Cause and Effect in European Politics and Law

The EU: Let`s Hit Crime Where It Hurts the Most - in the Pocket

Ralitsa Kovacheva, March 19, 2012

The total amount of criminal profits in 2009 was approximately USD 2.1 trillion, according to United Nations estimates. There are no general estimates for the European Union, but data for individual member states are instructive. In Italy, the profits of organised crime in 2011 were estimated at 150 billion euros. In 2006 organised crime in the UK has earned 15 billion pounds. Compared to the profits of criminal activity, the amounts seized by governments are too modest - in 2009 seized assets amounted to 281 million euros in Germany, 185 million euros in France, 154 million pounds in Britain, 50 million euros in the Netherlands. However, corruption costs the European taxpayer 1% of European gross domestic product annually, and only in Italy 60 billion euros annually sink into corruption schemes, according to the European Court of Auditors.

Quite reasonably, these data cause the genuine indignation of the European taxpayer who is forced to pay higher taxes at the expense of lower incomes, to bail out troubled countries and literally to make personal sacrifices in the name of solidarity. Furthermore, the citizen has already been misled that the financial sector would pay for the crisis, which to date has not happened. Although some EU countries have introduced new banking taxes, at European level the proposal for a financial transaction tax has been stalled and the European Commission`s threats have not reduced senior bankers` bonuses. And if it is arguable whether the emptied state coffers should look enviously at the profits of private banks, there is no doubt, however, that nations must do everything they can to collect the money stolen by organised crime.

Last week the European Union has made a major step forward in this regard. The European Commission proposed a directive on freezing and confiscation of proceeds of crime in the European Union. And the European Parliament has created a special committee on organised crime, corruption and money laundering with a one year term.

"Putting criminals in jail is only one part of this job. The other crucial work is making sure that crime does not pay - and ensuring that we empty criminals' pockets, and get their money back into the legal economy where it belongs. In times of crisis this is even more crucial," European Commissioner for Home Affairs Cecilia Malmstrom said.

The Commission concludes that "although regulated by EU and national laws, confiscation of criminal assets remains underdeveloped and underutilised." Therefore, the directive provides a minimum set of rules to be applied by Member States aimed at more efficient use of confiscation and freezing of assets acquired through criminal activity. In addition to the classical confiscation, resulting from a final criminal conviction, the directive allows in a limited number of cases the application of:

- confiscation of assets which are not directly linked to a specific crime, but which clearly result from similar criminal activities committed by the convicted person (extended confiscation);

- confiscation where assets have been transferred from the suspect to a third party;

- confiscation of criminal assets where a criminal conviction is not possible because the suspect is deceased, permanently ill or has fled (non-conviction based confiscation).

The new rules give prosecutors the right to freeze property in danger of being dissipated, hidden or transferred out of the jurisdiction with a view to getting a court ruling later. The Member States are required to manage the frozen property in such a way that it does not lose value before being confiscated. To that end, they should create national centralised offices or equivalent mechanisms. At the same time, the directive instructs in details how the freezing and confiscation to be accompanied by guarantees that fundamental rights will be respected, particularly the presumption of innocence and the right of property.

Member States should keep comprehensive statistics and send them to the Commission each year to ensure evaluation of the effectiveness of their confiscation systems. The countries have two years after the directive`s entry into force to bring their legislation in line. Moreover, they should communicate to the Commission the texts of the main provisions of their national law in the covered by the directive areas.

"The aim of this proposal is very simple: make it easier for the police to hit mafia groups where it really hurts – by going after their profits," Commissioner Malmstrom said. Thus said sounds really a piece of cake. But the long history of this directive shows how difficult it is to negotiate these measures at European level and even more – to implement them in a synchronised manner in all member states. Perhaps the discussion on the proposal in the Council of interior ministers and the European Parliament will again show all the difficulties. Bulgaria is a good example, because confiscation of criminal assets is a regular topic in the Commission’s reports under the monitoring mechanism in terms of judiciary and home affairs. Some key points in the directive are well known from the recommendations in those reports.

Amid expectations how this mechanism will continue functioning five years after being installed in Bulgaria and Romania, the direction of its development can clearly be seen. Only 10 days ago we saw, in respect of the Schengen rules, how some procedures and mechanisms, applied so far to Bulgaria and Romania, are being included in Community legislation to apply to all countries. As political scientist Vladimir Shopov wrote in a commentary for euinside, one of the possible continuations of the mechanism is "to establish procedures and mechanisms for assessing corruption and judicial systems, which is already under way in the EU."

As we see, this is now happening in practise, even in this very sensitive area. And for countries like Bulgaria it is the only way to ensure that appropriate action will be taken. Because, unlike the recommendations under the Cooperation and Verification Mechanism, where there are no penalties available, failure to comply with the European directives has legal (and financial) consequences.

The European Parliament also joined the offensive launched by the Commission, by creating a special committee on organised crime, corruption and money laundering. In the course of one year the Committee will investigate the level of infiltration in EU's legal economy, public administration and financial systems of organised crime, including mafia. As a result, it will propose legislative and other measures to tackle the problem. Sonia Alfano MEP (ALDE, Italy), parliament's rapporteur on this issue, said: "The establishment of an anti-mafia committee in the European Parliament represents a real turning point in the history of European Union policies. Finally, Europe is sending a clear message to criminal organisations and gangs: the institutions are not going to back down in the face of organised crime."