Comparative Law Study Of The Implementation Of Mutual Recognition Of Orders To Freeze And Confiscate Criminal Assets In The EU

English

 COMPARATIVE LAW STUDY OF THE IMPLEMENTATION OF MUTUAL RECOGNITION OF ORDERS TO FREEZE AND CONFISCATE CRIMINAL ASSETS IN THE EUROPEAN UNION

COUNTRY REPORT

__________________

                                By

YIANNOS GEORGIADES

CYPRUS

 

 

 

 


 

1.    CHAPTER 1: Introduction.

1.1.        General rules on the freezing and confiscation of criminal assets.

1.2.        Transposition status of Framework Decision 2003/577/JHA.

1.3.        Transposition status of Framework Decision 2006/783/JHA.

1.4.        Suggestions on improvement to mutual recognition and enforcement of orders to freeze and confiscate criminal assets.

1.5.        Implementation of Articles 52 and 54 of the 2003 United Nations Convention on Corruption. 

1.6.        Implementation of Article 6 of the 2000 United Nations Convention on transnational organised crime.

1.7.        Implementation of Articles 5 and 7 of the 1988 United Nations Convention on drug trafficking.

1.8.        General impact of 12, March 2012 Directive Proposal.

2.    CHAPTER 2: Process of freezing and confiscating criminal assets.

2.1.        Procedure.

2.2.        Competent authorities (table).

2.3.        Cooperation procedures with supranational agencies.

2.4.        Implementation of regulations (table).

3.    CHAPTER 3: Mutual recognition on confiscation of criminal assets.

3.1.        National mechanism for non-conviction based confiscation orders.

3.2.        Scope of the recognition of non-conviction-based confiscation orders issued by another Member State (civil/criminal).

4.    CHAPTER 4: Remedies and procedural safeguards.

4.1.        Remedies for wrongful decisions.

4.2.        Procedural safeguards.

5.    CHAPTER 5: Statistics.

5.1.        Decisions to freeze and confiscate criminal assets.

5.2.        Appeals against decisions to freeze and confiscate criminal assets.

5.3.        Criminal orders to freeze criminal assets transmitted to other Member States.

5.4.        Implementation of such orders.

5.5.        Criminal orders to confiscate criminal assets transmitted to other Member States (conviction and non-conviction based).

5.6.        Implementation of such orders.

5.7.        Criminal orders to freeze criminal assets received from other Member States.

5.8.        Implementation of such orders.

5.9.        Criminal orders to confiscate criminal assets received from other Member States (conviction and non-conviction based).

5.10.        Implementation of such orders.

5.11.        Civil based orders to confiscate criminal assets received from other Member States (conviction and non-conviction based).

5.12.        Implementation of such orders.

 

1.CHAPTER 1: Introduction

 1.1.   General rules on the freezing and confiscation of criminal assets

 In May 1996, The Prevention and Suppression of Money Laundering Activities Law (No. 61(I)/96) was enacted but was later amended in 1997, 1998, 1999, 2000, 2003 and 2004, to include further international measures or improve existing ones. In 2007 the Law

was replaced by the Prevention and Suppression of Money Laundering of Unlawful Activities Act, 2007 (No. N.188 (I) / 2007), which unified all previous laws. The most recent amendments were made with Law No. 80(I)/2012 and 192(I)/2012 (the current legislation in Cyprus). {A copy of the current legislation is included herewith}

 The aforementioned legislation was created and amended to be, inter alia, in line with the U.N. Convention (Vienna Convention) of 1998, The Council of Europe Conventions on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime 1990-2005, various EU Directives and the EU Council Framework Decisions on Freezing and Confiscation. Further, the Law was established in line with the 40 Recommendations of the Financial Action Task Force (FATF), based on issues of money laundering and to the Guidelines of the European Council.

 The main purpose of the current law in Cyprus is to define and criminalize the laundering derived from all serious criminal offenses and provides for the seizure and confiscation of proceeds by depriving criminals of the profits made from the criminal activities.

 Although the current legislation in Cyprus provides a comprehensive basis for the fight against money laundering and for the prevention and suppression of and confiscation of assets obtained through criminal activities - the proposed directive on the freezing and confiscation of the proceeds of crime in the European Union once fully approved and implemented/transposed would significantly improve the procedures, legislation and the legal rules covering such matters as they would be simplified and the loop holes which exist in the general systems in place throughout the various member states would be closed thereby preventing further exploitation by cross border criminal groups. In general the proposed directive would provide a harmonised approach to be followed throughout the member states and would serve to improve confidence in the financial markets and the economy of the countries would be better protected in general. Additionally, the proposed directive complements the proposal for a regulation on market abuse – this will then work towards the improvement of the existing European Union legislative framework through the reinforcement of administrative sanctions in general.

 The general rules on the freezing and confiscation of criminal assets are found Sections 14 and 15 of the aforementioned current legislation in Cyprus.

 Under the current legislation the court can issue the following types of orders;

a) Disclosure order

b) Freezing order

c) Restraint order

d) Freezing order against an absent suspect

e) Confiscation order

f) Confiscation order against an absent suspect

 Generally, in accordance with the aforementioned sections of the relevant law, the Court can issue a freezing/restraint order where:

a)      Criminal proceedings have been instituted and have not been concluded or are about to be instituted in the Republic against a person for the commission of a predicate offence, or

b)     

The Unit possesses information which creates a reasonable suspicion that a person may be charged with the commission of a laundering offence and

c)     

The Court is satisfied that there is a reasonable reason to believe that the above person has benefited from the commission of a predicate offence.

 Sections 6-13 of Part II of the Act mainly cover issues relating to the confiscation of criminal assets. In accordance with Section 6 ‘if a person is convicted for a prescribed offence, the Court which has convicted the person shall proceed with an inquiry before sentencing in order to determine whether the accused person has acquired any proceeds from the commission of a predicate offence’.

 Further, in accordance with the relevant AML/CFT Act, in particular Sections 32-34 a person can obtain freezing/confiscation orders in non-conviction based provisions in two cases:

a)      The suspect is outside the jurisdiction of the Republic,

b)     

The suspect is deceased.

It is relevant here to note the provisions contained in the relevant legislation of Cyprus deal with matters ranging from the court issuing an order for the freezing of assets/data when there is reasonable suspicion that such have originated from illegal activities to confiscation following conviction for a specified offense the person (or chargeable offense money laundering).

 In any event, the proceeds which were confiscated are either returned to the victim (i.e. relevant in fraud cases) or submitted the Consolidated Fund of the Republic (i, e relevant in drug trafficking offenses)

It is important to confirm that decrees of foreign courts concerning the freezing and confiscation of property can be registered in the Courts of Cyprus and after registration are effective as if issued by a Court of Cyprus.

 Cyprus is one of the Members States which has implemented an ARO (Asset Recovery Office), this being The Unit for Combating Money Laundering (MOKAS). The unit co-operates with the Authorities and ARO’s of the other EU Member States in order to better tackle and reduce issues of money laundering and cross border criminal activities. { A copy of the Annual Report 2011 published by MOKAS is included herewith}

It is interesting to note that Cyprus’ anti-money laundering system has been assessed on four occasions by the Moneyval Committee of the Council of Europe – these assessments took place in April 1998, September 2001, April 2005 and in June 2010. The subsequent evaluation reports were published in June 1998, June 2002, March 2006 and the last report published on the 27th September 2011, respectively. The reports concluded that Cyprus had in fact ‘adopted measures which were in line with international standards and should be commended for the very comprehensive legal framework put in place’. Even though Cyprus is clearly putting into practice good standards it will also benefit from the implementation of further EU directives and regulations – not only as a result of the changes which such would make in Cyprus but also for the changes which such would make in other Member States as they would make the working with other jurisdictions and the ability to co-operate together with other Member States and eliminate further cross border criminal activities easier and more achievable.

MOKAS correctly referred in its 2011 Annual Report to the fact that the Republic of Cyprus has ratified the Convention on Law of the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (the Vienna Convention) in 1990, the Convention of the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of Proceeds of crime (the Strasbourg Convention) in 1995 and the Convention of Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Criminal acts and terrorist financing in 2007. The ratification of such further evidencing the willingness and ability of the Republic of Cyprus to develop, strengthen and support a sophisticated system of legal regulations on these matters.{A copy of the report shall be included with the completed Report herein.}

Generally, the legal framework in this field, provides a comprehensive and effective basis for the fight against money laundering, since it contains both provisions to prevent and combat, as well as for tracing, freezing and confiscation assets.

In line with the regulations currently in force in Cyprus, a number of professionals, organizations and professional bodies in Cyprus are obliged understand the law and to help combat money laundering.

The obligation relates to, inter alia, the following organizations or individuals:

Banks

Cooperative Credit Institutions

Stock Agencies

Investment Firms

Insurance Companies

Accountants / Auditors

Lawyers

Realtors

Service Providers Trusts and Corporate Services

Cash Handling Services

 SUMMARY:

 The current law is The Prevention and Suppression of Money Laundering of Unlawful Activities Act, 2007, amended most recently by Law 192(I)/2012.

The procedures are criminal procedures.

