal assistance 
route is relatively weak.  

The issues with the certificates which lead to under-utilisation of these procedures are described 
in paragraph 4.2.4. 

Finally, the existing legal framework includes two similar instruments, ie FD 2006/783/JHA on 
the mutual recognition of confiscation orders and FD 2005/214/JHA on the  mutual recognition 
of financial penalties, including compensation orders. This dichotomy between confiscation and 
compensation seems unnecessary given that the recovery mechanisms employed are very similar. 

4.2.4.  Powers for confiscation, preservation and enforcement are underutilised 

Based  on  available  statistics  (Annex  2),  there  is  a  significant  underutilisation  of  asset 
confiscation laws throughout the EU. This is in some cases a matter of law, but mostly 
due to other factors. The study on confiscation conducted by Matrix in 2009 shows how 
cultural  differences  in  the  Member  States  affect  the  general  approach  to  confiscation. 
As a result some judges consider confiscation almost as an additional punishment of an 
already convicted person and are reluctant to apply it systematically.  

In  general  the  profitability  of  asset  confiscation  work  is  also  poorly  understood  by 
government  decision-makers  in  some  Member  States.  This  lack  of  understanding 

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this  factor,  underutilisation  of  asset  confiscation 

causes  asset  confiscation  work  to  be  viewed  as  a  drain  upon  scarce  resources.  Also 
tools  persists, 
because  of 
notwithstanding  ample  rhetoric  on  the  utility  of  confiscating  and  recovering  criminal 
assets. At law enforcement level, in some Member States the tracing and identification 
of criminal assets are neglected in favour of the criminal investigation. This evidently 
hampers  the  possibility  to  confiscate  criminal  assets.  Within  the  judicial  system 
prosecutors have a discretionary power to request freezing and confiscation orders and 
the courts have a discretionary power to issue them. As a result they are underutilised. 
On a cross-border level, the requests for freezing are very often made alongside other 
requests  (eg.  a  house  search),  so  practitioners  using  the  specific  certificates  in  FDs 
2003/577/JHA  and  2006/783/JHA  must  complete  additional  paperwork  (for  mutual 
legal assistance mechanisms) and need to be familiar with many different instruments. 
Fieldwork revealed these to be significant barriers for practitioners.   

4.2.5.  Member  States  tools    for  maximising  social  utility  from  recovered  assets 

(Redistribution)  

The  existing  EU  legislation  does  not  contain  provisions  on  the  disposal  of  assets. 
National provisions exist in some countries, including on the reuse of confiscated assets 
(eg for social purposes). In practice not all Member States have redistribution schemes 
in  place.  The  assets  recovered  from  organised  crime  are  often  sold  in  public  auctions 
and  the  proceeds  are  returned  to  the  State  budget.  In  some  cases  organised  criminal 
groups  have  been  able  to  re-acquire  the  confiscated  assets  by  discouraging  potential 
bidders through intimidation. In countries where a system of decreasing value auction is 
in place (ie the price of the auctioned asset is progressively reduced if no one bids for it) 
they have also been able to pay a very low price. So this factor may also reduce State 
revenues resulting from recovered assets and affect the stages of attrition described in 
Figure 2. Moreover, the social reuse schemes established in some Member States take 
various  forms.  In  some  cases  confiscated  assets  are  directly  put  to  social  purposes,  in 
others income streams are used to fund social benefits. 

4.3. 

How would the problem evolve, all things being equal? 

The  baseline  scenario  or  status  quo  indicates  how  the  identified  problem  is  likely  to 
evolve  without  additional  public  intervention,  taking  account  of  existing  and 
forthcoming interventions and following the introduction of the Lisbon Treaty. 

Based  on  historical  progress,  at  EU  level  the  status  quo  policy  option  would  likely 
result in an increase in the assets owned or controlled by criminal organisations, as well 
as  an  increase  in  their  acquisitions  of  assets  in  other  Member  States.  Evidence  of  a 
progressive  increase  in  cross  border  criminality  and  in  the  cross-border  acquisition  of 
assets  can  be  derived  from  investigative  sources.  The  threat  assessments  issued  by 
Europol28 show an increasing trend in cross-border criminal activities and in the links 
between  criminal  groups  located  in  different  regions.  The  number  of  investigations 
coordinated  by  Europol,  facilitated  by  Eurojust  or  supported  by  Joint  Investigation 
Teams is steadily increasing. To some extent, the increasing cross-border acquisition of 
assets by organised crime is demonstrated by the steadily increasing number of requests 

28  

Executive Summary of the EU Organised Crime Threat Assessment 2011. 

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for information on assets which are exchanged on a daily basis between Asset Recovery 
Offices in the Member States.  

The  expected  increase  in  the  cross-border  acquisition  of  criminal  assets  would  be 
mitigated  to  some  extent  by  a  corresponding  slight  increase  of  the  amounts  frozen  or 
seized,  of  the  amounts  confiscated,  of  the  amounts  recovered  and  of  the  cases  where 
mutual  recognition  of  orders  issued  in  other  Member  States  is  successful.  Such 
increases would partly result from a slightly better transposition of the EU instruments. 
Better  transposition  could  entail  a  wider  recourse  to  extended  confiscation  and  an 
increased number of cases of successful mutual recognition of freezing and confiscation 
orders issued in other Member States. The TFEU provides for the possibility of using 
infringements  procedures  to  ensure  transposition  of  the  EU  acquis  in  the  area  of 
Freedom,  Security  and  Justice.  However,  even  if  these  procedures  may  serve  as  an 
incentive  for  the  Member  States  to  act,  their  benefits  will  not  be  visible  in  the  short-
term. 

Moreover,  as  the  EU  legislation  currently  harmonises  only  some  provisions  on  the 
national  confiscation  systems,  significant  gaps  would  persist  and  would  continue 
hampering  a  more  successful  recovery  of  criminal  assets  across  the  Union.  For 
example, while it is common practice for criminals to transfer their assets to a knowing 
third party with a view to avoiding confiscation, there are no binding provisions at EU 
level  on  third  party  confiscation.  The  current  EU  legal  framework  only  applies  to 
criminal  proceedings  and  the  issuance  of  confiscation  orders  generally  requires  a 
criminal  conviction.  Non-conviction  based  rules  to  deprive  criminals  of  illicit  profits, 
which are successfully used in some Member States, are not provided for at EU level. 
While  assets  tend  to  decrease  in  value  in  the  period  between  their  freezing  and  the 
confiscation, the EU legislation does not contain harmonised provisions on preservation 
of assets and the management of seized assets pending the confiscation procedure.  
At national  level the progressive  exchange of  best practices and cross-border  judicial 
cooperation between Member States will result in a slight increase of the utilisation of 
existing  instruments,  which  should  result  in  more  successful  asset  investigations  and 
confiscations.  However,  this  progress  in  cross-border  law  enforcement  and  judicial 
cooperation  may  be  partially  offset  by  the  expected  increase  in  cross-border  criminal 
activities,  in  the  links  between  organised  criminal  groups  and  in  the  revenues  of 
criminal  organisations.  On  the  other  hand,  the  collection  of  statistics  to  measure  the 
actual extent of confiscation and asset recovery activities (notably judicial statistics) and 
the corresponding costs will remain patchy, rendering any comparison between Member 
States difficult. 

At  international  level  the  EU  Member  States  will  progressively  sign  and  ratify  the 
2005  Council  of  Europe  Convention  (CETS  198).  This  new  set  of  international 
obligations may induce some Member States to amend their national legislation to align 
it with the provisions of the Convention.While this Convention is based on a relatively 
good  consensus,  seven  EU  Member  States  have  not  even  signed  it  yet.  Without  EU 
action, the implementation of the provisions of this Convention only by some Member 
States  may  therefore  further  widen  the  differences  in  the  legislation  between  the 
Member States, at least in the short/medium term.  

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In  any  case  action  at  EU  level  would  still  be  necessary  in  order  to  address  the 
shortcomings  identified  above.  The  shortcomings  on  asset  preservation  and  reuse  and 
on utilisation of confiscation powers are not addressed in the Convention. The existing 
EU  legislation  on  the  powers  to  confiscate  (e.g.  on  extended  confiscation)  is  more 
detailed  than  the  provisions  of  the  Convention.  Finally,  the  enforcement  of  orders  in 
other Member States is based on the principle of mutual recognition instead of mutual 
legal assistance. 

As  a  result,  the  spread  between  criminally  owned  assets  and  assets  recovered  by 
governments  is  likely  to  increase  and  the  cross-border  dimension  of  confiscation  is 
likely to gain relevance. We will be even more in a situation where "crime does pay". It 
is likely that the current costs of confiscation procedures would remain unchanged. 

4.4. 

The EU's right to act and subsidiarity  

4.4.1.  Conferral of power 

The  EU  has  already  passed  measures  relating  to  the  confiscation  and  recovery  of 
criminal assets. However, the EU’s conferral of power has changed following the entry 
into  force  of  the  Treaty  of  Lisbon.  Whereas  action  under  the  old  Third  Pillar  was 
essentially  unconstrained  provided  all  Member  States  agreed,  the  Treaty  of  Lisbon 
places specific conditions upon the EU’s right to act. 

4.4.2.  Legal basis  

The legal basis to support action in the field of confiscation and recovery of assets can 
be found in Article 82(1) TFEU for the provisions on mutual recognition and in Article 
82(2) and Article 83 (1) TFEU for harmonisation. 

Under  Article  5(3)  TEU,  the  Union  shall  only  act  if  the  proposed  action  cannot  be 
sufficiently  achieved  by  the  Member  States.  Article  67  TFEU  foresees  that  the  Union 
shall provide citizens with a high level of security by preventing and combating crime. 
Pursuing  criminal  assets  is  increasingly  recognised  as  an  essential  tool  to  combat 
organised crime, which is very often transnational in nature and thus needs to be tackled 
on a common basis. This is all the more true in the EU, where the abolition of internal 
frontiers makes it far easier to commit cross-border crimes.  

As acknowledged by the Stockholm Programme, the Union must reduce the number of 
opportunities available to organised crime as a result of a globalised economy, not least 
during a crisis that is exacerbating the vulnerability of the financial system. The EU is 
therefore  better  placed  than  individual  Member  States  in  sharpening  more  efficiently 
one of the most effective tools to fight organised crime groups. 

The  assets  of  organised  criminal  groups  are  increasingly  invested  outside  their  home 
country (often in several countries). This double cross-border dimension (of organised 
crime activities and their investments) further justifies pan-European action to target the 
assets of organised criminal groups. 

While  cross-border  criminal  and  asset  investigations  may  occur  in  several  countries, 
prosecution  and  the  judicial  activities  leading  to  confiscation  normally  take  place  in 
only one Member State. The resulting freezing and confiscation orders then need to be 
enforced in other Member States. Therefore, while criminal activities and investments 

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are  increasingly  cross-border,  confiscation  procedures  remain  essentially  national. 
However,  their  cross-border  dimension  is  immediately  evident  in  the  enforcement  of 
orders in other Member States. 

Moreover,  the  penetration  of  organised  crime  into  the  licit  economy  even  of  a  single 
Member State has an inherent cross-border dimension, as this affects the functioning of 
the whole EU Internal Market.  

Apart  from  the  issue  of  cross-border  organised  crime,  the  free  movement  of  persons 
(11.3 million EU citizens live in a foreign Member State) and capitals within the Union 
entails a need for action at supra-national level in enforcing judicial decisions, including 
those on asset freezing and confiscation. 

4.5. 

Fundamental rights  

Inasmuch  as  it  deprives  the  offender  of  his  or  her  possession,  confiscation  interferes 
with  the  right  to  property  enshrined  in  Article  17  of  the EU  Charter  of  Fundamental 
Rights. This right is not however absolute: it can legitimately be subject to restrictions 
when  the  legislator  pursues  a  valid  objective  of  general  interest  or the  need  to  protect 
the  rights  and  freedoms of  others,  such  as  the  prevention  of  organised  crime.  There 
must nevertheless be reasonable proportionality between the policy behind the law and 
its effect upon the individual.  

In the decisions of the European Court on Human Rights (ECtHR), the proportionality 
test  mainly  depends  on  the  application  of  the  confiscation  order  in  the  particular  case 
under examination. The Court gives great weight to the procedural guarantees in place: 
a measure will be usually proportional if the individual had effective means to contest 
it.  

Article  17  guarantees  a  right  to  own,  use,  dispose  and  bequeath  lawfully  acquired 
possessions. This wording seems to corroborate the possibility to confiscate the direct 
and  indirect  proceeds  of  crime,  which  by  definition  have  been  proven  to  have  illicit 
origin.  In  fact  under  this  Article  it  seems  unclear  whether  a  right  to  property  exists 
where said property has illicit origin.  

Article 47 of the Charter guarantees the right to an effective remedy and the right to a 
fair trial. Inasmuch as confiscation orders interfere with the right to property, affected 
parties must be able to challenge such orders under the conditions set by this Article.  

1)  Ordinary  conviction-based  confiscation  is  generally  perceived  to  be  a  legitimate 
restriction  to  the  right  to  property  guaranteed  by  Article  17  of  the  Charter,  if  coupled 
with  procedural  guarantees  to  secure  the  right  of  affected  individuals  to  an  effective 
remedy  and  to  a  fair  trial  provided  in  Article  47.  In  certain  circumstances,  this  right 
must be exercised together with the right to presumption of innocence of Article 48, the 
principles  of  legality  and  proportionality  of  criminal  offences  and  penalties  of  Article 
49 and with the right not to be tried or punished twice in criminal proceedings for the 
same criminal offence of Article 50 of the Charter.  

2) Non-conviction based and extended confiscation regimes enable interferences with 
the  right  to  property,  in  the  meaning  of  Article  17  of  the  Charter,  without  the  said 

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property being linked to a specific criminal conviction. These measures are in principle 
harder  to  justify  as  necessary  and  proportionate  restrictions  to  the  right  to  property. 
Since  these  regimes  do  not  relate  to  assets  for  which  a  criminal  conviction  has  been 
obtained, they may raise issues with regard to the presumption of innocence guaranteed 
by Article 48(1) of the Charter and Article 6(2) ECHR.   

As with non-conviction based confiscation, extended confiscation may raise questions 
with  regard  to  the  presumption  of  innocence,  as  it  is  by  definition  a  process  which 
enables  confiscation  without  an  established  link  between  the  asset  and  a  particular 
criminal  conviction.  Extended  confiscation  regimes  may  also  raise  concerns  with 
regard  to  Articles  49  of  the  Charter  and  7  ECHR  which  spell  out  the  principle  of 
legality, including the non-retroactivity of criminal law, and the prohibition against the 
imposition  of  harsher  penalties.  An  issue  may  in  particular  arise  in  respect  of  newly-
introduced extended confiscation provisions which allow for the confiscation of assets 
acquired  through  criminal  conduct  which  occurred  prior  to  the  introduction  of  the 
extended confiscation regime.  

3)  The  confiscation  of  assets  transferred  to  third  parties  also  affects  the  right  to 
property within the meaning of Article 17 of the Charter. Again, the main issue is about 
proportionality,  ie  whether  this  limitation  is  proportionate  to  the  objectives  being 
pursued (deterring crime, restitution to victims).  

4) Although freezing orders are only temporary measures, their consequences can be 
far reaching, particularly with regard to the right to property, despite criminal liability 
having  yet  to  be  established.  On  the  other  hand,  they  are  necessary  to  ensure  the 
subsequent application of confiscation orders, and have been  upheld on  this basis and 
justified because of public interest. Freezing orders can also raise issues with regard to 
the right to private and family life guaranteed by Article 7 of the Charter, and there is a 
growing  awareness  that  to  ensure  compatibility  with  this  right,  as  well  as with 
the respect for human dignity in line with Article 1 of the Charter, Member States are 
expected to apply freezing orders in a way which leave people with their basic means of 
survival.  Freezing  orders  can  also  have  effects  on  third  parties  since  it  is  often  a 
criminal offence to have any dealings, commercial or otherwise, with a person on whom 
such a measure has been imposed.  

5. 

POLICY OBJECTIVES 

The overall long-term objective is the substantial reduction of organised crime revenues 
and  accumulated  wealth  within  the  EU.  The  following  general  objectives  for  the 
confiscation  and  recovery  of  criminal  assets,  which  align  to  general  objectives  of  the 
Union in the Treaty of Lisbon, have been identified: 
•  to combat organised crime 
•  to achieve justice for victims  
•  to raise public confidence in the criminal justice system.   

The specific objectives of the EU intervention aim at both harmonising Member States 
practices in order to facilitate mutual recognition and to prompt asset recovey activities 
at  national  level  in  order  to  deter  more  effectively  criminal  activity.  In  line  with  the 
underlying components of the problem, four specific policy objectives can be defined: 

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•  to further harmonise the confiscation powers of the Member States  
•  to harmonise the preservation powers of the Member States  
•  to  enhance  the  enforcement  of  freezing  and  confiscation  orders  across  Member 

States' borders  

•  to enhance the utilisation of existing tools in the Member States.  

The table below shows the components of the problem, together with descriptions of the 
status quo at EU-level and associated specific and operational objectives.  It emphasises 
that the existing EU legal framework is far from comprehensive.  

Table 2: Problem and objectives 

Problem 

Existing EU legal 
framework 

General 
objectives 

Specific 
objectives 

Operational objectives 

Not always possible 
to confiscate criminal 
assets due to gaps 
in MS powers 
(barriers to 
prosecution, 
insufficient evidence 
or both) 

Not always possible 
to freeze criminal 
assets, or preserve 
and manage frozen 
assets, due to gaps 
in MS preservation 
powers 

Rules are contained 
in FD 2005/212/JHA 
but many aspects of 
the problem are not 
addressed 

1/ combat 
crime (notably 
organised 
crime) 

No EU rules 

2/ achieve 
justice for 
victims 

3/ raise public 
confidence in 
the criminal 
justice system 

Not always possible 
to enforce freezing 
and  confiscation 
orders across 
borders due to gaps 
in MS enforcement 
powers 

FD 2003/577/JHA and 
FD 2006/783/JHA 
deal with mutual 
recognition of freezing 
and confiscation 
orders, but are limited 
in scope 

No EU rules 

Underutilisation of 
freezing and 
confiscation 
procedures and tools 
by MS agents 

A. Increase the 
harmonisation of 
rules allowing to 
confiscate criminal 
assets, with due 
respect of 
fundamental rights 

B. Minimum 
harmonised rules 
allowing to freeze 
and manage 
criminal assets 
pending 
confiscation, with 
due respect of 
fundamental rights 

C. Make it easier 
for MS to freeze 
and confiscate 
assets across 
borders 

1. harmonise confiscation of type 1 
criminal assets (ordinary 
confiscation) 
2. harmonise confiscation of type 2 
criminal assets (barriers to 
prosecution) 
3. harmonise confiscation of type 3 
criminal assets (insufficient evidence)
4. harmonise confiscation of assets 
of third parties 

1. allow freezing orders for all assets 
liable to confiscation 
2. To have effective mechanisms to 
preserve assets pending 
enforcement of freezing  
3. To have effective systems for 
managing frozen/seized assets  

1. MS to recognise and enforce (all 
types of) freezing orders from other 
MS 
2. MS to recognise and enforce (all 
types of) confiscation orders from 
other MS 

D. Raise utilisation 
of freezing and 
confiscation tools 
by MS agents 

1. MS to raise utilisation of freezing 
powers 
2. MS to raise utilisation of 
confiscation powers 
3. MS to raise utilisation of mutual 
recognition instruments 

6. 

POLICY OPTIONS 

6.1. 

Identification and screening of "policy actions"  

In order to meet the specific and operational objectives identified above and remedy the 
shortcomings resulting from the problem definition identified in Chapter 3. 21 EU-level 
policy  actions  were  identified  (some  of  which  are  complementary)  which  target 

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particular  operational  objectives.  These  21  policy  actions  are  described  in  Annex  3, 
where they are grouped according to the four specific objectives they aim to achieve.  

Given the high number of envisaged policy actions, the 21 EU-level actions were first 
screened  individually  against  the  following  potential  barriers  to  implementation:  i) 
adequate  conferral  of  power  to  the  EU;  ii)  proportionality;  iii)  compatibility  with 
fundamental constitutional or criminal law principles of the Member States.  

The  impact  on  fundamental  rights  was  also  analysed  in  detail,  based  on  the  relevant 
jurisprudence  of  the  European  Court  of  Human  Rights.  Whilst  many  of  the  identified 
policy  actions  affect  fundamental  rights,  only  in  a  small  minority  of  cases  it  is  not 
possible to remedy potential negative consequences. On the other hand, in some cases it 
appears that appropriate remedies can actually promote fundamental rights throughout 
the Union (by inducing a positive impact in Member States which currently afford low 
levels of protection). 

6.2. 

