Learning from failure: cross-border confiscation in the EU

Publication Date02 Jul 2019
AuthorGeorgios Pavlidis
SubjectFinancial risk/company failure,Financial crime
Learning from failure: cross-border
Georgios Pavlidis
School of Law, Neapolis University, Pafos, Cyprus
Purpose The purpose of this paper is to critically examine the strengths and weaknesses of a new
European Union (EU) initiative attempting an interesting paradigm shift in the eld of cross-border asset
freezing and conscation. The entry into force of the Lisbon Treaty and lessons learned from the manifest
failure of pastEU initiatives (Framework Decisions 2003/577/JHAand 2006/783/JHA) have allowed forsuch a
paradigmshift for the strengthening of mutual recognitionof freezing and conscation orders in the EU.
Design/methodology/approach This paper drawson reports, legal scholarship and other open source
data to examine a legislative innovationfor the mutual recognition of freezing and conscation orders in the
Findings The EU legislative initiative that will be examined is innovative in nature and goes beyond
internationalnorms on cross-border asset freezing and conscation. The new initiative needsto be integrated
into the broaderEU framework that targets criminal proceeds, and at the sametime, to be anchored to respect
for human rights.
Originality/value This study examines the strengths and weaknesses of an important new EU
initiative, its compatibility with human rights standards and its relationship to international standards of
cross-borderasset freezing and conscation.
Keywords European Union, Money laundering, Conscation, Asset freezing, Mutual recognition,
Proceeds of crime
Paper type Research paper
1. Cross-border conscation in the European Union: rhetoric or reality?
Since the days of the US War on Drugs in the 1970s, the goal of taking away the nancial
gain of criminal activity (crime does not pay) has been praised time and again by
policymakers at nationaland international level. Nevertheless, there are reasonsto doubt the
effectiveness of the asset-tracing and conscation strategies, which often seem more
aspirational than reality-based in cross-border conscation cases (McTaggart, 2017).
Conscation of the proceeds of crime is still not used to its full potential, despite legislative
and treaty progress in the past decades; this is especially true in cases of cross-border asset
tracing, freezing and conscation, due to a lack of effective coordination or resources,
differences between the cooperating legal systems and a lack of trust between authorities,
failure to comply with international instruments, etc., (UNODC, 1993;UNODC, 2012;
UNODC, 2016).
At the European Union (EU) level, a staggering98.9 per cent of estimated criminal prots
are not conscated and remainat the disposal of criminals. In other words, only a fractionof
the e110bn generated by illicit markets in the EU is eventually recovered (Europol, 2016;
European Commission, 2016a).This record is surely problematic, but it revealsan area with
potential for improvement, especially following the entry into force of the Treaty of Lisbon
and the communitarisationof police and judicial cooperation in criminal matters
(Mitsilegas, 2016;Trauner and Ripoll Servent, 2016;Herlin-Karnell, 2008). Furthermore,
there is a promising process for closer judicial cooperation in criminal matters in the EU,
Learning from
Journalof Financial Crime
Vol.26 No. 3, 2019
pp. 683-691
© Emerald Publishing Limited
DOI 10.1108/JFC-08-2018-0087
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