THE EU STANDARDS ON CONFISCATION OF PROCEEDS FROM CRIMINAL ACTIVITY

Por

PLAMEN PANAYOTOV

Professor of Criminal Law

Sofia University “St. Kliment Ohridski”

[email protected]

Revista General de Derecho Romano 20 (2013)

KEY WORDS: confiscation, proceeds, criminal activity, EU standards.

1. The EU regulation in this field is contained in a number of regulatory acts. They can be systematized in three groups depending on the main subject matter of regulation.

The first group comprises those acts which regulate primarily the standards in the sphere of substantive criminal law. More specifically, here the important ones are: the Council Framework Decision of 26 June 2001 on money laundering, the identification, tracing, freezing, seizing and confiscation of instrumentalities and the proceeds of crime, effective as of 5 July 2001 /only “the 2001 Framework Decision” hereinafter/(1); the Council Framework Decision 2005/212/JHA of 24 February 2005 on confiscation of crime-related proceeds, instrumentalities and property, effective as of 15 March 2005 /only “the 2005 Framework Decision” hereinafter/(2) and the Second Protocol, drawn up on the basis of Art. K.3 of the Treaty on European Union /TEU/, to the Convention on the protection of the European Communities’ financial interests, signed as early as 19 June 1997, yet not effective until 19 May 2009 /only “the Second Protocol” hereinafter/(3).

The second group comprises those regulatory acts the subject matter of which mostly consists of standards in the sphere of procedural criminal law. What is of great interest here is: the Council Framework Decision 2003/577/JHA of 22 July 2003 on the execution in the European Union of orders freezing property or evidence, effective as of 2 August 2003(4) and the Council Framework Decision 2006/783/JHA of 6 October 2006 on the application of the principle of mutual recognition to confiscation orders, effective as of 24 November 2006.(5)

The third group consists of regulatory acts which primarily define standards on police cooperation in the field under consideration. The most important acts here are: the Council Decision of 17 October 2000 concerning the arrangements for cooperation between financial intelligence units of the Member States, effective as of 17 October 2000(6); the Council Framework Decision 2006/960/JHA of 18 December 2006 on simplifying the exchange of information and intelligence between law enforcement authorities of the Member States of the European Union, effective as of 30 December 2006(7) and 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, effective as of 18 December 2007.(8)

In view of the purposes of this study, the standards regulated by the first group of regulatory acts are of the greatest interest. These standards predetermine the scope of applicability of the other part of the regulation – the part concerning the proceedings and the cooperation of the Member States in connection with the confiscation of proceeds from criminal activity.

2. The EU basic regulatory act of the first group is the 2005 Framework Decision. The Member States are obligated to take the necessary measures in order to comply with the said Framework Decision not later than 15 March 2007. Until that date they should send to the Council and the Commission the text of the provisions transposing into their national legislation the obligations arising from the Framework Decision. At the same time, on the basis of the information submitted and a report from the EC, the Council should assess, by 15 June 2007, the extent to which the Member States have carried into effect and applied the 2005 Framework Decision. Due to impreciseness of the submitted information, the respective report of the EC ranks Bulgaria among those countries which have transposed the 2005 Framework Decision in part.(9)

The regulation under the 2005 Framework Decision is distinguished by a number of characteristic features.

The first characteristic feature is connected with the objective set forth. The content of p. 6 through 10 of the motives to the 2005 Framework Decision makes it clear that the main purpose of this regulatory act is to be the next step along the way to enhancing the legislation guaranteeing the confiscation of proceeds from crime in all Member States. In that respect, the conclusion made should be shared and extended, this being a conclusion according to which the currently operative international law regulation and the EU regulation in the field under consideration do not presuppose the necessary harmonisation of the Member States’ legal systems, and, due to that, they are not particularly efficient. The problem in the international law regulation does not consist in the fact – as one might assume – that there are Member States which have not ratified the respective Conventions. On the contrary, both the United Nations Convention against Transnational Organised Crime /only “the UN Convention” hereinafter/(10), and the Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime /only “the CE Convention” hereinafter/(11) are effective in all Member States.

