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Final report

1. Short description of the project – scope, activities, experts, participants

2. Money laundering – legal framework (national, international), best practices

I. International standards with regards to money laundering

a. FATF recommendations

Brief history

The authoritative international body with regards to prevention and fighting money laundering and financing of terrorism is the Financial Action Task Force1, better known with its English acronym – FATF.

The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 in Paris at the G7 Summit. Its aim is to develop and promote domestic and international policies pertaining to prevention and fight against money laundering and financing of terrorism.

Initially FATF had a mandate reviewed every 5 years but in 2004 the ministers representing the 33 member states agreed to extend its mandate for 8 years, until 2012, which shows the trust of the states in the effectiveness of this body in their fight against terrorism and crime in general, at an international level.

This body doesn’t have any judicial tasks, it only issues policies for the prevention and fight against money laundering and financing terrorist acts, policies that subsequently have to be included in the domestic legal system either as primary legislation (laws, government decisions, government ordinances), or as secondary legislation, such as regulations and norms issued by the various institutions and authorities of a state, considered by the FATF standards as “enforceable means”.

Currently FATF is composed of 36 members (34 member states and 2 regional organizations: the EU and the Gulf Cooperation Council), 8 associated members2

1 Financial Action Task Force (FATF) – Groupe d'Action financière (GAFI), http://www.fatf-gafi.org/pages/0,2987,en_32250379_32235720_1_1_1_1_1,00.html

"With the financial support from the Prevention of and Fight against Crime Programme of the European UnionEuropean Commission - Directorate-General Home Affairs. This publication reflects the views only of the author, and the European Commission cannot be held responsible for any use which may be made of the

information contained therein"1

http://www.fatf-gafi.org/pages/0,2987,en_32250379_32235720_1_1_1_1_1,00.html

and it cooperates on its turn with other international bodies3, together with which it studies the techniques and trends in money laundering and in financing acts of terrorism, with the aim to review and update the measures that have to be taken for an efficient fight for the mitigation and combating of this phenomenon.

Romania is not a FATF member state yet, but in 2006 the representatives of Romania at Moneyval, a committee in the European Council, participated at the works of the first joint plenary of the two international bodies, and at this occasion Moneyval became associated member of the FATF.

With regards to prevention and fight against money laundering FATF issued in 1990 a series of 40 recommendations regarding money laundering, representing an international standard in the assessment of the effectiveness of the system of prevention and fight against money laundering in a state.

Following the 2001 terrorist attacks in the USA FATF was assigned the mission to develop such standards for the prevention and fight against terrorism, as a result a set of 9 special recommendations being issued.

These recommendations have undergone a series of successive reviews in order to be aligned to the new trends in the fight against the phenomenon: first in 1996, then in 2003 and the last amendments in February 2012. Thus, the 40 recommendations regarding the prevention and fight against financing of terrorism have undergone a restructuring to the essence. The new FATF recommendations are presented in a new structure, included into a single set of 40, and also include notes regarding interpretation. The key element of all recommendations is the risk based approach, and the new R1 presents clearly the principles and guidelines of the risk based approach, the fact that the implementation of the risk based approach is applicable to all FATF recommendations, setting more clear and more specific obligations for countries, financial institutions, financial professions and supervising authorities. Below we’ll list

2 The Asia/Pacific Group on Money Laundering (APG), Caribbean Financial Action Task Force (CFATF), Eurasian Group (EAG), Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), Financial Action Task Force on Money Laundering in South America (GAFISUD), Inter Governmental Action Group against Money Laundering in West Africa (GIABA), Middle East and North Africa Financial Action Task Force (MENAFATF)3 World Bank, International Monetary Fund, European Bank for Reconstruction and Development, etc.



http://www.fatf-gafi.org/document/11/0,3343,en_32250379_32236869_34864395_1_1_1_1,00.html














some of the amendments relevant for this project and that were debated in the seminars held after such amendments were issued.

Recommendations regarding money laundering and forfeiture

In what concerns indictment of the offense of money laundering, according to FATF recommendations, each country has to extend the offense of money laundering to all the serious crimes in order to include in it the vastest range of predicate offenses. The predicate offenses can be described by reference to all offenses, or to a limit linked either to a category of serious offenses or to the punishment by imprisonment applicable to the predicate offense (limit approach), or to a list of predicate offenses, or to a combination of these approaches.In case of the countries that apply a limit approach, the predicate offenses shall include all offenses that are in the category of serious offenses set forth in their domestic legislation or to include offenses that are punished with the maximum punishment or with more than one year in prison or, in case of the countries that have a limited number of offenses set forth in their legal system, the list of predicate offenses shall include all the offenses that are sanctioned with the maximum penalty or with more than six month prison.

Regardless of the type of approach, each country shall include at least a series of offenses from each named category of offenses4.

The predicate offenses of money laundering must be extended in such a way as to lead to those committed in another country, that are considered as offense in that country, and that would have been considered predicate offense had it occurred inside the country. The countries shall set forth as single precondition that in case the offense had been committed inside the country, such act would have been considered a predicate offense.

The countries may set forth that the offense of money laundering is not applicable to the persons that committed the predicate offense when such thing is required by the fundamental principles of the domestic laws.

At the same time the countries shall make sure that:

a) The intention and knowledge required to prove the offense of money laundering is in compliance with the standards set forth in the Vienna and the Palermo Conventions, including the concept that such an element of intent can be deduced from objective factual circumstances.

4 See the definition “Named categories of offenses” in the “Definition of terms.”



b) The criminal liability and, in case this is not possible, the civil or administrative liability shall apply to legal persons. This does not remove the parallel criminal, civil or administrative procedures with regards to legal persons in the countries where such forms of liability exist. The legal persons shall be subject to effective sanctions, discouraging and in proportion with the act. Such measures must be in place without affecting the criminal liability of the individual.

With regards to the precautionary measures and forfeiture, the countries shall adopt similar measures to those set forth in the Vienna and the Palermo Conventions, including some legislative measures in order to allow the competent authorities to forfeit the laundered goods, the gain from money laundering or predicate offenses, the tools used or meant for committing any offense of money laundering, or goods of corresponding value, without any prejudice to the rights of bona fide third parties.

Such measures should include the competence to: (a) identify, pursue and assess the goods that are subject to forfeiture; (b) take precautionary measures, such as freezing or seizure in order to prevent any operation, transfer or alienation of such property; (c) act for the prevention or cancel the actions that prejudice the ability of the state to recover the goods that are subject to forfeiture; and (d) take any appropriate measures of investigation.The countries may consider adopting measures that allow the forfeiture of such gain or tools of making such gain, without requiring a criminal sentence, or may ask an offender to prove the legal origin of the property allegedly liable to forfeiture, to the extent such a requirement is in compliance with the principles of the domestic laws.

Following the amendments of February 2012, the former recommendations [R1] and [R2] became [R3] – the offense of money laundering, and the former recommendation [R3] became [R4] – Forfeiture and precautionary measures. Thus, the countries are compelled to incriminate the offense of money laundering and have to take measures of forfeiture of the illicit wealth. The aim of the measures against money laundering is extended in order to include also a series of infringements of the fiscal law. The new recommendations include clarifications regarding the fact that the activity of smuggling includes the obligation to pay customs duties, i.e. excises and taxes.

I. The financial sanctions against the financing of terrorism and the financing of proliferation of weapons of mass destruction

The former special recommendation [SRIII] became [R6] – Financial sanctions against terrorism and financing of terrorism and [R7] – Financial sanctions with regards to the proliferation of weapons of mass destruction. This chapter, together



with the interpretation notes, emphasize the provisions regarding international cooperation, namely the cooperation and coordination of mechanisms in order to facilitate the development and implementation of policies and activities of combating the financing of proliferation of weapons of mass destruction.

II. Transparency and the actual beneficiary. The former recommendation [R33] became [R24] and [R25] with regards to transparency and the actual beneficiaries of a legal person or other legal economic setups. Thus, it is requested from the states that all companies are registered and be compelled to record the essential information for the identification of the actual beneficiary (address, shareholders, managers, etc.) and of the control structure of the company. Several alternative mechanisms have been set forth for the identification of the actual beneficiary.

III. International cooperationThe new recommendations with regards to international cooperation strengthened the regulations through which the countries are compelled to have setups for the partition of the forfeited goods.

b. The European Directives with regards to the prevention and sanctioning of money laundering

The law is the general framework within which the prophylaxis of money laundering may be successful. For this very reason, both internationally and domestically we see an abundance of mandatory or recommendation norms, the general trend being that of risk based approach of this globalized phenomenon. From the mandatory norms we point out the following: Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering, known as the 3rd Directive; Directive 2006/70/EC of the Commission of 1 August 2006 laying down implementing measures for Directive 2005/60/EC of the European Parliament and of the Council as regards the definition of ‘politically exposed person’ and the technical criteria for simplified customer due diligence procedures and for exemption on grounds of a financial activity conducted on an occasional or very limited basis, known as the Implementation Directive.

