European Parliament committee paves way for Russian asset confiscation

2023-03-31 | Political initiatives, Asset confiscation

Last week, the European Parliament Committee on Budgets (BUDG) adopted a proposal to extent the scope of the directive on Asset recovery and confiscation to include asset seizure in case of Russian aggression against Ukraine and circumvention of sanctions against Russia. This would open the doors to fully confiscate Russian assets frozen by the EU member states in the past months and divert them to Ukraine’s reconstruction.

Active U4U member Vlad GHEORGHE was the responsible rapporteur. Here are the main points of the proposal:

  1. Where the crime is related to Russian aggression against Ukraine, the assets will be frozen and confiscated. They will be redirected to a social reuse: rebuilding back better the infrastructure in Ukraine such as energy, food infrastructure and public services, as well as the compensation for the victims. (Art 2.3a:) This Directive shall apply to the crimes of aggression or facilitation of aggression against Ukraine subject to the adoption of the relevant Council Decisions identifying and defining those crimes in accordance with Article 83 TFUE.
  2. Where the confiscated assets are not in monetary form, they will be sold and the monetary value of those assets will form an external assigned revenue under EU budget. In the first place, the money will be channelled to Ukraine via Neighbourhood, Development and International Cooperation Instrument (as this instrument already exists it will be quicker). Then there might be established as a new own resource to channel the confiscated assets to UA. We also ask the Commission to assess the feasibility and relevance of channelling the external assigned revenues related to the Russian aggression against Ukraine to the future [Rebuild Ukraine Facility].
  3. The reuse of confiscated assets for the compensation and support of victims of crime and for affected communities has the potential to build resilience. For that, the opinion suggests to set up a Ukrainian victims’ claims registry and dedicated claims commission.
  4. Important part of the Directive – asset confiscation on the basis of the violation of the EU restrictive measures. Sanction evasion has the goal of economic gain for criminals – something we should never tolerate in the EU and we should fight against evasion also to guarantee the efficiency of EU sanctions. Criminal law measures adopted in the Union, and the freezing and confiscation that result therefrom, represent a way to support Ukraine’s reconstruction.
  5. The money channelled for Ukraine will be disbursed based on projects that the Ukrainian authorities will prepare in consultation with civil society. The spending will be subject to regular reporting and the discharge procedure, to ensure that the partners responsible for implementation respect the principle of sound financial management in particular anti-corruption measures. The implementation of the EU-funded projects will be subject to the ordinary EU budgetary control.
  6. Even though the directive focuses only on private assets, it also calls for a legal regime be established to enable the confiscation of state-owned Russian assets frozen by the EU in response to Russia’s war of aggression against Ukraine and their subsequent use for the reconstruction of Ukraine.
  7. For other crimes (like environmental crime, human trafficking, drug trafficking, murder), the confiscated assets will first stay with the Member States, but might form a new own resource of the EU. Such new Own resource would reduce GNI-based contributions of the MS into the EU budget. Basically, the more we confiscate from the criminals the less the EU MS will need to contribute to the EU budget.
  8. Member States should guarantee sufficient human and financial resources for carrying out tasks laid down in the Directive. Therefore, the additional revenue generated by measures of the asset recovery system can cover the procedural costs that asset recovery offices and asset management offices incur during their work. This is necessary to make their work efficient an implement well this directive. We want national implementing authorities to be sure that their work on assets does not come at a high cost and that their procedural expenses will be covered by the confiscated money.
  9. We call for the cooperation with EPPO all along the process of confiscation. Asset recovery offices shall incur the reporting obligations under the EPPO Regulation, reporting to the EPPO in the same way as they do to national competent authorities and Financial Intelligence Units. Particularly it is necessary to prevent, detect or investigate criminal offences related to the violation of Union restrictive measures.

You may find an overview in German in the FOKUS article here: Vlad Gheorghe. Der Angreifer Russland muss für den Wiederaufbau bezahlen. Die Furche.