The problem regarding the first Convention is in its limited field of application. According to Art. 3 of the UN Convention outlining its field of application, the Convention applies, except as otherwise stated herein, to two types of hypotheses. On the one hand, it applies to those crimes which have their own separate regulation in the Convention. It is explicitly mentioned that these are the crimes under Arts. 5, 6, 8 and 23, i.e. participation in an organized criminal group; laundering of proceeds of crime; corruption and obstruction of justice, respectively. On the other hand, its field of application also comprises serious crimes /those which, according to Art. 2(b), are punishable by a maximum deprivation of liberty of at least four years or a more serious penalty/ where the offence is transnational in nature and involves an organised criminal group. At the same time, Art. 3, p. 2 of the UN Convention clarifies that an offence is transnational in its nature where: а/ it is committed in more than one State; b/ it is committed in one State but a substantial part of its preparation, planning, direction or control takes place in another State; c/ it is committed in one State but involves an organised criminal group that engages in criminal activities in more than one State; or d/ it is committed in one State but has substantial effects in another State. The outlined scope of the UN Convention predetermines the framework within which it regulates obligatory standards on confiscation of the proceeds of crimes. Art. 12, p. 1(а) explicitly lays down that the parties regulate confiscation of proceeds of crime covered by the Convention(12). Along with that, the same provision sets forth one more restriction on the scope of the obligatory standards. Where the proceeds of crime cannot be confiscated and it is impossible to trace their transformation into other property /p. 3 of the same Article/, the alternative is to confiscate immovable property the value of which corresponds to that of such proceeds(13).

Unlike the UN Convention, the CE Convention does not limit the field of application of the confiscation of proceeds in view of the type of crimes they originate from. Art. 2, p. 1 obligates the parties to regulate the confiscation of proceeds or property the value of which corresponds to such proceeds. Art. 1(a) and (b) specify that “proceeds” means any economic advantage from a criminal offence, and “property” includes property of any description, whether corporeal or incorporeal, movable or immovable, and legal documents evidencing title to, or interest in such property. In other words, in principle, the CE Convention does not provide for the other restriction on the scope of the prescribed confiscation, this restriction being peculiar to the UN Convention. Where confiscation is applied to property the value of which corresponds to the proceeds from a crime, it is not necessary for the property to be immovable. However, the problem regarding the CE Convention consists in the opportunity for the parties thereto to make a reservation in respect of the operation of the said regime. According to Art. 2, p. 2 each party may state in a respective declaration that confiscation applies only to those offences or categories of offences which are specified in such declaration. So, though the CE Convention – due to its subject matter of regulation – does not presuppose restrictions on the scope of proceeds from crimes, it allows such restrictions being imposed at the will of the parties.

The 2001 Framework Decision takes the first step towards overcoming the said imperfections of the international law regulation. According to its Art. 1(а), Member States are obligated not to make or uphold reservations in respect of the CE Convention regime of confiscation of proceeds if the crime they are derived from is punishable by deprivation of liberty or a detention order for a maximum of more than one year. In these cases, non-performance of this obligation is permitted only with respect to the proceeds from tax offences, yet not for limiting the field of application of confiscation, but only with a view to changing the purpose of the confiscated property, the new purpose being the performance of tax obligations. However, in spite of that, one should not fail to give attention to the fact that, during the operation of the 2001 Framework Decision, the Member States still have a possibility of making or upholding reservations within the terms of Art. 2, p. 2 of the CE Convention in respect of the regime of confiscation of proceeds if the crime they are derived from is punishable by deprivation of liberty or a detention order for a maximum of up to one year inclusive. Furthermore, the standards established through the 2001 Framework Decision allow one more restriction on the field of application of confiscation. However, this restriction concerns those cases where property of equivalent value should be confiscated. According to Art. 3 of the 2001 Framework Decision, Member States may exclude the confiscation of property the value of which corresponds to the proceeds of crime in cases in which that value is less than EUR 4000. The foregoing means that, according to the regime that is being established, the Member States are obligated to confiscate the proceeds of crimes punishable by deprivation of liberty or a detention order for a maximum of more than one year, however, if these proceeds cannot be confiscated, the Member States are not obligated to confiscate property of equal value if the value of the proceeds is less than EUR 4000. In spite of the said conditionalities, the 2001 Framework Decision defines obligatory standards which contribute to further harmonization of the national legislations of the Member States in the field of confiscation of proceeds of crimes. But, in spite of that, towards the year 2005 the EU institutions observe that the efficiency of applying these standards is not sufficient. Thus, the ambitious aim of the 2005 Framework Decision is formulated: “to ensure that all Member States have effective rules governing the confiscation of proceeds from crime, inter alia, in relation to the onus of proof regarding the source of assets held by a person convicted of an offence related to organised crime”.