1.2.  

Transposition status of Framework Decision 2003/577/JHA

 The Framework Decision 2003/577/JHA relates to the enforcement of decisions which bind assets and evidence in the European Union and focuses on the execution in the European Union of orders freezing property or evidence.

 The framework decision has been fully transposed into the national legislation of Cyprus by virtue of the Prevention and Suppression of Money Laundering and Terrorist Financing Amendment Act of 2010 58 (I)/2010.

 Part II A of the law covers confiscation orders and Part D covers freezing and confiscation orders of property with Part IV covering the enforcement of foreign orders and registration as well as other matters regarding international co-operation.

 The Law therefore aims to ensure that the purpose of the Framework Decision (i.e. the establishment of a specific set of rules under which the Member States shall recognise and execute orders freezing property or evidence) is fully covered and implemented in the national law.

 This piece of legislation was enforced fully in Cyprus on the 25th June 2010 for harmonisation purposes.

 SUMMARY

 Framework Decision 2003/577/JHA is fully transposed by the Prevention and Suppression of Money Laundering and Terrorist Financing Amendment Act of 2010 58 (I)/2010.

 No provisions remain to still be transposed. To date we have not faced a situation which gave rise to any apparent difficulties in the execution of decisions which have been given in another member state nor for the execution of a decision given in our member state for its execution and or enforcement in another member state.

 Case transcripts have already been provided which show how such cases are handled and executed, although the number of such cases is low.

 

Transposition status of Framework Decision 2006/783/JHA

 The Framework Decision 2006/783/JHA which regulates the application of the principle of mutual recognition in confiscation orders has been fully transposed into the national legislation of Cyprus by virtue of the Prevention and Suppression of Money Laundering and Terrorist Financing Amendment Act of 2010 58 (I)/2010.

 In particular, the said national legislation makes specific provisions with regards to recognition and execution of confiscation orders in line with the Council Framework Decision 2006/783/JHA by virtue of Part IV on International Co-operation covering namely the following;

 Section 38 Procedure for the enforcement of foreign orders;

 Section 38.A. Transmission to a foreign country of an order issued on the basis of the provisions of this law.

 Section 39 Effect of registration;

 Section 40 Cancellation of registration;

 Section 41 External order shall be binding;

 Section 42 Amount of an order;

 Section 43 Implementation of the provisions of this law in foreign orders;

 And additional Part IV A on Co-operation with other Member States covering namely the following;

 Section 43 A. Interpretation of terms;

 Section 43.B. Transmission to a Member State of an order issued on the basis of the provisions of this law;

 Section 43.C. Procedure for the enforcement of freezing or confiscation orders within the Republic;

 SUMMARY

 Framework Decision 2006/783/JHA is fully transposed by the Prevention and Suppression of Money Laundering and Terrorist Financing Amendment Act of 2010 58 (I)/2010 and as a result no provisions remain to be transposed.

 Case law has already been provided where such is applicable to this matter.

 The relevant provisions of the law are stated herein and a copy of the legislation has been provided.

 We are not aware of any real problems and or obstacles associated with the implementation of these sections and provisions of the law as no issues have been identified during its implementation and use to our knowledge.

1.4.  

Suggestions on improvement to mutual recognition and enforcement of orders to freeze and confiscate criminal assets

 The enforcement of freezing and confiscation orders is generally not problematic in a national context. Problems arise more often when enforcing in a Member State an enforcement order to freeze and confiscate criminal assets which is issued by a judge in another Member State.

The Report on confiscation conducted by Matrix Insight in 2009 shows how cultural differences in the Member States affect the general approach to confiscation. As a result some judges consider confiscation almost as an additional punishment of an already convicted person and are reluctant to apply it systematically. The existing EU legal framework seeks to address the cross-border aspects of confiscation through mutual recognition provisions. However, it seems that at present the EU legal framework is insufficient, not completely transposed and in a few cases lack coherence. The main obstacles which hinder the proper execution of mutual recognition and enforcement of orders emanates mainly as a result of the different systems which are in place throughout the Member States in relation to the freezing procedures employed but mainly in relation to the procedures implemented in relation to the confiscation procedures.

The Proposal for a Directive of the European Parliament and the Council on the freezing and confiscation of proceeds of crime in the European Union is of great assistance which it contains a number of policies whose aim is to substantially reduce the organized crime revenues and accumulated wealth within the EU. Although it should be noted that it is not and will not be a mutual recognition instrument. The specific objectives of the EU intervention aim at harmonizing Member States practices in order to facilitate mutual recognition and to find a better approach to the freezing, management and confiscation of criminal assets so that a standard treatment and recognition throughout the EU is seen. Additionally by doing so we would hope to achieve and to better serve the functioning of the Internal Market.

Policy actions are grouped into policy options and the maximal legislative option which includes mutual recognition seems to be the most effective. The option consists of all the envisaged policy actions and includes important provisions which foresee the mutual recognition of all types of orders (policy action 13). The EU legal framework could remove existing limitations on the mutual recognition of freezing and confiscation orders allowing orders to better circulate around the Union. This would make the legal framework more coherent. This option would also entail the mutual recognition of compensation orders (policy action 14). The legal framework could be simplified by consolidating FD 2006/783/JHA and 2005/214/JHA and extending their scope to include all compensation orders made in the context of criminal proceedings. This option would also provide for consolidated mutual recognition forms (policy action 19) and for measures enforcing the primacy of mutual recognition (policy action 20).

It is known that harmonization can be achieved in two ways, actively or passively. It can be argued that passive harmonization which occurs through voluntary non-legislative agreements is the least successful. On the other hand active harmonization which is preferred incorporates the harmonized principles into the national law through the enactment of legislation.

One could also argue that a natural convergence of the law through custom and frequent use of harmonized principles is also promising since: ‘All that matters is that the courts of different European States achieve similar results in the same cases regardless of which norms doctrines or procedures they apply in order to reach this end.[1]

  

The fact that crime is often perpetrated in one member state and the proceeds are then transferred to another Member State increases the difficulties faced for law enforcement and judicial authorities to successfully combat cross border crime – this is a further reason as to why successful and full harmonization and mutual recognition of strategies and regulations are so important.

If it is possible to provide through Directives, regulations and the national legislations a more comprehensive and tighter set of rules which focus more on, in particular, the extended confiscation, third party confiscation, precautionary freezing orders and on the management of assets which have been frozen and the record keeping for such then it will be possible to ensure that a more streamlined approach is obtained.

Legislation should be simplified to make the procedure for obtaining a confiscation/freezing order simple to and quick to follow and easy to implement. If this is the case then obtaining a single minimum standard throughout the Member States would not be far of achievable.

In accordance with Article 46 of the United Nations Convention on Corruption (UNCAC) “Each State Party shall designate a central authority that shall have the responsibility and power to receive requests for mutual legal assistance and either to execute them or to transmit them to the competent authorities for execution.”

 The Central Authority of mutual recognition in Cyprus pursuant to Article 46 paragraph 13 of the UNCAC is located at the following address: 

Ministry of Justice and Public Order

Address: 125 Athalassas Avenue

Telephone: 00 357-22-805-955

Fax: 00 357-22-518-356

Email: registry@mjpo.gov.cy

The Prevention Authority in Cyprus pursuant to Article 6, paragraph 3 of the UNCAC is located at the following address:

 Prevention Authority

Minister of Justice and Public Order

Address: 125 Athalassas Avenue

Telephone: 00 357-22-805-955

Fax: 00 357-22-518356

Email: registry@mjpo.gov.cy]

 Cyprus signed the UN Convention against Corruption on the 9th December 2003 and fully ratified it on 23rd February 2009.

 Pursuant to Article 46 paragraph 13, the Ministry of Justice and Public Order is assigned as the Focal Authority of the Republic of Cyprus for the purposes of the said United Nations Convention against Corruption. 

 Article 54 (1) (a) of UNCAC provides that: ‘Each State party shall...take such measures as may be necessary to permit its competent authorities to give effect to an order of confiscation issued by a court of another state party’. Indeed article 54 (2) (a) of UNCAC also provides for the provisional freezing or seizing of property where there are sufficient grounds for taking such actions in advance of a formal request being received.

 Recognising that recovering assets once transferred and concealed is an exceedingly costly, complex and often unsuccessful process this Chapter also incorporates elements intended to prevent illicit transfers and general records that can be used where illicit transfers eventually have to be traced, frozen, seized and confiscated (Article 52).

 Cyprus has incorporated into its national law, via ratification and the introduction of implementing provisions the United Nations Convention against corruption. The relevant Ratification Law being L.25(III)/2008.

 It is interesting to note that Cyprus is a member of the Group of States against Corruption (GRECO) of the Council of Europe.

 As pointed out in GRECO’s Third Round Evaluation Report on Cyprus, “Cyprus has ratified the Criminal Law Convention on Corruption and its Additional Protocol and made the offences contained in these instruments directly applicable as domestic law”.

 It should also be noted that Cyprus has other laws in place which also deal with corruption, for example, the Penal Code (Cap.154) defines a series of offences of official corruption, in addition the Prevention of Corruption Law Cap. 161 provides for sanctions to be taken against both public and private corruption. 