The 3rd Directive had a social and economic impact on systems of prevention and fight against money laundering in the EU member states, including Romania, by widening its area of applicability and by the new requirements set forth, as follows:



It extended the area of definition of the ‘financial institution’ through including certain new categories of reporting entities, such as, e.g.: consultancy services, service providers, intermediaries on the insurance market, etc. It brought changes with regards to knowing the customer, in the sense that: o The requirements with regards to customer due diligence have been extended and consolidated substantially;o The requirements with regards to customer due diligence shall be applied both to current and new customers;o It set forth the obligations of the financial institutions in case they cannot enforce the requirements with regards to customer due diligence;o It extended the cases and conditions under which additional requirements with regards to customer due diligence are necessary;o It extended the situations in which it is allowed to apply simplified customer due diligence procedures. It set forth clear requirements with regards to the reporting obligations of the suspicious transactions, such as:o Protection of the persons reporting suspicious transactions; o The possibility of reporting transactions through professional associations; o The interdiction of information with regards to the reports transmitted to FIU, with some exceptions. It set forth rules with regards to monitoring and supervision of the customer, setting forth:o Different levels of supervision;o Enforcing sanctions in case of infringement of the obligations;o Liability of legal persons. It introduced the concept of politically exposed person and gave a definition of the actual beneficiary.

Politically exposed persons are understood to be persons entrusted currently or in the past with prominent public functions, their immediate family members or persons known to be close associates of such natural persons entrusted with prominent public functions, as follows: heads of State, heads of government, members of parliaments, European Commissioners, members of the government, counsellors of the president, state counsellors, secretaries of state; of constitutional courts, members of supreme courts or of other high-level judicial bodies whose decisions are not subject to further appeal, except in exceptional means of appeal; members of courts of auditors or of bodies similar to these, members of the boards of central banks; ambassadors, chargés d'affaires and high-ranking officers in the armed forces;



heads of public institutions and authorities; members of the administrative, management or supervisory bodies of national utility companies, state-owned enterprises and national companies.Actual beneficiary is any natural person that holds or controls in the end the customer and/or the natural person on whose behalf or interest a transaction or operation is carried out directly or indirectly. Thus the concept of “actual beneficiary” shall include at least the following:a) in case of companies: the natural person or persons that hold or control in the end a legal person by holding, directly or indirectly, the full package of shares or a sufficient number of shares or ballot rights to ensure them control, including bearer shares, the held or controlled legal person not being a company with shares traded on a regulated market and subject to publicity requirements in agreement with those regulated by the Community legislation, or with the standards set at international level. This criterion is considered to have been met in case of holding at least 25% plus one of the shares; the natural person or persons that exercise control over the administration or management bodies of a legal person in another way;b) in case of legal persons, other than those set forth at letter a) or other entities or legal constructions that manage and distribute funds: the natural person beneficiary of at least 25% of the assets of a legal person or of another entity or legal construction, in case the future beneficiaries have already been identified; the group of persons in whose main interest a legal person or entity or legal construction is set up, in case the natural persons that benefit from the legal person or from the legal entity have not yet been identified; the natural person or persons that exercise control over at least 25% of the assets of a legal person or a legal entity or construction.

We point out these two definitions as they brought about major changes in the fight against laundering and corruption, both in the law enforcement bodies and in the business environment or in the activity of the persons that carry out certain independent activities, such as lawyers, notaries public, auditors, tax advisors, etc., creating the possibility of customer due diligence and of documenting the performed transactions and operations, but for the enforcement of certain additional measures of prevention, enforced uniformly, in case the actual beneficiary of an operation is not disclosed.

c. Implementation of the International Conventions pertaining to the prevention and sanctioning of money laundering, financing of terrorism, enforcing seizure and forfeiture



A. International Conventions adopted under the auspices of the United Nations Organization

Law no. 565 of 16 October 2002, published in the Official Gazette no. 813 of 8 November 2002 for the ratification of the Convention of the United Nations Organization against transnational organized crime, of the Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children Protocol, in addition to the Convention of the United Nations Organization against transnational organized crime, as well as of the Protocol against the Smuggling of Migrants by Land, Sea and Air, in addition to the Convention of the United Nations Organization against transnational organized crime adopted in New York on the 15 th

of November 2000Law no. 365 of 15 September 2004, published in the Official Gazette, Part 1 no. 903 of 05/10/2004, entering into force: 05/10/2004 for the ratification of the Convention of the United Nations Organization against corruption of 09/12/2003

B. International Conventions adopted under the auspices of the European Council

Law no. 263 of 2002 published in the Official Gazette, Part 1 no. 353 of 28/05/2002, entering into force: 28/05/2002 for the ratification of the European Convention of 08/11/1990 with regards to the laundering, discovery, seizure and forfeiture of the results of the offense

Law no. 420 of 22 November 2006, published in the Official Gazette no. 968 of 4 December 2006 for the ratification of the Convention of the Council of Europe with regards to the laundering, discovery, seizure and forfeiture of the results of the offense and financing of terrorism, adopted in Warsaw on the 16th of May 2005.

Criminal Law Convention on Corruption, adopted by the Committee of Ministers of the Council of Europe in Strasbourg on the 27 th of January 1999, ratified by Romania by Law no. 27 of 16 January 2002 with regards to ratification of the Criminal Law Convention on Corruption, published in the Official Gazette no. 65 of 30 January 2002.

Civil Law Convention on Corruption, adopted by the Committee of Ministers of the Council of Europe on the 4th of November 1999, ratified by Romania by Law no. 147 of 1 April 2002 with regards to ratification of the Civil Law Convention on Corruption, adopted in Strasbourg on the 4th of November 1999, published in the Official Gazette no. 260 of 18 April 2002.

C. European regulations



Framework Decision 2003/577/JHA of 22 July 2003 of the Council on the execution in the European Union of orders of freezing property or evidence, by Law no. 302/2004 of 28/06/2004 with regards to international judicial cooperation in criminal matters, republished in the Official Gazette, Part 1 no. 377 of 31/05/2011

Framework Decision 2005/214/JHA of 24 February 2005 of the Council of Europe on the application of the principle of mutual recognition to financial penalties, by Law no. 302/2004 of 28/06/2004 with regards to international judicial cooperation in criminal matters, republished in the Official Gazette, Part 1 no. 377 of 31/05/2011

Framework Decision 2006/783/JHA of 6 October 2006 of the Council of Europe on the application of the principle of mutual recognition to decisions of forfeiture, by Law no. 302/2004 of 28/06/2004 with regards to international judicial cooperation in criminal matters, republished in the Official Gazette, Part 1 no. 377 of 31/05/2011

Framework Decision 2005/212/JHA on Confiscation of Crime-Related Proceeds, Instrumentalities and Property

Decision 2007/845/JHA of the Council of Europe 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, by Government Decision no. 32/2011

EEC Directive (91/308/EEC) on prevention of the use of the financial system for money laundering of 10/06/1991, by Law no. 21/1999 on preventing and sanctioning money laundering, published in the Official Gazette. no. 18 of 21 January 1999 (repealed according to art. 31 of Law no. 656 of 12.7.2002 on prevention and sanctioning of money laundering, published in the Official Gazette. No. 904 of 12.12.2002)

EC Directive amending Directive 91/308/EEC on prevention of the use of the financial system for money laundering of 4.12.2001, by Law no. 656/2002 on preventing and sanctioning money laundering, and to put in place measures to prevent and combat terrorist financing, published in Official Gazette no. 904 of December 12, 2002

EU Directive (2005/60/EC) on prevention of the use of the financial system for money laundering and terrorist financing, 26.10.2005, Government Emergency Ordinance no. 53/2008 amending and supplementing Law no. 656/2002 on preventing and sanctioning money laundering, and to put in place measures to prevent and combat



terrorist financing, published in Official Gazette no. 333 of 30.04.2008, as amended by Law no. 238/2011.

