Guy Loesch  -  Louis-Eudes Giroux  - Catherine Freichel BusinessCrimeLinks

New legislation in Luxembourg enhances the freezing and confiscation of proceeds of crime

With the entry into force on 5 July 2022 of the law of 22 June 2022 on the management and recovery of seized or confiscated assets (“Loi du 22 juin 2022 sur la gestion et le recouvrement des avoirs saisis ou confisqués”, hereafter “the Law”), the transposition of the European directive on the freezing and confiscation of instrumentalities and proceeds of crime (hereafter “the Directive”) has been completed. The Law also addresses deficiencies in the Luxembourg Code of Criminal Procedure to improve its effectiveness, by enabling a better detection and tracing of property to be frozen and confiscated.

The Law provides for:

  • the creation of an office of management of assets (“Bureau de gestion des avoirs” or “BGA”), under the supervision of the Ministry of Justice, responsible for the adequate management of all sums and other property seized in the course of national or foreign criminal proceedings, which includes the power to sell or destroy them;
  • the creation of an office of recovery of assets (“Bureau de recouvrement des avoirs” or “BRA”), established at the Public Prosecutor's Office of Luxembourg, whose tasks are the detection and tracing of assets in the course of national or foreign criminal investigations, with a view to their seizure or confiscation, including the tracing of property belonging to the convicted person in the context of a post-sentence investigation of assets;
  • 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 new penalty of value confiscation, which may be ordered where no property liable to confiscation has been identified or where the property identified is insufficient to cover the object or direct or indirect proceeds of an offence or any pecuniary advantage derived from an offence;
  • the adaptation of the confiscation regime 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 previous Luxembourg legislation, there was no such possibility for the authorities to conduct a post-judgement investigation on the convicted person’s estate. The new provisions grant such powers to the BRA; 
  • the possibility for any person who has benefited from a final decision awarding damages as compensation for the harm he/she has suffered because of a criminal offence and who has not obtained compensation or full reparation, to obtain from the BGA that these damages be paid to him/her as a matter of priority out of the confiscated funds or the liquidated value of the confiscated property of the convicted person; 
  • the designation of the BRA as “National Asset Recovery Office” within the meaning of Council Decision 2007/845/JAI of 6 December 2007 on the cooperation between Asset Recovery Offices of the Member States in tracing and identifying proceeds of crime or other crime-related property. 
Comment

It is likely that the newly instituted BRA and BGA will be keen to make full use of their powers to detect, trace and manage proceeds of crime. In particular, the BRA’s 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.