Discarded policy actions  

Four  of  the  identified  policy  actions  were  discarded  after  the  screening  of  the  policy 
actions against the implementation barriers mentioned earlier:  

•  Civil standard of proof regarding whether an asset is "criminal" (policy action 
3):  The  standard  of  proof  on  whether  particular  assets  are  proceeds  could  be 
harmonised to a lower "balance of probabilities" standard, to make it more difficult 
for  convicted  criminals  to  retain  type  1  assets.  This  action  was  discarded  due  to 
likely  problems  with  the  conferral  of  powers  to  the  EU  and  the  proportionality 
principle, as well as problems of compatibility with Member States' legislation.  

•  Designating Asset Management Offices (policy action 11): Further harmonisation 
could require all Member States to entrust the management of frozen assets to Asset 
Management  Offices  at  a  national  or  regional  level.  This  could  increase  efficiency 
and  promote  best  practice.  This  action  was  discarded  due  to  problems  with  the 
conferral of powers to the EU.  

•  Mandatory assets investigation (policy action 17): The EU legal framework could 
require investigators to open a parallel financial investigation, at least for the crimes 
listed  in  TFEU  article  83(1).    This  action  was  discarded  due  to  problems  with  the 
conferral  of  powers  to  the  EU  and  the  proportionality  principle  and  problems  of 
compatibility with Member States' legislation.  

•  Limited judicial discretion (policy action 18): Judicial discretion could be limited 
by  requiring  freezing  to  be  ordered  wherever  there  is  reasonable  cause  to  suspect 
that  an  asset  may  become  liable  to  confiscation  and,  in  the  event  of  a  criminal 
conviction,  by  requiring  confiscation  to  be  ordered  unless  doing  so  would 
disproportionately  affect  fundamental  rights.  This  action  was  discarded  due  to 
problems  with  the  conferral  of  powers  to  the  EU  and  the  proportionality  principle 
and problems of compatibility with Member States' legislation. 

Doubts on the compatibility with the above implementation barriers could be expressed 
also in relation to other policy actions. However, such doubts were not so strong as to 
cause the relevant action to be discarded. 

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6.3. 

Policy actions grouped into policy options 

Following  the  elimination  of  unfeasible  policy  actions,  the remaining  policy  actions 
are  grouped  into  policy  options  representing  different  degrees  of  EU-level 
intervention:  a  non-legislative  option,  a  minimal  legislative  option  (correcting 
deficiencies  in  the  existing  EU  legal  framework  which  inhibit  it  from  functioning  as 
intended) and a maximal legislative option (going beyond the aims of the existing EU 
legal framework). Within the latter, two maximal legislative sub-options are analysed, 
one  with  and  one  without  EU  level  action  relating  to  mutual  recognition.  The  "do 
nothing" option forms the baseline against which all other options are analysed. 

6.3.1.  Policy option 1 – Status quo 

This  policy  option  would  involve  no  new  action  at  EU  level,  but  constitutes  the 
continuation  of  existing  activities.  The  possible  developments  of  this  policy  option  at 
EU, national and international levels are indicated in section 4.3. 

No  new  action  at  EU  level  does  not  mean  no  change  at  EU  level.  Protocol  36  to  the 
Treaty  of  Lisbon  ensures  that  the  existing  EU  legal  framework  (or  at  least  those 
provisions which do not exceed the EU’s post-Lisbon competence) will, on 1 December 
2014,  become  enforceable  against  Member  States  through  infringement  proceedings 
brought by the Commission before the ECJ. Analysis will need to account for this step-
change, as well as for other factors, including continued international developments and 
scrutiny in the forum of mutual evaluations by Moneyval and FATF. 

6.3.2.  Policy option 2 – Non-legislative option 

Under  the  non-legislative  policy  option,  workshops  would  be  used  to  encourage 
Member States to better transpose the existing EU legal framework into domestic law 
(by highlighting its benefits and reiterating its compulsory nature) and to better utilise 
their asset confiscation laws (by highlighting benefits and sharing scientific knowledge 
and best practice). Better transposition can be achieved by promoting implementation 
of  existing  confiscation  obligations  (policy  action  1).  Although  the  trends  towards 
compliance  with  FD  2005/212/JHA  are  positive,  continued  implementation/expert 
workshops could help ensure ongoing progress. Better utilisation of national legislation 
can  be  achieved  by  promoting  implementation  of  existing  mutual  recognition 
obligations  (policy  action  12)  via  implementation/expert  workshops  on  Framework 
Decisions  2003/577/JHA  (freezing  orders)  and  2006/783/JHA  (confiscation  orders). 
Utilisation workshops for government decision-makers in some Member States on the 
profitability  of  asset  confiscation  work  (policy  action  15)  could  increase  utilisation  of 
these  tools  and  provide  a  forum  for  the  sharing  of  knowledge  and  practitioner 
experience. 

6.3.3.  Policy option 3 – Minimal legislative option 

This option consists of transposition and  utilisation  workshops plus the  policy  actions 
aiming at consolidating confiscation and compensation orders (which concern the return 
of confiscated assets as compensation to identifiable victims of crime) and at providing 
consolidated  mutual  recognition  forms.  These  additional  policy  actions  deal  with 
identified deficiencies in the existing legal framework on mutual recognition.   

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In  relation  to  the  enforcement  of  confiscation  orders,  this  option  envisages  mutual 
recognition of compensation orders (policy action 14). The legal framework could be 
simplified  by  consolidating  FD  2006/783/JHA  and  2005/214/JHA  and  extending  their 
scope to include all compensation orders made in the context of criminal proceedings.  

With  regard  to  utilisation,  this  option  would  include  the  introduction  of  consolidated 
mutual  recognition  forms  (policy  action  19).  A  single  form  for  all  types  of  mutual 
recognition  at  the  investigative  stage  could  be  provided  within  the  European 
Investigation  Order  (and  by  suppressing  the  existing  mutual  legal  assistance 
alternative). This option would also entail enforcing the primacy of mutual recognition 
(policy  action  20).  The  EU  legal  framework  could  suppress  the  use  of  mutual  legal 
assistance  with  respect  to  freezing  and  confiscation  by  repealing  the  existing  mutual 
legal assistance conventions as regards requests between Member States. 

6.3.4.  Policy option 4.1 – Maximal legislative option without mutual recognition 

This option would introduce many new aspects into the EU legal framework. It would 
consist  of  the  transposition  and  utilisation  workshops  coupled  with  the  policy  actions 
aimed  at  further  harmonising  the  confiscation,  preservation  and,  to  some  extent, 
enhancing enforcement, i.e. all policy actions which do not involve legislative action in 
relation to mutual recognition. 

In  order  to  enhance  confiscation  powers,  this  option  would  foresee  the  possibility  of 
confiscating all valuable benefits, including indirect proceeds (policy action 2). The 
EU legal framework could harmonise a (wide) definition of criminal ‘proceeds’ in order 
to ensure the recovery of ‘indirect’ proceeds resulting from the appreciation in value, or 
profitable reinvestment, of direct proceeds.  Harmonisation could also ensure that any 
valuable  benefit  (including,  for  example,  the  value  of  liabilities  avoided)  is  liable  to 
confiscation. 

As  a  way  to  address  the  foreclosure  of  confiscation  activities  when  the  criminal 
procedure  is  concluded,  this  option  foresees  separating  confiscation  proceedings 
from  criminal  proceedings  (policy  action  4).  The  EU  legal  framework  could  ensure 
that separate confiscation proceedings can be brought also at a later date when criminal 
proceedings are finalised. 

This option would also include strengthen extended confiscation (policy action 5) by 
providing  for  extended  confiscation  at  least  where  a  court  finds  it  substantially  more 
probable  that  the  assets  of  a  person  convicted  of  an  offence  covered  by  Article  83(1) 
TFEU are derived from other similar criminal activities.   

the 

With  a  view  to  addressing  the  identified  barriers  to  prosecution,  this  option  would 
include 
limited 
introduction  of  non-conviction  based  confiscation 
circumstances  (policy  action  6).  The  EU  legal  framework  could  make  ordinary 
confiscation possible in circumstances where a conviction cannot be obtained because 
the  suspect  has  died,  fled  prosecution  or  sentencing  or  is  unable  to  stand  trial  due  to 
permanent illness. 

in 

As  criminals  often  transfer  their  assets  to  knowing  third  parties  as  soon  as  they  are 
under investigation in order to avoid confiscation, this option would also include third 

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party  confiscation  (policy  action  7)  in  some  cases.  Laws  could  be  harmonised  by 
requiring third party confiscation to be available for assets received for less than market 
value and which a reasonable person in the position of the third party would suspect to 
be derived from crime 

Policy actions 5, 6 and 7 have been conceived in a targeted way in order to comply with 
the  principle  of  proportionality  and  take  into  account  of  the  concerns  expressed. 
Extended  confiscation  powers  are  already  provided  for  in  EU  legislation  (FD 
2005/212/JHA). They already can be used only in case of serious crimes and have been 
applied  in  practice  in  a  quite  limited  number  of  cases.  Action  5  does  not  intend  to 
enlarge the scope of extended confiscation. It merely intends to streamline the existing 
system  of  alternative  criteria  and  options  for  Member  States  by  providing  a  single 
minimum  criterion  for  extended  confiscation.  The  envisaged  provision  would  not 
introduce  a  totally  new  obligation  and  would  propose  a  minimum  criterion  (which  is 
neither  the  lowest  nor  the  most  extreme)  with  which  most  Member  States  may  be 
comfortable.  If  adopted,  this  provision  would  probably  require  only  a  few  Member 
States to amend their legislation and bring it beyond their existing minimum.  

In  order  to  comply  with  the  principle  of  proportionality,  non-conviction  based 
confiscation  would  not  be  introduced  in  all  cases  (full  harmonisation),  but  would  be 
allowed  only  in  very  limited  circumstances  where  a  criminal  conviction  cannot  be 
obtained,  eg  because  the  suspect  has  died,  fled  the  jurisdiction,  or  is  unable  to  stand 
trial  due  to  permanent  illness.  This  provision  has  been  also  enshrined  in  the  United 
Nation  Convention  against  Corruption  (Art.  54.1.c),  which  has  been  ratified  by  the 
Union and by 25 Member States.  

Equally, under Action 7 third party confiscation is not foreseen in all cases, but only in 
limited  circumstances  (ie  for  assets  which  a  reasonable  person  in  the  position  of  the 
third party would suspect to be derived from crime  and which have beenreceived for 
less than market value). This action would not affect the position of a bona fide third 
party  who  has  acquired  an  asset  paying  its  market  value.  Moreover,  third  party 
confiscation would take place only after an assesment, based on specific facts, showing 
that confiscation of assets directly from the person who transferred them is unlikely to 
succeed, or in situations where unique objects must be restored to their rightful owner. 

In  relation  to  the  freezing/  of  criminal  assets,  this  option  foresees  the  introduction  of 
standards  of  universal  freezing  (policy  action  8).  Harmonised  minimum  standards 
could  ensure  that  it  is  possible  to  preserve  any  assets  and  would  facilitate  the  mutual 
recognition  of  freezing  orders.  It  would  also  foresee  mechanisms  to  safeguard 
freezing (policy action 9), so that  Member States would be required to have in place 
appropriate mechanisms to ensure that assets  in danger of being hidden or transferred 
out  of  their  jurisdiction  can  be  frozen/seized  immediately.  This  would  include,  in 
appropriate circumstances, the ability to freeze/seize prior to seeking a court order. 

With  regard  to  asset  preservation,  this  option  would  grant  powers  to  realise  frozen 
assets  (policy  action  10).  Harmonisation  could  ensure  that,  regardless  of  how  frozen 
assets  are  managed,  there  are  powers  to  realise  them  at  least  where  they  are  liable  to 
decline in value or uneconomical to maintain. 

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In the area of utilisation of powers, this option would introduce reporting obligations 
(policy action 16) for Member States, for example an obligation to report for all serious 
crimes covered by TFEU article 83(1), the assets frozen, the confiscation orders (if any) 
obtained  and  the  type  of  order  (eg  ordinary,  extended,  non-conviction  based 
confiscation).  This  would  also  help  generate  statistics  which  could  be  used  for 
evaluation purposes.  

Policy option 4.2 – Maximal legislative option including mutual recognition 

This option consists of all the envisaged policy actions (but policy actions 19 and 20 
partly  overlap).  Compared  to  option  4.1,  this  means  that  it  also  includes  important 
provisions which foresee the mutual recognition of all types of orders (policy action 
13).  The  EU  legal  framework  could  remove  existing  limitations  on  the  mutual 
recognition  of  freezing  and  confiscation  orders,  allowing  orders  to  better  circulate 
around  the  Union.    This  would  also  make  the  legal  framework  more  coherent.  This 
option would also entail the mutual recognition of compensation orders (policy action 
14). The legal framework could be simplified by consolidating FD 2006/783/JHA and 
2005/214/JHA and extending their scope to include all compensation orders made in the 
context of criminal proceedings. 

As  under  the  minimal  legislative  policy  option,  this  option  would  also  provide  for 
consolidated mutual recognition forms (policy action 19) and for measures enforcing 
the primacy of mutual recognition (policy action 20). 

7. 

ANALYSIS OF THE IMPACTS OF THE POLICY OPTIONS 

The  five  policy  options  (including  two  suboptions  under  maximal  legislative  option) 
have  been  assessed  against  an  overall  estimate  of  their  social,  economic  and 
environmental impacts. No environmental impacts were identified. 

Given  the  scarcity  of  measurable  indicators  and  the  lack  of  a  coherent  comparative 
statistics  system  on  confiscation  and  asset  recovery  across  the  EU,  it  is  almost 
impossible to quantify with precision the potential impacts of the policy options (some 
including  policy  actions  which  are  very  different  in  nature).  Qualitative  assessment 
therefore complements the analysis when quantification is not possible. 

The figure below shows the main social and economic impacts and highlights in bold 
those which can be analysed meaningfully. Impacts flowing from a reduction in crime 
cannot  be  analysed  because  there  is  insufficient  evidence  that  asset  confiscation  will 
reduce crime. 

Figure 5: Impacts which can be assessed meaningfully 

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1st order                     2nd order                          3rd order                      4th order                      

Impact on 
crime (?) 

Increased 
public confidence 
in justice system 
(social, +)

Capital flight 
(economic, –/+) 

Other impacts 
(social, economic, 
environmental,  ?) 

Confiscation 

Preservation 

Enforcement 

Utilisation 

Recovery of more 
assets to MS 
(economic, +) and 
victims (social, +) 

Associated direct 
costs (economic, –)

Redistribution

Impacts on 
victims (social, +) 

7.1. 

Analysis of Option 1 - Status Quo  

For the reasons indicated in Section 3.5, on the ‘do nothing’ option, slow progress can 
be  predicted  towards  achieving  each  of  the  specific  objectives  (i.e.  confiscation, 
preservation, enforcement, utilisation and distribution).  

Economic impact: Is  expected to be  low, resulting from natural progression in assets 
recovered.  The  spread  between  criminally  owned  assets  and  assets  recovered  by 
governments is likely to increase. 

Social impact: Is likely to be negligible, mostly resulting from an increased application 
of  social  reuse  practices  across  Europe  and  possibly  leading  to  a  slight  increase  in 
criminal assets being recovered in favour of crime victims. 

Impact  on  criminal  behaviour:  Without  additional  action  at  EU  level,  criminals  are 
likely to continue investing their assets in other Member States, thereby increasing the 
need for a cross-border dimension of confiscation activities. 

Overall assessment of Option 1: The analysis in Section 4.3 revealed significant gaps, 
mutual recognition instruments would remain underutilised and the amount of criminal 
assets  confiscated  throughout  the  EU  would  remain  small  compared  to  estimates  of 
organised criminal turnover. Whilst the situation without EU intervention would not be 
static, the pace of change would be too slow. This option would therefore not achieve 
the objective of increasing the recovery of criminal assets in the Union. Member States 
support  for  this  option  is  unlikely.  The  European  Parliament  is  expected  to  be  totally 
dissatisfied with this solution. 

7.2. 

Analysis of Option 2 – Non-legislative option 

Economic impact: Transposition workshops on the EU legislation in force would not 
be particularly expensive and could entail a slight positive impact on transposition (and 
ultimately on assets recovered) by speeding up the process for the Member States which 
have not yet fully transposed the relevant texts. The costs of utilisation workshop would 

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depend on the scale on which they are organised and their usefulness would likely be 
proportional to their scale. Given the severe underutilisation of confiscation procedures 
(as  evidenced  in  the  Matrix  Study,  see  footnote  10)  utilisation  workshops  could 
potentially have a more significant impact upon utilisation and avoid that decisions may 
continue  to  be  made  based  on  the  assumption  that  asset  confiscation  work  is 
unprofitable.  Their  added  value  would  be  proportional  to  the  creation  of  a  suitable 
evidence  base.  Transposition  workshops  on  adopted  EU  legislation  are  regularly 
organised  in  Brussels.  A  meeting  organised  at  the  Commission  premises,  using  the 
Commission  interpreters  and  covering  the  travel  expenses  of  two  government  experts 
per Member State costs around € 30 000. Utilisation workshops organised at EU level 
by the Commission would entail similar costs. If organised at national level, utilisation 
workshops are likely to be less expensive (lower travel costs, no interpretation needed) 
than those organised at EU level. 

Social impact: The direct impact would be negligible, as workshops would impact on 
State  authorities.  A  complete  and  correct  transposition  of  EU  legislation  on  extended 
confiscation and mutual recognition in the Member States and utilisation of confiscation 
tools would indirectly result in more compensation to victims and increased confidence 
in  the  criminal  justice  system.  An  increase  in  the  use  of  extended  confiscation  would 
correspond to an increased limitation of  the fundamental rights (right to property, right 
to  a  fair  trial,  presumption  of  innocence)  of  the  defendant.  It  should  normally  be 
balanced  by  adequate  safeguards  in  national  legislation  (if  Framework  Decision 
2005/212/JHA is correctly transposed).  

Impact  on  criminal  behaviour:  To  the  extent  that  this  option  can  be  expected  to 
generate  increased  utilisation  of  existing  tools,  any  impact  on  criminal  behaviour  is 
expected to be quite limited. While it may cause occasional criminal capital flight, this 
option  will  likely  oblige  criminals  to  better  hide  their  assets,  for  example  by 
increasingly  transferring  them  to  a  knowing  third  party  before  their  conviction  in  a 
criminal  court.  It  may  therefore  have  a  feeble  negative  impact  on  the  illicit  economy 
and on the economies of third countries29. 

Overall assessment of Option 2: Overall the added value of the non-legislative option 
is  likely  to  be  low.  Although  transposition  remains  incomplete,  there  is  only  slight 
scope for non-legislative action alone to add value in circumstances where the existing 
legal framework will become enforceable by 2014 in any event30. The organisation of 
EU  transposition  workshops  could  also  affect  practitioners'  perception  and  facilitate 
enforcement.  However,  the  most  promising  aspect  of  the  non-legislative  option  is  the 
utilisation workshops. This option would hardly achieve the objective of increasing the 
recovery of criminal assets in the Union.  It would also draw heavy criticism from the 
European Parliament. 

29  

30  

The impact on third countries is not identified as positive or negative, as it is not known where 
assets would be moved or re-invested and an inflow of (laundered) criminal money may affect 
different  countries  (e.g.  a  developing  country  vs.  a  small  country  which  is  known  as  a  tax 
haven) in a different way.  
As stated above the fact that the EU legal framework is incompletely transposed is only part of 
the  problem.  It  is  also  incorrectly  transposed  and,  above  all,  insufficient  to  address  the 
shortcomings identified in this impact assessment. 

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7.3. 

Analysis of Option 3 – Minimal legislative option  

Economic  impact:  the  impacts  of  transposition  workshops  (Actions  1  and  12)  and 
utilisation workshops  (Action  15)  are described  above.  Improving  mutual  recognition 
instruments by consolidating confiscation and compensation orders (policy action 14), 
providing  consolidated  mutual  recognition  forms  (policy  action  19)  and/or  enhancing 
the primacy of mutual recognition (policy action 20) would clearly increase the number 
of  cross-border  enforcement  procedures  and,  to  some  extent,  the  value  of  the  assets 
recovered. However, it is hard to assess the economic added value of even a significant 
increase in the utilisation of mutual recognition instruments. An increased utilisation in 
mutual recognition instruments would shift administrative costs from central authorities 
(in  charge  of  mutual  legal  assistance)  to  (local)  judicial  authorities.  As  mutual 
recognition  is  less  convoluted  than  mutual  legal  assistance,  the  administrative  cost  of 
handling requests from other Member States should in principle decrease. The extent of 
this  slight  decrease  in  direct  costs  would  depend  on  the  relative  efficiency  of  the 
different parts of Member State bureaucracies. The time savings resulting from a wider 
use  of  mutual  recognition  (as  opposed  to  mutual  legal  assistance)  would  allow  faster 
cross-border execution and increase the chances of successful recovery by limiting the 
risks  for  asset  dissipation.  The  envisaged  consolidation  of  mutual  recognition  forms 
may require some training for the practitioners to use the new single mutual recognition 
form. These costs would be likely offset by the benefits in the form of increased value 
of  assets  recovered  (resulting  from  an  increased  number  of  cross-border  enforcement 
procedures).  