ROMANIA

a. The legislation with regards to prevention and sanctioning of money laundering, terrorist financing and international sanctions in Romania

• Law no. 656/07.12.2002 on prevention and sanction of money laundering was published in Official Gazette no. 904 of 12 December 2002 and later on amended and supplemented by several regulations with the aim to align it to the 3 rd Directive of the EU for the prevention of the use of the financial system for money laundering and terrorist financing, as well as for adopting in the domestic legislation the provisions of the implementing directive. • Government Decision no. 594/2008 with regards to the approval of the Rules of enforcing Law no. 656/2002 for preventing and sanctioning money laundering, and to put in place measures to prevent and combat terrorist financing, published in Official Gazette no. 444 of June 13, 2008.• Law no. 535/2004 with regards to prevention and combating terrorist financing;• Law no. 217/2009 for approving Government Emergency Ordinance no. 202/2008 with regards to enforcing international sanctions

b. Description of the Romanian system of preventing and combating money laundering and terrorist financing. The role of the National Office for Prevention and Control of Money Laundering – FIU in Romania

Financial Intelligence Unit in Romania, the National Office for Prevention and Control of Money Laundering was established in April 1999. It is an administrative entity, reporting to the Romanian Government and coordinated by the Chancery of the Prime Minister. The management of FIU is collective, provided by a panel of 7 members, representatives of the Ministry of Justice, the Prosecutor's Office attached to the High Court of Cassation and Justice, Ministry of Administration and Interior, Ministry of Public Finance, the National Bank of Romania, the Romanian Court of Accounts and the Romanian Banking Association. The FIU President is elected from the members of the panel.

Legislation applicable to the National Office for Prevention and Control of Money Laundering: • Government Decision no. 1599/ 4.12.2008 for approval of the Internal Regulations of the National Office for Prevention and Control of Money Laundering, published in Official Gazette no. 841 of 15/12/2008;



• Decision no. 674/17.06.2008 of the Plenary of the Office with regards to the form and contents of the Report of suspicious transactions with cash, in RON or foreign currency, the minimum limit of which is the RON equivalent of 15,000 Euros, regardless whether the transaction is carried out by one or more interrelated operations, and of the Report of international transfers to and from accounts, for amounts the minimum limit of which is the RON equivalent of 15,000 Euros, published in Official Gazette no. 451 of June 17, 2008; • Decision no. 496/11.07.2006 for the approval of the Norms with regards to the prevention and combating money laundering and terrorist financing, customer due diligence standards and internal auditing for the reporting entities that are not subject to prudential supervision of authorities, published in Official Gazette. 623/19.07.2006.

Duties of the National Office for Prevention and Control of Money Laundering

In performing their duties, the plenary of the National Office for Prevention and Control of Money Laundering adopts decision by vote of the majority of their members. Thus, from the main duties of the Office we list the following:• receive data and information from the reporting entities and the financial-control and supervisory authorities mentioned in the special law, with regards to the operations and transactions carried out in RON and/or foreign currency;• analyze and process the data and information received by law in order to identify the existence of serious indications of money laundering or terrorist financing;• requests from any competent institution to supply data and information necessary for the financial analysis, information that is processed and used within the Office as confidential;• issues, under the law, decisions to suspend the transactions that are suspicious to be intended to money laundering and/or terrorist financing;• notify the Prosecutor's Office attached to the High Court of Cassation and Justice in case is where there are serious indications of money laundering and financing of terrorism, and the Romanian Intelligence Service with regards to transactions suspected to finance terrorism;• notify without delay the competent authority in case it is found that there are serious indications of offenses other than those of money laundering or terrorist financing being committed;• drafts and updates lists of natural and legal persons suspected of committing or financing terrorist acts, which lists are sent to the Ministry of Public Finance, according to the provisions of the law in force;• performs controls and audits of the persons required to report to the Office with regards to way of enforcing the provisions of the law, together with the authorities in charge of financial audit and/or prudential supervision of the entities set



forth in art. 8 of the law; organize and conduct specialized training of their own staff and attend the special training programs of other institutions;• collaborate with the authorities or public or private institutions that can supply useful data for their area of activity;• responsible for the enforcement of international sanctions regime, consequent to entering into force of Law no. 217/2009 for the approval of Government Emergency Ordinance no. 202/2008 on the enforcement of international sanctions regime, taking into account their capacity of supervisor for those reporting entities that have no prudential supervisory authority, according to the special law.

The professional and banking secrecy is not enforceable to the National Office for Prevention and Control of Money Laundering.

Types of reports

In compliance with the provisions of the law, the Office receives from the reporting entities three types of reports:• Reports of suspicious transactions (RST),• Reports regarding the operations in cash, in RON or foreign currency, the minimum limit of which is the RON equivalent of 15,000 Euro,• Reports of international transfers to and from accounts, for amounts the minimum limit of which is the RON equivalent of 15,000 Euro.

Decision no. 674/29.05.2008 sets forth the form and contents of the above mentioned three types of reports.

Domestic and international cooperation

The main duties of the National Office for Prevention and Control of Money Laundering (NOPCML) regarding international cooperation refer to:• exchange of information, based on reciprocity, with foreign institutions that have similar functions;• draft, negotiate and conclude conventions, protocols, agreements with domestic institutions that have responsibilities in the field and with similar institutions abroad, under the law; may be a member of international professional bodies and participate in their activities.

At an international level NOPCML is a member of the Egmont Group since May 2000.

In compliance with the best practices, the Financial Information Units supply financial information, on the principle of reciprocity, under a standard Memorandum of



Understanding (MOU), which has been negotiated and concluded in 2004 between the Egmont members and the members of FIU.NET network, consequent to a PHARE Regional Project in 2003-2005, developed and implemented by the FIU.NET Office, located within the Dutch Ministry of Justice.

Since its establishment to this date NOPCML has concluded a total of 49 MOUs with institutions with similar duties from other states.

Statistical data5:

a. Suspending the transactions that are suspicious of money laundering

According to the NOPCML Report of activity in 2011 there were four cases in which the plenum of the institution decided to suspend outstanding transactions that were reported, the total amount for which this administrative measure was ordered reached a value of 5,102,128 Euro, measure of followed by the seizure of 98.2% of the amount frozen by the office by the competent prosecutor’s office.

b. The number of reports of transactions suspicious of money laundering and financing of terrorism

The total number of reports received by NOPCML in 2011 was 4,116.

c. Number of reports regarding cash transactions

In 2011 a total of 44,616 reports were recorded at NOPCML regarding operations in cash, a total of 5,639,158 operations, of which 4,377,983 were cash deposit operations, and also a number of 1,261,175 cash withdrawal operations. It is to be noted that from the total reports of cash transactions 33,611 reports were transmitted by notaries.

d. Number of reports regarding international transactions

The National Office for Prevention and Control of Money Laundering recorded 7,623 international transaction reports, representing a total of 1,728,748 operations regarding operations of amounts transferred in the country and amounts transferred out of the country from for various accounts.

5 The statistical data presented in this report is taken over from the NOPCML Report of activity published on the website of the institution http://www.onpcsb.ro/pdf/RAPORT%20FINAL%2007%20MARTIE%202012%20web.pdf



http://www.onpcsb.ro/pdf/RAPORT%20FINAL%2007%20MARTIE%202012%20web.pdf

http://www.onpcsb.ro/pdf/RAPORT%20FINAL%2007%20MARTIE%202012%20web.pdf

e. The activity of the Plenum In 2011 the Plenum of the Office debated a total number of 1,737 works, of which we note the following: transmission of a number of 207 notices to the Prosecutor’s Office by the High Court of Cassation and Justice with regards to serious indications of the offense of money laundering; transmission of a number of 6 notices to the Prosecutor’s Office by the High Court of Cassation and Justice and to the Romanian Intelligence Service with regards to serious indications of the offense of financing terrorism; transmission of a number of 257 replies to the requests for information of the criminal prosecution bodies; 98 notices of other competent bodies in solving acts that represent indications with regards to committing offenses other than money laundering or financing terrorism.

I. The offense of money laundering. Key elements of the domestic regulations with regards to money laundering and issues raised in the practice of the Romanian magistrates and criminal prosecution bodies.

I. Indictment(1) The following are considered as offense of money laundering and are punished with 3 to 12 years in prison:a) exchange or transfer of property, knowing that they are proceeds of offense, with the purpose of concealing or disguising the illicit origin of such property or with the aim to help the person who committed the offense the proceeds of which is said property to evade prosecution, trial or the execution of the sentence;b) concealing or disguising the true nature of the origin, location, disposition, movement or ownership or rights over such property, knowing that said property is the proceed of offense;c) acquisition, possession or use of property, knowing that such property is the proceed of committed offense.(5) Knowledge, intent or purpose as elements of the facts set forth in para. (1) may be inferred from objective factual circumstances.

