A Fair Cop

A simple guide to money laundering, confiscation and corruption

This post explains the difference between confiscation, forfeiture, restraint, sequestration, seizing, freezing, civil recovery and asset recovery. This is to help you understand what is in the news, whichever country you are in.

Being frozen

These terms are all lawful ways to deprive people of the proceeds of crime in litigation against criminals or criminal assets. They are all English words with everyday meanings but also technical terms which are frequently used wrongly by journalists, lawmakers and commentators. Unfortunately they have also been wrongly used in English translations of foreign legislation and technical papers.

Terms for taking criminal assets

  • Asset recovery – universal term for using all the powers listed below*
  • Seize – physically take away and preserve
  • Restrain – court order on a person keeping an asset to prevent its disposal
  • Freeze – as above
  • Sequestrate – as above
  • Confiscate – court order to take assets after conviction, this can be the assets or the value of the assets
  • Forfeit – a court order that takes away the ownership of an asset
  • Non-conviction based confiscation – court order after litigation to take assets found to have criminal origins
  • Civil recovery – as above (a term in UK legislation)
    • *The StAR initiative and ICAR use the term asset recovery for the recovery of the proceeds of corruption only

Temporary powers

I am going to describe the terms in chronological order of their use. At the beginning of an investigation law enforcement officers can temporarily control an asset using lawful powers to seize, freeze, restrain or sequestrate. In the UK to seize means to physically take away and place in a law enforcement facility. In the UK to restrain means to prevent a person from disposing of an asset by serving a court order on them. They can still live in a restrained property of drive a restrained car, but if they dispose of it thye breach the court order. English-speaking countries correctly use the term freeze and restrain interchangeably. In Eastern Europe the translators tend to use the term ‘sequestrate‘ for freeze. European Criminal Procedure Codes use the same legal process to temporarily seize (physically) or freeze (by court order); this means pan-EU laws use the terms seize and freeze together, with the local court specifying what actually happens to the asset. All the above powers are temporary and can be challenged in court by purported owners.

Permanent powers

At the end of litigation the legal ownership of assets can be passed from the purported owners to the State. This is done by a court order to confiscate or forfeit. This can be value-based or object-based. In the UK and similar regimes a confiscation order imposes a debt calculated according to the value of assets, the debt has to be enforced after the order is made. In mainland Europe the confiscation order is made against the actual assets, transferring ownership to the State when the order is made. This is done after conviction for a crime. In the following circumstances confiscation can be ordered without a conviction: “Non-conviction based” confiscation can occur where a criminal trial is impossible because a defendant has died, absconded or is unfit for trial (cases disparagingly called “the dead, the fled and the mad”). This is legally possible in much of Europe, but rarely used. In the UK and Ireland, unusually, have a more routinely used non-conviction based confiscation procedure (originally called Civil Recovery because it took place in civil rather than criminal courts). The power to forfeit applies to specific objects that are unlawful to possess without permission, for example contraband at a frontier, or controlled drugs anywhere.

Footnote

Asset recovery is a global term in use to describe all the above procedures. Note, if you are reading World Bank material, for example the StAR initiative, these organisations are only referring to the proceeds of corruption, not the proceeds of other types of crime.

One thought on “What does freezing mean?

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