Social impact: A moderate increase in the number and value of assets recovered should 
logically  correspond  to  a  moderate  increase  in  compensation  to  victims.  Better 
enforcement of cross-border procedures would likely result in increased confidence in 
the  national  criminal  justice  systems  and  in  the  EU  Area  of  Justice,  Freedom  and 
Security. In relation to fundamental rights, the increase in the cross-border enforcement 
of orders will concern ordinary confiscation. Because this is the procedure with the least 
impact on fundamental rights, a low impact on the right to property is expected. 

Impact  on  criminal  behaviour:  Slight,  as  it  results  from  an  increased  utilisation  of 
existing tools and increased mutual recognition of orders issued in other countries. As 
under  option  2,  it  would  oblige  criminals  to  better  hide  their  assets  (eg  using  third 
parties). A better enforcement of cross-border procedures may have some displacement 
effects,  resulting  in  a  net  capital  flight  of  criminal  money  out  of  the  EU.  It  may 
therefore have a slight negative impact on the illicit economy and on the economies of 
third countries. 

Overall  assessment  of  Option  3:  Overall  the  added  value  of  the  minimal  legislative 
option is likely to be moderate. In addition to the (low) added  value of option  2, the 
increased  enforcement  of  freezing  and  confiscation  orders  in  other  Member  States 
resulting  from  better  mutual  recognition  instruments  would  likely  produce  limited 
economic and social impacts. However, policy actions 19 and 20, aimed at facilitating 
the  mutual  recognition  of  orders,  would  significantly  enhance  utilisation  of  mutual 
recognition  instruments  although  action  19  has  additional  benefits  over  action  20. 
Moreover,  an  enhanced  utilisation  of  mutual  recognition  over  mutual  legal  assistance 

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would  substantially  reduce  the  time  necessary  to  enforce  freezing  and  confiscation 
orders  in  other  Member  States.  This  option  would  barely  achieve  the  objective  of 
increasing  the  recovery  of  criminal  assets  in  the  Union.  It  would  likely  not  be 
considered as an adequate response to the problem by the European Parliament. 

7.4. 

Analysis  of  Option  4.1  -  Maximal  legislative  option  without  mutual 
recognition  

The maximal legislative option (in its sub-option without mutual recognition) builds 
upon  the  non-legislative  option  by  introducing  a  number  of  new  aspects  into  the 
existing  EU  legal  framework,  i.e.  all  policy  actions  which  do  not  involve  legislative 
action in relation to mutual recognition. 

Economic  impact:  In  addition  to  the  impacts  of  transposition  workshops  (Actions  1 
and 12) and utilisation workshops (Action 15) described above, it can be estimated that 
most of the actions in this policy option, considered in isolation, would have at least a 
moderately positive economic impact. For example, although policy action 10 on new 
powers  to  realise  frozen  assets  would  entail  implementation  costs  (introduction  of 
procedures to sell frozen assets), these would be largely or entirely offset by the benefits 
in the form of reduced ongoing costs for asset management and no decrease in the value 
of  the  assets.  Policy  Action  7  introducing  confiscation  from  third  parties  would 
produce, even in its most limited form31, at least a moderate increase in the confiscation 
powers and hence in the value of assets recovered. The application of policy  action 6 
introducing  non-conviction  based  confiscation,  even  in  limited  circumstances  has 
demonstrated that it may have a substantial impact on organised crime as illustrated in 
box 5 .  

Box 5 – Operation "Nemesi":  

In Italy the application of non-conviction based confiscation provisions to a dead suspect's heirs 
has allowed in 2010 to freeze, in a single case, assets estimated at € 700 million at least. Dante 
Passarelli, a businessman suspected of being the "fiduciary person" of the head of the Camorra 
Casalesi  clan,  died  in  unexplained  circumstances.  He  had  been  convicted  of  participation  in  a 
criminal organisation by a first instance criminal court, but an appeal was pending. The assets 
frozen (registered in his name or attributed to him by investigators) included 136 apartments, 11 
warehouses, 75 land estates, 8 shops, 2 villas, 51 garages, company shares and bank accounts, 
for a total amount estimated between € 700 million and € 2 billion.  

In 2008 Italy passed legislation which could prevent the heirs from a deceased defendant, whose 
assets have been frozen or seized, from legally inheriting the assets and having them released. 
Mr Passarelli's wife and 6 children were not able to explain the licit origin of all these assets, nor 
the huge disproportion between their declared revenues and the frozen assets.  

The  reuse  of  confiscated  assets  for  social  purposes  may  also  have  economic  benefits, 
allowing  NGOs  to  start  business  activities  using  confiscated  assets32  which  normally 
become profitable over time. On the other hand, separating criminal proceedings from 
confiscation proceedings (Action 4) would likely result in slightly increased direct costs 

31  

32  

Which corresponds to recovery only from mala fide third parties that have paid less than market 
value. 
The most recurring example is that of agricultural cooperatives. 

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the  overall  cost  of 

(due to additional procedures). These costs can likely be offset by the expected increase 
in the assets recovered, resulting from being able to identify and pursue criminal assets 
for a longer time, even when criminal proceedings are over. Because of the severe lack 
of data in relation to amounts frozen, confiscated and recovered, and in relation to the 
costs  of  carrying  out  confiscation-related  activities,  it  is  not  possible  to  provide  a 
quantification  of 
in  many  cases 
implementation costs may differ depending on the characteristics of the Member States, 
for  example  for  social  reuse  programmes  (Action  21)  and  in  some  cases  costs  would 
depend on how Member States would implement an action. For example, the separation 
of criminal and confiscation proceedings (Action 4) could be applied automatically in 
all cases or only in cases where this is considered necessary. The administrative burden 
related  to  the  reporting  obligations  (Action  16)  would  also  vary  between  Member 
States, depending on the extent to which they do or do not already collect some of the 
data required for reporting purposes.  

this  option.  Moreover, 

In  order  to  address  the  lack  of  data  described  earlier,  the  main  economic  analysis 
presented  is  an  EU27  profitability  estimate  based  on  a  model  which  uses  proxy 
indicators to extrapolate from a detailed analysis of income and cost in the UK (details 
in Annexes 4 and 5). The UK is the only Member State for which income and costs for 
all  elements  of  the  asset  confiscation  system  can  be  estimated.  Its  asset  confiscation 
system is also a reasonable approximation of the maximal legislative sub-option under 
consideration. Although only indicative, the results of this exercise are encouraging: 21 
of 27 Member States are indicated by the model to be profitable (many of them highly 
profitable)  for  the  maximal  legislative  option  in  its  sub-option  without  mutual 
recognition.  

Table 3: Profitability of maximal legislative option without mutual recognition, EU27 

Member 
State 

Czech 
Republic 

Revenue 
(€m)  

Cost 
(€m)  

Profit 
(€m)  

Profit ratio
(profit/cos
t) 

Categorisation 

131.00 

36.57 

94.43 

3.50 

Highly profitable 

Lithuania 

188.08 

131.08 

57.00 

167.56 

124.86 

42.70 

Spain 

Latvia 

Poland 

Slovakia 

31.66 

19.21 

32.49 

10.87 

4.27 

18.33 

Slovenia 

105.42 

91.92 

Romania 

109.13 

96.73 

Estonia 

Bulgaria 

Hungary 

19.24 

10.78 

8.89 

13.80 

5.77 

4.12 

20.79 

14.94 

14.15 

13.49 

12.40 

5.44 

5.01 

4.77 

2.63 

2.58 

2.12 

1.91 

1.46 

1.37 

1.16 

1.11 

0.87 

0.81 

Highly profitable 

Highly profitable 

Highly profitable 

Highly profitable 

Highly profitable 

Highly profitable 

Highly profitable 

Highly profitable 

moderately profitable 

moderately profitable 

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Netherlands 

12.88 

Portugal 

Malta 

UK 

Cyprus 

Greece 

Italy 

France 

Germany 

Belgium 

Luxembourg 

Sweden 

Austria 

Ireland 

Finland 

Denmark 

8.32 

4.43 

2.38 

8.02 

5.85 

21.39 

19.22 

2.74 

3.43 

2.37 

2.11 

1.00 

0.26 

1.48 

7.67 

7.74 

7.66 

1.99 

1.73 

0.75 

1.45 

0.76 

1.49 

0.48 

0.18 

1.51 

8.62 

9.27 

9.89 

4.33 

5.79 

4.56 

3.59 

3.47 

2.17 

1.99 

1.98 

1.61 

0.62 

0.53 

0.08 

-0.03 

-0.96 

-1.53 

-2.23 

-2.35 

-4.06 

0.77 

0.55 

0.46 

0.43 

0.42 

0.39 

0.34 

0.15 

0.13 

0.11 

-0.02 

-0.11 

-0.17 

-0.23 

-0.54 

-0.70 

moderately profitable 

moderately profitable 

moderately profitable 

moderately profitable 

moderately profitable 

moderately profitable 

moderately profitable 

moderately profitable 

moderately profitable 

moderately profitable 

Not profitable 

Not profitable 

Not profitable 

Not profitable 

Not profitable 

Not profitable 

The  fact  that  asset  confiscation  work  appears  to  be  potentially  profitable  in  most 
Member States pleads in favour of EU-level intervention For the minority of Member 
States for which asset confiscation may be unprofitable (mostly Nordic Member States 
where  relatively  low  criminality  and  commensurately  low  investment  in  policing  may 
results  in  less  assets  recovered)  this  does  not  detract  from  the  case  for  EU-level 
intervention.  In  fact,  even  the  maximal  legislative  options  would  oblige  all  Member 
States  to  transpose  the  new  EU  provisions  into  their  legislation,  but  would  not  force 
reluctant  Member  States  to  incur  the  (higher)  costs  of  increased  utilisation  of 
confiscation procedures. 

(ii) Social impact: It can be assumed that recovering more assets in favour of the State 
will have a significant social impact as it will, provide funding for public authorities for 
provision of public services, including in favour of victims of crime.  

(iii)  Fundamental  rights  impacts:  Actions  having  a  significant  positive  impact  upon 
confiscation  tools  (eg  Action  5  on  extended  confiscation,  6  on  non-conviction  based 
confiscation or 7 on third party confiscation) are also those with the biggest impact on 
fundamental rights. Defence lawyers expressed concerns about their possible increased 
use.  On  the  other  hand,  these  measures  were  considered  extremely  important  by 
investigators,  prosecutors  and  other  practitioners.  A  limitation  of  the  right  to  property 
and right to a fair trial of the defendant must be justified, respect proportionality and be 
accompanied by adequate safeguards.  

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   EN 

 
 
While  conviction-based  confiscation  regimes,  as  such,  are  rarely  problematic  from  a 
fundamental  rights  perspective,  non-conviction  based  and  extended  confiscation 
regimes  are  more  contentious.  The  ECtHR  has  rendered  many  decisions,  consistently 
upholding  their  application  in  particular  cases.  However,  it  has  avoided  ruling  on  the 
principled question of their compatibility with the Convention. Since these regimes do 
not  pursue  solely  a  punitive  objective,  they  have  to  be  justified  on  broader  grounds. 
With regard to Articles 47 (right to a fair trial) and 48 (presumption of innocence) of the 
Charter  and  to  the  corresponding  Articles  6  and  13  of  the  European  Convention  on 
Human  Rights  (ECHR),  non-conviction  based  confiscation  regimes  have  consistently 
been  held  to  be  civil  in  nature,  and  the  ECtHR  has  also  refused  to  qualify  extended 
confiscation as a ‘criminal charge’.  

Reversals  of  the  burden  of  proof  concerning  the  legitimacy  of  assets  have  so  far 
survived the scrutiny of the ECtHR, so long as they were applied fairly in the particular 
case, with adequate safeguards in place to allow the affected person to challenge these 
rebuttable  presumptions.  For example in a specific case the Italian regime was held to 
be a proportionate restriction in as much as it constitutes a “necessary weapon” in the 
fight against the Mafia. In another specific case the UK civil confiscation regime was 
upheld and considered more generally targeted at recovering criminal assets that did not 
lawfully belong to the applicant.  

The right to be presumed innocent until proven guilty under Article 48 of the Charter 
only  applies  when  a  person  has  been  charged  under  criminal  law  and  not  where  the 
proceedings  are  civil  in  nature.  Before  the  European  Court  of  Human  Rights, 
defendants in non-conviction based confiscation proceedings have argued that these are 
criminal  and  violate  the  right  to  the  presumption  of  innocence,  but  these  arguments 
have so far failed before the ECtHR. 

It  is  also  harder  to  justify  the  compatibility  of  extended  confiscation  with  the  right  to 
property. Indeed, the confiscation order extends to assets beyond those derived from the 
offence for which the person was convicted in the main proceedings. It therefore has to 
be  shown  that  it  pursues  a  broader  legitimate  objective  to  that  of  punishing  the 
individual. While the ECtHR has consistently upheld extended confiscation regimes in 
specific cases (eg the Italian regime, which is perhaps the most severe regime in the EU 
as  it  combines  non-conviction  based  and  extended  confiscation),  their  compatibility 
with the Convention is assessed on a case by case basis. Again, the degree of procedural 
safeguards  afforded  to  the  defendant  plays  a  determinant  role  in  assessing  the 
proportionality of the measure.   

A  strong  argument  in  favour  of  justifying  third  party  confiscation  is  the  case  where 
assets are claimed both by the third party and by a victim. If the perpetrator of a crime 
has insufficient assets to meet a claim (as is often the case), measures in favour of the 
third party would weaken the position of the victim. 

Temporary  measures,  such  as  freezing  orders  may,  due  to  their  provisional  character, 
justify  further  limitations  of  certain  rights  and  traditional  principles  of  due  process, 
provided  sufficient  safeguards  or  remedies  are  available  and  those  limitations  respect 
the  essence  of  those  rights  and  principles  (compare  Art.  52  of  the  Charter  of 
Fundamental  Rights).  Many  States  use  techniques  such  as  ex  parte  or  in  camera 
proceedings to ensure  that  the  affected person is not able to defeat the purpose of  the 

EN 

37 

   EN 

 
order  through  prior  knowledge  of  it.  So  far,  the  ECtHR  has  repeatedly  held  that  the 
Italian procedural rules for ordering a preventative confiscation violate the right to a fair 
hearing  as  they  do  not  foresee  the  possibility  for  the  defendants  to  ask  for  a  public 
hearing. It thus becomes even more pressing to avoid that national measures which may 
violate the ECHR or the Charter could benefit from EU rules on mutual recognition.   

If applied with proportionality and complemented with adequate safeguards, laid down 
in  the  EU  legislative  proposals,  the  measures  in  this  policy  option  would  respect 
fundamental  rights.33.  According  to  the  jurisprudence  of  the  ECtHR  the  existence  of 
effective  legal  remedies  is  a  pre-condition  to  ensure  that  fundamental  rights  are 
respected.  Equally,  under  the  Charter  of  Fundamental  Rights,  it  is  necessary  that  EU 
legislation itself contains sufficient procedural safeguards and remedies (see Box 7). 

Box 7 – Legal remedies  

The existing EU legislation (eg Article 4 of Framework Decision 2005/212/JHA) provides that 
Member  States  should  ensure  that  adequate  legal  remedies  for  the  affected  persons  exist  in 
national legislation.  

With  a  view  to  fully  comply  with  the  EU  Charter  on  Fundamental  Rights,  safeguards  are 
required at EU level in order to guarantee, the respect of the presumption of innocence, the right 
not to be tried or punished twice in criminal proceedings for the same criminal offence, the right 
to  a  fair  trial,  the  existence  of  effective  judicial  remedies  before  a  court  and  the  right  to  be 
informed on how to exercise such remedies. 

 (iv)  Impact  on  criminal  behaviour:  Would  be  significant,  as  non-conviction  based 
confiscation (even in limited circumstances) and third party confiscation would oblige 
criminals  to  change  their  practices  and  make  it  more  difficult  for  them  to  hide  their 
assets.  This  option  could  cause  moderate  capital  flight  of  criminal  money  to  non-EU 
countries  and  have  a  significant  negative  impact  on  the  illicit  economy  and  on  the 
economies of third countries. 

Overall assessment of Option 4.1: Overall the added value of the maximal legislative 
option  (sub-option  without  mutual  recognition)  is  likely  to  be  significant.  The  fact 
that asset confiscation work appears to be potentially profitable in most Member States 
is  a  strong  argument  which  significantly  reduces  the  immediate  need  to  demonstrate 
other benefits. However, significant social benefits can also be expected, provided that 
the actions most likely to affect fundamental rights are proportional in their scope and 
balanced by adequate safeguards. The immediate impacts of implementing this option 
include stronger systems for confiscation, freezing, managing and redistributing assets. 
However,  this  option  would  also  bring  an  important  impact  on  utilisation.  Member 
States  do  not  want  to  be  seen  to  be  performing  poorly.  While  utilisation  workshops 
would  inform  Member  State  decision-makers  about  the  potential  profitability  of  asset 
confiscation  work  and  thus  empower  them  to  promote  change,  more  powerful 
legislative  tools  would  encourage  utilisation  by  concretely  raising  the  chances  of 
successful intervention. Moreover, harmonisation of confiscation laws can also de facto 
promote  mutual  recognition  by ensuring that incoming  orders are  compatible  with  the 
judicial system of the executing Member State. This option would achieve the objective 

33  

The  proposed  option  would  introduce  non  conviction  based  confiscation  measures  and  third 
party confiscation only in a limited way.  

EN 

38 

   EN 

 
 
                                                 
of  increasing  the  recovery  of  criminal  assets  in  the  Union.  Most  likely  it  would  be 
moderately welcomed by the European Parliament. 

7.5. 

Analysis  of  Option  4.2  -  Maximal  legislative  option  including  mutual 
recognition  

Economic  impact:  In  economic  terms,  adding  EU-level  action  on  mutual  recognition 
(policy  actions  14,  19  and  20  aiming  to  ensure  utilisation  of  mutual  recognition 
instruments,  the  impacts  of  which  are  described  in  Section  7.3,  and  policy  action  13 
which aims at expanding the scope of mutual recognition to all orders) would improve 
the results of the EU27 profitability analysis still further. However, given the scarcity of 
data  on  the  number  and  amounts  of  orders  to  be  enforced  in  other  Member  States,  a 
detailed  profitability  estimate  by  country  for  this  policy  option  is  not  possible.  The 
additional costs for Member States liable to receive many foreign non-conviction based 
orders  for  execution  would  be  fully  offset  by  the  existing  provision  (in  FD 
2006/783/JHA) that the Member State enforcing a confiscation order is entitled to retain 
50% of the recovered value34. 

Social impact: Significant. In addition to the impacts described in Section  7.4 (more 
assets  recovered  in  favour  of  the  victims  and  victimised  communities  and  increased 
confidence  in  the  national  criminal  justice  systems,  increased  impact  on  fundamental 
rights  which  requires  new  provisions  to  comply  with  the  principle  of  proportionality 
and  be  balanced  by  adequate  safeguards)  the  important  enhancements  on  mutual 
recognition can be expected to result in increased confidence in the EU Area of Justice, 
Freedom and Security.  

Impact on criminal behaviour: Significant. The measures in the maximal legislative 
option  (notably  non-conviction  based  confiscation  in  limited  circumstances  and  third 
party confiscation), coupled with a significantly improved enforcement of cross-border 
procedures (resulting especially from the expansion of mutual recognition to all types of 
orders, including non-conviction based orders) would likely oblige criminals to change 
their  practices  and  could  have  displacement  effects,  resulting  in  a  net  capital  flight  of 
criminal money out of the EU. This would result in an even more significant impact on 
the illicit economy and on the economies of third countries. 

Overall assessment of Option 4.2: Overall, the added value of the maximal legislative 
option  (sub-option  with  mutual  recognition)  is  likely  to  be  very  significant.    The 
combined effects of economic profitability, significant social impacts (both on victims 
and  victimised  communities  through  more  assets  recovered  in  favour  of  victims  and 
more  social  reuse)  and  greater  utilisation  are  further  enhanced  by  actions  on  mutual 
recognition which are more far-reaching than those described in Section 7.3. Together 
with  the  other  policy  actions,  the  latter  will  significantly  improve  the  status  quo  as 
regards  cross-border  enforcement  of  orders  throughout  the  Union.  This  is  important 
because barriers to enforcement are effectively a dampener on profitability, tending to 
discourage  utilisation  in  Member  States  with  non-conviction  based  confiscation 

34  

The underlying assumption is that Member State agents would not request the freezing of assets 
in other Member States (which is more costly and time-consuming than a national procedure) 
unless  the  value  of  the  criminal  assets  identified  and  the  chances  of  recovery  are  sufficiently 
high. 

EN 

39 

   EN 

 
                                                 
regimes.  This  option  would  be  fully  consistent  with  the  objective  of  increasing  the 
recovery of criminal assets in the Union. It would likely be welcomed by the European 
Parliament. 

8. 

COMPARING THE POLICY OPTIONS  

8.1. 

