In order to fight crime more effectively the European Union wants to make it easier for member states to freeze and confiscate proceedings linked to criminal activity. In the past a number of measures have been taken on the European level to achieve these goals. Since these measures have proven to be ineffective, the EU has adopted a new directive (2014/42/EU). It will make it easier to freeze and confiscate assets by harmonising the national legislation regarding these matters. The directive deals with both freezing and confiscation orders. The directive will make freezing and confiscating assets easier in the EU, but it also threatens the basic rights of people and companies.

All member states of the EU, except the UK and Denmark, have ratified this new directive. By now the member states will have implemented the necessary legislation in order to comply with the directive, the deadline was October 2015.

All proceeds of crime can be subject to a freezing and confiscation order. The term “proceeds” is defined as any economic advantage derived directly or indirectly from a criminal offence. It can consist of any form of property and includes subsequent investments, transformation of direct proceeds and any valuable benefits. “Property” is described as property of any description, whether corporeal of incorporeal, moveable or immovable. Legal documents and instruments evidencing title or interest in this property are also included. The list of criminal offences for which these orders can be given is very broad and includes money laundering, computer related crimes and fraud.

The directive also introduces the possibility of freezing and confiscating proceeds that are not derived directly or indirectly from the specific criminal offence the subject is suspected of. These proceeds fall under the definition of an “extended confiscation”. Assets that the subject owns which are deemed to be disproportionate to the lawful income of the subject can be frozen and confiscated under the power of extended confiscation. These proceeds will be confiscated when the suspect is convicted of the crime he was suspected. Examples of crimes where these orders can be issued for are partaking in a criminal organization, corruption and crimes for which the sentence is at least 4 years. The court will decide on this on a case by case basis and will take into account all relevant circumstances.

Third parties can also be confronted with a freezing order of their assets. This will happen if the court has reason to believe that the suspect has transferred assets to a third party and the third party knew or ought to have known that the suspect did so in order to avoid confiscation of the assets. In order to determine this, the court will look at the facts and circumstances of the case. One of the circumstances that will be deemed as sufficient proof by the court is when the third party acquired these assets free of charge or in exchange for an amount significantly lower than the market value. The third party can try to get the freezing order overturned at the court of the country where the frozen assets are located. Should the third party not convince the court and should the court find the suspect guilty, those frozen assets will be confiscated.

Freezing and confiscation orders can be issued by all criminal courts within the EU and for all assets held within the EU. The authorities of the countries that receive such orders will execute the order without delay. After the assets are frozen the suspect or third party will be informed, unless it poses a risk for the criminal investigation. The goal of the freezing order is to secure assets for the criminal investigation or to secure the assets for the possible confiscation of the assets. The order can be given during the investigation and during the court procedure. The assets will remain frozen until the suspect is found not guilty, until the criminal investigation has ceased or until the assets are confiscated. Experience has shown that this can take years.

While the problems this legislation are trying to solve are serious, it does pose a threat to the rights of all people and companies within the EU. First and foremost the law tramples on what used to be the bedrock of the rule of law as known in the West. It by and large does away with a requirement of the public prosecutor to prove the crime of which someone is accused.  Even if there is no crime that can be proven; if the defendant cannot prove that he obtained his assets from legal income, these assets can be frozen and confiscated under the extended freezing and confiscation order. The burden of proof is therefore reversed: the defendant must prove his innocence by proving how he derived his assets. One would almost be forgiven for considering this nothing new, and indeed it is not because this has already been the law in most EU countries, however now it is ensured that within the EU this is the case everywhere and works uniformly. Secondly, people that are hit which a freezing order won’t have access to their assets and depending on the scope of the order, this can mean that all their assets will be frozen. This can potentially be a threat to their business continuation and it will also be a severe burden on their daily lives. Even in case the suspect have been found innocent of the crime, he will already have incurred serious damage. While the directive does offer countries the possibility to compensate damages for the unjust freezing of assets, this will differ from country to country and it will also be highly doubtful that countries will compensate the victims of these freezing orders in such a way that all their damages are covered. Furthermore this legislation is a threat to the right of fair trial for suspects and third parties, since their assets will be frozen they won’t have access to the best lawyers possible and will have to depend on lawyers the state appoints them, whose quality might be questionable. Parties that have assets held in other EU countries than where they live are confronted with a foreign legal system and the costs of going to court in another country. It is understandable and commendable that the EU wants to fight crime, but they should do it in such a way that it doesn’t strip away the basic rights of its citizens. Trampling with the rule of law for the sake of increasing confiscated assets is one thing, but what makes it even worse is that the EU holds itself up as a bastion of the rule of law from which the rest of the world presumably has something to learn.