Reform On Asset Recovery In Criminal Proceedings

Author:Dr. Constantin Rehaag
Profession:Dentons
 
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As of 1 July 2017 new rules under the Criminal Code (StGB) and Criminal Procedural Order (StPO) shall enter into force to regulate the recovery of criminal proceeds. The reform aims to effectively confiscate illegal proceeds from the offender or third beneficiaries as well as clarify terminology.

The new rules shall exclusively apply, also for old cases that have not been finalized in the first legal instance. This means that the principle of supremacy of the more favourable legal form, which normally prevails in cases of conflict, shall not apply.

Overview - Confiscation of criminal proceeds, previously forfeiture

The new law no longer distinguishes between confiscation and forfeiture; the latter terminology was replaced by the wording "confiscation of criminal proceeds". The previously applicable principle of immediacy has been eliminated and the new terminology now also includes indirect benefits derived from criminal offences. It suffices to establish connections between the offence and the benefit based on the law of unjust enrichment.

A prerequisite for the confiscation of criminal proceeds pursuant to §§ 73ff. StGB is that an illegal but not necessarily a culpable offence must have led to a pecuniary benefit, either by obtaining the gain/loot or payment for the offence. Also legal surrogates of obtained or enjoyed benefits may be confiscated, however, it is permitted to estimate the amount of the obtained benefit.

Just like under the old law, the gross principle shall continue to apply whereby expenditures of the offender are in principle not deductable. Only if the benefit obtained through the offence is based on an effective legal transaction may the offender's expenditures be deducted, i.e. deduction of provided consideration.

However, assets may not be confiscated if the claims of the injured individuals were thereby being thwarted. Such claims always take precedence over the recovery for the benefit of the state. If assets nevertheless have been confiscated, such confiscation shall not be effective against the injured individuals so that they continue to have access to the secured or confiscated assets.

As stipulated under § 73b StGB, the new rules facilitate taking action against third party beneficiaries thereby making transfers of assets to uninvolved parties pointless. This also applies in the case of inheritance. If the transfer in and of itself is already punishable under German law, such as the offence of money laundry...

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