Comparison of options and justification for choosing the preferred option 

As  a  reminder,  the  table  below  summarises  the  objectives,  policy  actions/options  and 
their expected impacts. In the table (cid:57) indicates that there is no problem, ? indicates a 
potential  problem,  ??  indicates  a  likely  problem,  and  (cid:56)  indicates  a  clear  problem,  in 
which case the action itself is struck out (screening).   

Impacts (applied vis-à-vis the ‘no change’ baseline) are rated + or – for slight impacts, 
++ or – – for moderate impacts, and +++ or – – – for significant impacts.   

EN 

40 

   EN 

 
Table 4: comparison of policy actions and options against objectives and with expected impacts 

Barriers

Primary impacts

Options

EU-level policy actions
EU-level policy actions
(grouped by specific objective)
(grouped by specific objective)

Operational objectives
Operational objectives

A1 A2 A3 A4 B1 B2 B3 C1 C2 D1 D2 D3 E1 E2 E3 E4

l
l
a
a
r
r
r
r
fe
fe
n
n
o
o
C
C

y
y
it
it
al
al
n
n
tio
tio
r
r
o
o
p
p
o
o
r
r
P
P

y
y
t
t
li
li

tibi
tibi
a
a
p
p
m
m
o
o
C
C

s
s
t
t
s
s
o
o
t c
t c
c
c
e
e
r
r
Di
Di

y
y
t
t
ici
ici
pl
pl
Sim
Sim

n
n
o
o
ti
ti
a
a
c
c
s
s
fi
fi
n
n
o
o
C
C

n
n
tio
tio
a
a
v
v
r
r
e
e
s
s
e
e
r
r
P
P

t
t
n
n
e
e
m
m
e
e
c
c
r
r
o
o
f
f
n
n
E
E

n
n
tio
tio
a
a
is
is
til
til
U
U

n
n
o
o
ti
ti
u
u
rib
rib
t
t
s
s
di
di
e
e
R
R

e
e
v
v
ti
ti
sla
sla
gi
gi
e
e
-l
-l
n
n
o
o
n
n

al
al
m
m
mini
mini

R
R
 M
 M
 -
 -
al
al
im
im
x
x
a
a
m
m

R
R
 M
 M
 +
 +
al
al
im
im
x
x
a
a
m
m

Implementation of 2005/212/JHA (cid:57) . (cid:57) .
.
.
.
Indirect proceeds
.
.
.
.
Civil standard of proof
.
Separable proceedings
.
.
. (cid:57) .
.
Stronger extended confiscation
.
.
NCB in limited circumstances
. (cid:57) .
Third party confiscation
. (cid:57) .

(cid:57) .
(cid:57) .
(cid:57) .
.
. (cid:57) .
.
.
.
.

.
.
.
.
.
.
.
.

.
.
.
.
.
.
.
.

.
.
.
.
.
.
.
.

Universal freezing/seizure

Confiscation
1
2
3
4
5
6
7
7a Third party confiscation (adjusted)
Preservation
8
9 Mechanisms to safeguard freezing
10 Powers to realise seized assets
11 Asset management office
Enforcement
12 Implementation of MR obligations
13 Broadened scope of MR
14 MR of compensation orders
Utilisation
15 Utilisation workshops
16 Reporting obligations
17 Mandatory assets investigation
18 Limited judicial discretion
19 Consolidated MR forms (cf. 20)
20 Enforced primacy of MR (cf. 19)
Redistribution
21 Social reuse programme

. (cid:57) (cid:57) .
. (cid:57) (cid:57) .
. (cid:57) .
.

.
.
.
.

.
.
.

.
.
.
.
.
.

.

.
.
.
.

.
.
.

.
.
.
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.
.

.

.
.
.
.

.
.
.

.
.
.
.
.
.

.

. (cid:57) .
.
.
.

.
. (cid:57) .
.
.

.
.
. (cid:57) .
. (cid:57) .

.
.
.

.
.
.
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.
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.

.
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.
.
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.

.
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.
.
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.

.

.
.
.
.
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.

.
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.

.
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.
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.
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.
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.
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.
.
.
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.
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.

. (cid:57) (cid:57) (cid:57) .
. (cid:57) (cid:57) (cid:57) .
. (cid:57) (cid:57) .
.
. (cid:57) (cid:57) .
.
. (cid:57) .
.
. (cid:57) .
.

.
.

.
.
.
.
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.
.
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.
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.
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.
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.
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.
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.
.
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R.
R.
.
.
F
F

.
R/+
R
R/+
R
−
− −
.

.
R/+
R
.

.
+
.

.
.
−
−
.
.
.
.

.
.
+
V

+
.
.

.
.
.
.
++
.
.
.

.
.
.
.

.
+
++

(cid:57)
(cid:57)
(cid:57)
(cid:57)
??
??
?? (cid:57)
(cid:57)
?
?
?
(cid:57)
?
(cid:57)
(cid:57)

(cid:57)
(cid:57)
(cid:57)
(cid:56)

(cid:57)
(cid:57)
(cid:57)

(cid:57)
(cid:57)
(cid:57)
(cid:57)

(cid:57)
(cid:57)
(cid:57)

(cid:57)
(cid:57)
(cid:56)
?
?
?
??
(cid:57)

(cid:57)
(cid:57)
?
(cid:57)

(cid:57)
?
(cid:57)

(cid:57) NA NA
(cid:57)
(cid:57)
(cid:57)
(cid:56)
(cid:56)
(cid:56)
(cid:56)
(cid:56)
(cid:56)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)

.
.
− −
.
− − −
.
− − − −
.
.

+
+

.
.
.
.
+ + +
+

.

.

.

. (cid:57) (cid:57) (cid:57) (cid:57) ?? (cid:57)

?

.

V

.

.
+
+ +
+ +
+ +
+ +
+ + +
+ +

.
.
.
.

.
.
.

.
.
.
.
.
.

.

.
.
.
.
.
.
.
.

.
+
+ +
+ +

.
.
.

.
.
.
.
.
.

.

.
.
.
.
.
.
.
.

.
.
.
.

+
+ + +
+

.
.
.
.
.
.
.
.

.
.
.
.

.
.
.

/
.
+ +
.
NA
.
.
NA
+ + + + +
+ + +

.
.
.
.
.
.
+
.

.
.
.
.

.
.
+ +

.
.
.
.
.
.

.

.

+ + +

(cid:57)
.
.
.
.
.
.
.

.
.
.
.

(cid:57)
.
.

(cid:57)
.
.
.
.
.

.

(cid:57)
.
.
.
.
.
.
.

.
.
.
.

(cid:57)
.
(cid:57)

(cid:57)
.
.
.
(cid:57)
(cid:57)

.

(cid:57)
(cid:57)
.
(cid:57)
(cid:57)
(cid:57)

(cid:57)

(cid:57)
(cid:57)
(cid:57)
.

(cid:57)
.
.

(cid:57)
(cid:57)
.
.
.
.

(cid:57)

(cid:57)
(cid:57)
.
(cid:57)
(cid:57)
(cid:57)

(cid:57)

(cid:57)
(cid:57)
(cid:57)
.

(cid:57)
(cid:57)
(cid:57)

(cid:57)
(cid:57)
.
.
(cid:57)
(cid:57)

(cid:57)

EN 

41 

EN

 
  
 
The  table  below  shows  that  the  potential  impacts  of  the  policy  actions  in  the 
Member States could be very different based on the differences in their legislation, 
structures and practices. There is a wide gap between countries which  have  only 
basic  rules  and  structures  in  place,  such  as  Greece,  to  countries  with  very 
sophisticated  and  effective  systems,  such  as  the  Netherlands.  In  the  table,  (cid:57) 
denotes  that  the  measure  under  consideration  is  already  implemented,  (cid:56)  denotes 
that it is not, P denotes partial implementation, A denotes an alternative approach 
to  the  objective,  ?  denotes  a  gap  in  the  dataset  and  P/?  denotes  at  least  partial 
implementation. 

Table 5 - Location of potential impacts by Member State 

EU-level policy actions
(grouped by specific objective)

Member State
BE BG CZ DK DE EE IE EL ES FR IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK

Confiscation

1A Extended confiscation

1B Value confiscation

(2) Indirect proceeds

3 Civil standard of proof

4 Separable proceedings

5 Stronger extended confiscation

6 NCB in limited circumstances

(7A) Third party: if mala fide

7B Third party: if gift

Preservation

(cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) P/A P (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:56) (cid:56) (cid:57) (cid:57) (cid:57) (cid:57) P (cid:57) P (cid:56) (cid:57) (cid:57) (cid:57) (cid:57)
(cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) P (cid:57) (cid:57) P (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57)
(cid:57) (cid:57) (cid:57) P (cid:57) (cid:57) (cid:57) P (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) ? (cid:57) (cid:57) (cid:57) ? (cid:57) (cid:57) (cid:57) (cid:57)
P (cid:57)
(cid:56) P (cid:56) P (cid:56) (cid:56) (cid:57) P (cid:56) (cid:56) P
? (cid:57)
?
?
(cid:56) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) P/A (cid:56) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:56) (cid:56) (cid:56) P (cid:57) (cid:56) P (cid:57) P (cid:56) ? (cid:57) (cid:57) (cid:57)
P (cid:57) (cid:57) (cid:57)
(cid:56) P (cid:57) P (cid:57) (cid:57) (cid:57) P (cid:57) ?
P
(cid:57) P/? P/? (cid:57) P (cid:57) (cid:57) P (cid:57) A P (cid:56) (cid:57) (cid:57) P/A (cid:57) P (cid:57) (cid:56) P (cid:57) (cid:56) P
P (cid:57) (cid:57)
P (cid:56) (cid:57)
P (cid:56) P
? P/? P/? (cid:57) P (cid:57) (cid:57) P

? (cid:56) (cid:56) (cid:56) (cid:56) ? (cid:57) P (cid:56) (cid:56) (cid:56) (cid:56) P

? A P (cid:57) (cid:57) (cid:56) A (cid:57) P A (cid:56) P

P (cid:56) (cid:56) (cid:56) (cid:57) (cid:57) P (cid:56) ? P/? (cid:56) ?

P (cid:57) (cid:56) P (cid:57) (cid:56) (cid:57) P

? (cid:56) ? (cid:57) ?

P (cid:56) P

? (cid:56) P

? P/? ?

P

P

?

?

8 Universal freezing/seizure
9 Mechanisms to safeguard freezing (cid:57) P (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) P/? (cid:57) P

(cid:57) (cid:57) ? (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) P/? (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) P/? P/? (cid:57) P P/? (cid:57)
? P/? P/? P/? (cid:57) (cid:57)
? (cid:57)
? (cid:56)

P
? (cid:57) (cid:57) ?
?
? (cid:57) (cid:57) (cid:57) (cid:56) (cid:56) (cid:56) (cid:56) (cid:56) (cid:56) (cid:57) (cid:56) ? (cid:56) (cid:56) (cid:56) (cid:56) ?

P (cid:57) (cid:57) (cid:57) (cid:57) P
? (cid:57) (cid:57) (cid:56) (cid:57) (cid:56) (cid:57) (cid:56) ? (cid:56) (cid:56) ?

(cid:57) (cid:57) (cid:57) (cid:56) (cid:57) (cid:57) ?
(cid:57) (cid:56) (cid:56) ? (cid:56) (cid:56) ?

P (cid:57) P/? P

?

10 Powers to realise frozen assets

11 Asset management office

Enforcement

12A Implemented FD 2003/577/JHA

(cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:56) (cid:57) (cid:57) (cid:56) (cid:57) (cid:57) (cid:57) (cid:56) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:56)

12B Implemented FD 2006/783/JHA

(cid:56) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:56) (cid:56) (cid:57) (cid:57) (cid:56) (cid:57) (cid:57) (cid:56) (cid:56) (cid:57) (cid:56) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:56) (cid:57) (cid:56) (cid:56)

12C Implemented FD 2005/214/JHA

(cid:56) (cid:57) (cid:57) (cid:57) (cid:56) (cid:57) (cid:56) (cid:56) (cid:57) (cid:57) (cid:56) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:56) (cid:57) (cid:56) (cid:56)

(13A) Recognition of NCB orders (CARIN) (cid:56) (cid:56) (cid:56) (cid:56) (cid:57) (cid:56) ? (cid:56) (cid:56) (cid:57) ? (cid:56) ? (cid:56) (cid:57) (cid:56) (cid:56) (cid:56) (cid:56) ? (cid:56) (cid:56) (cid:56) (cid:56) (cid:56) (cid:57) (cid:57)
(13B) Ratified 2005 Warsaw convention (cid:57) (cid:56) (cid:56) (cid:56) (cid:56) (cid:56) (cid:56) (cid:56) (cid:57) (cid:56) (cid:56) (cid:57) (cid:57) (cid:56) (cid:56) (cid:57) (cid:57) (cid:57) (cid:56) (cid:57) (cid:57) (cid:57) (cid:57) (cid:57) (cid:56) (cid:56) (cid:56)
? (cid:57) (cid:57) ?

14 Principle of 'adhesion' or similar

? (cid:57) ?

?

?

?

?

?

?

?

?

?

?

?

?

?

?

?

?

?

?

?

?

Utilisation

17 Mandatory assets investigation

18A Limited discretion re: freezing

?
?
(cid:56) ?

?

?

? (cid:56) (cid:57) ?
? (cid:56) P (cid:56) ? (cid:56) (cid:57) (cid:57) ?

? (cid:56) (cid:57) ?

? (cid:56) (cid:56) (cid:56) ?
P (cid:57) (cid:56) ?

18B Limited discretion re: confiscation

P

? (cid:56) ? (cid:57) (cid:57) P

? (cid:56) (cid:57) ? (cid:57) ?

?

?

?

Redistribution

?

? (cid:57) ? (cid:56) ? (cid:57) ? (cid:56) ? (cid:56)
? (cid:56)
?
P (cid:57) (cid:57)

?
?
P
? (cid:57) (cid:57) (cid:57) ?

?
?
?
? (cid:56) ?

P

?

21 Social reuse programme

(cid:56) (cid:57) (cid:56) (cid:56) P (cid:56) (cid:56) (cid:56) (cid:57) (cid:57) (cid:57) (cid:56) (cid:56) (cid:56) (cid:57) (cid:56) (cid:56) (cid:56) (cid:56) (cid:56) (cid:57) (cid:56) (cid:56) (cid:56) (cid:56) (cid:56) (cid:57)

Bearing in mind the analysis of impacts, each policy option can be ranked in terms 
of  its  impact  against  the  five  specific  objectives  of  enhancing  confiscation, 
preservation,  enforcement,  utilisation  and  social  utility  from  recovered  assets 
(redistribution).    Based  on  the  first  four  of  these  rankings,  a  ranking  can  also  be 
derived for impact upon the number of assets recovered (which corresponds to the 
problem  of  insufficient  recovery).  In  the  tables  below,  rankings  are  expressed  in 
decreasing order, 1 being the highest score. 

EN 

42 

   EN

 
 
 
 
 
Table 6: Preliminary ranking of options against specific objectives 

Specific objective 

Confiscation 

Preservation 

Enforcement 

Utilisation 

Redistribution 

Assets recovered* 

Policy option rankings 

No change 

Non-
legislative 

Minimal 
legislative 

maximal  
without MR 

Maximal 
with MR 

0 

0 

0 

0 

0 

0 

2 

2 

3 

4 

4 

3 

2 

2 

2 

2 

3 

2 

1 

1 

3 

3 

2 

2 

1 

1 

1 

1 

1 

1 

* Impact on number of assets recovered is a function of confiscation, preservation, enforcement and utilisation. 

legislative  options  entail  a  higher 

The  maximal 
impact  on  confiscation, 
preservation  and  redistribution  with  respect  to  the  other  options.  The  minimal 
legislative option impacts positively on enforcement and utilisation. The maximal 
legislative  options  entail  a  higher  overall  impact  on  assets  recovered.  The  sub-
option  with  mutual  recognition  (which  includes  all  actions  in  the  minimal 
legislative option and the maximal option without mutual recognition) would have 
the highest impact. 

The table below shows the policy options ranked against each other with reference 
to the impacts, the potential barriers to implementation and other factors, using the 
same ranking criterion (1 being the highest). It finally shows an overall assessment 
in the form of a ranking. 

Table 7: Ranking of options against impacts, barriers and criteria 

Criteria 

Economic Impacts 

Social Impacts 

Fundamental Rights 

Proportionality 

MS compatibility 

Policy option 

no change 

Non-
legislative 

minimal 
legislative

maximal  
without MR 

Maximal 
with MR 

2 

2 

2 

2 

2 

1 

1 

2 

2 

3 

0 

0 

0 

0 

0 

4 

4 

1 

1 

1 

3 

3 

1 

1 

1 

43 

EN 

   EN

 
Simplicity & coherence 

Implementation costs 

Administrative burden 

Geographical 
disposition 

Overall assessment 

0 

0 

0 

0 

0 

4 

1 

1 

1 

3 

2 

1 

1 

1 

2 

3 

2 

2 

1 

2 

1 

2 

2 

1 

1 

As described in Sections 7.4 and 7.5, the maximal legislative options entail higher 
economic and social impacts than the other options, while having a bigger impact 
also on fundamental rights, proportionality, compatibility, costs and administrative 
burden.  This  analysis  clearly  shows  that  the  preferred  policy  option  is  the 
maximal  option  featuring  action  on  mutual  recognition.  The  maximal  legislative 
option without action on mutual recognition and the minimal legislative option are 
ranked equal second.  

8.2. 

Proportionality and subsidiarity of the preferred option 

The  preferred  option  respects  the  principles  of  subsidiarity  and  proportionality 
because it does not go beyond what is needed to achieve the objectives described in 
section  5  whilst  respecting  fundamental  rights.  The  maximal  legislative  option 
including  mutual  recognition  would  considerably  enhance  the  confiscation  and 
enforcement  powers  of  the  Member  States,  inter  alia  by  amending  existing 
provisions  on  extended  confiscation  and  introducing  new  provisions  on  non-
conviction  based  confiscation,  third  party  confiscation  introducing  the  mutual 
recognition of all types of orders (including non-conviction based orders).  

However,  its  policy  actions  would  be  calibrated  in  order  to  be  proportionate  and 
not unduly affect fundamental rights. For example the introduction of harmonised 
non-conviction based confiscation provisions is not foreseen in all cases, but only 
in  very  limited  cases  where  the  defendant  cannot  be  prosecuted  (due  to  death, 
illness, abscondence or immunity). Third party confiscation would not be allowed 
in all cases, but only when the acquiring third party should have suspected that the 
assets are proceeds of crime and paid less than market value. In order to meet the 
concerns expressed by defense lawyers, safeguards at EU level are foreseen with a 
view to fully comply with the EU Charter on Fundamental Rights. In order to reach 
an  equivalent  outcome,  virtually  all  Member  States  would  have  to  amend  their 
national legislation. However, these legislative changes would not be coordinated 
and would in any case not address the mutual recognition of foreign orders (where 
common  rules  are  required).  As  a  result,  effective  freezing  and  confiscation  of 
assets would not be possible in all cross-border cases. 

EN 

44 

   EN

 
 
 
 
 
9. 

IMPLEMENTATION, MONITORING AND EVALUATION  

The implementation of the preferred option should be subject to future monitoring 
and evaluation.  

This  report  has  repeatedly  highlighted  the  lack  of  statistical  data  on  asset 
confiscation and the poor quality of available data. As a result of these data gaps, it 
is  currently  not  possible  to  carry  out  a  proper  evidence-based  assessment  of  the 
impact  of  new  policies/legislation  at  EU  level  or  at  Member  State  level  in  most 
countries.  In  addition,  information  on  the  extent  to  which  mutual  recognition 
facilitates  cross-border  enforcement  is  not  readibly  available  as  a  result  of  which 
the role of mutual recognition is poorly understood.  

For  this  reason,  the  preferred  option  includes  the  introduction  of  reporting 
obligations on the Member States in relation to asset confiscation work. Data will 
be collected by judicial authorities (courts, prosecution offices) asset management 
offices and other authorites in charge of asset disposal, at least on an annual basis35. 
The  data  so  collected  will  feed  into  monitoring  and  evaluation  activities  and  will 
allow the Commission to assess to what extent the proposed legislation achieves its 
objectives. Particular attention should be paid to those Member States where data 
collection is relatively under-developed. Examples of the type of data that could be 
collected include: 

•  Number of freezing orders executed 
•  Number of confiscation orders executed 
•  Value of assets frozen 
•  Value of assets recovered  
•  Number of requests for freezing orders to be executed in another Member State 
•  Number  of  requests  for  confiscation  orders  to  be  executed  in  another  Member 

State 

•  Value of assets recovered following execution in another Member State 
•  Value of assets destined to social use 
•  Number  of  cases  where  confiscation  is  ordered/  number  of  convictions  for  the 

criminal offences covered by the Directive.   

implementation  plan  and  produce 

In  order  to  monitor  the  effective  implementation  of  the  proposed  legislation  the 
regular 
Commission  will  prepare  an 
implementation  reports  based  on  consultations  of  the  Member  States  and 
stakeholders. The first report is in principle foreseen three years after the entry into 
force of the legislation. The mapping exercise of the asset confiscation legislation 
in the Member States which was carried out in preparation for the present impact 
assessment  could  be  used  as  a  baseline  for  monitoring  developments  in  law  and 
utilisation in the Member States.  