Art. 23 letters a, b and c of Law no.656/2002 Ensures the autonomy of the offense of money laundering Previous or simultaneous conviction is not necessary for the offense of money laundering

Art. 23 par. 5 of Law no. 656/2002 No efforts are needed to prove the predicate offense itself



It suffices to represent the offender of the laundering in relation with the source of the money

Article 9 of the Warsaw Convention basically requires signatory states to ensure domestic rules for indicting the offense of money laundering by itself, independent of convictions obtained for predicate offenses.

The Romanian legislator, whose domestic will shall be identified in the law enforcement process, with the amendments introduced by Government Emergency Ordinance no. 53/2008 amending Law no. 656/2002, did not intervene to the text of art. 23 letters. a, b, or c, but it introduced additional provisions exactly in the sense of the provisions of the Convention.

These provisions were introduced under par. 5 of Art. 23, that is it made clarifications with regards to the possibility of arresting on the basis of indirect evidence of "knowledge, intent or purpose as an element of the facts set forth in par. 1 (can be inferred from objective factual circumstances, that is may be proven by circumstantial evidence).

So, the Romanian legislator considered that the text of art. 23, as it was written, satisfies the requirement imposed by the Convention to ensure the autonomy of the offense of money laundering, namely the fact that prior or simultaneous conviction for the predicate offense is not necessary.

Consequently, as a condition of the subjective nature of the offense, in terms of evidence concerns of the judicial officer called upon to interpret and enforce the law, as and par. 5 of Law no. 656/2002 also enhances, no efforts are needed to prove the predicate offense itself, it suffices to represent the offender of the laundering in relation with the source of the money, which can be carried out sufficiently also through indirect evidence (even more so if we have direct evidence too regarding the subjective side. What is to be proven it is proven).

The enforcement of the law is largely an effort to interpret the law and to determine the domestic will of the legislator. However, the foregoing unveil unequivocally this domestic will not condition the offense of money laundering (conviction for this offense) of the conviction for the predicate offense.

Taking into account these theoretical elements for identifying the legislator’s domestic will to convey efficiency to the indictment, in accordance with the international regulations adopted in the matter, we’ll see that in this case we find all the aspects that meet the exigency set forth by the legislator to enforce the criminal liability of the offenders of money laundering.



II. The autonomy of the offense of money laundering.

In analyzing this issue it is important not to confuse the syntagm "committing offenses" in the text of art. 23 of Law no. 656 2002 with that of "committing an offense" in the Criminal Code.

In other words, "all crimes approach" was integrated into the Romanian legislation so that the offense of money laundering can be retained simultaneously with any prerequisite offense.

Likewise, it is not necessary to prove the predicate offense itself, it suffices to represent the offender of money laundering with regards to the origin of the money, which can be done also through indirect evidence, a concept of common law.

The double nature of the offense of money laundering – offense of consequence and autonomous offense – explains the complex legal regime of the fight against the acts of laundering, in terms of the specificity of means of evidence used in its investigation6.

Finding by the judicial body of the constitutive elements of the offense generating dirty money is a necessary and sufficient condition. It is void of importance that the predicate offense was committed abroad, the circumstances of its commission have not been clarified, that the criminal prosecution has not been initiated or that a final sentence could not be issued because the offender has died, a clause to remove their guilt is applicable or they enjoy immunity.It is important that the judicial authorities in the countries where the acts of money laundering are indicted when committed with intent should know this interpretation, especially since in the practice of the Supreme Court some solutions that we consider illegal can be found7.

In the French doctrine it is considered that not even the acquittal by a final penal decision regarding the offender committing the main act generating dirty money should be an obstacle to criminal liability for the offense of money laundering,

6 Philippe Nérac, La répression de l’ infraction générale de de blanchiment, Actualité Juridique Pénale 2006, p. 440.7See High Court of Cassation and Justice, Criminal Section, Decision no. 5685/2005, published on www.scj.ro; High Court of Cassation and Justice, Criminal Section, Decision no. 3615 of 5 July 2007, published in Cassation Bulletin no. 2/2008, p. 59-61.



provided that the decision of acquittal has not been due to the lack of offense being committed or lack of criminal nature of such committed act8.

Regarding the principle of autonomy of the offense of money laundering, we consider that it ought to be observed by the Romanian courts, too, and even more so by the High Court of Cassation and Justice.

In an opinion9, erroneously, the Supreme Court noted that conviction for the act of money laundering could only be ruled in the hypothesis of simultaneously convicting for other offenses10.

We pointed out to the judicial authorities that Romania, having ratified the Warsaw Convention, is compelled to ensure that a previous or simultaneous conviction for a predicate offense is not a condition for a conviction for money laundering11 as the Courts have not always interpreted correctly the autonomous nature of the offense of money laundering12.

In order to comply with the requirements set forth by the provisions of art. 9 par. 3 letter b) of the Convention, Romania should have kept the solution from the Draft amending and supplementing Law no. 656/2002 on prevention and sanctioning of money laundering, as well as for putting in place measures for the prevention and combating the financing of terrorist acts, with subsequent amendments and supplements, and to indict the acts of money laundering also when committed by fault as negligence, especially since MONEYVAL experts pointed out these aspects to our country both during the second round of evaluations, and during the third round of evaluations13.

8 Jérôme Lasserre Capdeville, La lutte contre le blanchiment d’argent, Ed. L’Harmattan, Paris, 2006, p. 50.9 Camelia Bogdan, her book about money laundering10 High Court of Cassation and Justice, Criminal Section, Decision no. 5685/2005, published on www.scj.ro11 See art. 9 par. 5 of the Warsaw Convention of the Council of Europe of 16/05/2005 with regards to laundering, discovery, seizure and forfeiture of the proceeds of offense and financing terrorism, according to which each party shall make sure that a previous or simultaneous conviction for a predicate offense is not a condition for conviction for money laundering.12 See High Court of Cassation and Justice, Criminal Section, Decision no. 5685/2005, published on www.scj.ro.13 See the Executive Summary of the Third Round Detailed Assessment Report on Romania Anti-Money Laundering and Combating the Financing of Terrorism, available on the website www.coe.int/t/dghl/monitoring/moneyval/Evaluations/round3/MONEYVAL(2008)06Su



In order to prove the element of guilt in the latter case, the judicial authorities must prove that the money launderer had to assume that the goods originate from crime and hence the constitutive contents of such offenses has to be proven14.

Although currently we cannot ignore the Decision no. 799 of 17 June 2011 on the Draft law to amend the Constitution, published in the "Official Gazette", Part I, no. 440 of 23.06.2011, the Constitutional Court found that “removing the second sentence of art. par. 44. (8) of the Constitution, according to which ‘Legality of acquirement shall be presumed’ is unconstitutional, because it has the effect of suppressing the guarantee of property rights, in violation of the limits of review set forth in art. 152. (2) of the Constitution, for sure, the life-long training of magistrates in criminal business law, and their thorough qualification could eradicate returns to the Prosecutor’s for a new prosecution and could enhance litigants’ feeling of confidence in the administration of justice.

Judicial practice:

The relevant jurisprudence, High Court of Cassation and Justice, Criminal Decision no. 1020/16.03.2011: The Court considers as unfounded the request for acquittal under art. 11 point 2. reported to art. 10 letter d of the Criminal Procedure Code for the offense of money laundering (cassation case set forth by art. 12 of art. 3859), because the defendant didn’t know that the money of defendant Migdal was the proceed of offense. The defense that the defendant did not know the origin of the money cannot be accepted, since he also took part in committing such offense, and his life experience would not have entitled him to believe that a person who can afford to buy a Jeep Cherokee car would rather register the car on another person’s name, just because in Ilfov County, where that person resides, registration fees are very low.

III. Can the active subject of the offense of money laundering be considered the perpetrator of the predicate offense?

Traditionally, the opinions expressed in the doctrine and the jurisprudence converge in the sense that, given the valences of the non bis in idem principle, the perpetrator and receiver of stolen goods must be different persons.

mm-ROM3_en.pdf, p. 3.14 Council of Europe, Explanatory Report to the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism, published on the website http://conventions.coe.int/Treaty/EN/Reports/Html/198.htm, p. 7.



As far as we are concerned, we consider that the possibility of noting simultaneously the offenses generating dirty money and the offense of money laundering must be considered on a case by case basis, observing the rules of strict interpretation of the criminal law.