While the first characteristic feature of the 2005 Framework Decision regulation makes it possible to trace back the road travelled by the Member States thus far, its second characteristic feature is connected with the content of the minimum obligatory standards which the Decision itself regulates in the field under consideration.

First, account should be taken of the content – explicitly laid down in Art. 1 of the 2005 Framework Decision – of those terms which are of key importance when clarifying the matters of what is subject to confiscation and what confiscation is in itself. In that respect, it is assumed that:

- “proceeds” means any economic advantage acquired through a criminal offence. The advantage may consist of any form of property as defined in the following indent;

- “property” includes property of any description, whether corporeal or incorporeal, movable or immovable, and legal documents or instruments evidencing title to or interest in such property;

- “confiscation” means a penalty or measure, ordered by a court following proceedings in relation to a criminal offence or criminal offences, resulting in the final deprivation of property(14).

When comparing the meaning of the said terms with the meaning of those used as an answer to the same questions /what is subject to confiscation and what confiscation is in itself/ under the CE Convention, it is obvious that there is no difference in essence. The fact that in the Bulgarian version different terms are used for denoting the same substance does not change this conclusion. Besides, in the said aspect there is no difference between the 2005 Framework Decision and the 2001 Framework Decision, as Art. 3 of the latter makes a reference to the CE Convention(15) for clarifying the content of the terms under consideration. The content of the said terms under the UN Convention is not identical with the content under the CE Convention and the two Framework Decisions of the EU. In spite of that, the comprehensive analysis of these regulatory acts results in the conclusion that the answers given by the UN Convention to the questions of what is subject to confiscation and what confiscation is in itself are not considerably different, either. According to Art. 2(d), (e) and (g) of the UN Convention:

- “proceeds of crime” means any property derived from or obtained, directly or indirectly, in consequence of/through the commission of an offence;

- “property” means assets of every kind, whether corporeal or incorporeal, movable or immovable, tangible or intangible, and legal documents or instruments evidencing title to, or interest in, such assets; and

- “confiscation” means the permanent deprivation of property by order of a court or other competent authority.

The broader scope of the aforesaid terms under the UN Convention in comparison with the CE Convention and the Framework Decisions of the EU ensues from the following: а/ the term “proceeds” denotes what is acquired not only through a crime, but also as a result /in consequence/ of a crime, i.e. as it is explicitly indicated, what is acquired, directly or indirectly, from a crime; and b/ the broader content of the term “proceeds” results in extending the scope of the term “confiscation” as well.

However, given that the other regulatory acts also regulate the confiscation of criminally acquired property even where and after it has undergone one or more transformations, and the confiscation of property of equivalent value in the event that it is impossible for the acquired property to be confiscated(16), the said differences in defining the terms “proceeds”, “property” and “confiscation” should not result in substantial differences in the minimum obligatory standards under the international law regulation and under the EU regulation in the field under consideration.

Further on, the 2005 Framework Decision lays down standards on the regulation and application, on the part of Member States, of two types of confiscation – basic and extended(17).

Basic confiscation is regulated in Art. 2, p. 1 of the 2005 Framework Decision. According to this provision, each Member State takes the necessary measures to enable it to confiscate, either wholly or in part, instrumentalities and proceeds from criminal offences punishable by deprivation of liberty for more than one year, or property the value of which corresponds to such proceeds(18). Thus, the 2005 Framework Decision reproduces the standard established through the 2001 Framework Decision without having to make a reference – as the latter does – to the international law regulation, or to the CE Convention, in particular. In addition, attention should be given to the fact that the reproduction is incomplete. Member States are provided with the opportunity of departing from the obligatory minimum standard under the 2001 Framework Decision in relation to the CE Convention. According to the said provision of the 2005 Framework Decision, Member States are enabled to regulate, in their national legal systems, confiscation not only in whole, but also in part of the proceeds from criminal offences. This departure from the regime established through the 2001 Framework Decision in relation to the CE Convention gives grounds for misunderstandings. The 2001 Framework Decision has not been repealed. Therefore, by using two separate regulatory acts, the EU regulation currently lays down a different minimum obligatory standard on confiscation of proceeds from crime. This inconsistency in the regime of the so-called “basic confiscation” should be overcome as soon as possible through a new regulatory act of the ЕU.