35  

It  is  not  yet  clear  whether  an  authority  (such  as  the  Ministry  of  Justice)  will  act  as 
centralised  national  contact  point  for  the  data  collection,  nor  whether  the  reporting 
requirement will also include a requirement to make the data publicly available. 

EN 

45 

   EN

 
                                                 
Evaluations  will  also  be  carried  out  on  a  regular  basis,  the  first  report  being 
foreseen  five  years  after  the  entry  into  force  of  the  legislation.  The  evaluation 
reports  could  include  a  cost-benefit  modelling  exercise  to  assess  the  current  and 
estimate the future profitability of asset confiscation work.  

Transposition workshops and other expert meetings will also take place to discuss 
implementation problems. The exchange of best practices in all the phases of the 
confiscation  process  will  continue  to  take  place  within  the  EU  Asset  Recovery 
Offices Platform. 

EN 

46 

   EN

 
 
Annex 1                     Summary of fieldwork of the external IA study 

Fieldwork was carried out in situ and/or by telephone in all 27 EU Member States.  
In order to understand how Member State laws operate in practice through the EU, 
government practitioners (i.e. police, prosecutors and others) were interviewed in 
each Member  State.  Only in Poland did scheduling difficulties prevent this. This 
core  of  interviews  was  complemented  with  other  perspectives  from  judges, 
defence lawyers, academics and, in the Italian case, from persons with experience 
in the social reuse of confiscated assets.  Table 1 summarises this fieldwork. 

Table 1 Fieldwork in Member States 

Police / 
prosecutor
1
3
2
2
5
2
2
2
3
2
2
2
2
1
2
2
2
2
2
.
3
2
2
2
3
3
7

Judge
.
.
.
.
.
1
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
1
.

MS
BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

Defence
.
1
.
.
.
.
.
1
.
.
.
.
.
.
.
.
.
1
.
1
.
.
.
.
.
.
2

Academic
1
.
.
.
1
.
.
2
1
1
3
.
.
.
.
.
.
1
.
.
.
1
.
.
1
1
1

Other
.
.
.
.
.
.
.
.
.
.
3
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

Moreover  interviews  were  held  with  representatives  of  EU  and  international 
institutions: 

•  Europol 
•  Eurojust 
•  CARIN (the Camden Asset Recovery Inter-Agency Network) 
•  Moneyval 
•  FATF 

EN 

47 

   EN

 
 
•  Council of Europe: European Court of Human Rights 
•  Council of Europe: Venice Commission 

EN 

48 

   EN

 
Annex 2  

Confiscation statistics 

Statistics  are  presented  for  the  following  Member  States  where  relevant  material 
was provided or located through fieldwork and data search: 

•  Bulgaria 
•  France 
•  Germany 
•  Hungary 
• 
• 
•  Netherlands 
•  United Kingdom 

Ireland 
Italy 

Bulgaria 

Table 2 Bulgarian Statistics, 2006-2010 

Freezing cases p/a  Assets frozen

2006 

2007 

2008 

100 

109 

126 

p/a (€m) 

21.8 

66.6 

66.3 

2009 
254 
155 
Source: CEPACA Annual Report (2009). 

Confiscation 
cases p/a 

Costs* 

(€ millions) 

12 

33 

57 

79 

. 

. 

. 

6.5 

As at the end of 2009, of all the confiscation cases brought to date: 

•  133 remained at first instance trial, 
•  28 decisions at first instance (CEPACA won 22), 
•  13 decisions at second instance (CEPACA won 7), 
•  6 cases finalised (CEPACA won 4). 

Recovered assets from the 4 cases won = €1.0m. 

Value of assets in the 29 successful cases = €10m. 

France 

Table 3 French statistics (2005-2009) 

Freezings by police (€m) 

Freezings by  Gendarmerie 
(€m) 

Total freezings (€m) 

2005 

2006 

2007 

2008 

. 

60.5 

51.8 

35.1 

. 

11.4 

3.8 

58.8 

2009 
Source: Reports of PIAC (Platform for Identification of Criminal Assets) 

127.7 

58 

51.3 

71.9 

55.5 

93.9 

185.7 

EN 

49 

   EN

 
 
 
 
Germany  

Table 4 German statistics, organised crime (1992-2009) 

% of O.C. investigations 
in which assets seized 

Estimated O.C. 
profit in these 
cases (€m) 

1992 

1993 

1994 

1995 

1996 

1997 

1998 

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

5.0% 

6.6% 

6.8% 

8.3% 

10.5% 

12.1% 

21.5% 

22.2% 

30.2% 

30.7% 

25.0% 

25.3% 

24.2% 

25.4% 

25.9% 

29.1% 

27.0% 

. 

. 

. 

. 

. 

. 

. 

. 

. 

760 

1,500 

468 

1,337 

842 

1,815 

481 

663 

Amount 
seized 

(€m) 

. 

<20 in mid 90s 

. 

118.5 

. 

. 

31 

69 

68 

97 

60 

39 

Total number of 

 recorded 
crimes 

. 

. 

. 

. 

6,647,598 

6,586,165 

6,456,996 

6,302,316 

6,264,723 

6,363,865 

6,507,394 

6,572,135 

6,633,156 

6,391,715 

6,304,223 

6,284,661 

170 

. 

2009 
Source:  Utilisation,  freezing,  profit  (BKA  annual  organised  crime  situation  reports);  Total 
number of crimes (Eurostat, 2010) 

26.9% 

113 

903 

. 

It is important to note that utilisation, amount seized and estimated profit refer to 
organised  crime  as  defined  in  the  BKA.  We  do  not  have  a  precise  definition  of 
‘profit’ in this context. 

EN 

50 

   EN

 
 
 
 
 
 
 
Table 5 German statistics, all crime (1999-2009) 

Number of proceedings 
in which assets 
confiscated 

Total (state and 
civil) claim (€m) 

Total amounts 
confiscated or 
forfeited (€m) 

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

- 

- 

- 

- 

- 

6045 

6010 

6101 

7050 

- 

- 

- 

- 

- 

- 

1268 

1191 

1066 

592 

- 

219 

.536.9 

.332.6 

294 

- 

306 

319 

301 

219 

- 

Total number of 

 recorded 
crimes 

6,302,316 

6,264,723 

6,363,865 

6,507,394 

6,572,135 

6,633,156 

6,391,715 

6,304,223 

6,284,661 

- 

2009 
Source: Confiscation statistics (Fieldwork, FATF 2010, Fijnaut & Paoli (2004) Organised Crime 
in Europe pp752-753); Total number of crimes (Eurostat, 2010) 

6725 

281 

901 

- 

Hungary  

Table 6 Hungarian statistics (1999-2008) 

Recorded 
crimes 

Convictions 
(total) 

Convictions 
(property and 
financial crime) 

Forfeiture 
cases 

Amount 
frozen/seized 

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

505,716 

450,673 

465,694 

420,782 

413,343 

418,833 

436,522 

425,941 

426,914 

. 

95398 

50840 

94538 

48249 

93442 

45090 

97558 

44676 

86705 

38112 

56 

14 

35 

233 

598 

(€m) 

. 

. 

. 

. 

. 

41 

69 

42 

102 

57 

Source:  Utilisation,  Amount  frozen  seized  (Police  interviews  and  Criminality  and  Criminal 
Justice' report of Hungarian Prosecutor General, 2008); Recorded crimes (Eurostat, 2010) 

These statistics evidence a rising utilisation rate (forfeiture cases as a function of 
convictions).  Data 
is  not  available  for  amounts  ordered  confiscated  or 
subsequently recovered. 

EN 

51 

   EN

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ireland  

Table 7 Irish statistics (2003-2009) 

CAB recovery 
from NCB 
confiscation (€m) 

CAB recovery 
from revenue 
powers (€m) 

2003* 

2004* 

2005 

2006 

2007 

2008 

2009 

? 

? 

2 

3 

0.3 

6.1 

1.4 

10 

16.4 

16.3 

19.1 

10 

5.9 

5.2 

CAB total 
recoveries 

(€m) 

? 

? 

18.3 

22.1 

10.3 

12.0 

6.6 

Running 
costs of 
CAB (€m) 

Recorded 
crimes 

5.7 

5.7 

5.2 

5.2 

5,1 

7.5 

6.9 

103,462 

99,244 

102,206 

103,178 

. 

. 

. 

 Source: CAB data (Annual Reports of the CAB); Recorded crimes (Eurostat, 2010). 

The  recovery  data  relates  only  to  the  Criminal  Assets  Bureau  (CAB)  which  has 
non-conviction based confiscation powers and also revenue powers (i.e. the ability 
to  levy  tax  on  previously  undeclared  income  where  even  a  non-conviction  based 
case  cannot  be  made  out  on  the  evidence.    Amounts  recovered  from  non-
conviction based confiscation mostly relate to work from previous years due to a 
lag  between  the  seizure  of  assets  and  their  vesting  in  the  state  (unless  there  is 
disposal by consent, the law requires seven years).36 Monies recovered by victims 
due  to  the  work  of  CAB  were  not  identified  and  so  were  not  available  to  add  to 
these figures. 

Operating  costs  for  the  CAB  include  the  cost  of  training  regular  Gardi  (police 
officers) so that conviction-based confiscation can be performed at local level.  No 
conviction based data is available. 

Italy 

Table 8 Italian statistics (1992-2009) 

Assets 
investigated 

Assets ordered
 confiscated 

Final 
orders 

Disposals  Recovered 
value (€)  

Social reuse 
(€m)  

1992 

1993 

1994 

0 

85 

1 

13 

9 

27 

9 

3 

2 

1.8 

0.4 

0.2 

0.5 

0.1 

0.1 

36  

Fieldwork interview. 

EN 

52 

   EN

 
 
 
 
 
 
                                                 
Assets 
investigated 

Assets ordered
 confiscated 

Final 
orders 

Disposals  Recovered 
value (€)  

Social reuse 
(€m)  

1995 

1996 

1997 

1998 

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

4427 

2007 

8040 

2008 

6173 

2009 

12741 

0 

15 

71 

155 

392 

435 

203 

211 

464 

660 

1044 

1566 

1790 

949 

2333 

22 

102 

340 

404 

640 

575 

718 

477 

300 

328 

400 

414 

325 

319 

380 

5 

18 

63 

129 

216 

249 

231 

329 

287 

287 

190 

172 

518 

804 

544 

1.0 

3.7 

18.6 

18.2 

37.2 

38.9 

47.4 

89.9 

40.8 

47.4 

51.8 

31.8 

97.5 

165.5 

101.3 

0.5 

2.7 

9.3 

8.6 

27.2 

18.2 

35.4 

71.5 

22.5 

27.1 

32.1 

10.0 

38.1 

80.8 

60.7 

TOTAL 

62551 

11067 

6207 

4074 

797.1 

447.4 

 Source: Italian Department of Justice (2010) 

Social  reuse  data  refers  to  assets  used  or  allocated  for  social  purposes  by 
municipalities.  It does not include and assets or revenue streams allocated to law 
enforcement agencies.   

Netherlands  

Table 9 Dutch statistics (2003-2009) 

  Frozen assets under 
administration (€m) 

Amount ordered 
confiscated (€m) 

Amount 
recovered (€m) 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

. 

. 

. 

. 

. 

550 

600 

. 

. 

. 

. 

. 

. 

70 

10 

. 

. 

. 

. 

23.4 

50 

Recorded 
crimes 

1,369,271 

1,319,482 

1,255,079 

1,218,447 

1,214,503 

. 

. 

EN 

53 

   EN

 
 
 
 
 
 
 
 
 
 
 
 
 
Source: Amount confiscated (Authors’ fieldwork) ; Recorded crimes (Eurostat, 2010) 

Data  for  frozen  assets  under  administration  includes  assets  frozen  in  previous 
years  and  remaining  under  administration.  Data  for  amounts  received  refers  to 
confiscation  orders  successfully  enforced,  which  typically  relate  to  confiscation 
orders from previous years. 

United Kingdom 

Table 10 UK statistics (2001-2009) 

Amount confiscated 

(£m, realised orders) 

Recorded crimes 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

. 

. 

25 

46 

84 

125 

136 

146 

6,085,903 

6,544,490 

6,548,691 

6,193,756 

6,096,153 

5,968,674 

5,444,648 

. 

2009 
Source: Amount confiscated (UK Home Office); Recorded crimes (Eurostat, 2010) 

154 

. 

EN 

54 

   EN

 
 
Annex 3 

List of EU-level actions 

In order to meet the specific and operational objectives identified and remedy the 
shortcomings  resulting  from  the  problem  definition,  this  impact  assessment 
proposes  an  analysis  of  21  EU-level  policy  actions  (some  of  which  are 
complementary)  targeting  particular  operational  objectives.  They  are  described 
below, grouped by the specific objectives to which they relate.   

Further harmonising the confiscation powers  

1.   Promoting  implementation  of  existing  confiscation  obligations.    Although 
the  trends  towards  compliance  with  FD  2005/212/JHA  are  positive,  the 
European  Commission  could  help  to  ensure  ongoing  progress  via  continued 
implementation/expert workshops. 

2.  Confiscation of all valuable benefits, including indirect proceeds. The EU 
legal framework could harmonise a definition of criminal ‘proceeds’, to ensure 
the recovery of ‘indirect’ proceeds resulting from the appreciation in value, or 
profitable reinvestment, of direct proceeds.   Harmonisation could  also ensure 
that  any  valuable  benefit  (including,  for  example,  the  value  of  liabilities 
avoided) is liable to confiscation. 

3.  Civil  standard  of  proof  regarding  whether  an  asset  is  "criminal".    The 
standard  of  proof  on  whether  particular  assets  are  proceeds  could  be 
harmonised  to  a  lower  "balance  of  probabilities"  standard,  to  make  it  more 
difficult for convicted criminals to retain type 1 assets. 

4.  Separate  confiscation  proceedings.    The  EU  legal  framework  could  ensure 
that separate confiscation proceedings can be brought also at a later date when 
criminal proceedings are finalised. 

Strengthening  extended  confiscation.  The  EU  legal  framework  could  be 
5. 
simplified and strengthened by providing for extended confiscation at least where a 
court finds it substantially more probable that the assets of a person convicted of an 
offence  covered  by  Article  83(1)  TFEU  are  derived  from  other  similar  criminal 
activities.   

6.  Non-conviction based confiscation in limited circumstances.  The EU legal 
framework could make ordinary confiscation possible in circumstances where 
a  conviction  cannot  be  obtained  because  the  suspect  has  died,  fled  the 
jurisdiction, or is unable to stand trial. 

7.  Third party confiscation.  Laws could be harmonised by requiring third party 
confiscation to be available for assets received for less than market value and 
which a reasonable person in the position of the third party would suspect to be 
derived from crime.   

EN 

55 

   EN

 
 
Harmonising the preservation powers  

8.  Universal freezing. Harmonised minimum standards for freezing could ensure 
that it is possible to preserve any assets and would ease the mutual recognition 
of freezing orders. 

9.  Mechanisms to safeguard freezing.  Member States could be required to have 
in place appropriate mechanisms to ensure that assets in danger of being hidden 
or transferred out of the jurisdiction are able to be immediately frozen/seized.  
This  would  include,  in  appropriate  circumstances,  the  ability  to  freeze/seize 
prior to seeking a court order. 

10. Powers to realise frozen assets.  Harmonisation could ensure that, regardless 
of  how  frozen  assets  are  managed,  there  are  powers  to  realise  them  at  least 
where they are liable to decline in value or uneconomical to maintain. 

11. Designating  Asset  Management  Offices  (AMOs).  Further  harmonisation 
could require all Member States to entrust the management of frozen assets to 
AMOs  at  a  national  or  regional  level.  This  could  increase  efficiency  and 
promote best practice. 

Enhancing the enforcement powers (mutual recognition) 

12. Promoting implementation of existing mutual recognition obligations.  The 
Commission  could  help 
implementing 
Framework  Decisions  2003/577/JHA  (freezing  orders)  and  2006/783/JHA 
(confiscation orders) via implementation/expert workshops.   

to  ensure  ongoing  progress 

in 

13. Mutual  recognition  of  all  types  of  orders.    The  EU  legal  framework  could 
remove  existing  limitations  on  the  mutual  recognition  of  freezing  and 
confiscation orders, allowing orders to better circulate around the Union.  This 
would also make the legal framework more coherent. 

14. Mutual recognition of compensation orders.  The legal framework could be 
simplified  by  consolidating  FD  2006/783/JHA  and  2005/214/JHA  and 
extending their scope to include all compensation orders made in the context of 
criminal proceedings. 

Enhancing the utilisation of existing tools  

The  existing  EU  legal  framework  neither  obliges  utilisation  nor  provides  for 
incentives  for  cultural  change  through  the  normalisation  of  asset  confiscation 
activity (where failure by police and prosecutors through negligence or reticence to 
recover criminal assets would be perceived as unacceptable). 

15. Utilisation  workshops.  Utilisation  workshops  on  the  profitability  of  asset 
confiscation  work  to  the  benefit  of  government  decision-makers  in  some 
Member States could increase utilisation of these tools and provide a forum for 
the sharing of scientific knowledge and practitioner experience. 

EN 

56 

   EN

 
 
 
 
 
 
16. Reporting obligations. Reporting obligations could be introduced, for example 
an  obligation  to  report,  for  all  crimes  covered  by  TFEU  article  83(1),  assets 
frozen,  the  confiscation  orders  (if  any)  obtained  and  the  type  of  order.  This 
would  also  help  generating  statistics  which  could  be  used  for  evaluation 
purposes. 

17. Mandatory  assets  investigation.  The  EU  legal  framework  could  require 
investigators  to  open  a  parallel  financial  investigation,  at  least  for  the  crimes 
listed in TFEU article 83(1).   

18. Limited  judicial  discretion.  Judicial  discretion  could  be  limited  by  requiring 
freezing  to  be  ordered  wherever  there  is  reasonable  cause  to  suspect  that  an 
asset  may  become  liable  to  confiscation  and,  in  the  event  of  a  criminal 
conviction,  by  requiring  confiscation  to  be  ordered  unless  doing  so  would 
disproportionately affect fundamental rights.  

19. Consolidated mutual recognition forms. A single form for all types of mutual 
recognition  at  the  investigative  stage  could  be  provided  within  the  European 
Investigation  Order  (and  by  suppressing  the  existing  mutual  legal  assistance 
alternative). 

20. Enforcing  the  primacy  of  mutual  recognition.  The  EU  legal  framework 
could suppress the use of mutual legal assistance with respect to freezing and 
confiscation  by  repealing  the  existing  mutual  legal  assistance  conventions  as 
regards requests between Member States . 

EN 

57 

   EN

 
Annex 4  

Asset recovery in the UK 

Utilisation trends 

As with other EU Member States, the UK’s traditional approach to criminal justice 
has  been  to  detect  and  prosecute  offenders,  punishing  them  with  fines  and 
imprisonment.    This  approach  came  under  scrutiny  following  the  Cuthbertson 
case, in which a drug trafficker sentenced to a lengthy jail term retained £750,000 
in  proceeds  because  the  prevailing  forfeiture  regime  in  the  Misuse  of  Drugs  Act 
1971 was too narrow.  This led eventually to stronger asset recovery laws in the 
form  of  the  Drug  Trafficking  Offences  Act  1986  and  the  Criminal  Justice  Act 
1988.  These laws extended confiscation to all indictable offences and introduced 
value  confiscation.    Extended  confiscation—a  reverse  burden  of  proof  regarding 
the legitimacy of all assets acquired in the preceding 6 years—was introduced for 
drug offences and then generalised by the Proceeds of Crime Act 1995.37 

Visible  impacts  can  be  expected  to  lag  the  introduction  of  such  new  powers  for 
several  reasons:  it  takes  time  for  practitioners  to  learn  how  to  use  them;  it  takes 
time for cases to progress through the courts; legal challenges will further slow the 
first  wave  of  cases.    Yet  Levi  and  Osofsky  reported  in  1995  that  confiscation 
powers were still being utilised only occasionally for drug crimes, and rarely for 
other  crimes  (Levi  and  Osofsky,  1995).    Five  years  later,  the  Performance  and 
Innovation Unit of the Cabinet Office reported that: 

In the last five years, confiscation orders have been raised in an average 
of only 20 per cent of drugs cases in which they were available, and in a 
mere 0.3 per cent of other crime cases. The collection rate is running at an 
average of 40 per cent or less of the amounts ordered by the courts to be 
seized.  Specially  tasked  law  enforcement  officers  struggle  to  investigate 
the financial aspects of crime to support this effort, but their effectiveness 
is limited by their numbers and modest training.38 

This  report’s  recommendations 
included:  a  strategic  approach  aimed  at 
incentivising asset recovery work within practitioner communities, more resources 
for financial investigation and a ‘new legislative attack’.  The latter took the form 
of  the  Proceeds  of  Crime  Act  2002,  which  consolidated  existing  legislation, 
tightened some aspects and introduced three new elements: a non-conviction based 
‘civil recovery’ power, a non-conviction based cash seizure/forfeiture regime and 
new  revenue  powers  to  allow  otherwise  unrecoverable  criminal  profits  to  be 
taxed.39    These  new  powers  were  given  over  to  a  new  Asset  Recovery  Agency 
(ARA), while responsibility for conviction-based confiscation work remained with 

37  

39  

This act provided for extended confiscation wherever a ‘course of criminal conduct’ was 
identified. 
38 PIU (2000), 5. 
See part of POCA 2002. 