The legislator itself nuanced the impossibility to note simultaneously the offense of money laundering and the offence from which originate the proceeds set forth in art. 23 par. 1 letter a. the second sentence of Law no. 656/2002. The normative version of art. 23 par. 1 letter. c of Law no. 656/2002 violates the principle of non bis in idem by retaining in ideal simultaneity the offense of money laundering and the offense from which the money subject to laundering results when the author of money laundering acquires assets originating from the offense of money laundering, if the acquisition of such property is not followed by a subsequent act aiming to disguise the illicit goods.Any natural person that meets the general conditions of criminal liability can be the active subject of the offense of money laundering; no special quality is required. A legal person can also be the active subject of the offense set forth in art. 23 of Law no. 656/2002 provided that the conditions with regards to the criminal liability of said legal person are met.

IV. Is a prior conviction for a predicate offense necessary for noting the offense of money laundering?

The double nature of the offense of money laundering – offense by consequence and autonomous offense – explains the complex legal regime of the fight against the acts of laundering.

The findings of the judicial body with regards to the constitutive elements of the offense generating dirty money are a necessary and sufficient condition.

The fact that the predicate offense was committed abroad is void of importance, that the circumstances of its commission have not been clarified, that the criminal prosecution was not started or no final sentence could be ruled, a case of removing the offender’s guilt is in force or that they enjoy immunity. Not even the acquittal by a final decision of the offender of the main act generating dirty money should be an impediment to criminal liability for the offense of money laundering, provided that the acquittal decision was not due to the lack of act or lack of criminal nature of such act.

The requirement that the laundered goods are the proceeds of an offense set forth by the incriminating text could hardly be considered as satisfactory. The legislator should have referred to goods resulting from an act set forth by the criminal law.



c. The investigation techniques

The Romanian Law on preventing and sanctioning money laundering contains provisions regarding the investigation techniques that can be used by the prosecution in order to gather evidence or to identify the perpetrator. Thus, art. 27 of the Law sets forth that the following special measures may be ordered, complemented with the provisions of the Code of Criminal Procedure: surveillance of bank accounts and accounts considered as such; surveillance, interception or recording of communications; access to IT systems; supervised delivery of cash. Similarly, in case there are serious and concrete indications that the offense of money laundering has been committed or the offense of money laundering or financing of terrorism is about to be committed, that cannot be identified or the perpetrators of which cannot be identified by other means, undercover agents may be used under the conditions set forth by the Code of Criminal Procedure for the purpose of gathering intelligence regarding the existence of the offense and identification of the perpetrators.

FRANCE

The fight against money laundering: the different indictments in the French law

There is a difference between the stricto senso offense of laundering (A) and the indictment introduced by the French law to fight proximity laundering: failure to justify resources (B).

A – money laundering offenses

1. General indictment of money laundering

a. Definition of the general indictment

Article 324 – 1 of the Criminal Law, of the Law adopted on 13 May 1996 sets forth the following: „Money laundering means the facilitation, by any means, of the deceitful justification of the origin of property or revenues of the perpetrator of a serious crime or of an offense that induced said perpetrator direct or indirect gain”"The contribution to a placement, dissimulation or exchange operation of the direct or indirect proceed of an offense is also money laundering”Three notes are necessary: First of all, the French law chose the general nature, without limiting the



number of predicate offenses and without setting a threshold: all the crimes and offenses are included here, which allows the prosecution of money laundering resulting from any offense set forth in the Criminal Code or other such norms, inclusively; for the sake of example, financing of terrorism or tax fraude15. Given the fact that the money is the result of drug dealing, the Criminal Code sets forth a specific indictment (cf. infra); Additionally, the notions used in 324-1 of the Criminal Code are too evasive to avoid certain enforcement issues. Thus, regarding at the same time „the deceitful justification of the origin of the property or revenue of the perpetrator of an offense or illegal act” and the „placement, disguise or exchange of the direct or indirect of a serious crime or offense", the offense of money laundering does not make any difference depending on the nature of the laundered goods between the concept of goods, revenue and proceeds, these being taken in the broad sense. However, the Court of Cassation has never chosen to restrict, in any way, the notions of property, revenues or proceeds, regardless of their value: the notion of "property" is understood in a broad sense and accounts for the purposes the December 19, 1998 Vienna Convention all types of goods "actual or abstract, movable or immovable, tangible or intangible." Also, the term "revenue" is interpreted broadly to encompass everything that can be perceived, without any idea of profit. Finally, we have to emphasize the fact that the two paragraphs of art. 324-1 of the Criminal Code do not set forth two different offenses, only two ways of money laundering, regarding different material elements: Par. 1 is broader: it represses the facilitation of the deceitful justification of property or revenue. This covers the concept of aid or assistance, that has to be interpreted in a broad sense because facilitation can be performed by any means. Yet the act of facilitation must be positive and not a simple omission or refrain. In this case the perpetrator can only be sanctioned criminally by virtue of a provision that sanctions lack of action.The notions of “deceitful justification” are represented by, for example, the use of false documents, false acknowledgement of debts, fictitious bank documents, false testimony, certificate of compliance, etc.We have to note that the text does not require to prove a link between the predicate offense and the property or revenue referred to in facilitating deceitful justification: from the moment the perpetrator of the main offense holds the property or the revenue for which the deceitful justification has been facilitated, the material element of money laundering has been constituted without the need to prove that the

15 These are only examples: in France any ‘profitable’ offense can be a predicate offense of money laundering. Take for example Paris, 9e ch., sect. B, 11 May 2006 (the so-called du Fondo case): the conviction of a leader of money laundering coming from the illegal financing of a political party.



proceeds of said offense have financed or is financing the prior or has fuelled or is fuelling the latter16;Par. 2 is more specific as it incriminates the contribution to the placement, concealment or exchange of the proceeds of the main indictment, which is equal to aid, assistance or support of an act through another one, or to co-participation at an act.The contribution to the placement, concealment and exchange of property corresponds to the various ways of committing the acts that are integrated into a money laundering system. In this case the act of money laundering may refer to any of said operations.The drawback of this paragraph is that, unlike par. 1, it requires to prove that the operation of placement, concealment or exchange refers to the proceeds of the predicate offense.

b. Sanction of the general indictment

For the simple offense itself, according to art. 324-1 of the Criminal Code, the applicable punishments are five years in prison and a fine of 375,000 €.

In case of aggravating circumstances (committing as a routine or pursuing a profession, or committing in an organized group) the applicable punishments are ten years in prison and a fine of 750,000 € (art. 324-2 of the Criminal Code).

When the serious crime or offense from which the laundered money results is punished by deprivation of liberty for a longer period than that provided for by art. 324-1 and 324-2 of the Criminal Code, money laundering is punishable by punishments applicable to the predicate offense and in any case the fine can reach half of the amounts laundered (art. 324-3 of the Criminal Code)

Among the additional punishments set forth by art. 324-7 and the following, the most important is the forfeiture of the entire patrimony of the convicted, the interdiction to hold any public office or perform professional or social activity within which money laundering has been committed, interdiction of civic, civil or military rights, interdiction to leave the territory of the Republic for a period of five years the most, or interdiction to leave the French territory, either for good, or for a period of 10 years.

16 All authors interested in this tipic share the same idea. See for example, M. Culioli, JCl. Pénal, Art. 324-1 of 324-9, fasc. 20, p. 9, n° 49 (the author speaks about a kind of basic presumption, for which tha countrary evidence is not accepted), and H. Robert, « Réflexions sur la nature de l’infraction de blanchiment d’argent »(Reflections on the nature of the offense of money laundering), JCP 2009, I, 146, spec. n° 10.



2. Special indictments of laundering

a. Laundering in relation with a terrorist enterprise

Definition – Money laundering is a terrorist act when it is committed intentionally in connection with an individual or collective enterprise that has the purpose to seriously disturb public order through intimidation or terror (art. 421-1-6 of the Criminal Code).

Sanction - Money laundering in relation with a terrorist enterprise is punished by maximum 7 years in prison and a fine of 375,000 Euro (art. 421-3-6), such punishment being extended to 15 years in prison and a fine of 750,000 Euro when the money laundering has been committed as a routine or by using the benefits conveyed by a professional activity, or when it has been committed in an organized group (art. 421-3-4).

b) Laundering of drug dealing

Definition – the offense that derives from the offense of laundering the drug dealing is set forth in art. 222-38 of the Criminal Code, in the same terms as the general offense, it is defined in art. 222 -34 and 222-37 of the Criminal Code. The latter ones regard the offenses related to drug dealing: 1. on the one hand, the serious offenses (leading, organization of group aimed for illegal dealing, production or production);2. on the other hand, the offenses (import, export, transportation, possession, offering, cession, procurement or illegal use).