In addition to the basic confiscation, Art. 3 of the 2005 Framework Decision regulates extended confiscation. It concerns a limited scope of cases. The established minimum obligatory standard on its provision in the national legal systems of the Member States is characterised by numerous conditions, the very systematisation of which is a challenge in itself. That is a precondition of the adoption and implementation of this standard. The said conditions can be divided in two groups – those relating to the object of extended confiscation and those relating to its being ordered by a national court in Member States.

On the one hand, the object of this confiscation is property held by a person convicted of at least one among a limitative range of types of crimes. This range is specified by way of making a reference to seven regulatory acts of the EU. Generally speaking, it comes to crimes relating to counterfeiting the euro; money laundering; trafficking in human beings; facilitation of unauthorised entry, transit and residence in the EU territory; sexual exploitation of children and child pornography; drug trafficking and terrorism. Besides, the obligatory standard does not presuppose confiscation of property from all the acts that can be termed as a crime belonging to any of the aforesaid types. The standard concerns only those of them which cumulatively fulfil the following requirements:

а/ they have been committed within the framework of a criminal organisation /with the exception of terrorism/;

b/ the maximum penalty provided for them is above a certain limit /for money laundering – deprivation of liberty for at least four years, and for the other types of crimes – deprivation of liberty for at least five to ten years/; and

c/ they are of a nature that enables them to generate financial benefit.

This first group of conditions makes it possible to summarise that the EU legislator aims at having the obligatory standard on extended confiscation spread over property held by a person convicted of an act which is among the explicitly and exhaustively specified types of crimes constituting serious organised crime or terrorism, furthermore, these crimes being of a nature that makes them generate financial benefit.

On the other hand, the 2005 Framework Decision also regulates the conditions regarding the ordering of extended confiscation by a national court in Member States. This second group of conditions has three alternative versions. The regulation of any of them in the national legislation means that the minimum obligatory standard is fulfilled. According to Art. 3, p. 2, extended confiscation should apply to the following cases at the least:

а/ where a national court, based on specific facts, is fully convinced that the property in question has been derived from criminal activities of the convicted person during a period prior to conviction for the offence referred to in § 1 /author’s note, P.P. – what is meant here is any of the crimes differentiated under the conditions of the first group/, the conviction being deemed reasonable by the court in the circumstances of the particular case; or

b/ where a national court, based on specific facts, is fully convinced that the property in question has been derived from similar criminal activities of the convicted person during a period prior to conviction for the offence referred to in § 1 /author’s note, P.P. – what is meant here is any of the crimes differentiated under the conditions of the first group/, the conviction being deemed reasonable by the court in the circumstances of the particular case; or

c/ where it is established that the value of the property is disproportionate to the lawful income of the convicted person and a national court based on specific facts is fully convinced that the property in question has been derived from the criminal activity of that convicted person.

Each of the alternatives the second group of conditions consists of allows for concluding that the obligatory standard on ordering extended confiscation presupposes the national court’s full conviction that the property which is the subject of confiscation has been acquired through criminal activity.

Therefore, in summary, the obligatory minimum standard on extended confiscation implies that the Member States should ensure the seizure of property held by a person convicted of an act which is among the explicitly and exhaustively specified types of crimes constituting serious organised crime or terrorism, furthermore, these crimes being of a nature that makes them generate financial benefit, only where the national court is fully convinced that the property in question has been acquired through criminal activity.

The third characteristic feature is connected with clarifying the maximum obligatory standards which – according to the 2005 Framework Decision – the Member States have to follow when regulating the confiscation of proceeds from crime. It is true that, in principle, the EU regulatory acts specify the minimum required standards that have to be ensured by the national legal systems. In consequence thereof, the Member States may provide for a more robust regime in the respective field. However, it is inadmissible to forget that the departure from the minimum standards the Member States may take is not limitless. These limits are the basic principles of the EU law and the fundamental rights of the EU citizens, and mark the maximum admissible boundaries within which the State may regulate the national measures in any sphere. Besides, it is not necessary that each regulatory act of the EU should contain explicit instructions for the Member States in this respect. However, in this case, the 2005 Framework Decision contains specific regulation in this direction. Art. 5 explicitly proclaims that the Decision “does not have the effect of altering the obligation to respect fundamental rights and basic principles, including in particular the presumption of innocence, as enshrined in Art. 6 of the Treaty on European Union”(19). In addition, Art. 4 of the 2005 Framework Decision obligates Member States to ensure that interested parties affected by property confiscation measures have effective legal remedies in order to preserve their rights.