 Although fully ratified and implemented into the national law, there is as noted above, a co-existence of old and new legislation which do in parts overlap and therefore can tend to make the framework in respect of corruption offences inconsistent. 

Obligations set forth in the Convention

National Regulation

Permit their authorities to give effect to an order of confiscation issued

by a court of another State party (art. 54, para. 1 (a)

[2]

Article 38  188(I)/2007

Article 38A  188(I)/2007

Article 39  188(I)/2007

Article 41 188(I)/2007

Permit their authorities to order the confiscation of such property of

foreign origin by adjudication of money-laundering or other offences within their jurisdiction or by other procedures under domestic law (art. 54, para. 1 (b)

[3]

Article 43(1)(2)(3)(4) 188(I)/2007

Permit their competent authorities to freeze or seize property upon a

freezing or seizure order issued by a competent authority of a requesting State party concerning property eventually subject to confiscation (art. 54, para. 2 (a)

[4]

Article 43(2) (a) 188(I)/2007

Permit their competent authorities to freeze or seize property upon

request when there are sufficient grounds

[5]

for taking such actions regarding property eventually subject to confiscation (art. 54, para. 2 (b)

Article 43(2) (b) 188(I)/2007

States parties that receive from another State party requests for confiscation over corruption offences must, to the greatest extent possible, submit to their competent authorities either:

(a) The request to obtain an order of confiscation and give effect to it (art.

55, para. 1 (a); or

(b) An order of confiscation issued by a court of the requesting State party

in accordance with articles 31, paragraph 1, and 54, paragraph 1 (a), of the Convention insofar as it relates to proceeds of crime situated in their own territory, with a view to giving effect to it to the extent requested (art. 55, para. 1 (b))

[6]

.

 

Article 43(B) 188(I)/2007

 

Article 43(C) 188(I)/2007

Upon a request by another State party with jurisdiction over a corruption offence, States parties must take measures to identify, trace and freeze or seize proceeds of crime, property, equipment or other instrumentalities (see art. 31, para. 1) for confiscation by the requesting State or by themselves (art. 55, para. 2).

Article 43(C) 188(I)/2007

 

Article 43(IΣΤ) 188(I)/2007

States parties must apply the provisions of article 46 of the Convention (Mutual legal assistance) to article 55, mutatis mutandis. In the case of a request based on paragraphs 1 or 2 of article 55, States parties must provide for the modalities set out in paragraph 3 (a)-(c) of the article in order to facilitate mutual legal assistance.

 

Article 43(Α) – (ΙΖ) 188(I)/2007

 

1.6.  

Implementation of Article 13 (corrected) of the 2000 United Nations Convention on transnational organised crime

 Cyprus fully ratified the Convention on the 22 April 2003. – (Ratification Law 11(III)/2003)

 The Convention was signed by Cyprus on the 12th December 2000 and then ratified and accepted on the 22nd April 2003 (details on the treaties which have been signed, ratified and accepted can be found at http://treaties.un.org/).

 Article 13 focuses on international cooperation for the purpose of confiscation.

 The aim is to ensure that requests for legal assistance from one State Party to another are managed promptly and effectively. 

 Paragraph 2 of Article 13 deals with measures ancillary to confiscation, such as freezing or seizing assets, to be taken by the requested State following a request under paragraph 1. Such provisional measures are essential to prevent the destruction, transformation or disposal of property that could later be subject to confiscation.

 “Article 13. International cooperation for purposes of confiscation  1. A State Party that has received a request from another State Party having jurisdiction over an offence covered by this Convention for confiscation of proceeds of crime, property, equipment or other instrumentalities referred to in article 12, paragraph 1, of this Convention situated in its territory shall, to the greatest extent possible within its domestic legal system:  (a) Submit the request to its competent authorities for the purpose of obtaining an order of confiscation and, if such an order is granted, give effect to it; or  (b) Submit to its competent authorities, with a view to giving effect to it to the extent requested, an order of confiscation issued by a court in the territory of the requesting State Party in accordance with article 12, paragraph 1, of this Convention insofar as it relates to proceeds of crime, property, equipment or other instrumentalities referred to in article 12, paragraph 1, situated in the territory of the requested State Party.

 2. Following a request made by another State Party having jurisdiction over an offence covered by this Convention, the requested State Party shall take measures to identify, trace and freeze or seize proceeds of crime, property, equipment or other instrumentalities referred to in article 12, paragraph 1, of this Convention for the purpose of eventual confiscation to be ordered either by the requesting State Party or, pursuant to a request under paragraph 1 of this article, by the requested State Party.

 3. The provisions of article 18 of this Convention are applicable, mutatis mutandis, to this article. In addition to the information specified in article 18, paragraph 15, requests made pursuant to this article shall contain:

(a) In the case of a request pertaining to paragraph 1 (a) of this article, a description of the property to be confiscated and a statement of the facts relied upon by the requesting State Party sufficient to enable the requested State Party to seek the order under its domestic law;

 (b) In the case of a request pertaining to paragraph 1 (b) of this article, a legally admissible copy of an order of confiscation upon which the request is based issued by the requesting State Party, a statement of the facts and information as to the extent to which execution of the order is requested;

 (c) In the case of a request pertaining to paragraph 2 of this article, a statement of the facts relied upon by the requesting State Party and a description of the actions requested. 

4. The decisions or actions provided for in paragraphs 1 and 2 of this article shall be taken by the requested State Party in accordance with and subject to the provisions of its domestic law and its procedural rules or any bilateral or

multilateral treaty, agreement or arrangement to which it may be bound in relation to the requesting State Party. 

5. Each State Party shall furnish copies of its laws and regulations that give effect to this article and of any subsequent changes to such laws and regulations or a description thereof to the Secretary-General of the United Nations.

 6. If a State Party elects to make the taking of the measures referred to in paragraphs 1 and 2 of this article conditional on the existence of a relevant treaty, that State Party shall consider this Convention the necessary and sufficient treaty basis.

 7. Cooperation under this article may be refused by a State Party if the offence to which the request relates is not an offence covered by this Convention. 

8. The provisions of this article shall not be construed to prejudice the rights of bona fide third parties.

 9. States Parties shall consider concluding bilateral or multilateral

treaties, agreements or arrangements to enhance the effectiveness of international cooperation undertaken pursuant to this article.”

 The Prevention and Suppression of Money Laundering and Terrorist Financing Laws of 2007 and 2010, i.e. the current legislation in Cyprus, Part IV deals with international co-operation. And Part IV A deals with co-operation with Member States.

 It is this Law which can be said to cover the provisions contained in the Convention.

 In particular, Section 37 (c) actually makes a reference to The United Nations Convention Against Transnational Crime.

 This section confirms that a foreign order means an order made by a court of a foreign country, which is made for the purposes of the conventions or legislation enacted for the purpose of implementing the conventions and shall include, orders for the confiscation of proceeds and instrumentalities as defined in the Conventions, restraint orders and orders for the seizure of property made temporarily for the purposes of future confiscation of proceeds and instrumentalities.

 Section 38 of the Law covers the procedure for the enforcement of external orders.

 Part IV A of the Law covers co-operation with member states, in particular, reference is made to Council Decision 2006/783/JHA on the application of the principle of mutual recognition to confiscation orders.

The Convention was signed by Cyprus on the 20th December 1988 and was fully ratified by Cyprus on 25 May 1990.

 Upon signature: it was stated that"[Signature is effected] subject to ratification, at the time of which reservations in respect of specific provisions of the Convention may be made and deposited in the prescribed manner.  [It is understood] that such reservations, if any, cannot be incompatible with the object and purpose of this Convention."

 Upon ratification: it was stated that "As a result of the occupation of 37% of the territory of the Republic of Cyprus, which since 1974 is occupied by Turkish troops in violation of the United Nations Charter and of basic principles of international law, the Government of the Republic of Cyprus is prevented from exercising its legitimate control and jurisdiction throughout the territory of the Republic of Cyprus and consequently over those activities in the illegally occupied area which are related to illicit drug trafficking."

 It should be noted that the Cyprus authorities are generally very strict on drug related issues.

 The police in Cyprus have established the Drug Law Enforcement Unit whose main target is to combat drugs and co-operate with other agencies involved in preventing and combating drug trafficking. The Police and the Department of Customs and Excise have signed a MOU regarding drug related issues. Contact points have been designated in order to co-ordinate actions derived from the provisions of this MOU.

Furthermore, the Department of Customs and Excise is in close cooperation with other governmental authorities on law enforcement issues such as the Ministry of Commence, Industry and Tourism and the Pharmaceutical Services.

 Article 5 of the Convention covers confiscation and states, in the main provisions , as follows:

 1. Each Party shall adopt such measures as may be necessary to enable confiscation of:

a) Proceeds derived from offences established in accordance with article 3, paragraph 1, or property the value of which corresponds to that of such proceeds;

b) Narcotic drugs and psychotropic substances, materials and equipment or other instrumentalities used in or intended for use in any manner in offences established in accordance with article 3, paragraph 1.