In this case the Courts have to establish the illegal nature of a serious offense connected to drug dealing. The proof that the suspect knew exactly the offense at the basis of the laundered funds is thus required, but such proof can of course, as in the case of the general offense, be given by the existence of objective factual circumstances (see infra).

Sanction – The applicable punishments for this offense are 10 years in prison and a fine of 750,000 €, with the remark that if the funds come from one of these offenses set forth in art. 222-34, 222-35 or 222- 36 par. 2, the punishments applicable for said offenses shall be applied to the perpetrator of the offense of laundering. In any case, the punishment by fine may be increased up to half of the value of the property or money obtained from laundering.

c) Customs laundering



Definition – This offense, set forth and punished according to art. 415 of the Customs Law, was harmonized with the general offense by the Law of 23 December 1998 so that the customs administration to be able to intervene in cases of money laundering resulting from any customs offense, when the facts take an international nature. The characterization of the offense supposes though that the perpetrator of the laundering would know the precise origin of the money.

Sanction – Customs laundering is punished by two to ten years of prison, forfeiture of the amounts, and a fine between the amount, or five times the amount alleged by the offense or attempted offense. Amongst the additional punishments set forth in art. 432 bis it the interdiction to undertake any industrial, commercial or independent profession or suspending the driver’s license.

B – The offense of failure to justify resources (“proximity laundering”)

1. Definition of the offense

In order to fight against the damages produced by the underground economy and what can be qualified as ‘proximity laundering’, the French legislator created in 1996 an offense of failure to justify the resources of drug dealing, set forth in art. 222-39-1 of the Criminal Code: inspired from the offense of procurement, the articles considered the consolidation of the repression against those that in their interaction with the dealers benefit from the money generated by drug dealing, without being directly involved.

This text actually incriminated the ‘act of not being able to justify the resources corresponding to the life style, being at the same time in connection with one or more persons that performed activities convicted according to this section [section IV of Drug Dealing], or with several persons that used drugs’.

The offense was extended progressively to other predicate offenses (association with criminal offenders in 2001, trafficking, exploitation of begging and terrorism in 2003, criminal extortion in 2004) before creating by the Law of 23 January 2006 a generic offense of failure of justification of resources.

Since 2006, art. 321-6 of the Criminal Code thus convicts: “the act of not being able to justify the resources corresponding to the life style, or not being able to justify the origin of the held property, being at the same time in regular relations with one or more persons that commit serious crimes or offenses punished by at least 5 years in prison and that generate them a direct or



indirect gain, or are the victims of one of these offenses”; “the act of facilitating the justification of fictitious resources of the persons that commit serious crimes or offenses punished by at least 5 years in prison and that generate them a direct or indirect gain”.

To these the specific indictments of failure to justify resources are added, out of which the 3 below:1. Failure to justify resources considered as pandering according to art. 225-6 of the Criminal Code;2. Failure to justify resources considered as exploitation of begging according to art. 225-12-5 of the Criminal Code;3. Failure to justify resources considered as in connection with a terrorist enterprise (art. 421-2-3 of the Criminal Code).

1 Characterization of the material element of the offense supposes the concurrence of two cumulative conditions.

a. The impossibility to justify the resources corresponding to life style or justify the origin of property

2 Jurisprudence in the field is limited. Studying the decisions of the Courts regarding to pandering allow emphasizing the fact that similarly to this last offense, the proof of the offense results from a “misbalanced” ratio between the declared resources on the one hand, and the life style of the interested party, on the other.

So, the simple proof of the gap between the declared resources and the life style is needed. In this framework both the analysis of the visible life standard of the suspect, and of their actual patrimony is essential for proving the gap from their officially declared revenue. Considering that this is a mere presumption, the defendant will be able to report the contrary evidence.

Yet the provided explanations have to be supported with documents and must be credible. Thus, in the case where the Criminal Section gave a decision on 24 May 2006, one of the defendants, though unemployed, yet the holder of bank accounts with substantial creditor balances, sustained that they are the holder of an inheritance from Algeria. The Criminal Section approved the decision of the Grenoble Appeals Court of 22 September 2005, according to which the “the defendant’s explanation that the amount of money had been transferred as inheritance from his father deceased in Algeria ... [was] inoperable as long as the defendant could not show any justifying document with regards to the inheritance, except for the amount of money wired from Algeria to France”.



We must signal the fact that the Criminal Section of the Court of Cassation considered that this was not the case of reversal of the burden of proof and it was not contrary to the provisions of art. 6 § 2 of the European Convention of Human Rights and Fundamental Freedoms, the act of deducing the culpability of the person in question based on art. 222-39-1 of the Criminal Code, under the conditions that said person would be unable to justify the resources corresponding to their life style (Decision of the Criminal Section of the Court of Cassation, 26 September 2001, no. 01-82.197).

If, as opposed to the Court of Cassation in the previously referred decision of 26 September 2001, the European Court of Human Rights and Constitutional Council did not have the opportunity to rule with regards to the compatibility of incriminating the failure to justify resources with the presumption of innocence, these two Courts still gave sentences in very similar cases:10. Thus, the European Court in Strasbourg issued two decisions regarding France, where the assumption of criminal liability of a company CEO was at stake.In these two decisions, issued in 1988 and 1992 (ECHR, 7 October 1988, Salabiaku c/ France and ECHR, 25 September 1992, Phom Hoang c/ France), the Court validated this presumption, with a very clear motivation, especially in the Salabiaku c/ France decision of 7 October 1988 decision: “Any legal system acknowledges actual and rightful presumptions”; the Convention does not impose any obvious impediment of principle, but in criminal cases it compels Contracting States not to exceed a certain threshold in this sense” (§ 17); “art. 6 § 2 that consecrates the presumption of innocence requests the States to include such presumptions within reasonable limits, considering the seriousness of stakes also for defending the rights of the defence.” (§ 28)11 The Constitutional Council, in a decision of 1999 also specified that the legislator could have set out the presumption of criminal liability from the moment when they consider the acts that allow them to set out such presumption of innocence, that this is not about an a irrefutable presumption, and that the rights of the defence are protected (Constitutional Council, DC 99-411 of 16 June 1999)

It is clear that the indictment of failure to justify the resources observes these provisions: only a simple presumption is enforced, based on specific facts (the gap between the life style and the declared resources; ongoing relations with offenders) and all these on behalf of keeping the public order and investigating the perpetrators of offenses (objective of constitutional value).

This simple presumption leaves it up to the defendant to prove the contrary, and all these in front of the Court, where obviously the rights of the defence and hearing are fully observed.



b) Existence of ongoing relations with one or more persons that commit serious crimes or offenses punished by at least five years in prison.

With regards to the relations, the person accused of failure to justify the resources is most times included in the circle of friends or family of the offenders.If jurisprudence that allows the characterization of the concept of ‘relations’ is limited, the study of the doctrine and the decisions given in similar cases, mainly pandering, allows the statement that except for living together, which is not set forth in the provisions of art. 321-6 of the Criminal Code, the nature of the direct or indirect relations can be limited to encounters, phone contact, visits or meetings (duly found).

But these relations have to be ongoing, i.e. with a sufficient frequency so that we may deduce that parties are in a close enough connection. Such connection can be established through physical surveillance or phone interception or by findings of the material acts (house call, residence of the bank accounts, etc.).

The proof of ongoing relations shall be additionally facilitated in the hypothesis of drug dealing or of offenses structured around a family, on condition that the linking elements exceed the strict framework of occasional family reunions.

As this is about persons in question, the plurality of offenders is not set forth by the text (“one or more”)17, which on the other hand requires, by the use of present tense, a simultaneity between the ongoing relations and the committing of the serious crimes and offenses. The fact that the text uses the expression ‘commit’ does not imply the conviction of said persons18.

2. Sanction

Failure to justify resources is punished according to art. 321-6 of the Criminal Code by:

17 It is to be noted that art. 222-39-1 of the Criminal Code makes the distinction between the persons that carried out the dealing (ongoing contact with one single person suffices) and users (the ongoing contact with several persons was necessary). This difference disappeared in 2006..18 According to the Decision no. 02-81.83 of 2 April 2003 of the Appeals Court, Criminal Section, previously referred to, (the concubine of a person ‘involved’ in drug dealing is convicted for failure to justify resources. Their appeal, whereby they stated as reasoning that “taking into account the presumption of innocence, in order to commit the offense it is not enough for the defendant to be in relation with a person ‘involved’ in drug dealing, but this latter person should have been previously convicted with a final decision for breaking the legislation with regards to drugs” was dismissed.



