Non conviction based confiscation in the Netherlands and Europe

Dr. Marie-Lena Marstaller, LL.M., AMLC, 2022

Introduction

As part of the fight against undermining and organised crime, many countries use non conviction based confiscation (NCBC) instruments to extracts assets with a criminal origin from circulation and avoid their reinvestment in criminal activity. This type of measure is also recommended in some international conventions[1] and by the FATF. So far, Dutch legislation requires a conviction of a person to enable the confiscation of the profits of their crimes. The draft legislative proposal of 16 November 2021 proposes to enact a non conviction based confiscation option outside of the criminal procedure.

What is non conviction based confiscation?

Non conviction based confiscation (NCBC) instruments enable the state to confiscate proceeds of criminal activity without requiring a conviction for that criminal activity. In contrast to extended confiscation measures, NCBC is even possible in the absence of any conviction, even for other crimes than the one from which the assets originate. NCBC is an in rem measure, because it is directed against the incriminated property or right itself, not against a person.

NCBC in the Netherlands

Current possibilities of confiscating criminal assets

The Dutch system today requires in Art. 36e I of the Dutch Penal Code (in the following: WvSr) a conviction of the person against who confiscation is ordered. Confiscation is ordered in a separate procedure following the conviction. It is not a „penalty“ according to Art. 6, 7 ECHR as interpreted by the ECtHR in Engel and Welch.[2] A confiscation  leads to an obligation of the convicted person to pay a sum of money equal to the value of the profit they made from the crime. This is a value-based approach to confiscating proceeds of crime. In contrast, object-based measures primarily aim at confiscating the original asset obtained by criminal activity or its direct substitute. In Dutch law, the confiscation of products, means or objects of crime according to Art. 33 WvSr is object-based.

Additionally, profits of other crimes than the ones of which the person has been convicted can be confiscatedaccording to Art. 36e II WvSr, a form of extended confiscation. For cases in which the conviction was for a serious crime,[3] this is supplemented by the assumption in Art. 36e III WvSr: Expenses from the last 6 years before committing the crime of which the person is convicted are presumed to represent profits of crime.[4] Equally, objects obtained in this time period are presumed to be profits of crime. The convicted person can discharge the assumption by providing proof of a different source of these objects and expenses.[5] In determining the amount of additional profit, the court decides on the civil standard of proof:[6] the balance of probabilities. In principle, if the Prosecution can state and substantiate based on e.g. a financial investigation, that there is illegal profit, the convicted person has to bring counter-evidence.

Draft Legislative Proposal regarding in rem NCBC

On 16 November 2021, the Minister Justice and Security published a draft legislative proposal regarding the confiscation of criminal assets.[7] In the explanatory memorandum of the proposal (in the following: MvT), the need for the new instrument is seen in its efficiency due to the civil evidentiary rules and the fact that the presumption of innocence is not applicable. The MvT also describes cases in which a suspects dies prior to a final conviction or has been convicted for the crime already abroad.

According to the draft legislative proposal, the law would introduce a new confiscation instrument. According to Art. 2 of the proposal, goods (objects and rights) worth at least 25.000 € are subject to confiscation if they are wholly or largely derived from the proceeds of a crime. The value needs to be reached either by one object on its own or by several objects that are closely connected e.g. due to the circumstances under which they were discovered. The NCBC procedure generally follows the rules of the Code of Civil Procedure (Wetboek van Burgerlijke Rechtsvordering, in the following: WvRv).

First, a permission to seize the assets needs to be granted by a preliminary relief judge according to Art. 10 et seq. on request of the prosecution service. Then, the prosecution service can apply for confiscation, of which interested parties are informed. The procedure is concentrated to the courts in Amsterdam, Oost-Brabant, Overijssel en Rotterdam. It follows the rules regarding the verzoek­schrift procedure in Art. 261 et seq. WvRv, including the civil rules of burden of proof and evidence: If the Prosecution service provides sufficiently concrete facts and circumstances regarding the illegitimate origin of the assets, the interested parties need to dispute the claims with substantiation. Only then, the burden of proof shifts back to the Prosecution. In effect, these evidentiary rules correspond to those applicable in confiscation procedures according to Art. 36 e III WvSr, although the requirements for contesting evidence are higher than those in the current confiscation procedure.[8] The MvT also considers the evidentiary rules of proving that an object is derived from a crime in money laundering proceedings[9] to be relevant here, although civil evidentiary rules are applicable to them.   

Comparable instruments in other countries

In the draft legislative proposal, NCBC measures in the UK, Ireland and New Zealand are named as models for the new procedure, whilst also taking into account Italian law. To better understand the proposed approach to NCBC in the international context, the following paragraphs provide an overview over the basic concept of ad rem confiscation in other European jurisdictions, namely the UK, Italy and Germany.

United Kingdom

Dutch confiscation legislation most closely resembles the confiscation instruments of the United Kingdom. The confiscation order regulated in the Proceeds of Crime Act 2002 (POCA) is value based, includes a form of extended confiscation regarding the profit from general criminal conduct (of which he was not convicted) and an evidentiary presumption in Art. 10 POCA comparable to Art. 36e II, III WvSr.

Non conviction based confiscation is known in the UK as civil recovery in Part 5 of POCA, which is subsidiary to other confiscation forms. The National Crime Agency may apply in civil proceedings before a civil court for the confiscation of property obtained through unlawful conduct. Proof of unlawful conduct is based on the balance of probabilities.  The initiation of proceedings in civil recovery is also possible after a previous acquittal or after the death of an accused.

