The European Commission is set to unveil plans on Wednesday (25 May) which will make it easier to confiscate frozen assets linked to serious illegal activities and suspected criminals, including those evading EU sanctions against Russia, according to documents seen by EURACTIV.
A draft of the directive proposes addressing a long-standing weakness in the EU where many states lack sufficiently robust legal frameworks to seize criminal assets, making it easier for criminals to hide their resources and benefit from illegal activities.
The legislative proposal would address these weaknesses by creating a common legal framework for how to deal with assets frozen in connection with crimes of EU relevance, including establishing new grounds for confiscation.
The draft proposal would provide for “a new confiscation possibility where assets are frozen based on suspicion of involvement in organized crime activities.”
Crimes for which the new rules would apply would refer to terrorism, participation in a criminal organisation, human and illicit trafficking, corruption and money laundering,
This would work without needing a conviction if “the national court is convinced that the assets in question derive from criminal activities.”
Moreover, and especially in the wake of Russia’s war in Ukraine, many states are struggling to freeze assets of people sanctioned by the EU for their ties to the Kremlin, or lack legal powers to confiscate frozen assets.
Under a separate proposal to be published on Wednesday, the violation of EU sanctions would become a crime across the EU.
Flagging ‘past, ongoing or planned’ sanctions
Since March, the European Commission has an EU Sanctions Whistleblower Tool which can be used to report on “past, ongoing or planned” EU sanctions violations, as well as attempts to circumvent these.
This concerns both individual sanctions, which apply to designated individuals and entities and usually consist of an assets freeze and/or travel bans, as well as sectoral sanctions related to arms embargoes, import and export prohibitions on specific goods and technologies and/or restrictions on the provision of specific financial and commercial services.
In relation to the five EU sanctions packages approved since Russia’s invasion of Ukraine on 24 February, a total of 64 complaints have been made through the tool, an EU official familiar with the matter told EURACTIV.
As of May, 35 of them concern sectoral restrictive measures, 27 are related to actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine and two refer to Belarus and the involvement of Minsk in the Russian aggression against Ukraine.
So far, 12 have been forwarded to the national competent authorities for examination.
“Some reports are still being clarified with reporters for further details, facts and so on,” the EU official said, adding that some reports do not necessarily point to possible sanctions violations but rather recommend new individual designations.
EURACTIV understands that the dark number is likely to be much higher.
Asset seizures would generally require a conviction, but under the draft law, they could be allowed pending trial in some cases for suspected criminals, and also when they are “transferred by a suspected or accused person to third parties,” including family members.
Such a practice has become common with Russian oligarchs targeted by the sanction packages since 24 February, officials close to the matter confirmed to EURACTIV.
Under the draft proposal, member states could also potentially proceed with selling frozen assets before a confiscation order is issued and charge the costs for the management of frozen assets to the beneficial owner.
Asset owners would receive safeguards, including the right to be heard.
Ukraine and beyond
According to experts, this could open the door to developing a legal instrument that would allow the seizing of Russian assets in relation to the war in Ukraine in general.
“We are working on a European tool to make confiscations possible everywhere in all EU states”, the Justice Commissioner Didier Reynders said while pre-announcing the incoming measures earlier in May.
Back then, he said one of the ultimate aims was to redistribute proceeds from these confiscations to Ukraine.
Although the proposed legislation is mainly motivated by the reconstruction of Ukraine, it could also be applied in the future for example for assets frozen in connection with the war in Syria, which also needs huge funding for its reconstruction.
However, some legal experts fear this might cause a high number of litigations and lengthy legal processes rather than quick steps.
The Commission proposal will still need the backing of member states, which have traditionally been cautious about reforms that require changes to their criminal laws.