EN 

58 

   EN

 
                                                 
police forces throughout the country.  A year after the new legislation entered into 
force, a government report concluded that there were: 

pockets of excellent practice but that the overall application of the powers 
across  England  and  Wales  was  patchy,  with  money  laundering  and 
confiscation  seen  as  complex,  specialist  activities,  divorced  from 
mainstream  business.  Activity  was  often  only  targeted  at  the  higher 
profile  ‘crime  barons’  and  almost  exclusively  against  drug  trafficking, 
leading  to  failure  to  use  POCA  to  its  full  potential.  Opportunities  to 
combat those engaged in volume crime, street robbery and low-level drug 
dealing were being missed.40 

Essentially,  whereas  ARA  had  embraced  asset  recovery  as  its  raison  d’être,  it 
remained alien to the mindset of ordinary police officers and prosecutors.  Part of 
the  solution,  beginning  in  April  2004,  was  to  raise  utilisation  within  all  relevant 
government agencies through the Asset Recovery Incentivisation Scheme (ARIS), 
whereby 50% of the revenue stream generated by confiscated assets is returned to 
the agencies who played a role.  Another part of the solution has been a concerted 
effort  to  train  and  deploy  financial  investigators.    These  efforts  have  led  to 
increased  utilisation,  with  more  than  10%  of  Crown  Court  convictions  for 
acquisitive  crimes  (fraud,  burglary,  drug  trafficking,  etc)  now  resulting  in 
confiscation orders. 

Figure 11: Utilisation in the UK Crown Court, April 2006 – March 2010 

Source: Data from JARD and other sources, collated by the National Policing Improvement 
Agency 

40  

http://library.npia.police.uk/docs/hmcpsi/AssetRecovery.pdf 

EN 

59 

   EN

 
 
 
                                                 
Although a utilisation rate just above 10% may seem low, the effective utilisation 
rate will be somewhat higher because these total figures included cases in which a 
confiscation  order  would  be  inappropriate,  either  because  there  are  no  relevant 
proceeds  (despite  the  offence  being  of  an  acquisitive  type)  or  because  there  are 
known  to  be  no  recoverable  proceeds  (e.g.  where  the  proceeds  have  been 
dissipated).    Against  this,  there  are  also  cases  in  which  ‘nominal’  confiscation 
orders in the amount of £1 are obtained, to allow the issue to be reopened should 
proceeds be identified at a later stage. 

Another  interesting  point  to  note  is  that,  in  the  last  four  years,  recoveries  in  the 
Crown Court have been rising in absolute terms (by an average of more than 12% 
a year) but not as a proportion of convictions for acquisitive crimes in the Crown 
Court, because these too are rising.41 However, even though the 2006–2010 Crown 
Court time-series data does not show an increasing rate of utilisation, a look at past 
statistics (for example the 0.3% utilisation rate for non-drug cases quoted above) 
suggests an increase in the wake of POCA 2002.  Indeed, there is strong evidence 
of this in the form of hugely increased treasury receipts, which reached £154m in 
FY2009/10 (see Figure 12). This figure is, however, felt by the UK government to 
be  still  too  low.  In  particular,  a  recent  report  has  bemoaned  the  UK  law 
enforcement  community’s 
recovery  work. 
Significantly, it recognised that one of the main barriers may be profitability: 

‘mainstream’  asset 

failure 

to 

"There is a dichotomy between the need to mainstream asset recovery if the value 
recovered from confiscation is to grow significantly, and the risk that a move away 
from  specialisation  could  dilute  skills,  knowledge  and  experience,  and  prejudice 
performance if it is not done in a carefully planned manner. One route out of the 
conflict  would  involve  a  significant  commitment  to  training  and  performance 
management  over  a  sustained  period,  in  order  to  achieve  the  necessary  shift  in 
thinking amongst frontline staff in all agencies. Alternatively, the way forward is 
to recognise that mainstreaming is unlikely to provide value for money, and focus 
resources  where  they  will  be  most  cost-effective,  such  as  in  expanded  specialist 
units.  There  is  also  an  argument  for  making  the  statutory  process  leading  to  a 
confiscation  order  more  streamlined,  so  that  orders  take  less  time,  and  there  are 
fewer  procedural  steps  to  take;  this  could  improve  the  cost-effectiveness  and  the 
commitment to asset recovery at the same time."42 

We now turn to consider the profitability of asset recovery work in the UK.  We 
take a narrow approach, looking only at the ongoing costs of asset recovery work 
and  the  annual  revenue  stream  generated,  disregarding  the  value  of  any  other 
potential  economic,  social  and  environmental  benefits.    We  focus  on  ongoing 
costs.  We lack the data to examine one-off costs, which we estimate to be small 

41  

42  

This is especially interesting because, with the exception of drug trafficking, the number 
of  acquisitive  crimes  recorded  in  the  UK  has  fallen  during  the  relevant  period:  see 
http://rds.homeoffice.gov.uk/rds/pdfs09/recorded-crime-2002-2009rev.xls. 
  There  are 
many possible ways to reconcile the statistics, but there is no need to do so here.  
Joint Thematic Review 2010, paragraph 2.13. 

EN 

60 

   EN

 
                                                 
by comparison, especially given the period under scrutiny (i.e. several years after 
the introduction of the POCA 2002). 

9.1.1.  Profitability analysis 

The  UK  maintains  a  Joint  Asset  Recovery  Database  (JARD)  which  records  all 
amounts  finally  recovered  in  favour  of  the  state  (though  not  those  recovered  in 
favour  of  victims).    Records  date  back  to  the  financial  year  April  2003–March 
2004  following  the  introduction  of  POCA  2002.    Amounts  are  net  of  any 
management  expenses  payable  to  private  receivers,  but  not  of  agency  operating 
costs.    The  data  in  Figure  12  shows  a  clear  upward  trend,  reflecting  increasing 
utilisation of powers in recent years, reaching £154m in FY2009/10. 

Figure 12: Assets recovered in favour of the state, England and Wales, 2001-2009 

Source: UK Home Office 2003-2009, interview estimate for 2001 

In order to analyse profitability we now turn to consider the ongoing costs of asset 
recovery work within the UK.  In the absence of an equivalent system to JARD for 
recording  costs,  we  examine  the  constituent  parts  of  the  UK’s  asset  confiscation 
apparatus.    In  many  cases,  the  agencies  concerned  have  a  reasonably  good 
understanding of their own costs, as there has been considerable emphasis placed 
on this politically.43  Indeed, understanding costs is essential when negotiating the 
division  of  assets  returned  as  incentives  under  ARIS.44    In  some  cases,  agencies 
have  published  information  which  directly  addresses  costs  and  profitability.    In 
other  cases,  we  base  our  estimates  on  expert  opinions  elicited  through  fieldwork 
with senior members of the agencies themselves.  Using this information, we are 
able to roughly estimate the ongoing cost of the UK’s asset confiscation apparatus. 

43  

44  

Prior to introducing the Proceeds of Crime Act 2002, the UK government did an estimate 
of implementation costs.  It has since maintained an interest in the costs and benefits of 
the legislation.  Profitability is one aspect of this.  
Under  ARIS,  agencies  receive  50%  of  amounts  the  recovery  of  which  they  are  solely 
responsible for.  Where responsibility is shared this amount is apportioned.  For example, 
criminal confiscation pursuant to POCA section 6 involves contributions from the Police 
authorities  (financial  investigation),  the  CPS  (obtaining  confiscation  orders  following 
successful  criminal  proceedings),  and  HM  Courts  Service  (enforcement),  and  these 
agencies receive, respectively, 18.75%, 18.75% and 12.5% of the revenue. 

EN 

61 

   EN

 
 
                                                 
We  begin  by  reviewing  the  main  ‘frontline’  agencies  involved  in  asset  recovery 
work,  examining  available  cost  data  and  making  assumptions  where  necessary 
along the way. 

•  Police authorities.  Police authorities are responsible for financial investigations 
in support of criminal confiscation proceedings pursuant to POCA section 6, and 
also  (using  their  own  legal  representation)  for  the  cash  seizure/forfeiture 
procedure in POCA Part 5.  The UK has some 50 police authorities, all of which 
are more or less engaged in asset confiscation work, using financial investigators 
who receive the standard training.  The Metropolitan Police is by far the largest 
force.    Data  for  the  2009/10  financial  year  shows  that  it  spent  £10.7m  on  asset 
confiscation activity—including £500,000 funding for community programmes—
whilst  it  had  receipts  of  £10.9m  generated  by  asset  confiscation  activity  itself 
(calculated under ARIS as 50% of forfeited cash plus 18.75% of conviction-based 
recoveries).45    We  assume  similar  levels  of  profitability  for  other  police 
authorities. 

•  Her Majesty’s Revenue and Customs (HMRC).  HMRC has an equivalent role 
to the police authorities, for cases within its area of responsibility.  In the absence 
of publicly available data, we make the same assumption for profitability as per 
the police authorities, i.e. that it is equivalent to that of the Metropolitan Police.46 
•  The  Serious  and  Organised  Crime  Agency  (SOCA).    SOCA’s  asset  recovery 
work  includes  conviction-based  proceedings  arising  from  its  own  investigations 
into  serious  and  organised  crime  (an  equivalent  role  to  the  police  authorities), 
non-conviction  based  ‘civil  recovery’  cases,  exercise  of  revenue  (taxation 
assessment) powers and, where it seizes cash in the course of an investigation, the 
non-conviction  based  cash  seizure/forfeiture  process.  The  civil  recovery  and 
revenue work was previously undertaken by the Asset Recovery Agency (ARA), 
which  was  merged  into  SOCA  from  1  April  2008.  As  a  sui  generis  entity 
administering  a  complex  piece  of  legislation,  the  ARA  was  beset  with  lengthy 
judicial  processes  and  never  became  ‘profitable’  in  the  sense  that  its  costs 
exceeded the income stream from its asset recovery work in all five years of its 
existence. Recently, SOCA’s 2008/09 accounts have been audited in a way which 
specifically  permits  comparison  with  the  work  previously  performed  by  ARA 
(civil recovery, taxation and some ‘legacy’ criminal confiscation cases).47 In these 

45  
46  

47  

is  more  profitable  overall. 

http://www.mpa.gov.uk/committees/finres/2010/100923/07/#h1000 
Data  from  2008/09  suggests that  HMRC  recovers  through  conviction-based  confiscation 
and  NCB  cash  seizure-forfeiture  in  a  similar  ratio  to  the  police  authorities.    This  is 
important  for  their  comparability,  as  the  seizure-forfeiture  regime,  by  virtue  of  its 
simplified  procedure, 
  As  regards  conviction-based 
proceedings, those of the HMRC tend to be more complex and expensive to run, but they 
also tend to involve higher value proceeds (although these are often too well hidden to be 
recovered).  
The 
http://www.publications.parliament.uk/pa/ld200809/ldhansrd/text/90720-
wms0004.htm#column_WS163;  SOCA’s  statement  of  accounts  is  useful  in  interpreting 
these figures: www.official-documents.gov.uk/document/hc0809/hc08/0870/0870.pdf. 

parliament, 

exercise 

results 

tabled 

been 

have 

see: 

this 

of 

in 

EN 

62 

   EN

 
                                                 
comparable areas (which represent the majority of SOCA’s asset recovery work), 
SOCA recovered £20.2m at a cost (including receivers’ fees) of £16.3m. Having 
not obtained any data regarding the profitability of the balance of SOCA’s asset 
recovery work (additional conviction-based cases), we assume an equivalent level 
of profitability. 

•  The  Crown  Prosecution  Service  (CPS).  CPS  brings  conviction-based 
confiscation proceedings on the back of investigations by the police, HMRC and 
SOCA,  and  also  works  to  enforce  some  of  the  more  complex  orders  obtained.48  
On  1  January  2010,  the  CPS  absorbed  the  Revenue  and  Customs  Prosecution 
Office (RCPO), which previously brought confiscation cases on behalf of HMRC.  
Expenditure  on  asset  recovery  work  is  not  published;  our  own  fieldwork 
(conversations with experts) suggests that it is approximately equal to CPS’s share 
of ARIS revenue.  An unpublished internal audit of RCPO undertaken prior to its 
merger with CPS suggested that its activities had previously been somewhat less 
profitable, though no figures are given.49 

•  Her  Majesty’s  Courts  Service  (HMCS).  HMCS  enforces  the  majority  of 
conviction-based  confiscation  orders.    This  work  involved  writing  letters,  fixing 
hearing  dates,  and  then  taking  measures  following  the  activation  of  default 
judgment by a Magistrate.  An unpublished study showed that in 2008/09, HMCS 
spent  slightly  less  on  asset  recovery  work  than  the  ARIS  funding it  received  (at 
the rate of 12.5% of the value of the orders enforced). 50 

The  roles  of  the  agencies  described  above  (which  are  the  main  agencies 
administering  POCA)  are  summarised  in  Figure  13.  The  assessment  of 
profitability can be summarised as follows: 

•  Police, HMRC, CPS and HMCS: approximately funded with ARIS funding. 
•  SOCA: recovers a little more than what it spends, but not enough to be funded 

through its share of ARIS. 

Broadly speaking, there are two plausible explanations for SOCA work being less 
profitable  than  that  of  the  other  frontline  agencies.    First,  mentioned  already,  is 
that  SOCA  administers  a  sui  generis  regime  which  generates  an  additional  legal 
burden as case law must be generated, at significant expense in terms of legal fees.  
Second¸ SOCA generates less income through cash seizure/forfeiture powers than 
the  other  investigative  agencies.    These  powers  are  more  profitable  than  other 
powers because they involve abbreviated court procedures, with the entire 50% of 
ARIS  funding  going  to  the  investigative  agency.    A  third  explanation—higher 
overheads due to smaller agency size, is less relevant following the ARA’s merger 
into SOCA. 

48  

49  
50  

Recent  legislative  amendments  have  given  the  CPS  the  power  to  also  bring  civil 
confiscation proceedings, but these are yet to be exercised. 
Thematic review, para 6.12. 
Thematic review, para 6.12. 

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Figure 13: Functions of ‘frontline’ UK asset confiscation agencies 

Investigation  Confiscation 

Enforcement 

Criminal confiscation 
(including extended)— 
POCA s6 

Police; 
HMRC; 
SOCA 

CPS 

HMCS; CPS 

Civil recovery— 
POCA Part 5 Chapter 2 

Cash seizure/forfeiture— 
POCA Part 5 Chapter 3 

Taxation— 
POCA Part 5 Chapter 6 

SOCA 

Police; HMRC; SOCA 

SOCA 

Because the foregoing estimates are expressed as fractions of amounts recovered 
and ARIS receipts, an absolute cost estimate requires disaggregated recovery data.  
Available data for the 2008/09 financial year is provided in Table 2, for financial 
year 2008/09. 

Figure 14 Disaggregated treasury receipts, FY 2008/09 

Agency 

Cash Forfeiture 

Confiscation 

[with CPS/HMCS] 

Police  

£27.51m 

£54.03m 

HMRC 

£10.51m 

£18.91m 

Civil 
Recovery  & 
Taxation 

Total 

- 

- 

£81.54m 

£29.42m 

SOCA 

£1.78m 

£10.05m 

£16.83m 

£28.66m 

Other 

- 

£6.09m 

£2.29m 

£8.38m 

Total 

£39.80m 

£89.08m 

£19.12m 

£148m 

It  can  be  seen  that  the  non-SOCA  share  of  confiscation  work  amounts  to  some 
£120m, including £8m ‘other’, which we will assume to be similarly profitable to 
work  undertaken  by  the  non-SOCA  agencies.51    Based  on  the  foregoing 
assumptions, we therefore calculate the ongoing annual cost of asset confiscation 

51  

Much  of  this  is  done  by  the  Department  of  Work  and  Pensions.    We  understand  from 
expert  interviews  that  this  work  is  likely  to  be  no  less  profitable  than  that  of  other 
agencies. 

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work  performed  by  frontline  agencies  in  the  UK  (specifically,  in  England  and 
Wales) in 2008/09 to be: 

119.34 * 0.5 + 28.66 * (16.3 / 20.2) = £82.8m 

In light of the numerous assumptions which have been made (in particular around 
the  police  authorities  and  HMCS),  it  is  appropriate  to  express  this  amount  as  a 
range with ±15% uncertainty, i.e. between £70.4m and £95.2m. 

To obtain a complete picture of the costs of the administration it is also necessary 
to consider other costs not borne by frontline agencies.  The main such cost is that 
of  an  increased  caseload  for  the  court  system.52    This  cost  is  not  accounted  for 
within  the  foregoing  analysis,  where  the  profitability  analysis  for  HMCS  refers 
only to enforcement work, and not the cost of hearing cases. 

We begin by considering criminal confiscation cases, which are typically heard in 
the  Crown  Court.    In  the  absence  of  any  more  specific  data,  we  assume  that  the 
cost of such a case is the same as the cost of the average Crown Court case.53  In 
2009,  the  Crown  Court  dealt  with  147,200  cases,  ranging  from  guilty  pleas  to 
lengthy  jury  trials.54    In  2007/08,  the  cost  of  operating  the  Crown  Court  was 
calculated  to  be  £382m.55    This  amounts  to  some  £2,600  per  case.    Statistics  for 
2008/09  indicate  that  there  were  4717  confiscation  orders  made  in  the  Crown 
Court that year; this amounts to a total cost of: 

2,600 * 4,717 = £12.2m 

In addition, it is necessary to account for the costs of civil confiscation cases and 
taxation  cases  (both  brought  by  SOCA  in  civil  courts),  as  well  as  for  cash 
seizure/forfeiture  cases.    The  former  may  be  less  costly  to  the  court  system  than 
conviction-based  cases  because  civil  courts  charge  fees,  with  the  aim  of  making 
civil procedure cost-neutral to the state.  The latter may also be less costly, because 
an abbreviated procedure is employed vis-à-vis conviction-based confiscation, and 
the cases are able to be heard in the Magistrates Court, which has lower operating 
costs.  On the other hand, these non-conviction based cases have raised many new 
questions  of  law  which  have  been  appealed  to  higher  courts,  causing  much 
additional  delay  and  expense.    Overall,  therefore,  we  make  the  assumption  that 
these  cases  present  the  court  system  with  a  similar  level  of  cost  to  conviction-
based cases.  Applying a ratio of 148:89.1 (based on table 2) we therefore calculate 
the overall ongoing annual cost upon courts as: 

52  

53  

54  
55  

There are also some costs borne by the Home Office (e.g. maintaining the JARD database) 
but these are negligible in the context of this analysis. 
On the one hand, much of the evidence for confiscation cases has already been heard in 
the  context  of  the  criminal  proceeding,  and  there  are  no  jury  costs.    On  the  other  hand, 
these cases are sometimes heavily contested. 
Ministry of Justice statistics. 
http://www.nao.org.uk/idoc.ashx?docId=9db2d94f-0642-41f7-a697-
334b2040ffdd&version=-1 

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12.2 * (148 / 89.1) = £20.3m 

Again,  in  light  of  the  broad-ranging  assumptions  which  have  been  made,  it  is 
appropriate to express this amount as a range with ±15% uncertainty, i.e. between 
£17.3 and £23.4m. 

Summing front-line agency and court costs, we arrive at the following estimate of 
overall  annual  ongoing  cost  (and  thus  profitability,  based  on  a  known  return  of 
£148m)  of  asset  recovery  activity  in  England  and  Wales  for  2008/09.    These 
calculations are set out in Figure 15. 

Figure 15 Cost and profit calculations for FY 2008/09 

Element 

Low estimate 

High estimate 

Cost 
(m£) 

70.4 

17.3 

87.7 

Profit 
(m£) 

Profit 
(m£) 

Cost 
(m£) 

95.2 

23.4 

60.3 

118.6 

29.4 

Front-line 
agencies 

Courts 

Total 

To be sure, this analysis has examined the profitability of asset recovery activity 
on  FY  2008/09  only:  being  the  sixth  year  after  the  introduction  of  POCA  2002, 
and the fifth year after the introduction of ARIS.  Receipts to the state in that year 
flow from a ‘pipeline’ of work which includes many cases commenced in previous 
years;  similarly,  many  cases  commenced  in  that  year  will  not  emerge  from  the 
pipeline  until  future  years.56    The  time  taken  for  cases  to  progress  through  the 
pipeline  varies  greatly:  cash  seizure/forfeiture  cases  in  the  Magistrates  Court 
typically  take  3  to  6  months  (and  are  often  only  lightly  contested),  whilst 
conviction-based  cases  in  the  Crown  Court  can  take  several  years  (until  appeal 
rights  are  exhausted),  with  convicted  criminals  often  fighting  hard  to  retain  their 
wealth.    An  important  corollary  is  that,  whereas  asset  recovery  work  in  the  UK 
appears now to be profitable, it was not necessarily immediately profitable in the 
wake  of  POCA  2002,  due  to:  the  lag  in  building  a  pipeline  of  work  from  an 
initially  low  base;  the  costs  associated  with  establishing  the  ARA  from  scratch; 

56  

In principle, given unlimited time and access to data held on JARD, it should be possible 
to reconstruct this pipeline for a more exact understanding of the system.  However, it is 
not necessary to do this in order to assess profitability, given that the UK situation is not 
unusual (more complex cases will tend to take longer to finally determine in all Member 
States), and also given that profitability is generally assessed with reference to financial-
year accounts. 

