Criminal Seizure: what are your obligations now?
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In 2014, the European Commission adopted Directive 2014/42/EU on the freezing and confiscation of the instrumentalities and proceeds of crime in the European Union. The purpose of the Directive was to make it easier for national authorities to confiscate and recover the revenues from criminal activities and the tools used to commit these crimes.
In Luxembourg, the implementation process started with the law of 1 August 2018 adapting the confiscation regime. However, the European Commission considered that Luxembourg had only partially implemented the obligations arising from the aforementioned directive. A new law of 22 June 2022 on the management and recovery of seized or confiscated assets (the Law) has been adopted to remedy the shortcomings highlighted by the European Commission and complete the transposition of the Directive.
One of its key features relates to past and future criminal seizures of funds.
Key features of the Law
The Law creates two new legal entities:
- the Asset Management Officer (hereinafter “AMO”) or “Bureau de Gestion des Avoirs” which is placed under the authority of the Minister of Justice, and which is competent to manage:
- all sums, whether cash or balances credited to an account, debts or virtual assets, seized during national or foreign criminal proceedings; and
- all other assets, whatever their nature and whether seized during a national or foreign criminal procedure, whose conservation in kind is not necessary for the manifestation of the truth and which require for their conservation or their valuation, acts of management.
- the Asset Recovery Office (hereinafter “ARO”), or “Bureau de recouvrement des avoirs”, whose role involves the detection and tracing of assets for seizure or confiscation of property belonging to the convicted person within the framework of international cooperation, of an investigation or a judicial inquiry and of the post-sentence asset investigation.
What does it mean for banks?
Existing criminal seizure
The transitional provision of the Law states that banks who hold sums seized before 1 October 2022 have a period of six months from 1 October 2022 to notify the AMO of the assets seized (i.e. until 31 March 2023).
Following the notification, the bank will have to follow the instructions of the AMO and transfer the funds immediately upon receipt of instructions from the AMO.
Future criminal seizure
A new chapter entitled “Management of seized assets” is added to the criminal proceeding code, which provides that:
- the State prosecutor or the investigating magistrate orders the transfer to the State Treasury (the “Caisse de Consignation”) of all sums that are seized during a domestic or foreign criminal proceeding; and
- the State prosecutor or the investigating magistrate will then provide the AMO with a copy of the seizure reports.
In accordance with these provisions, the investigating magistrate is in charge of ordering the transfer of any sums that relate to a seizure procedure (whether cash or balances credited to an account, debts or virtual assets).
Liability risks
Banks may potentially be held liable if they do not comply with their obligation to declare all seized assets that they hold, which are subject to criminal seizure, to the AMO and do not comply with transfer instructions received from the AMO/the investigating magistrate.