New legislation in Luxembourg will enhance the freezing and confiscation of proceeds of crime
Recently, the Luxembourg government filed a draft bill no 7452 with the Parliament (the Draft Bill) aiming to complete the transposition of directive no 2014/42/EU of the European Parliament and of the Council dated 3 April 2014 on the freezing and confiscation of instrumentalities and proceeds of crime in the European Union (the Directive). The Draft Bill also addresses deficiencies in the Luxembourg Criminal Code to improve its effectiveness, by enabling the better detection and tracing of property to be frozen and confiscated.
The Draft Bill aims to provide for:
- the creation of a centralised office of management and recovery of assets (“Bureau de gestion et de recouvrement des avoirs” or “BGRA”), under the administrative supervision of the Chief Public Prosecutor. The BGRA will be responsible for the adequate management of frozen properties with a view to possible confiscation. It will also have the ability to undertake investigations into estates if the identified assets are insufficient to cover the amount of any confiscation order. In addition, this office will have extended powers for managing the assets, including the power to sell them in order to avoid any loss of value (e.g. for cryptocurrencies or perishable goods);
- the amendment of the Code of Criminal Procedure in order to ensure the right of access to a lawyer for any person claiming to have a right to an asset subject to a criminal seizure proceeding (even if this person is not the alleged victim or the prosecuted person);
- the adaptation of the confiscation regime under the Luxembourg Criminal Code in order to improve its effectiveness by enabling the detection and tracing of property to be frozen and confiscated, even after a final conviction for a criminal offence, and ensuring the effective execution of a confiscation order (if any). Indeed, as mentioned at recital 30 of the Directive: “Suspected or accused persons often hide property throughout the entire duration of criminal proceedings. As a result confiscation orders cannot be executed, leaving those subject to confiscation orders to benefit from their property once they have served their sentences. It is therefore necessary to enable the determination of the precise extent of the property to be confiscated even after a final conviction for a criminal offence, in order to permit the full execution of confiscation orders when no property or insufficient property was initially identified and the confiscation order remains unexecuted”. Under the current Luxembourg legislation, there is no such possibility for the authorities to conduct a post-judgement investigation on the convicted person’s estate. The new provisions shall grant such powers to and under the supervision of the new centralised office (BGRA).
It is likely that, once the BGRA comes into operation, it will be keen to make full use of its enhanced powers to confiscate and freeze identified proceeds of crime. In particular, its new power to investigate criminal estates post-judgment is likely to lead to the re-opening of enquiries into the estates of convicted criminals and potentially to the compensation of victims who have suffered loss as a result of criminal activities.