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and  the  costs  of  answering  the  legal  challenges  which  inevitably  followed  the 
introduction  of  novel  powers.    Unfortunately,  whilst  the  ARA’s  financial 
statements are public, a lack of data for other elements of the system prevents us 
from estimating profitability in these early years. 

Future possibilities 

We  have  seen  that  POCA  2002  and  the  attendant  focus  on  utilisation  has  led  to 
increased  asset  recovery  work,  the  current  level  of  which  is  profitable  in  the 
(narrow)  sense  that  receipts  into  government  coffers  exceed  the  total  cost  of  the 
work  itself.    For  the  purpose  of  impact  analysis,  it  is  useful  to  consider  now  the 
potential  for  continued  growth.    This  requires  estimates  of  future  recoveries  and 
costs. 

Turning first to future recoveries, we begin by examining the available time-series 
data  in  order  to  estimate  the  relationship  between  past  amounts  collected  and 
current amounts over the period 2003 to 2009.  Statistical tests suggest the amount 
recovered  in  the  current  year  is  correlated  with  the  previous  year’s  amount 
recovered.57  As such, we regress the amount recovered in the current year on the 
amount  recovered  in  the  previous  year  (and  a  constant).  Using  the  mean  point 
estimate for the relationship, we compare the actual and predicted (or estimated) 
amounts of asset recovery in each year from 2003 to 2009.  As shown in Figure 
16,  we  can  see  that  the  match  between  actual  and  estimated  amounts  coincide 
better  in  more  recent  years.  There  are  any  number  of  explanations  for  this,  not 
least of which is the short time-series.  

Figure 16: Illustration of model estimates and actual values 

Source: Authors. 

57  

We  test  current  year  and  one,  two  and  three  years  previous.  Tests  do not  find  statistical 
significance with two- and three-year lags, possibly due to the limited time-series. 

EN 

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Estimates suggest that we can be 95 percent confident that the mean proportion of 
last year’s recovery associated with this year’s is greater than 50 percent and less 
than  110  percent.  Given  that  there  are  many  uncertainties  and  other  factors  for 
which we have not accounted, we use this range (rather than the point estimate we 
used  to  compare  our  model  to  the  actual  amount  recovered)  to  determine  the 
possible  range  of  amounts  collected  in  the  UK  through  to  2020.    As  shown  in 
Figure 17, we find that there may be between £80 million to £1.2 billion collected 
in ten years time. 

Figure 17: Potential recoveries through to 2020, United Kingdom 

Because these estimations are based purely on the time-series model, it is useful to 
discuss the type of scenarios which they represent.  This is particularly so for the 
maximal prediction, which involves year-on-year increases which do not diminish 
with time, thus assuming not only that the pool of available criminal assets is large 
enough to support this, but also that the marginal return on additional investment 
remains  constant.    The  first  assumption  seems  likely  to  be  true,  given  that  the 
annual turnover of organised crime in the UK is estimated to be £15b, and given 
also  that  extended  confiscation  powers  render  previous  years  gains  liable  to 
confiscation.  The second assumption demands closer examination. 

All  of  the  frontline  agencies  involved  in  financial  investigation  and  bringing 
confiscation proceedings have finite resources, necessitating selectivity.  Managers 
and practitioners must decide how much confiscation work to undertake and also 
which cases to prioritise.  These decisions should follow a harm-reduction ethos, 
which  should  involve  (at  least  for  police)  differing  approaches  in  different 
localities with different problems. Sometimes, authorities may take on unprofitable 
cases in order to deal with specific problems—an example from the UK (and other 
Member States) is the confiscation of expensive cars from low-ranking criminals 
in  order  to  discourage  crime  within  their  communities.    Generally,  however,  the 
very  purpose  of  asset  confiscation  justifies  focusing  upon  profitable  cases 
(especially  those  where  the  assets  are  more  readily  recoverable),  as  the  deterrent 

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effect  of  confiscation  orders  is  largely  a  function  of  the  amount  recovered.58    A 
more  cynical  view  is  that  ARIS  may  encourage  agencies  to  focus  on  high-value 
cases at the expense of a harm-reduction ethos.  In any event,  it is reasonable to 
assume a bias towards ‘low hanging fruit’—i.e. that the most profitable cases tend 
to be selected ahead of intractable or low-value cases.59  All else being equal, this 
will cause the marginal (and overall) profitability of asset recovery work to decline 
as more work is undertaken.  Some countervailing  trends will, however, tend to 
negate  this  effect.    Frontline  agents  will  become  more  efficient  at  identifying, 
freezing, confiscating and recovering assets due to learning effects and economies 
of scale.  Court processes will become more efficient for similar reasons, and also 
because legal challenges will be fewer as the law becomes more settled.  Against 
these    trends,  success  will  be  met  with  increased  efforts  to  hide  wealth  (as 
criminals  play  the  ‘game’  against  the  state,  making  asset  recovery  work  more 
expensive. 

recovery 

for  profitable  asset 

Ultimately  there  must  come  a  point  at  which  the  profitability  of  asset  recovery 
work  begins  to  decline  (because  all  the  low-handing  fruit  has  been  picked),  and 
another  at  which  further  efforts  are  unprofitable.    In  the  absence  of  a  detailed 
model, however, we have no better guide than expert practitioner opinions.  In this 
regard, whilst it is recognised that not every case of acquisitive crime will present 
the  doubt,  about 
an  opportunity 
‘mainstreaming’  asset  recovery  work  expressed  in  the  recent  Joint  Thematic 
Review,  and  discussed  above),  there  seems  to  be  a  general  concensus  that  much 
more  could  be  profitably  done.    Some  experts  favour  a  more  systematic  use  of 
money laundering laws and confiscation laws to target top-tier criminals.  Others 
consider that much could be achieved if police simply did ‘more of the same’ by 
employing more financial investigators in more of the existing investigations into 
known  mid-ranking  criminals.    It  is  also  believed  that  financial  investigation 
exposes  new  crimes  and  criminals,  increasing  the  pool  of  assets  practically 
available to be targeted.  These opinions have one thing in common: that a lack of 
trained  financial  investigators  is  a  limiting  factor,  and  will  remain  so  into  the 
foreseeable future.60 

(hence 

58  

59  

60  

The  purity  of  this  deterrent  logic  is  questioned by  some  defence  lawyers  in  the  UK  and 
other Member States, on the basis that confiscation proceedings constitute an oppressive 
interference  against  a  defendant’s  capacity  to  defend  criminal  charges  by  diverting 
attention  away  from  preparing  a  defence  and  into  rearranging  personal  finances  to  deal 
with  freezing  orders.    The  suggestion  is  that  confiscation  proceedings  are  sometimes 
instituted for tactical reasons related to the goal of prosecution. 
This bias will not be as strong as one would expect from a rational decision-maker with 
perfect  foresight:  it  is  not  always  possible  to  know  in  advance  which  cases  are  ideal 
targets  for  investigation  and  prosecution.   Even  where  it  is,  these  cases  will  not  present 
themselves at  
Paradoxically, there is evidence that some police forces may lay off financial investigators 
in  the  near  future—even  though  their  work  is  profitable  in  the  narrow  sense  considered 
here—due  to  financial  constraints.    The  explanation  is  that  ARIS  returns  only  50%  of 
recovered  revenues  to  frontline  agencies,  making  it  possible  for  asset  recovery  work 
which  is  profitably  to  the  UK  government  overall  to  entail  opportunity  costs  for  the 

EN 

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Turning now to potential future costs, these are plotted in Figure 18 as minimum 
and  maximum  scenarios.  The  data  for  2008  are  the  low  and  high  estimates  in 
Figure 17, with previous years’ data (in the absence of any estimate) assumed to 
be in the same ratio, but reduced in proportion to the relative amount recovered in 
each year versus 2008. Looking forward, the minimum scenario then assumes that 
costs remain at 2009 levels, i.e. that asset recovery operations do not expand. The 
maximum  scenario  assumes  instead  that  costs  escalate  at  15%  per  year  as  more 
and  more  financial  investigators  and  other  agents  are  hired,  and  more  cases 
brought.61 

Figure 18: Potential cost of asset recovery through to 2020, UK 

Minimum Forecast

Maximum Forecast

£700,000,000

£600,000,000

£500,000,000

£400,000,000

£300,000,000

£200,000,000

£100,000,000

£0

Finally,  we  combine  minimum  and  maximum  revenue  and  cost  forecasts  to 
produce minimum and maximum profit forecasts, shown in Figure 19. It should be 
remembered when interpreting these data that the maximum scenario assumes that 
there  are  no  limitations  upon  the  profitability  of  asset  recovery  work  through  to 
2020, whereas the minimum scenario assumes fixed costs and profitability which 
(pursuant to the formula derived from the historical time-series) declines and then 
plateaus. 

61  

agencies  involved,  i.e.  if  it  is  not  sufficiently  profitable  to  be  self-financed  from  ARIS 
receipts. 
This reflects the actual increase in the number of persons trained as financial investigators 
(from 2283 to 2622) in the period from 2008/09 to 2009/10. 

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Figure 19: Potential profitability to 2020, UK 

Minimum profit scenario

Maximum profit scenario

£500,000,000

£400,000,000

£300,000,000

£200,000,000

£100,000,000

y
r
e
v
o
c
e
r

t
e
s
s
a
m
o
r
f

s
t
i
f
o
r
p

l

a

i
t
n
e
t
o
P

£0

-£100,000,000

Source: Authors’ calculation. 

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Annex 5  

EU27 profitability model 

This Annex includes profitability estimates for the EU27 by using proxy indicators 
to generalise the UK estimate in Annex 6. This approach is made necessary by the 
paucity of useful empirical data, especially as regards the cost of asset confiscation 
work.  This involves: 

•  devising a logic model by adverting to available evidence about the causes 

• 

of (non)utilisation; 
identifying proxy indicators and available EU27 datasets for the identified 
barriers and drivers within the model; 

•  using the proxy indicators to generate output from the model; and 
• 

interpreting the output data. 

It is worth reiterating the underlying assumption that the UK situation in 2008/09 
approximates the potential impact by 2020 of the maximal policy option (without 
mutual recognition) upon a Member State with a currently low rate of utilisation.  
We  shall  return  to  the  implications  of  this,  and  other  assumptions,  when 
interpreting the results.  [?] 

The starting assumption is the basic equation that profit = income – cost.  Lacking 
any EU-27 indicators of the cost of asset confiscation work, we assume this to be a 
function  of  overall  administrative  efficiency  in  each  Member  State.    Likewise, 
lacking any EU-27 indicators of the income generated by asset confiscation work, 
we assume this to be a function both of profitable criminality (driving the amount 
of  assets  available  to  be  confiscated  in  each  Member  State  based  on  a  given 
amount  of  investment)  and  investment  in  policing  (representing  the  latent 
apparatus  which  each  Member  State  is  able  to  bring  to  bear  upon  asset  recovery 
work,  as  well  as  the  level  of  commitment  to  combating  organised  crime).  In 
addition, the overall size of Member State economies has an impact on their asset 
confiscation costs and revenues. 

This  simple  logic  is  appropriate  given  that  research  has  revealed  what  would 
otherwise  be  a  catastrophic  lack  of  appropriate  data.    Had  there  been  more  time 
available,  more  investment  could  have  been  made  in  developing  the  suite  of 
indicators and improving their reliability and validity.  We shall return to this issue 
in our final recommendations. 

Because the logic model assumes that the maximal legislative option approximates 
recent  measures  in  the  UK,  it  must  be  adjusted  (in  the  case  of  the  maximal 
legislative  option  incorporating  mutual  recognition)  to  account  for  the  impact  of 
increased utilisation of mutual recognition instruments (which has not formed part 
of the UK’s approach).  The basis of such an adjustment—which takes the form of 
an adjustment factor coupled with a sensitivity analysis—is that options targeting 
mutual recognition will ease cross-border enforcement and, thus, raise the amounts 
recovered by each Member State.  The extent of this depends, however, upon the 
status  quo  ante.    In  particular,  Member  States  which  rely  upon  non-conviction 

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based  orders  stand  to  enjoy  a  greater  impact  because  they  currently  struggle  to 
enforce these orders overseas (whereas, for conviction-based orders, the potential 
advantages of mutual recognition relate mostly to speed and efficiency rather than 
the more fundamental question of whether an order will be enforced).  To account 
for this difference we double the adjustment factor for those Member States which 
currently rely upon non-conviction based orders to a significant extent. 

Two other potentially relevant factors are:  

• 

• 

the extent to which  each Member State is a popular destination for 
organised crime profits (relevant because under FD 2006/783/JHA, the 
default position is that the executing Member State retains 50% of the 
value of the recovered asset); and 
the extent to which proceeds derived from crimes committed within each 
Member State tend to be retained at home, transferred elsewhere within the 
EU, or transferred outside the EU. 

As there are no reliable data on these factors, we do not take them into account in 
our analysis. Nevertheless, as a matter of logic and in line with the microeconomic 
decision  model  for  the  rational  criminal,  we  suggest  that  Member  States  with 
relatively  efficient  law  enforcement  systems  are  likely,  all  else  equal,  to 
experience  greater  flight  of  illicit  assets  to  other  States.    Conversely,  Member 
States  with  less  efficient  systems  will  tend  to  have  a  greater  inflow  of  criminal 
assets. In these countries, criminals are likely to seek ways to transfer their illegal 
(cash)  wealth  into  the  legal  economy  (Europol,  2009).  An  error  factor  in  this 
prediction is the fact that in some countries organised criminal groups benefit from 
being  culturally  embedded  in  particular  locations  and  from  being  a  recognised 
‘brand’  in  the  local  economy.    Where  this  is  the  case,  organised  criminal  gangs 
tend  to  invest  large  proportions  of  their  profits  in  the  local  community  thus 
reducing the level of capital flight that might otherwise be predicted. 

Proxy indicators 

investment 

The  three  basic  components  of  the  logic  model  (administrative  efficiency, 
internationally 
profitable  criminality  and 
comparable  proxy  indicators.    The  proxies  employed  are  outlined  in  Table  1.4.  
We  reiterate  that  these  indicators  refer  to  a  whole  country  (e.g.  quality  of 
institutions) or a whole institution in a country (e.g. tax collection efficiency), and 
are but proxies for narrower concepts specifically impacting on asset confiscation 
outputs for which EU-27 data is not available. 

in  policing)  demand 

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Table 20 Components of the model for generalising profitability, with proxy 
indicators 

Component 

Proxy 

Reason for inclusion 

Profitable 
Criminality 

Composite Rule of 
Law indicator (2007) 

Costs of organised 
crime for business 
(2007) 

The Rule of Law indicator is a composite 
generated by the World Bank’s 
‘Unobserved Components Model’.  In 
essence, it rescales 80 individual 
indicators used to create the composite 
Rule of Law indicator and places them in 
common units. It then constructs the 
composite measure as a weighted average 
of the underlying individual indicators. 

Perceptions of businessmen about the 
costs imposed on their business by 
organised criminal groups is one of the 
best available indicator of the size of 
organised criminal business in a country. It 
is a proxy which more specific than the 
rule of law indicator, but it also neglecting 
important aspects of organised crime. 
Thus, the two indicators complement in 
each other in gauging the scope of 
profitable organised crime in a country. 

Source 

World 
Bank 

WEF 
(2008) 

Administrati
ve efficiency 

Wastefulness of 
government 
spending  (2007) 

Aggregate tax 
collection costs to 
net revenue 
collected (2007) 

Investment 
in Policing 

Expenditure on 
public order and 
safety, PPP EUR per 
100 000 citizens 
(2007) 

Number of police 

Inefficient government spending is 
approximated by perceptions of 
businessmen who are major consumers of 
public services thus well placed to 
formulate informed judgements.  

WEF 
(2008) 

Asset Confiscation is a particular and 
highly complex and costly form of tax 
collection. We argue that those States 
whose taxation systems are less cost 
effective will tend to resist additional 
pressures to improve asset confiscation 
unless it can be demonstrated that asset 
confiscation regimes will always be 
profitable. 

General government expenditure on 
public order and safety as well as number 
of police officers indicate the available 
capacities and sophistication of law 
enforcement authorities for improved 
asset confiscation work.  

OECD 
(2009)   

Eurostat 

Eurostat 

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officers per 100,000 
citizens (2007) 

These  chosen  proxy  indicators  reflect  the  constraints  of  this  short  project  and 
suffice to provide headline results for immediate support of policy decisions, the 
list  of  indicators  can  easily  be  expanded  and  refined  in  the  future  in  order  to 
develop  a  more  accurate  model.  Table  21  reports  the  data  as  collected  from  the 
original  sources  per  table  20.    It  should  be  noted  that  these  data  are  for  2007, 
whereas the UK data is for the 2008/09 financial year.  This does not represent an 
important  shortcoming  in  our  analysis  as  the  institutional  and  environmental 
factors  underlying  asset  confiscation  work  such  as  wastefulness  of  government 
spending are stable over time (Kaufmann et al, 2005). 

For the subsequent data analysis and predictions these indicators are standardised 
using  Z-scores  where  the  sample  mean  is  0  and  standard  deviation  is  1.  
Furthermore,  the  standardised  values  were  transformed  in  order  to  eliminate 
negative values by adding to the absolute value of the lowest score plus 1 (to avoid 
adjusting by a factor of 0).  By this means, the variable values used for the analysis 
are  rendered  of  comparable  magnitude.    They  are  also  made  positive  while  fully 
preserving  the  relative  variance  represented  by  them.    This  use  of  Z-scores 
eliminates  bias  caused  by  underlying  variable  distributions  having  different 
shapes. Table 21 reports two variables additional to the proxies listed in Table 20.  
The first is a purchasing power parity (PPP) variable to account for differences in 
price  levels  of  Member  States  relative  to  the  EU-27  average  (in  2007),  which  is 
necessary for estimating law enforcement costs in a comparable manner as labour 
and capital inputs have different prices in different Member States.  The second is 
a  gross  domestic  product  (GDP)  variable  which  indicates  the  relative  size  of 
Member State economies. 

