COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on the mutual recognition of freezing and confiscation orders
Date: 2016-12-21
Institutions: Directorate-General for Justice and Consumers, European Commission
Subjects: confiscation of property, criminal proceedings, fight against crime, judicial cooperation in criminal matters in the EU, mutual recognition principle, offence, organised crime, seizure of goods

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   EUROPEAN COMMISSION  Brussels, 21.12.2016  SWD(2016) 469 final   COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT  Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on the mutual recognition of freezing and confiscation orders  {COM(2016) 819 final} {SWD(2016) 468 final}  
 
 
Executive Summary Sheet 

Impact assessment on a Proposal for a Regulation on the Mutual Recognition of Freezing and Confiscation 
Orders 

A. Need for action 

Why? What is the problem being addressed?  
The  current  legal  framework  for  the  recovery  of  criminal  assets  within  the  EU  does  not  respond 
effectively  to  the  challenge  of  criminals  hiding  their  assets  in  other  Member  States.  Only  very  few 
freezing  and  confiscation  orders  are  executed  in  other  Member  States.  As  a  result,  too  few  criminal 
assets  are  frozen  and  confiscated  across  the  EU,  thus  allowing  criminals  to  benefit  from  their  illegal 
gains. Several reasons have been identified as to the reasons for the limited use of the two framework 
decisions.  A  major  issue  is  that  the  current  two  mutual  recognition  instruments  do  not  cover  many 
types of freezing and confiscation orders that can be adopted at national level (notably with regard to 
non-conviction  based  confiscation,  but  also  extended  confiscation  and  third-party  confiscation). 
Moreover,  the  current  procedures  and  certificates  are  unnecessarily  complicated  and  inefficient.  In 
addition  to  the  above-mentioned  problems,  the  current  instruments  do  not  contain  any  provisions  on 
victims' compensation or restitution. 
What is this initiative expected to achieve?  

The general objectives of the proposal are: 
1. To freeze and confiscate more assets deriving from criminal activities in cross-border cases in order 
to prevent and combat crime, including terrorism and organised crime; 
2. To enhance the protection of victims' rights in cross-border cases.  
The specific objectives are: 
1.  To  improve  the  mutual  recognition  of  freezing  and  confiscation  orders  in  cross-border  cases  by 
extending the scope of the mutual recognition instrument;  
2. To provide simpler and faster procedures and certificates;  
3. To increase the number of victims receiving cross-border compensation.  
What is the value added of action at the EU level?  
As  criminals  often  hide  their  assets  in  other  Member  States,  effective  cross  border  co-operation  is 
essential in order to seize the proceeds of crime. EU legislation already provides for mutual recognition 
of freezing and confiscation orders; however, this legislation has not kept up with recent developments 
in  national  legislation  in  some  Member  States  and  with  recent  EU  legislation  on  common  minimum 
rules.  This  proposal  widens  the  scope  for  cooperation  and  means  that  a  wider  range  of  confiscation 
orders will be enforceable across Member States. It will also provide simpler and faster procedures and 
certificates.  In  addition,  it  will  foresee  specific  rules  on  the  possibility  of  victims  to  claim  restitution  or 
compensation in cross-border cases. 

B. Solutions 

What legislative and non-legislative policy options have been considered? Is there a 
preferred choice or not? Why?  
Four  main  policy  options  were  considered:  retention  of  the  status  quo  (Option  1),  a  soft  law  option 
(Option 2) and two regulatory policy options (Options 3 and 4). The retention of the status quo would 
involve taking no action at EU level, while the other three alternative policy options will improve, to a 
different extent, the ability to seize and confiscate proceeds of crime on a cross-border basis. Option 2 
(non-legislative action/soft-law) would support mutual recognition of freezing and confiscation orders 