3. For the sake of completeness, this study should also focus attention on the Proposal made by the EC for a Directive of the European Parliament and the Council on the freezing and confiscation of proceeds of crime in the European Union /only “the Proposal” hereinafter/(20). It should immediately be pointed out that, even after its eventual adoption, the Directive will not repeal in substance the 2005 Framework Decision treated above.(21) What are the main legal consequences thereof?

On the one hand, the scope of the current concept of “proceeds” would be extended. According to Art. 2, p. 1 of the Proposal, “proceeds” would mean “any economic advantage derived from a criminal offence; it may consist of any form of property and includes any subsequent reinvestment or transformation of direct proceeds by a suspected or accused person and any valuable benefits”. In other words, “proceeds” denotes what has been derived not only through, but also as a result /in consequence/ of a crime, i.e. what has been derived directly or indirectly from a crime. As it was pointed out above, the broader content of the term “proceeds” would bring about extending the scope of the term “confiscation” as well. That would also result in the explicit unification of the content of these terms under the EU law and the UN Convention. That should be assessed positively.

On the other hand, however, the effect of the new Directive would be limited only to the crimes committed in the areas specified in Art. 83, § 1, sentence 2 of the Treaty on the Functioning of the EU (TFEU), the latter forming the legal grounds for adopting the Directive. And these areas are the following: terrorism; trafficking in human beings and sexual exploitation of women and children; illicit drug trafficking; money laundering; corruption; counterfeiting of means of payment; computer crime; organised crime(22). Accordingly, Art. 2, p. 6 of the Proposal defines that the term “criminal offence” in the Directive means a criminal offence covered by the EU standards regulated in the explicitly and exhaustively specified regulatory acts, these being those EU acts which contain the regulation of the separate types of criminal activities in the areas in question. The Union has not yet adopted such a regulatory act in the ninth area among those explicitly specified under Art. 83, § 1, sentence 2 of the TFEU – illicit arms trafficking. That is why, as regards criminal offences in this area – by the way, the same also holds true of other criminal offences which do not fall within the scope of the areas under Art. 83, § 1, sentence 2 of the TFEU – the standards of the proposed Directive would be effective only if the criminal offences are committed as a form of organised crime. This is possible due to the fact that the EU legislator considers organised crime in two aspects. One of the aspects deals with the establishment and participation in formations which should be treated as structures of organised crime. This gives grounds for setting apart – within the national criminal law systems of the Member States – of a separate type of criminal offences which should be regarded as committed through the establishment and participation in structures of organised crime. However, in view of the conclusion made here, what is of primary importance is the other aspect. It deals with the commission of criminal offences by the already existing structures of organised crime. In practice, here it may come to any type of criminal offence other than the very establishment or membership in a formation of organised crime. The restricted scope – based on the areas specified in Art. 83, § 1, sentence 2 of the TFEU – of the standards under the Proposal should not be assessed positively. The EU institutions still fail to use the full amount of competence they are provided with under the Lisbon Treaty in combating crime. That is especially clear where a solution is needed to a problem which concerns not only one or a few forms of criminal activity. Such a problem is the seizure of proceeds from criminal activity. Therefore, the EU institutions should unite around an overall decision based on the competence they have under Art. 83, § 1, sentence 3; Art. 83, § 2 and Art. 325 of the TFEU, instead of reducing the scope of the proposed Directive only to crimes in the areas specified in Art. 83, § 1, sentence 2 of the TFEU.

