13 Freezing and confiscation of proceeds
of crime
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7641/12
+ ADDs 1-2
COM(12) 85
| Draft Directive on the freezing and confiscation of proceeds of crime in the European Union
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| Legal base | Articles 82(2) and 83(1) TFEU; co-decision; QMV
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| Department | Home Office
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| Basis of consideration | Minister's letter of 4 December 2013
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| Previous Committee Reports | HC 86-xxii (2012-13), chapter 9 (5 December 2013);
HC 86-xii (2012-13), chapter 5 (12 September 2012);
HC 86-vi (2012-13), chapter 4 (27 June 2012);
HC 428-lvii (2010-12), chapter 1 (18 April 2012)
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| Discussion in Council | Agreed at COREPER level on 3 December 2013
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| Committee's assessment | Legally and politically important
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| Committee's decision | Not cleared; further information requested
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Background and previous scrutiny
13.1 The draft Directive, which would establish a set of minimum
rules covering different types of confiscation (value-based confiscation,
extended confiscation, non-conviction based confiscation and third
party confiscation), has been considered in some detail in our
earlier Reports[50] and
was the subject of a "Lidington" opt-in debate in June
2012. Despite welcoming the aims of the draft Directive and indicating
that it was broadly in line with existing UK legislation and practice,
the Government somewhat belatedly concluded that it might undermine
the UK's domestic civil asset recovery regime. This was because
the draft Directive — an EU criminal law measure —
included provisions on non-conviction based confiscation which
are governed in the UK by civil procedures under Part V of the
Proceeds of Crime Act (POCA) 2002 and might, the Government feared,
provide a basis for asserting that more stringent criminal law
standards and safeguards (under Article 6(2) and (3) of the ECHR)
should apply to Part V of the Act. The Government therefore decided
not to opt in to the draft Directive, but to play an active role
in negotiations with a view to considering a post-adoption opt-in.
13.2 We have retained the draft Directive under
scrutiny for two reasons. First, a decision to opt into the Directive
after its adoption by the Council and the European Parliament
might have some bearing on the UK's 2014 block opt-out decision,
as many of the criminal offences to which the Directive would
apply are set out in EU criminal law instruments adopted before
the Lisbon Treaty entered into force and are thus within the scope
of the UK's block opt.[51]
We therefore asked the Government to ensure that its progress
reports on the negotiations explained the significance which any
changes to the Commission's original text might have for UK participation
in the Directive. Second, the Government indicated that its priority
was to establish effective mutual recognition arrangements for
conviction and non-conviction based confiscation orders, in both
the civil and criminal contexts. We asked the Government to inform
us of the progress it is making in exploring with EU partners
more effective arrangements for mutual recognition in this area.
13.3 We last reported on the draft Directive
just over a year ago, when it was anticipated that the Council
would agree a general approach at the December Justice and Home
Affairs Council. Our Twenty-second Report of Session 2012-13,
agreed on 5 December 2012, summarised the main developments in
negotiations within the Council. We noted that the Government's
principal concern — that the inclusion in an EU criminal
law measure of provisions on non-conviction based confiscation
might increase the risk of legal challenge to the UK's civil recovery
procedures — remained in Article 5 of the draft Directive.
However, other changes appeared to make it somewhat more, rather
than less, likely that the Government might wish to consider opting
in post-adoption.
13.4 We asked the Government to provide further
progress reports once negotiations with the European Parliament
were underway highlighting, in particular, changes likely to affect
the Government's assessment of the costs or benefits of participating
in the draft Directive. Finally, we reminded the Minister that
we looked forward to hearing what progress the Government was
making in seeking to establish more effective arrangements for
the mutual recognition of confiscation orders obtained in both
civil and criminal law contexts.
The Minister's letter of 4 December 2013
13.5 The Minister for Security (James Brokenshire)
confirms that a general approach was agreed at the Justice and
Home Affairs Council in December 2012 and that trilogue negotiations
began in June 2013. His letter summarises the main elements of
a provisional agreement reached by the European Parliament and
Council:
"The most
significant changes to the text relate to the non-conviction based
(NCB) confiscation provisions. Article 5 of both the Commission
text and that of the General Approach contained stand-alone NCB
provisions. This Article has now been deleted. The obligation
to take measures to enable the confiscation of assets from those
who have fled, or are too ill to stand trial, are now included
in Article 3, and, as in the General Approach, may be met through
holding trials in absentia or, if that is not possible,
through the use of an NCB power (Article 3(2)).
"Article 4, on extended confiscation, has also
been significantly amended. The Directive now identifies those
offences to which extended confiscation should at least apply.
In the General Approach, extended confiscation applied to a person
convicted of a 'serious criminal offence'. However, the term
'serious' was not defined and was left to Member States to define.
The Parliament and the Commission found that approach unacceptable
and compromise was reached with the Council on a list of 'serious'
offences.
"The Parliament and the Council have also provisionally
agreed a declaration calling upon the Commission to conduct a
feasibility study for a separate instrument for NCB confiscation.
This declaration will sit alongside the declaration agreed at
the General Approach calling on the Commission to consider revising
the mutual recognition arrangements in light of the changes brought
about by the Directive. Given the upcoming European Parliamentary
elections, and changes at the European Commission, I do not expect
any proposals for an instrument on the mutual recognition of NCB
orders to emerge in the short term."
13.6 The Minister expects the European Parliament
formally to approve the compromise text in January 2014, followed
by formal approval in the Council in February. He continues:
"As you know, the Government did not opt in
to this instrument at the pre-adoption stage. Once the text has
been adopted the Government will carefully consider a post-adoption
opt-in. This will be subject to Parliamentary scrutiny in the
normal way."
Conclusion
13.7 We thank the Minister for providing us with
a copy of the text provisionally agreed by the Council and the
European Parliament and note the Government's intention to consider
opting into the Directive once it has been formally adopted by
both institutions. We ask him to ensure that the final agreed
text is deposited in Parliament with an Explanatory Memorandum
explaining how the Directive differs from the text originally
proposed by the Commission and the general approach text agreed
by the Council in December 2012.
13.8 We are particularly interested to hear whether
the removal of a specific provision on non-conviction based confiscation
addresses the Government's concern that the Directive might taint
the UK's domestic civil asset recovery regime under Part V of
the Proceeds of Crime Act 2002. We also note that most of the
EU criminal law instruments to which the Directive would apply
are subject to the UK's 2014 block opt-out decision and the Government
has already indicated that it does not intend to rejoin them.
We look forward to receiving a detailed explanation of the impact
that the Government's 2014 block opt-out decision will have on
the scope of application of the Directive in the UK, should the
Government recommend opting in. Pending deposit of the final
agreed text of the Directive, the proposal remains under scrutiny.
50 See headnote. Back
51
See HC 683 (2013-14); The UK's block opt-out of pre-Lisbon
criminal law and policing measures. Back
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