3 years in prison and a fine of 75,000 Euro; 5 years in prison and a fine of 150,000 Euro when the serious crimes and offenses are committed by a minor against under the authority of the person that cannot justify resources (art. 321-6-1 par. 1); 7 years in prison and a fine of 200,000 Euro when the serious crimes and offenses are trafficking, extortion, association of offenders and drug dealing (art. 321-6-1 par. 2) and 10 years when such serious crimes and offenses were committed by one or more minors (art. 321-6-1 par. 3); 7 years in prison and a fine of 100,000 Euro when the serious crimes and offenses are acts of terrorism according to the definition of art. 421-1 and 421-2-2 of the Criminal Code (art. 421-2-39 according to the Law of 18 March 2003).

Art. 321-10-1 of the Criminal Code sets forth as additional punishment that all or a part of the property of convicted natural persons be forfeited, regardless of the nature of such property, movable or immovable, divided or undivided, the origin of which they cannot justify (art. 321-10-1 par. 1) and that additional punishments can also be ruled for serious crimes and offenses committed by the person(s) with whom the perpetrator of such acts was in ongoing relation, which means that the forfeiture of the entire patrimony set forth in art. 121-31 of the Criminal Code is possible from the moment when it is set forth for the main offense (art. 321-10-1 par. 2, for example, certain offenses of breaking the law with regards to drugs and money laundering, offenses of terrorism, trafficking and procurement, etc.)II. – The requirements with regards to the offense of laundering

As of 1996, data of issuing the general offense of money laundering, countless jurisprudential decisions have been issued. A number of these decisions have been issued by the Criminal Section of the Court of Cassation. The general trend of jurisprudence is irrefutable: the Courts, approved by the Supreme Court, sanction more and more efficiently the offense of money laundering.

From a quantitative point of view the evolution is unquestionable:

2002 2003 2004 2005 2006 2007 2008 2009Simple laundering 47 61 64 110 98 142 134 165Aggravated laundering 13 16 23 38 37 51 67 61Customs laundering 12 14 18 9 25 11 24 22Total 72 91 105 156 160 204 225 248

From a quantitative point of the analysis of the jurisprudence of the recent years proves that the Tribunals, Appeals Courts and the Court of Cassation distance



themselves more and more from reference to concealment (which consists of insisting on the nature of offense by consequence of the laundering) in order to develop the consequences of the autonomous nature of the offense of laundering.

A. – Overcome difficulties due to the autonomous nature of money laundering

Naturally, laundering is and can only be an offense by consequence. By definition there is no money laundering without a predicate offense having been committed, that would allow for revenues to be obtained: it is clear that if there is no predicate offense, in other words if such an offense is not proven, there cannot be any conviction for laundering. This is the main difficulty of the offense, and we’ll return to it infra. The Court of Cassation stated that money laundering is not a less autonomous offense.

This autonomy stated by the Court of Cassation proves that the constitutive elements (material element and moral element) of laundering are of its own and separate from the predicate offense that generated profit. The Court drew several conclusions from this autonomy, in favour of prosecution. We may quote in this case two examples, and the other two will be studied infra.

1. The possibility of cumulating of qualities: See infra “4-Relevant case law

2. The possibility to prosecute laundering of tax fraud, including in the act, when the tax fraud is not prosecuted: See infra “4-Relevant case law

B. – Subsisting difficulties, under mitigation

In practice, be it money laundering or failure to justify resources, the two situations are treated distinctly, because they do not raise the same kinds of difficulties.1. The most simple situation: Prosecution of laundering or failure to justify resources at the same time with the predicate offense

The first case is when the prosecution starts from the predicate offenses (e.g. drug dealing) to go ‘downstream’ of these offenses, pursuing the gained funds, to the offense of laundering or failure to justify resources.

These are the most simple situations, because the predicate offense has already been established and prosecuted. In addition the existence of the material elements and intention of the offenses of laundering or failure to justify resources will have to be proven, which is possible, on condition that a thorough investigation of the patrimony is carried out, starting from as early in the investigation as possible.



With regards to the element of intent, this must obviously be proven, but the jurisprudence is relatively flexible both regarding laundering and failure to justify resources.

a) For laundering

When applying the general principle of the French criminal law, according to which “there is no serious crime or offense without the intention of committing it” (art. 121-3 par. 1 of the Criminal Code), and in addition with regards to laundering, when the indicted material act is in itself illicit, the offense is only constituted if the suspected person was aware of the fraudulent origin of the funds. In this case intent results from the awareness of the illicit origin of the funds and from the (sustained) will of the offender to make this transaction of the funds, despite everything19.

This means that the perpetrator of the offense of laundering acted in awareness of the material aspects of the situation and of the criminal act.

Thus it suffices that the prosecuted person was aware of: either that the person for whom they have facilitated deceitful justification with regards to the origin of property or revenue have committed a serious crime or offense that made them direct or indirect profit (art. 324 - 1 par. 1 of the Criminal Code); or that the property placed, concealed or converted with their assistance comes from a serious crime or offense (art. 324 - 1 par. 2 of the Criminal Code).

Thus, under the terms of the ministerial letter of 10 June 1996, mere knowledge of the fraudulent nature of the amount is sufficient to establish the element of intent. It is not necessary that the offender of laundering know the exact nature, the circumstances of time, place, and even the identity of the person, the victim or the

19 This need was reminded by the Ministry of Justice in the parliamentary debates for the ballot with regards to the Law of 13 May 1996: “The Prosecutor’s Office will have to establish whether the laundered funds are the proceeds of serious crime or offense ... and to prove that the offender of the money laundering knew that the funds are the proceeds of offense. In order to be general, the offense of laundering as proposed for definition is still intentional ... the offense of laundering is not objective, but intentional: it must have been committed in awareness in order to constitute said offense”: (JO Debates AN, 13 February 1996 Meeting, p. 806 and 807). In this requirement the 10 June 1996 Circular regarding enforcement is also included (“the offense of money laundering, as defined henceforth, and that remains an intentional offense, and the Prosecutor’s Office is the one that has to prove that the offender knew that the funds were the proceeds of serious crime or offense”).



offender of the main offense, as noted by Criminal Section in the decision of December 3, 200320.

The 3 December 2003 Decision of the Criminal Section of the Court of Cassation

In the case that lead to this decision a person called on a financial consultant with two million francs in cash, in a brief case. He explained to the expert that the amount came from customs and tax fraud, and he wanted to convert it to anonymous shares at a Swiss or Luxembourg bank, which did happen with the assistance of the financial consultant. The latter filed a statement of suspicion with Tracfin. Eventually it was proven that the two million didn’t come from customs fraud, but from re-sale of hardware coming from theft committed some months earlier.

The Grenoble Appeals Court, through the Decision of 11 January 2001, convicts the client (to one year probation and a fine of 30,000 Euro; it is not known why the offense of aggravated money laundering was not convicted) as accessory to theft and fencing and the financial consultant for money laundering.

At the appeal the financial consultant argued that on the one hand he wasn’t criminally liable because he had made a statement of suspicion, and on the other hand he could not be convicted for laundering as the Appeals Court could not establish the existence of the main offense, at least to what he knew, that of customs and tax fraude.

In the 3 December 2003 Decision the Criminal Section dismissed the appeal. First of all they reminded that the principle of exoneration from criminal liability of the latter is not valid in case of their concerted fraudulent action with the owner of the money, found in a supreme manner by the first instance, as the case was about computer theft. Thus, the offense of money laundering was constituted: the financial consultant had contributed to an operation of conversion of the proceeds of thefts committed previously, and the actions showed that the latter was not aware that the origin of the funds was illicit, even if he erroneously had thought the money came from tax and customs fraud.

As Mrs. Cutajar points out in her comment, “the requirement that the 20 Decizia Curţii de Apel, Secţia Penală., 3 decembrie 2003, n° 02-84.646 ; Bull. crim. 2003, n° 234 ; JCP ed. G 2004, II, 10066, note Ch. Cutajar.



perpetrator of the money laundering to know the main offense would generate insurmountable difficulties in proving the moral element of the offense of laundering, the perpetrators of the offense of money laundering being very rarely informed of the exact origin of the funds. Additionally, this requirement would paralyze the indictment regarding money laundering, the effectiveness of which is already reduces due to the requirement that the Public Ministry to prove the existence of the main offense. In reality, ratio legis commands that the moral element of the general offense of money laundering be circusmcribed, that is, the offender knowing that the laundered goods come from offense or crime, without the need to prove which of the serious crimes or specific offenses are at the origin of such property.”

