POLITICS & INSTITUTIONS - EUROPE

EU Directive

Luxembourg moves on seized assets after EU warning



Members of parliament this week agreed to split a seized assets office into two entities as part of implementing an EU directive Photo: Maison Moderne

Members of parliament this week agreed to split a seized assets office into two entities as part of implementing an EU directive Photo: Maison Moderne

Luxembourg is moving forward on implementing an EU directive on the freezing and confiscation of proceeds of crime after the European Commission in June said it would seize the Court of Justice of the European Union to issue a penalty against the grand duchy.

Lawmakers this week discussed setting up an office for seized assets as part of transposing the 2014 EU directive. This office to manage seized assets would be supervised by the justice ministry and be separate from an asset recovery office, under the authority of the public prosecutor’s office.

The two branches were initially supposed to form part of the same agency under proposals tabled in 2019 but Luxembourg’s state council had warned that the office risked becoming victim of cumbersome procedures, prone to bottlenecks and slow procedures.

As a result, the asset management and recovery office (BGRA) will be split into two separate entities, lawmakers of the justice committee agreed on Wednesday. This preliminary step paves the way for the bill to be voted in parliament.

EU member countries were required to implement the directive into national law by 4 October 2016. “To date, Luxembourg has not notified the commission of the full transposition of the directive into its national law,” the EU’s executive said in a 9 June statement.

The commission referred the case to the Court of Justice of the European Union, which can issue a fine for every day the directive isn’t applied as part of infringement procedures.

The justice ministry in response acknowledged it hadn’t yet fully implemented the EU rules but said it is actively working on doing so.

During this week’s meeting, members of parliament also discussed difficulties in freezing cryptocurrencies, which are set to be converted into euro currency when they are seized. Given their volatility and fluctuation in price, the state cannot guarantee that the crypto assets seized will have the same value in cases where they can be recovered by their owners.

The European Commission said the directive on the freezing and confiscation of proceeds of crime is “a crucial tool to break criminals’ business models and combat organised crime.”

Only about 2% of criminal proceeds are frozen and 1% confiscated in the EU, meaning organised crime groups can expand their activities through illegal profits, infiltrating the legal economy, the commission said. “Freezing and confiscating criminal assets is key to ensure that crime does not pay.”

The directive isn’t the only one that is still pending implementation in Luxembourg.

The commission in September referred Luxembourg to the Court of the Justice over its failure to implement a directive on the acquisition and possession of firearms after launching the infringement procedure in 2018.

A draft law was submitted to parliament in March 2019 but is yet to be voted on by members of parliament.

It also opened infringement procedures against the grand duchy and 18 other EU member countries for failing to transpose a directive on access to public sector data by a July 2021 deadline.

A draft law to transport the directive into national law is pending in parliament. The bill was first submitted in July 2020.