Table 21 EU-27 country scores of drivers and barriers to enhanced asset 
confiscation work 

Rule of law; 
-2.5 = 
lawless, 2.5 
= lawful 
(2007) 

Cost of OC 
for business; 
7 = 
significant, 1 
= insignificant 
(2007) 

Govt. 

spending; 7 
= wasteful, 
1 = efficient 
(2007) 

Ratio of tax 
collection 
costs to net 
revenue 
(2007) 

Public order 
spending per 
100,000 citizens 
(EUR, PPP) 
(2007) 

Police 
officers per 
100,000 
citizens 
(2007) 

PPP within 
EU; EU27 
average = 
100% 
(2007) 

1.30 

-0.08 

0.87 

1.96 

1.70 

1.8 

4.2 

2.1 

1.2 

1.8 

4.2 

5.2 

5.2 

3 

3.9 

1.40 

1.29 

1.25 

0.62 

0.78 

4836.9 

2504.3 

4120.3 

3079.5 

4570.9 

360 

481 

421 

193 

305 

108.3 

46.2 

62.4 

137.4 

101.9 

MS 

BE 

BG 

CZ 

DK 

DE 

GDP at 
market 
prices, 
€m 
(2007) 

335,085 

30,772 

127,331 

227,534 

2,432,400 

EN 

75 

   EN

 
 
 
4.1 

4.2 

4.7 

3.9 

4.1 

5.8 

3.4 

4.8 

5 

3.4 

5.7 

4.1 

3.2 

3.7 

5.3 

4.4 

5.2 

4.7 

5.2 

2.9 

3.3 

4.7 

0.86 

0.79 

1.69 

0.65 

0.97 

1.16 

5.80 

1.31 

3532.0 

5738.8 

2679.4 

4908.8 

3526.6 

4576.5 

4881.8 

3685.1 

0.98* 

2423.5 

1.18 

1.15 

0.97 

1.11 

0.64 

1.42 

1.41 

0.91 

0.83 

2.41 

0.77 

0.41 

1.10 

5868.4 

2981.8 

2608.0 

6160.6 

4588.1 

2406.4 

2869.2 

2193.2 

3467.5 

3172.4 

3540.3 

4231.7 

7546.7 

242 

290 

454 

469 

371 

178 

647 

364 

334 

308 

263 

467 

218 

319 

258 

487 

211 

392 

261 

153 

193 

266 

73.1 

124.5 

90.7 

92.8 

108.1 

102.9 

88.1 

66.6 

60 

115.3 

66.7 

75.5 

101.9 

102.2 

62 

85.7 

63.8 

79 

63.2 

119.9 

115.7 

112.6 

15,828 

189,374 

225,540 

1,053,537 

1,895,284 

1,546,177 

15,951 

21,111 

28,577 

37,491 

100,742 

5,480 

571,773 

272,010 

311,002 

168,737 

124,729 

34,568 

54,905 

179,702 

337,944 

2,052,847 

2 

1.7 

2 

1.4 

2.1 

4.4 

1.7 

1.8 

2.1 

1.5 

2.4 

1.3 

2.1 

1.4 

3.5 

1.5 

3 

2.1 

2.6 

1.3 

1.7 

2.7 

EE 

IE 

HE 

ES 

FR 

IT 

CY 

LV 

LT 

LU 

HU 

MT 

NL 

AT 

PL 

PT 

1.13 

1.73 

0.80 

1.08 

1.38 

0.40 

1.06 

0.73 

0.64 

1.76 

0.88 

1.58 

1.74 

1.93 

0.41 

1.01 

RO 

-0.05 

SI 

SK 

FI 

SE 

0.89 

0.49 

1.86 

1.86 

UK 

1.66 

Equations 

The predicted asset confiscation profits were derived by combining the theoretical 
model with the available cost and revenue estimates of the UK. This has been done 
by  assuming  that  asset  confiscation  costs  or  revenues  would  surpass  the  UK’s 
costs  and  revenues  if  the  respective  net  drivers  and  barriers  scores  in  the  given 
Member State exceed the UK values (e.g. if the given Member State has a more 
efficient  tax  collection  system  than  that  of  the  UK,  it  is  expected  to  achieve  the 
same asset confiscation revenue under lower costs ceteris paribus).  Comparison 
takes  a  linear  multiplicative  form,  i.e.  we  assumed  that  drivers  and  barriers 

EN 

76 

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multiply each other’s impacts. This is justified by the fact that achieving revenue 
from asset confiscation work requires a series of institutions such as police, courts, 
financial  investigators,  etc.  to  function  properly  simultaneously.    For  example, 
having an excellent judicial system in combination with zero investigative capacity 
will result in zero achievement. 

By implication, the analytical model can be described by the following: 

where  MSi  refers  to  the  ith  Member  State  and  revenue  and  cost  refer  to  asset 
confiscation work in financial year 2008/2009. 

Revenue of the ith Member State is generated in the following way: 

where Profitable criminalityMSi is the arithmetic average of the Composite Rule of 
Law (2007) and the Costs of organised crime for business (2007) indicators; and 
Investment in policingMSi is the arithmetic average of Expenditure on public order 
and  safety  (2007)  and  Number  of  police  officer  per  100,000  citizens  (2007) 
indicators, GDP MSi is the gross domestic product at market prices in 2007. 

Cost of the ith Member State is generated in the following way:   

where  Administrative  efficiency  MSi  is  the  arithmetic  average  of  Wastefulness  of 
government  spending    (2007)  and  Aggregate  tax  collection  costs  to  net  revenue 
collected (2007) indicators. Simple arithmetic averages are used when aggregating 
constitutive  indicators  because  we  lack  reliable  knowledge  about  the  relative 
importance  of  each  indicator;  arithmetic  average  assigns  equal  weights  to  each 
indicator. 

Modelling outputs 

These  equations  yield  the  predicted  asset  confiscation  revenue,  cost,  and  profit 
figures per member state as highlighted in table 22 and table 23. 

Table 22 Predicted profits for the ‘maximal’ legislative option, EU27 

Member State  

Revenues (€ m) 

Costs (€m) 

Profit (€m) 

Spain  

UK 

Italy  

131.00 

188.08 

167.56 

36.57 

131.08 

124.86 

94.43 

57.00 

42.70 

EN 

77 

   EN

 
 
 
 
Poland 

Czech Republic  

Netherlands  

France  

Germany  

Greece  

Bulgaria  

Romania  

Portugal 

Hungary  

Slovakia  

Belgium  

Lithuania  

Slovenia  

Latvia  

Cyprus 

Estonia  

Malta  

Luxembourg  

Sweden  

Austria  

Ireland  

Finland  

Denmark  

Source: own calculation 

31.66 

19.21 

32.49 

105.42 

109.13 

19.24 

10.78 

8.89 

12.88 

8.02 

5.85 

21.39 

2.74 

3.43 

2.37 

2.11 

1.00 

0.26 

1.48 

7.67 

7.74 

7.66 

1.99 

1.73 

10.87 

4.27 

18.33 

91.92 

96.73 

13.80 

5.77 

4.12 

8.32 

4.43 

2.38 

19.22 

0.75 

1.45 

0.76 

1.49 

0.48 

0.18 

1.51 

8.62 

9.27 

9.89 

4.33 

5.79 

20.79 

14.94 

14.15 

13.49 

12.40 

5.44 

5.01 

4.77 

4.56 

3.59 

3.47 

2.17 

1.99 

1.98 

1.61 

0.62 

0.53 

0.08 

-0.03 

-0.96 

-1.53 

-2.23 

-2.35 

-4.06 

EN 

78 

   EN

 
Table 23 Distribution of predicted revenues, costs, and profits across EU-27 Member States, 
2008/2009, million EUR 

200.00

150.00

100.00

50.00

0.00

0

-50.00

revenue

cost

profit

5

10

15

20

25

source: own calculation 

As can be seen from the above table and graph, enhanced asset confiscation work 
would  yield  positive  financial  profits  in  all  but  5  EU  Member  States.  Due  to 
imprecision  of  the  data  and  the  restrictive  assumptions  used  to  arrive  at 
predictions, we recommend using a less refined scale categorising Member States 
into  three  broad  groups  (table  24).  This  categorisation  summarises  not  only  the 
absolute  predicted  profit  per  EU  Member  State,  but  also  the  predicted  relative 
profitability of their efforts understood as the ratio of asset confiscation revenues 
and costs. 

Table 24 Profitability of the ‘maximal’ legislative option, EU27 

Member State 

Categorisation 

Profit ratio 
(profit/cost) 

Czech Republic 

highly profitable 

Lithuania 

highly profitable 

Spain 

highly profitable 

3.50 

2.63 

2.58 

EN 

79 

   EN

 
 
 
 
Latvia 

Poland 

Slovakia 

Slovenia 

Romania 

Estonia 

highly profitable 

highly profitable 

highly profitable 

highly profitable 

highly profitable 

highly profitable 

Bulgaria 

moderately profitable

Hungary 

moderately profitable

Netherlands  moderately profitable

Portugal 

moderately profitable

Malta 

moderately profitable

UK 

moderately profitable

Cyprus 

Greece 

moderately profitable

moderately profitable

Italy 

moderately profitable

France 

moderately profitable

Germany 

moderately profitable

Belgium 

moderately profitable

Luxembourg 

not profitable 

Sweden 

Austria 

Ireland 

Finland 

not profitable 

not profitable 

not profitable 

not profitable 

Denmark 

not profitable 

Source: own calculation 

2.12 

1.91 

1.46 

1.37 

1.16 

1.11 

0.87 

0.81 

0.77 

0.55 

0.46 

0.43 

0.42 

0.39 

0.34 

0.15 

0.13 

0.11 

-0.02 

-0.11 

-0.17 

-0.23 

-0.54 

-0.70 

The  analysis  thus  far  has  not  yet  accounted  for  a  crucial  aspect  of  the  maximal 
option  which  transcends  national  borders:  increased  utilisation  of  mutual 
recognition  instruments.  As  this  is  a  crucial  aspect  of  the  proposed  set  of  policy 
options, we are bound to comment on this important issue. 

There  is,  unfortunately,  no  data  which  would  allow  us  to  gauge  the  potential  or 
actual magnitude of utilisation of mutual recognition either across the whole EU or 
per individual Member State.  We have therefore been forced to rely on a range of 
potential  parameters  in  order  to  scope  the  magnitude  of  impact  of  mutual 

EN 

80 

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recognition  on  profitability.  It  is  assumed  that  Member  States  where  non-
conviction  based  confiscation  constitutes  a  considerable  proportion  of  asset 
confiscation work can benefit relatively more (double the benefit derived by other 
Member  States)  from  strengthened  mutual  recognition  as  their  scope  for 
alternative solutions is more limited currently. Countries which are considered as 
such are Bulgaria, Ireland, Italy, Romania, and the UK. 

In  the  following  sensitivity  analysis,  we  assume  that  mutual  recognition  would 
increase the revenues of asset confiscation, but would also entail a modest increase 
in costs.  We assume that the former outweighs the latter in a 10:1 ratio, reflecting 
the fact that by the time assets have been traced to overseas locations, most of the 
investigative effort has been spent, permitting it to be treated as a sunk cost when 
analysing  the  marginal  benefits  brought  by  utilisation  of  mutual  recognition 
instruments.  Parameters used in sensitivity analysis are shown in Table 25. 

Table 25 Range of parameters used in the sensitivity analysis 

Scenario 

profit aspect 

Predominantly 
conviction-
based 

Significant 
NCB 
element 

5% 

10% 

15% 

20% 

25% 

30% 

50% 

Revenue factor 

Cost factor 

Revenue factor 

Cost factor 

Revenue factor 

Cost factor 

Revenue factor 

Cost factor 

Revenue factor 

Cost factor 

Revenue factor 

Cost factor 

Revenue factor 

Cost factor 

1.050 

1.005 

1.100 

1.010 

1.150 

1.015 

1.200 

1.020 

1.250 

1.025 

1.300 

1.030 

1.500 

1.050 

1.100 

1.010 

1.200 

1.020 

1.300 

1.030 

1.400 

1.040 

1.500 

1.050 

1.600 

1.060 

2.000 

1.100 

Note: The cost factor is assumed to be 10% of the revenue factor and the non-conviction based 
regimes have double factors compared to the conviction based regimes. 

The  results  of  the  sensitivity  analysis  show  that  the  already  profitable  countries 
would  benefit  the  most  from  utilisation  of  an  efficient  and  effective  system  of 
mutual  recognition.  Results  are  less  promising  at  the  other  end  of  the  scale, 

EN 

81 

   EN

 
however,  four  Member  State  become  profitable  upon  consideration  of  mutual 
recognition impacts, viz: 

•  Luxemburg (5% scenario or higher); 
•  Sweden (15% scenario or higher); 
• 
•  Austria (25% scenario or higher). 

Ireland (20% scenario or higher); and  

Error!  Reference  source  not  found.6  presents  revenue,  cost  and  profit  data 
adjusted to account for mutual recognition. The 5%, 15% and 50% scenarios are 
shown.  

Table 26 Profitability for EU27, including mutual recognition ` 

250.00

200.00

150.00

100.00

50.00

0.00

0

-50.00

5%

15%

50%

5

10

15

20

25

30

General points of interpretation regarding validity 

Our  profitability  analyses,  as  already  noted,  presumes  increasing  utilisation  over 
time,  in  the  absence  of  which  asset  recovery  work  is  likely  to  be  less  profitable.  
However, whilst some policy actions are designed to directly raise utilisation, we 
do not necessarily regard these policy options as sufficient.  Rather, they represent 
steps  which  the  EU  is  able  to  take  in  the  context  of  the  legal  framework  on  the 
confiscation  and  recovery  of  criminal  assets.    These  mostly  target  political  will, 
but  there  are  also  some  important  practical  considerations  which  fall  outside  the 
scope  of  the  EU  legal  framework.    These  include  the  need  for  greater  financial 
investigation capacity to generate system throughput (i.e. cases in the ‘pipeline’).  
This  requires  training  which,  in  turn,  requires  infrastructure  and  an  up-front 
commitment  of  resources.    This,  according  to  many  practitioners  with  whom  we 

EN 

82 

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spoke, represents a significant barrier to increased utilisation (especially in Eastern 
Europe,  where  there  were,  accordingly,  questions  raised  about  our  policy  action 
#17).  Expansion of financial investigation capacity is, however, not just a matter 
of quantity, but also quality.  In addition to resources, there is a knowledge input 
requirement, which presents as a significant barrier in Member States which do not 
yet  have  sophisticated  financial  investigation  capacities.    Both  of  these  areas  are 
potentially  apt  for  EU-level  intervention  in  support  of  the  options  under 
consideration in this study.62 

It can be argued pro tem that Member States in the highly or moderately profitable 
categories  may  directly  benefit  from  adopting  an  enhanced  asset  confiscation 
system  with  a  similar  cost-benefit  structure  to  the  UK  in  2008/2009.    However, 
this  does  not  mean  that  Member  States  with  different  political-administrative 
systems  cannot  adopt  different  institutional  solutions  to  become  profitable  or 
increase  their  profitability  despite  our  findings.    In  this  regard,  it  should  be 
reiterated  that  all  of  our  proxy  variables  refer  to  country  level  or  country 
institutional  level  characteristics,  i.e.  we  could  not  employ  asset  confiscation 
specific indicators and thus could not take into account the specific characteristics 
of asset confiscation work compared to the wider law enforcement environment. 

It should also be remembered that unprofitability in the narrow sense considered 
here  does  not  imply  that  Member  States  will  not  achieve  a  net  economic  benefit 
once  higher-order  impacts  are  taken  into  account,  to  say  nothing  of  the  value  of 
social and environmental benefits. 

General points of interpretation regarding timing 

The  foregoing  analysis  centres  on  a  point  in  time  (April  2008  –  March  2009) 
during which there is reasonable availability of UK cost data.  As already noted, 
this data reflects six years of effort to raise utilisation following the introduction of 
the Proceeds of Crime Act 2002, prior to which utilisation was minimal.. Several 
important points flow from this. 

First,  whereas  asset  recovery  work  in  the  UK  was  profitable  in  the  year 
considered,  it  does  not  necessary  follow  that  it  was  profitable  in  each  of  the 
preceding six years.  In fact, the opposite is likely to be true, of the UK as of most 
Member States, because results take time to manifest as cases progress through the 
system resulting, finally, in valuable assets vesting in the state.  Costs, on the other 
hand, will be more evenly distributed, as capacity is continually added; they may 
even be greater in the early stages, as new policies are implemented and, perhaps, 
new agencies stood up. 

62  

This is already acknowledged within the EU.  Consider, e.g., recommendation 4 in section 
6.2  of  the  Council  fifth  round  report  on  the  UK:  ‘the  role  and  powers  of  financial 
investigators as well as their training system need to be presented at EU level and taken 
into account when common EU standards or training projects are being developed.’ 

EN 

83 

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Second,  the  predicted  impacts  may  take  more  or  less  time  to  manifest  in  other 
Member States than in the UK.  This is a question which concerns each aspect of a 
state’s  asset  confiscation  apparatus,  from  time  taken  to  increase  financial 
investigation capacity, to the time taken for a case to progress through the judicial 
system,  to  the  time  taken  for  assets  to  then  vest  finally  in  the  state.    As  we  are 
mainly focused here on the question of whether asset recovery work is potentially 
profitable, we do not make further adjustments to the data. 

Third,  the  fact  that  utilisation  was  previously  minimal  is  critical  to  properly 
interpreting  the  EU27  profitability  results.    Essentially,  it  means  that  Member 
States  can  achieve  the  predicted  results  from  a  standing  start.    By  implication, 
Member States which have already begun to  uplift utilisation,  they could  exceed 
the predicted outcome. 

Fourth, the foregoing model, fixed as it is upon one point in time, does not predict 
what  happens  next.    Whilst  it  seems  reasonable  to  assume  that  profitability  does 
not  suddenly  decline,  we  have  attempted  to  take  account  of  uncertainty  in 
developing a rough (minimum/maximum) prediction for future profits in the UK.  
This  is  presented  as  Table  27,  with  the  2008/09  data  for  UK  (converted  to  €)  at 
year  6.    The  projections  thus  represent  what  could  happen  in  a  country  with  an 
asset confiscation operation the same size as that in the UK; they can be scaled to 
account for different sized operations.  In any event, the uncertainty involved is so 
great that the projections are unlikely to assist policy-makers. 

Table 27 Annual profit predictions for UK asset recovery work 

Minimum profit scenario

Maximum profit scenario

€ 600,000,000

€ 500,000,000

€ 400,000,000

€ 300,000,000

€ 200,000,000

€ 100,000,000

€ 0

-€ 100,000,000

y
r
e
v
o
c
e
r

t
e
s
s
a
m
o
r
f

s
t
i
f
o
r
p

l

a

i
t
n
e
t
o
P

Source: Authors’ calculations  performed in £ and converted to € using the 2009 average 
annual exchange rate from European Central Bank as of 11/8/2010, €1 = £0.891. 

EN 

84 

   EN

 
 
 
 
 
 
 
 
Specific points of interpretation 

The proxy indicators upon which our results are based can now be used to interpret 
the  results.    We  focus  here  on  those  Member  States  which,  according  to  the 
profitability  model,  are  moderately  profitable  or  unprofitable.    According  to  the 
data  available  and  the  theoretical  model  developed,  the  reasons  for  negative  or 
moderate  are  essentially  threefold.  They  are  presented,  together  with  country 
examples, in table 28. Error! Reference source not found. 

Table 28 Main causes of negative profitability and potential remedies 

Reasons for negative 
or moderate  
profitability 

Relevant indicator 

Country 
examples 

Potential remedy 

low level of potential asset confiscation revenue 

not enough assets to 
confiscate 

•  High level of rule of 

law 

•  Low level of reported 

Finland, 
Denmark 

•  Not available 

not enough capacity 
to confiscate 

interference of 
organised crime 
•  Low number of 
police officers 
•  Low spending on 
public order and 
safety 

Slovenia,  
Estonia, 
Lithuania 
Romania, 
Hungary 

• 

Increase capacity by 
training or spending 
more 

•  More efficient 

utilisation of available 
resources 

high cost of asset confiscation 

Questionable levels 
of efficiency in 
financially oriented 
law enforcement 

•  High level of 

wasteful government 
spending 

•  Low efficiency of tax 

collection 

• 

Belgium, Greece, 
Portugal 

•  Create specific 
organisations 
dedicated to asset 
confiscation work 
where efficiency is 
higher than average 
public service 

• 

Source: own categorisation 

However,  due  to  a  number  of  restrictive  assumptions,  the  narrow  focus  of  the 
available  proxies  and  the  form  of  the  theoretical  model,  some  countries  may  do 
much  better  than  predicted  by  this  model.    For  example,  in  Ireland,  asset 
confiscation work by the specialist Criminal Assets Bureau (CAB) has proven to 
be profitable, partly due to a very effective utilisation of revenue powers (i.e. the 
ability to levy income tax owed against undeclared income in cases where its illicit 
origin cannot be proved).63  The work of CAB is, however, complemented by that 

63  

Data from CAB annual reports. This data has not been fed into our profitability model for 
two  reasons:  because  it  does  not  represent  the  whole  of  the  Irish  asset  confiscation 

EN 

85 

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of  local  police  officers.    Because  the  capacity  of  the  CAB  is  limited,  there  is  a 
strong focus in Ireland on ‘mainstreaming’ local asset recovery work in this way, 
but  the  profitability  of  this  component  is  not  known.    Nevertheless,  the  Irish 
example  shows  that  Member  States  may  be  able  to  establish  profitable  specialist 
agencies irrespective of the profitability of mainstream asset recovery work.64  On 
the other hand, the very promising results for Spain are difficult to reconcile with 
the opinion of one expert whom we interviewed that Spain’s (Napoleonic) system 
of enforcement through local courts makes it very difficult to recover assets cost 
effectively.  This may suggest that the proxy indicator for administrative efficiency 
takes  too  little  account  of  enforcement  mechanisms  and/or  efficiency  within  the 
judicial system.  This is an aspect of the model which warrants further research. 

In  any  case,  we  draw  attention  to  an  appropriate  way  to  interpret  the  foregoing 
rankings.    Non-profitability  as  estimated  here  flows  from  certain  deficiencies  in 
the Member State involved.  Whilst our profitability analysis may disregard many 
potentially relevant factors at (including any factors unique to particular Member 
States)  this  does  not  mean  that  Member  States  cannot  benefit  from  attending  to 
any deficiencies which factor in our analysis. 

64  

apparatus  (it  only  includes  work  done  by  CAB  and  even  then  it  does  not  include  court 
costs and enforcement costs), and because the Irish NCB system (administered by CAB) 
employs a 7-year lag between assets being confiscated and realised, making profitability 
at a given point in time difficult to estimate from on the available data. 
The Netherlands is another example of a Member State which has established a profitable 
specialist  agency:  specifically,  the  Bureau  Ontnemingswetgeving  Openbaar  Ministerie 
(BOOM), which is profitable according to the website of the Openbaar Ministerie [public 
prosecution] although figures to support this claim are not provided. 

EN 

86 

   EN