Prospects for asset recovery and confiscation in the EU

March 2025 | EXPERT BRIEFING | FRAUD & CORRUPTION

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European asset recovery provisions are part of the common European strategy against organised crime, corruption and money laundering, falling within the international parameters of the United Nations Convention against Organised Crime, the United Nations Convention against Corruption, the Council of Europe’s Warsaw Convention and Recommendation Number 4 of the Financial Action Task Force (FATF).

In view of the scale of organised crime challenge, adoption of supranational instruments has become essential to effectively trace, identify, freeze, confiscate and manage instrumentalities and proceeds of crime. Depriving criminals of property is no longer achievable without a strategy that goes beyond national borders, since organised crime has evolved into a system that has reached an international dimension.

This has been highlighted by the ‘Global Risk Report’ promoted by the World Economic Forum, which points out that criminal networks generate more than €300bn, with less than 1 percent of these assets confiscated in the European Union (EU). Analysis by Europol in its ‘Organised Crime Threat Assessment’ confirms the threat in the EU, drawing a picture of this parallel economy.

Directive 2024/1260 of the European Parliament and of the Council of 24 April 2024 on asset recovery and confiscation (the 2024 Asset Recovery Directive), has been expanded to create an effective and efficient asset recovery system and promote cross-border cooperation and information exchange. It renews the previous EU regime and provides more operational capacity to member states to trace, identify, freeze, confiscate and manage criminal proceeds.

Before the adoption of the 2024 Asset Recovery Directive, the European asset recovery system was regulated by Directive 2014/42/EU of the European Parliament and of the Council of 3 April 2014 on the freezing and confiscation of instrumentalities and proceeds of crime in the EU (the (2014 Freezing and Confiscation Directive). As stated by Francisco Javier Garrido Carrillo, a professor at the University of Granada, the EU regime on asset recovery was in need of renewal: “After the period elapsed and the appropriate evaluation of the regulations in force, it has been found that the results obtained with the 2014 Directive have been very poor and have not provided the expected response, so the need to modify the institution again has arisen.”

Besides the 2014 Freezing and Confiscation Directive, the EU legal framework on asset recovery consisted of Council Decision 2007/845/JHA and Council Framework Decision 2005/212/JHA. With the approval of the 2024 Asset Recovery Directive, regulation of asset recovery is now contained in a single legal instrument, improving harmonisation.

The 2024 Asset Recovery Directive is framed within the EU Strategy to Tackle Organised Crime 2021-2025, which was presented by the European Commission (EC) on 14 April 2021. This strategy is built upon the pillars of: (i) boosting law enforcement and judicial cooperation; (ii) supporting more effective investigations to disrupt organised crime structure and tackling high priority crimes; (iii) eliminating profits generated by organised crime and preventing their infiltration into the legal economy and society; and (iv) making law enforcement and the judiciary fit for the digital age.

Under the EU Strategy, the Directive Proposal of the European Parliament and of the Council on asset recovery and confiscation was adopted on 25 May 2022. The European Economic and Social Committee justified in its report dated 16 March 2023 the adequacy of the Directive Proposal to address contemporary challenges: “The proposal correctly responds to the need to broaden the scope of application of confiscation mechanisms, strengthens the powers of national authorities and establishes cross-border cooperation mechanisms to increase the rate of asset recovery.”

The 2024 Asset Recovery Directive expands and updates the 2014 Freezing and Confiscation Directive framework by strengthening every phase of asset recovery, including identification of illegally acquired assets, seizure for subsequent confiscation, administration of seized assets, and confiscation and disposal of said assets.

The 2024 Asset Recovery Directive focuses on promoting cross-border cooperation by highlighting the importance of asset recovery offices and registers. It introduces more structures for cross-border cooperation, including a requirement for member states to set up asset recovery offices (ARO), asset management offices (AMO) and registers.