 2. Each Party shall also adopt such measures as may be necessary to enable its competent authorities to identify, trace, and freeze or seize proceeds, property, instrumentalities or any other things referred to in paragraph 1 of this article, for the purpose of eventual confiscation.

 3. In order to carry out the measures referred to in this article, each Party shall empower its courts or other competent authorities to order that bank, financial or commercial records be made available or be seized. A Party shall not decline to act under the provisions of this paragraph on the ground of bank secrecy.

 In Cyprus the appropriate legislation(s) which cover this area are as follows;

 The Prevention and Suppression of Money Laundering Activities Law came into force in 1996, repealing and substituting the Confiscation of Proceeds of Trafficking of Narcotic Drugs and Psychotropic Substances Law of 1992, and was subsequently amended in 1997, 1998, 1999 and 2000.

 The Prevention and Suppression of Money Laundering Activities Law 61(1)/96 brought the domestic legislation in line with and facilitated the practical implementation of the European Convention on Search, Seizure and Confiscation of the Proceeds from Crime, ratified by the Republic of Cyprus in 1995 by Law 18(II)/95.

 This Law:

 (a) defines and criminalizes laundering of proceeds from serious criminal offences including drug trafficking, accepting property derived from illicit profits or providing aid for the purpose of concealing such profits;

 (b) provides for the tracing, freezing and confiscation of proceeds from serious crime;

 (c) requires suspicion for money laundering activities to be reported to the Special Unit Against Money Laundering composed inter alia, from Officials from the Law Office of the Republic and the Department of Customs and Excise, and such an act will not be treated as a breach of the duty of confidentiality;

 (d) empowers the courts to order the disclosure and production of information held by any person, including banks, if such information is related to money laundering investigations;

 (e) enables the registration and enforcement of foreign orders for the freezing and confiscation of proceeds from crime;

 (f) contains special provisions relating to the conducting of financial business, including, inter alia, requirements for customer identification and record keeping procedures, internal control systems and staff training.

 The Law does not provide for the specific use of confiscated money, but there is nothing to prevent such use. As a matter of practice, confiscated money is deposited in the “consolidated fund” (general Treasury) of the Republic. 

 It is also interesting to note that the Law on the Prevention of the Use and Dissemination of Drugs – The Establishment of the Anti-Drugs Council of 2000, was amended twice in 2002. The basic scope of this Law was to create a legal background for the implementation of the European Council Regulation 302/93. Furthermore, it provides for the establishment of the Anti Drugs Council and contains detailed provisions on the duties and powers of the Council. The establishment of the Anti Drugs Council aims at actively fighting the issue of drugs. The priority of the Council remains with combating drugs, so all the relevant departments are taking political and legislative action to improve the co-ordination of activities and the efficiency of measures towards this target. The council acts as a liaison between the Republic of Cyprus and other foreign organizations concerning drug related issues, as well as having the responsibility for promoting legislative or any other measures in an attempt to effectively achieve the prevention of the use and dissemination of drugs and the proceeds from such. Furthermore, the Cyprus Anti Drugs Council is the body responsible for the strategic design, development and implementation of the National Drugs Strategy and the National Action Plan on Drugs, aligned with the EU Drugs Strategy. The Cyprus Anti Drugs Council also has the overall responsibility for the establishment, support and monitoring of the Reitox National Focal Point and the National Drugs Information System.

 Further, Article 7 of the Convention refers to Mutual Legal Assistance and in the main, states as follows;

 1. The Parties shall afford one another, pursuant to this article, the widest measure of mutual legal assistance in investigations, prosecutions and judicial proceedings in relation to criminal offences established in accordance with article 3, paragraph 1.

 2. Mutual legal assistance to be afforded in accordance with this article may be requested for any of the following purposes:

 a) Taking evidence or statements from persons;

 b) Effecting service of judicial documents;

 c) Executing searches and seizures;

 d) Examining objects and sites;

 e) Providing information and evidentiary items;

 f) Providing originals or certified copies of relevant documents and records, including

bank, financial, corporate or business records;

 g) Identifying or tracing proceeds, property, instrumentalities or other things for

evidentiary purposes.

 3. The Parties may afford one another any other forms of mutual legal assistance allowed by the domestic law of the requested Party.

 4. Upon request, the Parties shall facilitate or encourage, to the extent consistent with their domestic law and practice, the presence or availability of persons, including persons in custody, who consent to assist in investigations or participate in proceedings.

 Generally, The Prevention and Suppression of Money Laundering Activities Law provides for international co-operation which would cover mutual legal assistance requests.

 

Obligations set forth in the Convention

[7]

National Regulation

States parties that receive a request for confiscation from another State party to take one of two actions, to the greatest extent possible within their domestic legal systems. The requested State party must either directly submit for enforcement by its competent authorities an order issued by the requesting State party ( 4 a) subparagraph (ii)), or submit the request to its competent authorities in order to obtain a domestic order of confiscation, to which the requested State party would be required to give effect if granted (4 a) subparagraph (i)).

 

Article 39(1) –(3) 188(I)/2007

 

Upon request of another State party, to identify, trace and freeze or seize proceeds of crime, property, equipment or other instrumentalities relating to offences covered by the Convention for the purpose of eventual confiscation

 

Article 43    188(I)/2007

 

Ensure that any requests for assistance in the confiscation or the freezing of the proceeds of crime are contain relevant information.

 

Article 43 Γ, 43Ε(α), 43 ΣΤ (α), 43 (Ζ)  188(I)/2007

 

  1.8.   General impact of 12, March 2012 Directive Proposal

 The Proposal for a Directive on the confiscation and recovery of criminal assets is a strategic initiative which forms part of a broader package on the ‘protection of the licit economy’, an agenda to protect Europe’s economy which is closely linked to the EU 2020 Strategy.

 The directive proposal would establish minimum standards and rules for which the Member States would be obligated to comply with, in addition however the Member States will be free to include their own national provisions where these go further than the EU directive but the minimum procedures would be laid out officially.

 The envisaged legislative proposal on the confiscation and recovery of criminal assets is also in line with the ten strategic priorities emphasized by the Commission in its Communication on the proceeds of crime adopted in 2008.[8] This Communication highlights shortcomings in the EU legal framework (lack of implementation, lack of clarity of some provisions, lack of coherence between the existing provisions) and proposes to amend it. It further states that a revision would also allow to introduce new provisions in order to achieve a more coherent and comprehensive framework.

 In May 2010, an external study was carried out in order to support the preparation of the Impact Assessment.[9] The identification and finalization of problems, objectives, policy options and assessment of impacts presented in this report were informed by the study which was completed in March 2011. The results of these studies show that Member States generally agree that more needs to be done on confiscation and asset recovery.

 The Impact Assessment Board (IAB) reviewed a preliminary version of this impact assessment and delivered its opinion on 10 June 2011. In particular the following changes were made:

 -The problem requiring EU intervention has been explained more precisely

 -The justification for the preferred option has been strengthened in order to clarify why it can be considered proportionate despite fundamental rights concerns

 -Stakeholder view have been presented earlier in more detail in the report and the limited consultation has been acknowledged.

 - Some cost element likely to arise from implementation has been indicated

 -The objectives of the initiative have been clarified to enable a meaningful evaluation in the future. 

 The proposed directive should assist in the simplification of the legal rules in the various member states and file the current loop holes in the national legislations which are currently exploited by cross border criminal groups.

 Additionally, the harmonization of the various legislations and national practices brings other advantages, for example, the implementation and creation of ARO’s and international legislation benefits cross border co-operations in various ways, it forces other member states to harmonize and comply with the regulations and to establish ARO’s and governing bodies in the various states which in turn makes international co-operation easier and more beneficial.

 Once implemented, the Member States will need to ensure that they have the necessary institutional set up, financial and human resources in place – otherwise the effective ongoing running of the legislation within the member states and in particular cross border matters will be of minimal success.

According to section 43 C of the Prevention and Suppression of Money Laundering and Terrorist Financing Act of 2007 and 2012, The Unit of Combating Money Laundering (the FIU) receives directly the foreign order to freeze or confiscate and if satisfied that it meets the requirements of part IV A of the law, it submits it to the Court as soon as possible for registration and enforcement.

 As soon as the Court decision for registration and enforcement is issued, the order is served by the FIU to the individuals/companies affected such as the bank, the land registry etc. 

 The table below, taken originally from the Questionnaire and amended as and where thought appropriate, refers to the relevant procedures and the competent authorities involved in receiving, validating and enforcing orders from one Member State to freeze and then confiscate criminal assets in another Member State, i.e. in Cyprus:

 

Procedure and rules

If the Flagrante Delicto - FD procedure is followed, then the Unit for Combating Money Laundering (the FIU) receives directly the order and applies to the Court for Registration and enforcement. 

 

The Court if satisfied that the provisions of the law are fulfilled registers and enforces the Order. 

The decision of the Court for enforcement is served by the FIU to the persons and or bodies affected, e.g. banks, land registry.

 

 If the MLA procedure is followed then the order is transmitted to the Central Authority, which in its turn submits the order to the FIU in order to proceed with an application before the Court for registration and enforcement.

 

 

 

Authority receiving the request/order

See above.