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by,  for  example,  training  and  the  dissemination  of  best  practice,  and  the  promotion  of  the  use  of 
international  instruments  to  promote  cross  border  seizure  and  confiscation.  However,  its  expected 
impact would be rather low and it would still be excluded for some EU Member States to act on certain 
requests from other Member States. Options 3 and 4 (legislative action foreseeing minimal to high level 
obligations) would entail obligations to recognise and execute a range of orders to freeze and confiscate 
criminal assets. Option 3 would require the recognition of only those freezing and confiscation orders 
which  are  set  out  within  Directive  2014/42/EU.  Option  4  would  require  the  recognition  of  non-
conviction  based  confiscation  orders.  Sub-option  4a (medium  option)  would  go  beyond  option 3  and 
cover  all  types  of  criminal  confiscation;  including  criminal  non-conviction  based  confiscation.  Sub-
option 4b (maximum option) would also include civil or administrative forms of non-conviction based 
confiscation. The preferred option is sub-option 4a as it foresees a new mutual recognition instrument 
with an extended scope covering all types of freezing and confiscation orders issued in the context of 
criminal proceedings. It thereby complements the harmonisation measures put into place by Directive 
2014/42/EU. It will also foresee specific rules for the protection of victims' rights in cross-border cases. 

Who supports which option?  
Member  States  acknowledge  the  need  to  improve  mutual  recognition  of  freezing  and  confiscation 
orders  with  a  new  legislative  instrument.  Thus  they  support  a  policy  option  which  entails  new 
legislation (Options 3, 4a or 4b). There is however variation among the Member States' positions as to 
what kind of measures the instrument should cover. Option 3 would not raise particular concerns from 
Member  States  but  would  not  be  considered  sufficient  by  those  Member  States  which  have  more 
extensive forms of confiscation. Option 4a would be the option the most easily accepted by Member 
States  as  most  of  Member  States  have  already  provisions  including  criminal  non-conviction  based 
confiscation.  Views  of  Member  States  are  rather  divided  as  regards  option  4b.  The  European 
Parliament  is  in  favour  of  a  legislative  proposal  to  strengthen  the  mutual  recognition  of  confiscation 
and freezing orders. 

C. Impacts of the preferred option 

What are the benefits of the preferred option (if any, otherwise main ones)?  
The  requirement  to  recognise  a  greater  range  of  freezing  and  confiscation  orders  should  increase  the 
amount  of  criminal  assets  frozen  and  seized  across  Member  State  borders.  It  should,  therefore, 
ultimately lead to reduced profits for organised criminals and would deny criminals the possibility to 
reinvest their profits to fund further criminality. Increasing the likelihood of confiscation also increases 
the deterrent effect on crime. It should also lead to a reduction in losses to Member State revenue. The 
social  impact  would  be  overall  very  positive  as  confiscated  criminal  assets  can  be  given  back  to  the 
victims from whom they are stolen, or put to positive social use. 

What are the costs of the preferred option (if any, otherwise main ones)?                                        
There  would  be  an  increase  of  administrative  costs  for  both  issuing  authorities  and  executing 
authorities,  stemming  from  an  increase  of  cross-border  procedures  and  enforcement  of  freezing  and 
confiscation orders. These administrative costs would however be (more than) offset by the expected 
increase  in  the  recovery  of  cross-border  assets.  Considerable  benefits  would  also  result  from  the 
prevention  of  criminal  activities  and  terrorist  attacks  given  that  criminals  would  be  deprived  from 
funds.  

How will businesses, SMEs and micro-enterprises be affected?  

Businesses,  SME's  and  micro-enterprises  will  not  be  directly  affected  by  this  proposal.  However, 
seizing of criminal assets makes it more difficult for criminal business to operate, thus in the long term 

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it should help legitimate business by decreasing competition by illegal actors. 

Will there be significant impacts on national budgets and administrations?  
The requirement to  recognise  and implement a greater range of freezing and confiscation  orders will 
lead  to  a  -limited  increase  in  the  costs  for  law  enforcement  and  judicial  authorities.  However,  this 
should  be  offset  by  the  increased  ability  to  recover  –  and  reuse  where  appropriate  –  the  proceeds  of 
crime. 

Will there be other significant impacts?  
The  ability  to  freeze  and  confiscate  effectively  criminal  assets  on  a  cross-border  basis  and  to  return 
assets to victims where appropriate would enhance confidence in the judicial systems of Member States 
and the EU in general.  

When will the policy be reviewed?  
5 years after the entry into application of the new legal instrument.  

D. Follow up 

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