Additionally, it broadens the definition of confiscation to explicitly cover all forms of property, including cryptoassets, and extends the asset recovery regime to all crimes, contrary to what was stated in the 2014 Freezing and Confiscation Directive, which limited offences by referring to serious organised transnational crimes.

The 2024 Asset Recovery Directive also regulates the recovery and confiscation of unexplained assets derived from criminal conduct. In the opinion of Teresa Aguado-Correa, a professor at the University of Sevilla, “This method of confiscation is one of the main new features of the proposed Directive. With it, the Commission puts the ‘final touch’ to its policy of zero tolerance to illicit money, constituting this ‘modality of closing the system’, the maximum expression of the principle that governs the current European policy of asset recovery and that is none other than ‘ensuring that crime is not profitable’.”

Lastly, the 2024 Asset Recovery Directive compensates victims using recovered assets where, as a result of a criminal offence, victims have claims against the person subject to a confiscation order.

To ensure the effectiveness of the EU’s asset recovery strategy, the 2024 Asset Recovery Directive includes specific deadlines. By 2027, member states must adopt a national strategy on asset recovery and undertake to update it every five years. The EC must submit a report assessing its implementation by 2028 and an evaluation report by 2031. The EC will be entitled to introduce legislative proposals based on the evaluation outcomes.

Academic debate is ongoing with regard to criminal procedures and safeguarding the fundamental rights of individuals subject to confiscation and seizure measures. According to researcher Anna Sakellaraki, strengthening of the asset recovery framework seems to go hand in hand with a reduction of procedural guarantees and fundamental rights: “One may always start from the premise that freezing and confiscation measures constitute a limitation to the right of property -and not only- per se, as they deprive criminals from their assets and have also the potential to violate several procedural safeguards in criminal matters to respond to the demand for effectiveness. Any new legislative effort by the EU raises the million-dollar question of finding the right balance between effectiveness and guarantees concerning these measures. … the more such measures are extended at EU level under the socio-political imperative to tackle organised crime and other serious cross-border profit-driven criminal phenomena and are increasingly invasive in regard to fundamental rights, the EU must at the same time ensure a level playing field for the exercise of procedural rights by affected persons.”

The EU’s efforts to ensure that crime is not profitable could lead to a breach of individuals’ fundamental rights arising from confiscation measures and, consequently, to a breach of the general principles of necessity and proportionality. The asset recovery regime may infringe the right of defence, the presumption of innocence and the right to be present at trial, based on presumptions that assets are of illegal origin and the owner was involved in illicit activities. As highlighted by Anna Maria Maugeri, a professor at the University of Catania, guarantees have been reduced under the previous EU regime: “The temporal limitation of the presumption of illicit origin (recital 21 of the 2014 Directive) is no longer mentioned. This element constitutes an important limitation to the extension of this form of confiscation with respect to the principle of proportionality and the presumption of innocence because the temporal limitation enhances the presumption of illicit origin. For this reason, it would be better to keep this element. … The standard of proof appears to be lower than the criminal standard, as the court must be satisfied, not convinced or fully convinced, however in any event, in determining whether the frozen assets are the proceeds of criminal activity, all circumstances of the case, including specific facts and available evidence, shall be taken into account, such as that the value of the property is substantially disproportionate to the lawful income of the owner of the property.”

In summary, the 2024 Asset Recovery Directive broadens the scope of the EU system on asset recovery to address new challenges and the need for immediate action by creating new bodies, introducing more detailed procedural requirements and enhancing mechanisms for cross-border cooperation and reporting. However, the transposition and implementation by member states of the 2024 Asset Recovery Directive should be monitored to ensure that the regime is not implemented at any price.

Ona Poy is a legal adviser and Marta Felipó is a managing associate at Cases & Lacambra. Ms Poy can be contacted on +376 340 591 or by email: ona.poy@caseslacambra.com. Ms Felipó can be contacted on +376 341 480 or by email: marta.felipo@caseslacambra.com.

Ona Poy and Marta Felipó

Cases & Lacambra