Although the Directive has a limited field of application, it is interesting to examine what standards on the seizure of crime-related proceeds it contains. These standards are connected with several types of confiscation. First, Art. 3 of the Proposal outlines the confiscation following a conviction. In the language of the 2005 Framework Decision, this confiscation could be designated as basic confiscation under the Directive. In this case, the standards obligate Member States to regulate confiscation in whole or in part of the proceeds or property the value of which corresponds to that of such proceeds, following a final conviction in connection with the crime. What impresses here is that the Proposal does not overcome the weakness – which has already been mentioned – present in the regulation under the 2005 Framework Decision. The latter provides for an alternative only to partial confiscation of the crime-related proceeds. This decision is even more impressive here, considering that the Directive would concern only the cases of serious crime of cross-border dimension within the meaning of Art. 83, § 1, sentence 1 of the TFEU. Second, Arts. 4, 5 and 6 of the Proposal outline the extended powers of confiscation, the non-conviction based confiscation and the third party confiscation, respectively. In the language of the 2005 Framework Decision, this is the so-called “extended confiscation”. However, its subject matter is considered in three aspects for the purpose of having a clearer definition of the standards and overcoming the weaknesses identified above in connection with their extremely complex wording under the 2005 Framework Decision.

In view of the extended powers of confiscation on the grounds of Art. 4 of the Proposal, Member States are obligated to regulate confiscation, in whole or in part, of assets belonging to a person convicted of a crime where a court finds, based on specific facts, that the said assets are substantially more probable to be derived from other criminal activities of similar nature than from any other activities. Restrictions on applying such confiscation are explicitly provided for. These are the cases where: a/ the similar criminal activities cannot be the subject of criminal proceedings due to prescription under national criminal law, or b/ the similar criminal activities have been the subject of criminal proceedings which are over and the person has been finally acquitted, or in other situations where the ne bis in idem principle applies.

As for the non-conviction based confiscation under Art. 5 of the Proposal, Member States are obligated to regulate the confiscation of crime-related proceeds even without a criminal conviction, following proceedings which could, if the suspected or accused person had been able to stand trial, have led to a criminal conviction, where: а/ the death or permanent illness of the suspected or accused person prevents any further prosecution; or b/ the illness or flight from prosecution or sentencing of the suspected or accused person prevents effective prosecution within a reasonable time, and poses the serious risk that it could be barred by statutory limitations.

In relation to the third party confiscation under Art. 6 of the Proposal, the Member States are obligated to regulate the confiscation of: а/ proceeds which were transferred to third parties by a convicted person or on his behalf, or by suspected or accused persons under the circumstances of Art. 5, or b/ other property of the convicted person which was transferred to third parties in order to avoid confiscation of property the value of which corresponds to the proceeds. Explicit restrictions are provided for this confiscation as well. The confiscation of the said proceeds or property is possible only where: a/ the property is subject to restitution – this should be interpreted as restitution to the convicted person, as otherwise the property would be finally acquired by the third party under the national law; b/ an assessment, based on specific facts relating to the convicted, suspected or accused person, indicates that the confiscation of property of the respective person under the circumstances of Art. 5 is unlikely to succeed; c/ the proceeds or property were transferred for free or in exchange for an amount lower than their market value when the third party:

- in the case of proceeds, knew about their illicit origin, or, in the absence of such knowledge, a reasonable person in its position would have suspected that their origin was illicit, based on concrete facts and circumstances;

- in the case of other property, knew that it was transferred in order to avoid confiscation of property the value of which corresponds to the proceeds or, in the absence of such knowledge, a reasonable person in its position would have suspected that it was transferred to avoid such confiscation, based on concrete facts and circumstances.

4. The foregoing makes it clear that it is necessary for the EU regulation on confiscation of proceeds from criminal activity to be considerably improved. Currently, it is spread out in a number of regulatory acts and holds numerous ambiguities and grounds for contradictory interpretations. These weaknesses cannot be overcome through the adoption of the Proposal of the EC. And yet, the minimum standards of the EU in this field can be summarised as follows: First, the property of a person convicted of a crime is subject to confiscation. The analysis shows that this requirement does not concern those convicted of any crime whatsoever. The restrictions in this respect ensue either from the imposition of a less serious penalty for a certain type of crimes compared to the one specified in the respective regulatory act /for instance, deprivation of liberty for more than one year under the 2005 Framework Decision/ or from the requirement that the committed crime should be among those of an exhaustive list of forms of criminal activity /as it is under the Proposal/. In addition, the exceptions to the standard which requires that the person should be convicted of a crime are most clearly formulated in the EC Proposal and concern only extremely serious crimes of cross-border dimension. These are the cases in which the perpetrator cannot be convicted due to death, permanent illness or flight from prosecution. Second, property which is directly or indirectly derived from crime is subject to confiscation. Exceptions are permitted in those cases where the value of the confiscated property corresponds to the value of the property derived from crime, however, the property which is the subject of confiscation should also be owned by the person convicted of a crime under the conditions of the previous standard. Third, according to the second standard, under certain conditions, property should also be confiscated in those cases where it has been transferred to third persons.