 

Authority validating the order (describe the procedure on the examination of the order)

The Court, following an application of the Unit (the FIU), on behalf of the Attorney-General, and if the requirements of the law are met proceeds with the registration and enforcement.

 

Authority enforcing the order

The Court, following an application of the Unit (the FIU), on behalf of the Attorney General, and if the requirement of the law are met proceeds to the registration and enforcement.

Contact point for exchanges with the other Member State

The Unit for Combating Money Laundering (the FIU).

 

2.2.  

Competent authorities (table)

 

Criminal Assets

Main Authority (if any)

Authority based on a ratione loci competence

Authority based on a ratione materiae competence (including shared prerogatives)

Resolution of concurrent jurisdiction issues

Identification

 

MOKAS

As main authority

As main authority

As main authority

Monitoring

 

MOKAS

As main authority

As main authority

As main authority

Freezing

 

Unit for Combating Money Laundering (FIU)

As main authority

As main authority

As main authority

Confiscating

 

Unit for Combating Money Laundering (FIU)

As main authority

As main authority

As main authority

Management of frozen assets

 

Unit for Combating Money Laundering (FIU)

As main authority

As main authority

As main authority

 SUMMARY OF INFORMATION

 The Unit for Combating Money Laundering (MOKAS) was established according to section 54 of the Prevention and Suppression of Money Laundering Activities Law 2007 (former Law No.61(I)/96), in December 1996 and became operational in January 1997.

 It functions under the Attorney General of the Republic and it is composed of representatives of the Attorney General, the Chief of Police, and the Director of the Department of Customs and Excise. The members of the Unit are appointed by detachment and the Unit is headed by the representative of the Attorney General. In relation to the composition of the Unit, the Law was amended in 2003 in order to include other professionals. As a result, the Unit recruited accountants and financial analysts.

The FIU is the national center for receiving, requesting, analyzing and disseminating disclosures of suspicious transaction reports and other relevant information concerning suspected money laundering and terrorist financing.

 When the Unit receive a suspicious transaction report (STR) it will immediately appoint a money laundering compliance officer (MLCO) who is responsible for ensuring the implementation of the directives and legislation.

 All members of MOKAS are deemed to be investigators by virtue of Section 5 of the Criminal Procedure Law.

 MOKAS will conduct an investigation when there are reasonable grounds for believing that a money laundering offence and or a terrorist financing offence has been committed.

 MOKAS also functions to provide training to the police, financial institutions and other professionals such as lawyers and accountants.

 MOKAS is the asset recovery office for co-operating with the corresponding authorities of other EU member states.

 In the case of confiscation orders resulting from co-operation with foreign authorities there is an agreement for sharing the proceeds confiscated.

 CONTACT DETAILS

 MOKAS can be contacted as follows;

 The Unit for Combating Money Laundering

PO Box 23768, 1686 Nicosia Cyprus

Telephone: +35722446018

Fax: +35722317063

Emails: mokas@mokas.law.gov.cy

 Our point of contact: Maria Kyrmizi – Senior Counsel of the Republic

Email: gdamianou@mokas.law.gov.cy

2.3.  

Cooperation procedures with supranational agencies

 Cyprus and its authorities strongly encourage and support international co-operation and therefore give priority attention to requests made for legal assistance from foreign authorities.

 The relationship between the national competent authorities and supra national mechanisms works relatively effectively.

 The Unit for Combating Money Laundering (MOKAS) in Cyprus has been appointed, following a decision of the Council of Ministers, as the Asset Recovery Office (ARO) of Cyprus and is therefore responsible for cooperating with corresponding Authorities in other EU Member States, this includes but is not limited to;

FIU’s of other countries

·        

Interpol

·        

Europol

·        

FIU Platform ( Committee in Brussels)

·        

European Commission (Committee on the Prevention of Money Laundering and Terrorist Financing)

·        

Council of Europe (    Moneyval Committee)

·        

Council of Europe – Conference of the Parties to the AML/CFT Convention

·        

Egmont Group – since June 1998

·        

The Camden Assets Recovery Inter-Agency Network (CARIN) – Since 2005

·        

ARO’s in the other Member States

 The ARO is used mainly in the phase of identifying illegal assets.

 Members of the Unit participate in international organisations that handle issues regarding money laundering, financing of terrorism and confiscation of illegal proceeds and international cooperation concerning these issues.

 In line with this, the Cyprus FIU signed a Memoranda of Understanding with the counterparts of 29 other countries - further there is a specific provision in the Law which enables MOKAS to cooperate with foreign counterparts without the needs of a Memorandum of Understanding.

 The courts of Cyprus are also more than co-operative when it comes to working with foreign authorities in these regards.

 EUROJUST is sometimes involved in the facilitation of effect co-operation and execution of orders.

 "The FIU (Financial Intelligence Unit) is the national center for receiving, requesting, analyzing and disseminating disclosures of suspicious transactions reports and other relevant information concerning suspected money laundering or financing of terrorism activities. The Unit, inter alia, has the following powers:

·        

It cooperates and exchanges information with other FIUs

·        

Issues guidance directives and provides training to financial institutions, the Police, professionals and others

·        

Issues administrative orders for the postponement of transactions

·        

Members of the Unit can apply and obtain court orders, ie, disclosure orders, freezing orders, confiscation orders

·        

Protect the privacy of the information it possesses

The Law provides for a mandatory reporting of suspicious transactions to MOKAS and the obligation to take the appropriate preventive measures (e.g. identification of customers, record keeping, mandatory reporting) applied to all persons who are engaged in financial business, including lawyers and accountants. The Unit may apply to the Court to obtain freezing, confiscation and disclosure orders. In addition, the Unit is also engaged in policy issues in the area of anti-money laundering measures as well as in various awareness raising and training initiatives on the subject, involving both the public and the private sector. There is close co-operation between the credit and other financial institutions on the one hand and the Unit on the other, based on the relevant provisions of the Law as well as on guidance notes issued by the supervisory authorities of the financial institutions.

Concerning suspected financing of terrorism, this task or authority was assigned to the Unit with the provisions of the Ratification Law of the UN Convention on the Suppression of the Financing of Terrorism (Law No. 29(III)/2001) section 10. The FIU is a member of the Co-ordinating Body Against Terrorism which was set up by a decision of the Council of Ministers, chaired by the Attorney General. Moreover, the FIU chairs the meeting of the "Advisory Authority for Combating Money Laundering and Terrorist Financing".

 The Unit for Combating money Laundering (MOKAS) has been designated by the Council of Ministers on 18 March 2009, as the Asset Recovery Office (ARO) for the purposes of implementing the Council Decision 2007/845/JHA of 6 December 2007 concerning cooperation between Asset Recovery Offices of the Member States in the field of tracing and identification of proceeds from, or other property related, to crime."

  2.4.   Implementation of regulations (table)  

Enforcement of order to freeze and confiscation assets

Brief description of the rules

Identification, location and tracing of assets

 

 

Requests can be made to FIU-ARO Cyprus which is MOKAS.  MOKAS using the tools of the AML Law e.g. Disclosure Orders for bank accounts or using data which has direct or indirect access e.g. land registry, shares etc. proceeds to the identification of assets.

 

Tools used to freeze and confiscate

 

The FIU may direct the bank to postpone a transaction (section 55 (i) (e) or proceed with application to court for domestic freezing orders or application to Court for registration and enforcement of foreign Orders.

Management, distribution and transfer of assets

 

Relevant provisions are contained in the AML Law.  Section 43 H A (5) for freezing of assets.

Costs related to the guarding, maintaining and protecting the value of the assets

 

Management of frozen assets sections 14 (7) (8) (9) (10) (11).

Receiver appointed for confiscation purposes sections 17, 18, 19 of AML Law

There is no maximum amount that can be frozen or seized OR limitation on the type of asset that can be frozen or seized.

 Life insurance products can be frozen.

 Shares can be frozen.

 Cash accounts can be frozen in whole.

 Cash accounts opened in the name of spouses can be frozen if it is evident that it was an unlawful gift, i.e. to avoid being taken, frozen etc.

 Real estate is covered by a freezing order.

 The banking laws: section 29(1) Part XI [Copy has already been provided relates to banking secrecy, i.e. that no information shall be given, divulged, revealed or used in anyway (section 29(1)) except in certain specified circumstances section 29(2), in particular subsection d, that information can be given to the police under the provisions of any law or any public officer duly authorised under the law to obtain such information or to the court in the investigation or prosecution of a criminal offence under such law.

 Deciding priority: in accordance with section 43D of the AML would be relevant according to which the Unit decides, in accordance with the law in force, which confiscation orders are executed, taking into account, eg, the existence of any assets, the relative seriousness and the place of the commission of the offence which each confiscation order relates too and the dates of the respective orders and the dates of transmission – this is applicable when two orders have been issued in different members states and this is the way in which the Unit would decide upon the priority of the orders.

 Is the burden of proof reversed at any point in cases of freezing and confiscation of criminal assets?