Since 2018, proving the prerequisites of a civil recovery order is simplified by the instrument of “unexplained wealth order” according to §§ 362A et seq. POCA. Assets worth more than £50,000 can be seized if they are in the possession of a person whose lawful income is insufficient to acquire the assets, provided the person is politically exposedor suspected of being involved in serious crimes.  If the person concerned cannot prove the lawful origin of the property, it is presumed to be confiscable property for the purpose of civil recovery.

Germany

§ 73 et seq. of the German Penal Code (Strafgesetzbuch – StGB) primarily follows an object-based approach to confiscation. The confiscation of a value equal to the original proceed is only available if the confiscation of the original proceed or its surrogate is not possible (§ 73c StGB). German law also knows a form of extended confiscation in § 73a StGB which allows the confiscation of proceeds of other crimes than the one the person is convicted for. However, the court has to be convinced that they are proceeds of crimes. Although this in theory conforms to the criminal standard of proof, there is a measure of uncertainty regarding the question as to whether this constitutes a lowering of the standard of proof.

Two forms of NCBC are known in Germany. § 76a I StGB is called „independent confiscation“ (selbständige Einziehung). In a special procedure, confiscation in any of the forms listed above can be ordered, even if conviction of a person is not possible, e.g. due to the absence or death of the offender or ne bis in idem. However, all requirements of the confiscation order need to be proven to a criminal standard of proof.

A second NCBC instrument was introduced in 2017 in § 76a IV StGB. This confiscation is also ordered in the independent confiscation procedure named above. Assets which have been frozen due to suspicion of a specific list of crimes (including serious organized crimes and also money laundering) can be subject to confiscation if they originate[10] from a crime (which can be any crime), even if the addressee of the freezing order is not convicted of either crime. It is subject to German legal debate to what standard of proof the criminal origin of the object needs to be proven for a court to order confiscation. Especially, the role of the evidentiary rule in § 437 German Code of Criminal Procedure is unclear. Although the legal text implies the usage of the criminal standard of proof and the principle of legality used in German criminal trial, the legislative history indicates that civil evidentiary rules might apply to a certain degree.

Italy

Italian law uses multiple systems of confiscation to combat organised crime. In addition to repressive measures, the Antimafia-Code of 2011 (Codice delle leggi antimafia v. 6.9.2011, Nr. 159/2011) includes asset-related preventive measures, including a form of confiscation in Art. 24 AMC. This can only be addressed to specific persons more closely defined in Art. 16, 4 AMC which have in the past committed crimes on a commercial basis or have been suspects of certain serious crimes. The confiscation procedure is independent from criminal prosecution and is held in a special court for preventative measures which in general uses the Italian rules of criminal procedure. Assets are subject to confiscation if their value is disproportionate to the declared income of the addressees or if they are assets or their surrogates and the addressee cannot prove their legal origin. The requirements of evidence are a bit unclear but the measure is lower than proving criminal guilt. The confiscation cannot rest solely on the fact that the addressee cannot prove legitimate origin of an asset.

According to the ECtHR, the Italian preventative confiscation measure does not constitute a criminal charge and has not in principle been declared as incompatible Art. 7 ECHR or Art. 6 ECHR in its criminal limb.^[11]

Conclusion

Many European countries use NCBC instruments to enable confiscating assets of crime even if no conviction is possible. The evidentiary standard and procedure to reach confiscation is different even among the three jurisdictions regarded here. The draft legislative proposal includes a procedure similar to the one used in the UK, which is in keeping with the similarities of the Dutch approach to confiscating proceeds of crime in general.

[1] Art. 54 para. 1 lit. c UNCAC.

[2] Judgement of ECtHR in Geerings v NL, 01.06.2007 – App. No. 30810/03, para. 20; in Engel et al v NL, 08.06.1976 – App. No. 5100/71, para. 82; Welch v UK, 09.02.1995 – App. No. 17440/90, para. 33. 

[3] I.e. in which a fine of the 5^th category can be imposed.

[4] It is not necessary that they are profits of crime committed by the convicted. Confiscation is also possible regarding the profits of a crime of another person.

[5] However, confiscation remains possible if they constitute profits of a crime committed by someone other than the convicted.

[6] Sdu Commentaar Strafrecht, 2 april 2019, Art. 36e WvSr. Evidentiary rules of criminal procedure are adapted for the confiscation procedure, comp. Art. 511f WvSv.

[7] Official title: Concept-Wetsvoorstel „Wet confiscatie criminele goederen en wijziging van het Wetboek van Strafrecht en het Wetboek van Strafvordering en einige andere wetten in verband met verdere versterking van de aanpak van ondermijnende criminaliteit (versterking aanpak ondermijnende criminaliteit II). Online available at https://www.internetconsultatie.nl/ondermijningii.

[8] P. 28 MvT.

[9] E.g. Hoge Raad, 18.12.2018 (ECLI:NL:HR:2018:2352).

[10] The German term is „herrühren“, which is used to describe the criminal origin of assets in the German definition of money laundering in § 266 StGB.

[11] ECtHR in Riela et al. v Italy, 04.09.2001 – App. No. 52439/99. The Court only found a breach of the ECHR due to a lack of publicity of the trial.