5. The difficulties in interpreting and summarising the aforesaid basic standards of the EU should not be treated as an excuse for those Member States which have not fulfilled them, either in full or in part. However, as it was pointed out above, the EU institutions have groundlessly ranked Bulgaria among these countries. Actually, even with its currently operative national legislation, our country fulfils and even extends, in certain cases, the minimum standards of the EU in the field under consideration. The important facts substantiating this conclusion are the following: First, in a number of cases of serious crimes, the Special Part of the Criminal Code (CC) provides for the penalty of confiscation, wholly or in part, of the convicted person’s property. In these cases the property which is the subject of confiscation does not necessarily have to be derived, directly or indirectly, from crime. Second, irrespective of the liability under criminal law, on the grounds of Art. 53, para. 2 of the CC, the property derived from crime is confiscated unless it is subject to restitution or restoration, and if the property is not available or is expropriated, its equivalent value is adjudged. Besides, no conditionalities are provided for as to the type or amount of the penalty or the type of crime through which the property was acquired. Third, the Law on Seizure in Favour of the State of Property Derived from Criminal Activity complies in detail with all those standards of both the international law and the EU law which relate to the confiscation grounds dealt with in this study. Its very first Art. 1 lays down that property derived from criminal activity, directly or indirectly, is subject to seizure in favour of the State in accordance with the procedure set forth in this Law. And § 1, p. 3 of the Supplementary Provisions clarifies that “criminal activity” denotes activity accomplishing the corpus delicti of any crime among those explicitly and exhaustively specified in Art. 3, para. 1. These are forms of organised crime and other serious crime. Of course, the seizure in favour of the State of property derived from criminal activity, either directly or indirectly, is carried out in accordance with the procedure provided for in this Law, except where the property has been restituted to the affected person or has been seized or confiscated in favour of the State under other Laws.

Having been ranked, though groundlessly, among the countries which have failed to adopt in full the EU standards, Bulgaria proceeded to passing a new Law on Seizure in Favour of the State of Unlawfully Acquired Property(23). This Law has considerably aggravated the regime of seizing property from persons. Of course, in principle, the Member States are not barred from regulating a more burdensome regime in comparison with the obligatory minimum standards of the EU in the field under consideration. However, in this case, a lot of the provisions of the new Law contravene the basic principles of the EU law and violate fundamental human rights. In other words, these provisions contravene the obligatory maximum standards of the EU in this field. In order for this conclusion to be made, it is sufficient to focus attention on two points. First, the Law also regulates seizure of property that is not derived from crime; what’s more, it is not derived from an offence of any other type. The Law permits the confiscation of lawfully acquired property. This holds true in the event that the person concerned is unable to submit evidence rebutting the presumption under Art. 1, para. 2. According to the said provision, “unlawfully acquired property” denotes property for the acquisition of which no legal source has been established. Second, the Law has a retroactive effect that is not time-limited. Relations connected with evidencing the lawfulness of persons’ income are resettled. According to Art. 27, para. 3 the verification covers the period of the last 15 years, counted from the starting date thereof. However, in order for the person to prove the lawful origin of the income through which he acquired property 15 years ago, he should keep documents issued long before this period. Special attention should be given to the fact that, until now, keeping such documents for such a long time has not been regulated even for State bodies.

The new Law on Seizure in Favour of the State of Unlawfully Acquired Property is challenged as unconstitutional before the Constitutional Court of Bulgaria. However, regardless of the decision the Constitutional Court will render, the Law should be regarded as neutralised in its content and, respectively, should not be applied by Bulgarian Courts due to its contravening the EU law. More specifically, this Law contravenes basic principles of law, such as legal certainty, the requirement of predictability of legal order, and respect for the fundamental human rights. The EU rules on the observance of these principles have their immediate applicability, direct effect and priority over the domestic law of Member States.

NOTAS:

(1). ОJ L 182, 05.07.2001, 1-2.

(2). ОJ L 68, 15.03.2005, 49-51.

(3). ОВ C 221, 19.07.1997, 12-22.