 According to Article 72 of the Law the standard of proof to be applied when examining an application such as the above mentioned is what applies in the civil cases, ie the balance of probabilities. On the basis of this can reasonably be inferred that when depositing an amount at the bank, the beneficiary acquires the specific amount meaning that he is an absolute beneficiary or as a trustee for a third person. Of course, there is possibility that this amount has been just transferred from another account. This can be proved by the via the application for disclosure which can be addressed to any bank or cooperative institution. Of course the accused is in a much better position to know where previously had the money and especially if he had received them in time out of six years set up by the Law. It is in this point that the burden of proof is shifted to the accused.

 Is value based confiscation always possible when requested by a Member State (in some Member States value based confiscation is only possible in certain cases and for certain offences by comparison to property based confiscation which is always is possible)?

 Article 7 of Law 188 (I) / 2007  "

  (A) recognized as income of the accused from the commission of a predicate offense all payments which were paid to him or to any other person, either before or after the implementation of this Law in relation to the predicate offense, regardless of whether it has committed by the same defendant or another person;

 (B) income of the accused from the predicate offense is the sum of payments or fees which have been paid thereon or the proceeds of a predicate offense or income as that term is defined in Article 2 of this Law.

  7(2) The Court to determine whether the accused has acquired income from a predicate offense and to calculate/estimate  the amount of income from this commission, may, except if he proves the contrary, assuming that-

 (A) Any property acquired by the accused after committing the crime or acquired or transferred to him at any time during the last period of six years prior commencing criminal proceedings against him, it amounts as an income, payment or remuneration from a predicate offense of this earliest will judge the court he acquired it; "

The mechanism that allows for non-conviction based confiscation orders in Cyprus is provided by Sections 32 and 33 of the AML Law based on which non-conviction-based freezing and confiscation orders can be given in cases of a suspect who is outside of the jurisdiction or has died, if certain conditions set out in the last mentioned sections are satisfied.

 Like most EU countries, though, Cyprus has no provisions allowing civil forfeiture of assets without a criminal case and so this mechanism is implemented through the criminal judicial system in Cyprus.

 Our jurisdiction has a system of extended confiscation.

 Each case must be judged on its own merits.

 If the charges against the accused have to do with import of goods avoiding taxes then «the hands of the law can go beyond the loss of taxes» for these goods and the court is allowed to assumed that in the past the same people have done it several times and consequently the loss of the country is much more that the existing case in front of the cause so all the property has been made out of this legal transactions must be confiscated

 Our jurisdiction also provides for the confiscation of property from third parties which are the recipients or beneficiaries of the proceed of a crime but are not themselves being prosecuted, whatever is illegal result or product of a criminal action you can proceed with confiscation even though the recipients or beneficiaries are not involved directly to the crime.

 It is notable that third parties do not have a right of audience in the Crown Court ..  In Robson the Court of Appeal stated that there was nothing in the Act giving a third party the right to make representations to the Crown Court .  This is not unjust as a confiscation order is just an order against the defendant to pay a sum of money.  It is only if the defendant does not pay the confiscation order voluntarily that the civil courts may make an order forcing the sale of particular properly.  At that stage the third party has a right of audience, indeed any order of the High Court to enforce a charge or empower a receiver to sell any property or ordering a third party to pay any sum to a receiver cannot be made until the interested party has been heard″.

 Confiscation is generally possible in the following cases;

 -          the death of the suspected or accused person

-         

permanent illness of the suspected or accused person

-         

the illness or flight from prosecution or sentencing of the suspected or accused person (when those situation prevents effective prosecution within a reasonable time, and poses the serious risk that it could be  barred by statutory limitations).

 Each case is assessed separately based on its own merits.

 It should be noted that there is no mutual recognition instrument in existence regarding the mutual recognition of civil decisions of non conviction based confiscation and this can therefore be seen as an obstacle which could hinder the effectiveness of any European regulations on mutual recognition of civil and criminal decisions on non conviction based confiscation of criminal assets. Only through improvement of the existing European legal framework in this area is there a possibility for the remedying of the obstacles which are currently facing the law enforcers.

In the event of adoption of the 12 March 2012 Directive on the freezing and confiscation of proceeds of crime, in particular with reference to the area of non conviction based confiscation orders, changes will be unavoidable and most necessary to the current national legislation.

 Change to the national system would assist in the facilitation of recognition in our Member State of civil non conviction based confiscation orders and criminal non conviction based orders emanating from other Member States.

3.2.  

Scope of the recognition of no-conviction-based confiscation orders issued by another Member State (civil/criminal)

 

Provided that the conditions set out in Sections 32 and 33 of the AML law are satisfied, it seems that there would be no obstacle to the enforcement of a criminal non-conviction based confiscation order issued by another Member State.

 According to section 33 (2) (b) ‘any person who is likely to be affected by the making of a confiscation order has been given the opportunity to make representations, if he so wishes, before the court in respect of the making of the order’.  This means that third parties like secured creditors, creditors, mortgagees, family members, victims of the crime etc.can oppose the enforcement of non conviction based confiscation orders provided they fulfil the criteria of the person stipulated in section 33(2)(b) – this meaning that the affected person has been given the opportunity to make any representations that they wish to make to the court.

 The table below, taken originally from the Questionnaire and amended as and where thought appropriate, refers to the relevant procedures and the competent authorities involved in receiving, validating and enforcing orders from one Member State to freeze and then confiscate criminal assets in another Member State, i.e. in Cyprus:

 

Procedure and rules for the establishment and transmission of orders to freeze criminal assets

Law enforcement authorities following an application by the Attorney General to the Court, obtain a freezing order by the Court.  According to the AML Law, freezing orders are transmitted by the Unit (the FIU) for execution directly to the competent authorities of the Member States involved.

 

 

 

Procedure and rules for the establishment and transmission of orders to confiscate criminal assets

Following Conviction and before sentencing the prosecution applies to the court to issue o confiscation order.

The confiscation order obtained is transmitted by the Unit (the FIU) for execution directly to the competent authorities of the Member States involved.

 

 

Authority issuing the request/order

Court.

 

Authority transmitting the order

The Unit for Combating Money Laundering (the FIU), if the Framework Decisions are used, or the Central authority which is the Ministry of Justice and Public Order, if the usual Mutual Legal Assistance channel is followed.

 

Contact point for exchanges with Member State B

If it is under the Framework Decision procedure is the Unit (the FIU).  Otherwise, if the MLA procedure is followed, then is the Central Authority.

 

 In relation to the co-operation of the Republic of Cyprus with other Member States, the relevant law is that of the AML of Cyprus, in particular Section 43.E which covers the grounds which are applicable for the refusal to enforce an order to freeze criminal assets, such are as follows;

 Section 43.E:

 A freezing order may not be enforced, if the Unit or the Court consider that:-

 (a) the certificate is not produced or is incomplete or manifestly does not correspond to the freezing order;

 (b) there is immunity or privilege which makes it impossible to execute the freezing order;

 (c) the execution of the freezing order infringes the ne bis in idem principle

 [The principle of ne bis in idem means is a legal doctrine to the effect that no legal action can be instituted twice for the same cause of action – similar to the double jeopardy rules]

 (d) the freezing order relates to an act which under the law of the Republic

does not constitute an offence which permits freezing.

 Further, section 43F, covers the grounds under which refusal to enforce an order for confiscation of criminal assets will be considered appropriate and acceptable;

 Section 43.F:

 A confiscation Order may not be enforced, if the Unit or the Court consider that:-

 (a) the certificate is not produced or is incomplete or manifestly does not correspond to the confiscation order;

 (b) there is immunity or privilege which makes it impossible to execute the confiscation order;

 (c) the execution of the confiscation order infringes the ne bis in idem principle;

 (d) the confiscation order relates to an act which under the law of the Republic does not constitute an offence which permits confiscation;

 (e) the rights of any interested party, including bona fide third parties, under the law of the Republic of Cyprus, make it impossible to execute the confiscation order, including the case where this is the result of the application of legal remedies in accordance with the law of the Republic of Cyprus;

 (f) according to the certificate, the person concerned did not appear personally and was not represented by a legal counselor in the proceedings resulting in the confiscation order, unless the certificate states that the person was informed personally or via his legal representative, in accordance with the law of the issuing state, or that the person has indicated that he does not contest the confiscation order; or

 (g) the confiscation order relates to criminal offences which are regarded as having been committed wholly or partly within the territory of the Republic of Cyprus or outside the territory of the issuing state.

 The Unit referred to herein refers to the Unit for Combating Money Laundering. i.e. MOKAS here in Cyprus.  Since June 1998, MOKAS has been a member of the ‘Egmont Group’ and participates actively with representatives in the meetings of its working groups and other Egmont Group meetings. The Egmont Group is an organization which serves as an international network fostering improved communication and interaction among the Financial Intelligence Units (i.e. the Unit).

Cyprus is a member of the Moneyval Committee of the Council of Europe; the Head of the FIU was elected and served as a member of the “Bureau” and Vice Chair of this Committee and is the Head of the Cyprus delegation. The “Bureau” is responsible for preparing the work of the Moneyval Committee. The aim of Moneyval is to ensure that states have in place effective systems to counter money laundering and terrorist financing and comply with the relevant international standards in these fields. Moneyval evaluates and reports on the performance of member states of the Council of Europe, which are not members of the FATF, in complying with the relevant international anti-money laundering and countering terrorist financing standards. Moneyval makes recommendations to the evaluated countries, with a view to improving the efficiency of their anti-money laundering and countering terrorist financing measures and to furthering international co-operation.