(4). ОJ L 196, 02.08.2003, 45-55.

(5). ОJ L 328, 24.11.2006, 59-78.

(6). ОJ L 271, 24.10.2000, 4-6.

(7). ОJ L 386, 29.12.2006, 89-100.

(8). ОJ L 332, 18.12.2007, 103-105.

(9). See Report from the Commission pursuant to Art. 6 of the Framework Decision /52007DC0805/. Later on, this becomes a reason for the country’s unfavourable assessment as regards the measures taken to combat organised crime, this assessment being given in the Interim Report of the EC of 18 February 2011 to the EP and the Council on the progress in Bulgaria under the cooperation and verification mechanism /52011DC0081/.

(10). The Convention was ratified by Bulgaria and has been effective for Bulgaria since 29 September 2003. It was promulgated and forms part of our domestic law on the grounds of Art. 5, para. 4 of the Constitution.

(11). The Convention was ratified by Bulgaria and has been effective for Bulgaria since 1 October 1993. It was promulgated and forms part of our domestic law on the grounds of Art. 5, para. 4 of the Constitution.

(12). By the way, such a restriction on the prescribed confiscation characterises the Second Protocol as well. According to its Art. 5, the proceeds of fraud, active and passive corruption and money laundering, or property the value of which corresponds to such proceeds should be subject to confiscation.

(13). For the sake of completeness, it should be mentioned that – though only as an option for the parties and not as an obligation – Art. 12, p. 7 of the UN Convention provides that the parties may regulate that an offender should demonstrate the lawful origin of alleged proceeds of crime or other property liable to confiscation, to the extent that such a requirement is consistent with the principles of their domestic law and with the nature of the respective judicial or other proceedings.

(14). The definition of confiscation makes it clear that it can either have or not have the nature of a criminal law measure. Because of that, Art. 3, p. 4 of the 2005 Framework Decision explicitly specifies that the Member States may apply procedures other than criminal proceedings for seizing the said property from the perpetrator.

(15). By the way, making a reference to the CE Convention, the 2001 Framework Decision lays down that the content of the term “property” used in the two Acts is identical. That proves once again that the difference in the terminology used in the Bulgarian version of the CE Convention and the EU Framework Decisions does not concern the substance, moreover, in the English version the terms are the same. The difference in terminology in the Bulgarian version is rather a result of the specificity of the translation of the respective regulatory acts in Bulgarian language.

(16). See Art. 12, p. 1(а), p. 3 and p. 5 of the CE Convention; Art. 3 of the 2001 Framework Decision; Art. 2, p. 1 of the 2005 Framework Decision.

(17). This designation of the two types of confiscation is adopted in the aforesaid Report from the Commission pursuant to Art. 6 of the Council Framework Decision dated 24 February 2005 on confiscation of crime-related proceeds, instrumentalities and property /52007DC0805/.

(18). Each of the said regulatory acts – both those of the international law regulation and those of the EU regulation – also sets out standards on the confiscation of crime-related instrumentalities. However, these standards are beyond the limits of the subject matter of this study.

(19). It is true that the 2005 Framework Decision makes a reference to the then operative version of Art. 6 of the TEU. Its main content is reproduced in the Art. 6 of the TEU, which is currently operative following the entry into effect of the Lisbon Treaty. Of course, the new wording is considerably enriched due to the renvoi made to the Charter of Fundamental Rights of the EU, which is recognised to have the same legal value as the Treaties.

(20). See 52012PC0085.

(21). According to Art. 14, p. 41 of the Proposal, the new Directive would replace only Arts. 1 and 3 of the 2005 Framework Decision, and Arts. 3 and 4 of the 2001 Framework Decision; and Art. 1, § 1(а) of the Joint Action of 3 December 1998, adopted by the Council on the basis of Art. K.3 of the TEU on money laundering, the identification, tracing, freezing, seizing and confiscation of instrumentalities and the proceeds from crime /ОJ L 333, 09.12.1998, p. 1-3/, which was partly repealed by the said Framework Decision.

(22). For further details regarding the EU regulation on the said areas of crime see Panayotov, Pl. Criminal Law of the EU and Bulgarian Criminal Law. Sofia: Sibi, 2012, 86-265.

(23). State Gazette No. 38 of 2012. According to § 16 of the Transitional and Final Provisions, this Law should take effect on 19 November 2012.