The Head of the FIU is the Head of the Cyprus delegation to this Committee which is the policy making body of the European Commission in the area of money laundering and terrorist financing. The recent important achievement of this Committee was the elaboration of the 3rd AML/CFT Directive.

Members of MOKAS participate in this network since 2005. It was established at the Hague on 2004 by Austria, Belgium, Germany, Ireland, Netherlands and the UK, constituting a global network of practitioners and experts with the intention of enhancing mutual knowledge on methods and techniques in the area of cross border identification, freezing, seizure and confiscation of the proceeds and other property related to crime. The CARIN ensures the rapid exchange of information between Asset Recovery Offices of all the Member States.

Following the publication of Council Decision 2000/642/JHA of 17th October 2000 concerning arrangements for cooperation between FIUs of Member States in respect of exchanging information, the EU Commission, through the DG Internal Market, launched the FIUNet initiative, a fully decentralized EU-wide system whereby FIUs join a computer network to exchange information in a secure environment. The project is managed by the FIUNet Bureau which is sited within the Dutch FIU. MOKAS started participating at Task Force meetings within the FIUNet during 2006. The Unit has been connected with FIU.NET in 2006.

MOKAS is also participating in the meetings of the FIU Platform which was set up by the European Commission to enable EU FIUs to exchange views and experiences on technical issues related to relevant provisions of the Third AML/CFT Directive. In this context the Platform is intended as a forum for discussion on specific aspects related to the application and implementation of the new provisions introduced by the Third Directive, focusing on the identification of issues of a practical nature, on problems and possible solutions.

Recognising the different types of FIUs and the consequent differences in the legal framework that could disrupt the smooth exchange of information, the Platform is therefore intended to serve as a forum to discuss issues related to differences in the operational structures of FIUs in order to explore possibilities of a harmonization process, particularly in the field of gathering and interpretation of information for statistical purposes.

The Unit for Combating money Laundering (MOKAS) has been designated by the Council of Ministers on 18 March 2009, as the Asset Recovery Office (ARO) for the purposes of implementing the Council Decision 2007/845/JHA of 6 December 2007 concerning cooperation between Asset Recovery Offices of the Member States in the field of tracing and identification of proceeds from, or other property related, to crime.

[Information in the above 8 paragraphs is taken directly from the website of The Republic of Cyprus Unit For Combating Money Laundering (MOKAS) http://www.law.gov.cy/]

 (for further information please see the additional information provided at the end of section 5)

4.     

CHAPTER 4: Remedies and procedural safeguards

 

Proposed EU safeguards

How is this guaranteed under national law?

Each Member State shall take the necessary measures to ensure that the persons affected by the measures provided for under this Directive have the right to an effective remedy and that suspects have the right to a fair trial, in order to preserve their rights.

 

Article 30.1 , 30.2, 30.3 οf Constitution

Article 38(3)(b) 188(I)/2008

Each Member State shall take the necessary measures to ensure that reasons are given for any decision to confiscate and that the decision is communicated to the person affected. Each Member State shall provide for the effective possibility to appeal against the decision to confiscate before a court by the persons whose property is affected.

 

Article 30.2, οf Constitution

Article 38(3)(b) 188(I)/2008

In the case of extended confiscation (extending beyond the proceeds related to the specific crime for which there is a conviction), the suspected or accused person shall have an effective possibility to contest the probability on the basis of which the property concerned is considered to be proceeds.

 

Criminal Procedure Act

In the cases of non-conviction based confiscation, the person whose property is affected by the decision to confiscate shall be represented by a lawyer throughout the proceedings in order to pursue the rights of the defence of the person relating to the establishment of the criminal offence and to the determination of the proceeds and instrumentalities.

 

Article 30.3 (d) οf Constitution

Article 38(3)(b) 188(I)/2008

Where the person whose property is affected is a third party, the person or the person’s lawyer shall be informed of the proceedings that can lead to a decision to confiscate that property and shall be allowed to participate in those proceedings to the extent necessary to effectively preserve the person's rights. That person shall have at least the right to be heard, the right to ask questions and the right to provide evidence before a final decision on confiscation is taken.

 

Article 30.3 (a) (b) οf Constitution

Article 38(3)(b) 188(I)/2008

 

1.                 

 When are they notified of the expert decision?

 When the  order granted by an ex parte application is duly served to the affected person.

 2.                  How long do they have to appeal?

As usual 6 weeks

 3.                  How long does the court take to make a decision?

As soon as possible. if it’s the hearing of the ex parte application the Court may make a judgment on the same day or after a week or as soon as possible.

 If it is about an interim order concerning the confiscation or frozen of assets then the Court is dealing with the case as soon as possible. When it hears the two sides it can grand an order for set aside the already granted interim order immediately or after some reasonable period.

 4.                  What if all the assets of someone have been frozen and they cannot buy food for themselves or their family or even employ a lawyer?

 This matter is going to be revealed before the judge on the day of the hearing of the application about confiscation where the accused has the chance to provide his objection or justify his requirements or if the accused ask for seting aside the order. It is upon the judge to decide accordingly. (but see below)

  5.                  Is there a limit on what can be frozen or can all of the assets and property of someone just be frozen and they cannot buy food for themselves or the  their family or even hire a lawyer?

 The court must then, calculate the amount that might be realised.  As a general principle the court cannot order the defendant to pay a confiscation order in an amount greater than he can pay.  The court must therefore calculate the amount that might be realised″

 The definition of realizable property given by Article 13 (1) of the Act and includes (a) property which has been accused and (b) property which has another person to whom the defendant has directly or indirectly from a prohibited this Law donation.

 According to the Article 14 (3) The frozen order can affect:

 The whole  assets /realizable property even though it has not been described to the order.

The realizable property which is conveyed to the accused  after granting the order.

 Confiscation should not be disproportionate to the gravity of the offense and should be considered as part of the overall penalty

 The apparent severity of the penalties and the penalties consistently imposed by the courts for them. The imposition of severe penalties for offenses of this nature seeks not only to punish the offender and the possible reform but also to deter other would-be offenders, who, when they know that their criminal activities will be dealt with strictly, which may be second thoughts they issue

 "The deterrence as a factor which acts in determining the sentence has two parameters. One reason is to prevent itself offender from repeating the crime or similar crimes in the future. Further in preventing third parties from committing similar or similar crimes. latter case, deterrence has two components: First, deterrence which is associated with the severity of the crime and reflected in the passage cited in the judgment of the Assize Court of the book of Thomas "Principles of Sentencing" and second, prevention as a means to suppress crimes are on the rise. in serious cases the element of deterrence is intertwined with the severity category of crimes, to which belongs the punishment under crime, and the intrinsic need to prevent them. "

 6.                  Details should also be given on the rights if third parties whose assets have been confiscated because of their association with a crime or because it is alleged that their assets are the proceeds of a crime.

 If the defendant / accused fails to pay the amount of subsequent confiscation, then and only then, in execution, if attempted liquidation and recovery of property of a third party, , it has the right to appear in Court and implicated in process by viewing its positions.

 7.                  What are the grounds of an appeal?

Repeatedly suggested that sentencing is predominantly the work of the first instance court and the Court of Appeals not interfere where the penalty could possibly be at the discretion of the first instance court but when there is clear evidence that the determination of the sentence was the result of error or authority when it is manifestly excessive. "

The Appeals Court intervenes only where the failure to have disclosed the penalty objective fact. See Philippou v. Republic (1983) 2 CLR 245, George v. Police (1991) 2 525 and HRD Attorney General Andrew Paul Law, Criminal. Appeals 6303 and 6304, dated. 13.6.1997.

 The importance for sentencing purposes is the damage caused to the complainant and not the amount availed himself appellant, factor that has a much more limited mitigating character.

 Error regarding the legislation and the case- law

Error regarding the evidence and testimony.

Lack or insufficient reasoning of the decision

 Misleadings of the facts

 Sentence is manifestly excessive - Confiscation is disproportionate to the gravity of the offense

 The court didn’t take into account the mitigating factors – and the personal circumstances of the acussed  e .g  difficult and problematic childhood, violence within the family, abused of childhood, interruption of school lessons, psychological problems, below the poverty line, regret, he didn’t have access or any benefit to the stolen property or to the illegal product of his actions.

 According to the AML, persons affected by a freezing or a confiscation order have the right to appear before the court and file an objection to the order being made.

 Freezing orders are obtained ex parte provisionally and then served on the affected persons to enable them to file an objection or to state their position.

 Otherwise it becomes final until the final determination of the criminal case.

 Remedies for wrongful freezing or confiscation orders include compensation by the Court as provided in Section 25 of the AML Law.

 Decisions can be reviewed and or appealed – this would take place before the District Court first, and then the appeal would be made to the Supreme Court.

 The affected person has the right of appeal and for review of the decision.

 The appeal against a decision or a request to review a decision to freeze or confiscate criminal assets temporarily suspends the actual process of the freezing or confiscation or transfer of assets – the suspension does not mean the assets can be used or moved it simply means that the situation is suspended whilst the request for review of the decision is dealt with. It is very much dependent upon the circumstances of the actual case as to whether an appeal could lead to an invalidation or limitation of the scope of an order to freeze and or confiscate criminal assets. In the event that an appeal successfully limited the scope of the order or even invalidated it, the authorities in Cyprus would immediately inform any other Member State authorities involved if the case were a cross border case.

 

4.2.  

Procedural safeguards

 A person who is affected by a freezing order or a confiscation order has the right to appear before the court and file an objection to the order which has been made.

 (For further information please see the additional answers provided at the end of section 5)

 The District Court accepts the initial application for such to take place from here the appeal on the decision will proceed to the Supreme Court which is the highest court in the Republic of Cyprus.

 As a general rule, the review of these types of decisions due to their nature does not usually cause undue delay. In some cases an appeal could lead to invalidation or a limitation of the scope of an order to freeze and confiscate criminal assets. If an appeal were to limit the scope of the order or invalidate it Cyprus would have to inform the other State Member immediately.

 In the event that a wrongful decision to freeze or confiscate assets etc have been granted/given, Compensation may be ordered by the Court as provided in section 25 of the AML Law.

 Safeguards are also provided within the laws, in particular the AML, which provide for example, for matters such as ne bis in idem principles, for example, an order for confiscation or a freezing order will not be enforced is there is a risk that the principle of ne bis in idem will be infringed, this prevents double jeopardy – i.e. no legal action can be instituted twice for the same cause of action (Sections 43 E and 43G).

 The response and procedural timeframes are very much dependant upon each case the the type of assets to be realised

5.     

CHAPTER 5: Statistics

 Since the MOKAS unit was established the total number of cases investigated annually has increased significantly, from 6 cases in 1996 to 1069 cases in 2011 – the increases are due to a number of different factors but these include improvements in the legal framework and available legislation, the role of the Advisory Authority for Combating Money Laundering and Terrorist Financing and the stronger links with international partners.

 

5.1.  

Decisions to freeze and confiscate criminal assets

 

 Number of confiscation orders enforced :

 

2007

2008

2009

2010

2011

0

2

1

0

1

 

In 2011 there were 16 freezing orders and 3 registration of foreign freezing court orders – the amounts involved included one motor vehicle and €4,681,553

 In 2011 there were 4 confiscation orders and 1 registration of a foreign confiscation order, the amount being €438,126.

 We have been informed, from statistics maintained by MOKAS that for the period 2007-2011, the number of the domestic freezing orders issued, following a relevant request from competent foreign authorities, not only Member States, is in the region of 40.

As

 

5.2.  

Appeals against decisions to freeze and confiscate criminal assets

 

We have been advised by MOKAS that no appeals against decisions to freeze criminal assets have been made and that appeals against decisions to confiscate criminal assets were filed as part of the appeals filed against convictions and sentencing. 

 However, there were 4 such appeals filed against confiscation orders but all such were dismissed.

 a. Ιωάννης Ανδρονίκου, Suphire Securities v. Δημοκρατίας (2008) 2 ΑΑΔ 486

 b. Αντρέας Σοφοκλέους v. Δημοκρατίας, Ποιν. ΄Εφεση 152/2009, 22.9.2011

 c. Αντρέας Αθανασίου v. Δημοκρατίας (2007) 2 ΑΑΔ 212

 d. Tekinder Pal v. Δημοκρατίας

 Χρύσω Προκοπίου Κίτα v. Δημοκρατίας, Ποινικές Εφέσεις 4/2010, 5/2010, 3.12.2010.

 [The transcripts for which have already been provided]

 Appeals are not frequent.

 An appeal would be assessed on its individual circumstances.

 There are no criminal orders to freeze or confiscate criminal assets that were transmitted to other Member States for registration but requests to freeze assets were included in formal mutual legal assistance requests submitted to other Member States.

 The use of Mutual Legal assistance was made as a result of the fact that they were all cases in which evidential material and the tracing and or identification of assets were requested and also in case of any property identified to be restrained. 

5.4.  

Implementation of such orders

 Non applicable.

As there are no cases we cannot expand on this.

5.5.  

Criminal orders to confiscate criminal assets transmitted to other Member States (conviction and non-conviction based)

 There are no criminal orders to freeze or confiscate criminal assets that were transmitted to other Member States for registration but requests to freeze assets were included in formal mutual legal assistance requests submitted to other Member States.

The requests for mutual legal assistance was made as a result of the fact that tracing and or identification of assets was required and so mutual legal assistance was requested.

Court orders obtained in Cyprus for the registration and enforcement of freezing orders obtained in EU Member States between 2006 and 2011 totalled 10.

5.8.  

Implementation of such orders

 Registration and enforcement in Cyprus of freezing orders obtained in EU Member States, between 2007-2011:

 10 cases:

 Αρ. Αίτησης: 34/09, Επαρχιακού Δικαστηρίου Λευκωσίας

 Αρ. Αίτησης: 346/07, Επαρχιακού Δικαστηρίου Λευκωσίας

 Αρ. Αίτησης: 774/07, Επαρχιακού Δικαστηρίου Λευκωσίας

 Αρ. Αίτησης: 622/08, Επαρχιακού Δικαστηρίου Λευκωσίας

 Αρ. Αίτησης: 384/11, Επαρχιακού Δικαστηρίου Λευκωσίας

 Αρ. Αίτησης: 1326/10, Επαρχιακού Δικαστηρίου Λευκωσίας

 Αρ. Αίτησης: 143/2009, Επαρχιακού Δικαστηρίου Λευκωσίας

 Αρ. Αίτησης: 1211/10, Επαρχιακού Δικαστηρίου Λευκωσίας

 Αρ. Αίτησης: 206/11, Επαρχιακού Δικαστηρίου Λευκωσίας

 Αρ. Αίτησης: 462/11 Επαρχιακού Δικαστηρίου Λευκωσίας

5.9.  

Criminal orders to confiscate criminal assets received from other Member States (conviction and non-conviction based)

 Court orders obtained in Cyprus for the registration and enforcement of confiscation orders obtained in EU Member States between 2006 and 2011 totalled 4.

 Registration and Enforcement in Cyprus of confiscation orders, obtained in EU Member States, 2007-2011:

 4 confiscationorders:

 Αρ. Αίτησης:  894/08, Επαρχιακού Δικαστηρίου Λευκωσίας

 Αρ. Αίτησης: 320/08, Επαρχιακού Δικαστηρίου Λευκωσίας

 Αρ. Αίτησης: 378/09, Επαρχιακού Δικαστηρίου Λευκωσίας

 Αρ. Αίτησης: 603/11 Επαρχιακού Δικαστηρίου Λευκωσίας

5.10.                      

Implementation of such orders

 

5.11.                      

Civil based orders to confiscate criminal assets received from other Member States (conviction and non-conviction based)

 None.

5.12.                      

Implementation of such orders

 Non applicable.

 

[1]

Colombi Ciacchi, A. “Non-Legislative Harmonisation of Private Law under the European Constitution: The Case of Unfair Suretyships”, (2005). 13 ‘’European Review of Private Law’’ page 285 in the book by Vogenauer, S and Weatherill, S (ed). (2006). ‘’The Harmonisation of European Contract Law Implications for European Private Laws, Business and Legal Practice’’. Oxford and Portland, Oregon: Hart Publishing. Page 198

[2]

The reference to an order of confiscation in this paragraph may be interpreted broadly, as including monetary confiscation judgements, but should not be read as requiring enforcement of an order issued by a court that does not have criminal jurisdiction.  See A/58/422/Add.1, para. 57.

[3]

Paragraph 1 (b) of article 54 must be interpreted as meaning that the obligation contained in this provision would be fulfilled by a criminal proceeding that could lead to confiscation orders.  See A/58/422/Add.1, para. 58.

[4]

First, each State party may choose to establish procedures either for recognizing and enforcing a foreign freezing or seizure order or for using a foreign freezing or seizure order as the basis for seeking the issuance of its own freezing or seizure order. Second, this should not be construed as requiring enforcement or recognition of a freezing or seizure order issued by an authority that does not have criminal jurisdiction.  See A/58/422/Add.1, para. 61.

[5]

Sufficient grounds should be construed as a reference to a prima facie case in States whose legal systems employ this term.  See A/58/422/Add.1, para. 60.

[6]

The Convention only obliges States to provide for domestic criminal confiscation and assistance to

other States parties seeking domestic criminal confiscation, in respect of those optional offences that they

actually adopt in domestic law (see also chap. VIII of the United Nations Anti-Corruption Toolkit, available

at www.unodc.org/pdf/crime/toolkit/f1tof7.pdf).

[8]

‘Proceeds of organized crime- Ensuring that ‘crime does not pay’, COM (2008) final.

[9]

Framework Service Contract No JLS/2010/EVA;/FW/001/A1, Study for an Impact Assessment on a proposal for a new legal framework on the confiscation and recovery of criminal assets.

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