The proof of awareness of the illicit origin of the funds may be reported by any means, including through the testimony or attachment of a set of clues or assumptions drawn from the actual circumstances (disproportionate pay compared to the provided service, unusual or simply an act derogatory conditions of an act, excessive opacity or unusual complexity of the operation, etc.) that may be so self-evident that it can be deduced that the perpetrator of the act of laundering must have known the illicit origin of the recycled property21.

We must add that the precise knowledge of the predicate offense still remains necessary when the prosecution refers to aggravated laundering according to art. 324-4 of the Criminal Code (“when the serious crime or offense the property subject to laundering results from is punished with deprivation of freedom for a longer period than the applicable imprisonment when enforcing art. 324-1 or 324-2, the laundering is punished with punishment for the offence the perpetrator of which was aware, and in case the offense is accompanied by aggravating circumstances with punishments with regards to the circumstances said offender was aware of”), or the laundering of the proceeds of drug dealing set forth in art. 222-38 of the Criminal Code (special mala fide).

The aggravated offense is not actually constituted unless the offender was aware of 21 We find here the method forecast by the international texts, and especially by art. 6 § 2 of the Strasbourg Convention of 8 November 1990 with regards to laundering, detecting and to seizure and forfeiture of the proceeds of the offense (“Awareness, intent or motivation required as elements of one of the offenses listed in this paragraph may be deduced from the objective factual circumstances”), and by art. 1 § 5 of Directive 2005/60/EC of 26 October 2005 (the 3 rd Directive against money laundering), that recommends repressive jurisdictions to look for the guilty intent in the “objective factual circumstances.”



the aggravating factor set forth by the text.

b) For failure to justify resources

The intentional element of the offense of failure to justify resources does not raise any special issue as it is only constituted out of the single general mala fide, characterized by the awareness of fraudulent use of the funds.

However, the Court of Cassation, applying classical jurisprudence to this offense, which shows that the only finding with regards to the violation of a legal provision in awareness supposes on behalf of the offender the culpable intent according to art. 121-3 par. 1 of the Criminal Code22, considered in a case of applying art. 222-39-1 that the defendants that had been declared guilty of failure to justify resources corresponding to their life style, being at the same time in ongoing relations with drug dealers, it resulted that, “it is impossible that they were unaware of the fraudulent use of the funds that had fuelled their life style”.23

22 Decision of the Appeals Court, Criminal Section, 25 May 1994, two decisions, no. 93-85.158 and no. 93-85.205.23 Decision of the Appeals Court, Criminal Section, 5 December 2001, no. 00-80.027 and no. 00-87.546: “Not being able to justify the resources corresponding to their life style, and being at the same time in ongoing relations with one or more persons that carried out illicit operations with drugs, it clearly results that it is impossible that they were unaware of the fraudulent use of the funds that had fuelled their life style.” See also Agen, 21 February 2002, the case of the drug dealer’s concubine that claimed that she had never wondered with regards to the origin of the money she was supplied with. (“Given the fact that the moral element of the offense is also characterized, since it is impossible that she hadn’t realized the origin of the funds available to her concubine, funds she had benefitted from; that she had claimed that she had never asked any questions regarding the origin of such funds, thinking that it may come from the care sale activity Jacques B had told her he would carry out; but considering that Jacques B. was unemployed, and according to her own testimony she hadn’t even known the alleged workplace or the exact nature of his sales activity, and it was very peculiar that she had never asked him any questions, though they had been together for 6 years; given the fact that she had known of his past imprisonment, and knew that although he had significant resources available, he kept receiving unemployment benefit; and also that this simple finding might have alerted her, and it was not credible that she might have seen large amounts of cash available to her concubine, without wondering of the origin of such cash; given the fact that it is thus clear that she had clearly been aware of Jacques B.’s fraudulent activity; given the fact that she is guilty of the facts accused of...”). The appeal against this decision was dismissed by the Criminal Section on 2 April 2003 (no. 02-81-838).



The Criminal Section considers that there is explicitly a simple presumption of intent for this offense. Thus, from the simple finding of the material element of the offense the presence of its element of intent is thus deduced24.

2. The most complex situation: prosecution of laundering or of failure to justify resources when the predicate offense has not been prosecuted

This is about the most difficult cases: as opposed to the previous case, we are trying to ‘identify’ in the acts suspected of money laundering the initial offense, which has neither been convicted or prosecuted so far: well, the existence of such offense will have to be proven in order to get conviction for money laundering.

Fortunately, the law was also relaxed here, as we have also seen above for the laundering of tax fraud: of course, it continues to require proof of the predicate offense, but it does not matter whether the perpetrator of the predicate offense was actually punished.

Indeed, the principle of the autonomy of the offense of money laundering shows that art. 324 -1 does not impose a conviction to have been pronounced against the perpetrator of the predicate offense, nor that any previous prosecution had been started against them. Similarly, it does not matter that the perpetrator of the predicate offense is still unknown, or has fled or deceased to benefits from family or personal non-liability immunity: either way, laundering can be prosecuted and punished.As the Criminal Section also noted in their Decision of 25 June 200325, it suffices that the existence of the serious crime or offense is irrefutable and that its constitutive elements are characterized by the motivation of the Court in the case of money laundering. The Correctional Court of Appeal of Aix-en-Provence has recently reiterated this need26.

This requirement, though more relaxed, represents often times a major difficulty in the case in question, for the characterization of the laundering, and even more so if the investigated predicate offense has occurred abroad, when international cooperation of both police and the judiciary having an essential role to play.

24 Crim., 14 January 2009, no. 08-83.972.25 Decision of the Appeals Court, Criminal Section, 25 June 2003, no. 02-86.182: with laundering “the constitutive elements of a serious crime or predicate offense must be shown, that has brought to its perpetrator a direct or indirect gain” (Rev. sc. crim. 2004, p. 351, chron. R. Ottenhof ; Dr. pén. 2003, comm. 142, obs. M. Véron ; Gaz. Pal. 2004, 1, Doctr., p. 790, obs. C. Ducouloux-Favard).26 Aix-en-Provence, 28 March 2007 : “The Court has the task to show accurately the constitutive elements of the predicate offense that brought [the offender] the disputed amounts”. (JurisData no. 2007-337276).



In these cases we should not hesitate to use the offenses close to money laundering, but easier to prove. One can of course think of concealment, but also of the indictment of the illegal practice of the profession of banker according to art. L. 571-3 of the Monetary and Financial Code (offense punishable by three years imprisonment and a 375,000 Euro fine).

SPAIN

SPANISH REGULATION

In Spain, the Criminal Code eludes the term “laundering” . However it does appear in Law 10/2010, dated April 28th, on Prevention of Money Laundering and Terrorism, which, in its article 1.2 says that, “ in terms of the present law, the following will be understood by money laundering: a) The transformation or transfer of the goods, knowing that they derive from a criminal activity or from the participation to a criminal activity, with the purpose of concealing or disguising their illegal origin, or with the aim of helping the people involved in such activities to elude the juridical consequences of their acts.b) The concealing or disguising the nature, origin, location, disposition, movement or real ownership of the goods or rights over the goods, knowing that the respective goods derive from a criminal activity or from the participation to a criminal activity.c) The acquisition, possession or usage of the goods, knowing at the moment of receiving them that they derive from a criminal activity or from the participation to a criminal activity.d) The participation to any of the above mentioned activities, the association to carrying out this type of acts, the attempts to perpetrate them as well as the helping, instigating and urging someone to carry them out or facilitating their execution”..

BASIC CRIME DESCRIPTION:

It is regulated in art. 301 under the Criminal Code and it show an extreme parallelism to the Law: He who should acquire, posses, use, transform or transmit the goods knowing that they are derived from a criminal activity, committed by him or a third person, or carry out any other act meant to conceal or hide their illegal origin or to help individuals who have participated to a crime elude the legal consequences derived from their acts, will be punished by detention penalty between six months and six years, and fined from simple to the triple of the goods’ value. In such cases judges or courts, according to the seriousness of the deed and to the offenders’ personal circumstances , will have the option of imposing a penalty consisting in the offender’s



disqualification for practising their profession between one to three years, and also they may decide the temporary or permanent closure of the premises. If the closure were temporary, it cannot exceed five years.

The penalty will be imposed at its upper level when the goods have their origin in crimes derived from trafficking toxic drugs, narcotic drugs or psychotropic substances as described in articles 368 to 372 under this Code. In these cases the dispositions of article 374 under the present Code will be applied. This penalty will also be imposed when the goods have their origin in some of the crimes envisaged in chapters V,VI, VII, VIII, IX and X of title XIX or in crimes envisaged in some crimes of chapter I of Title XVI. (Bribery, influence peddling, embezzlement, illegal taxation, negotiation forbidden to civil servant, crimes against territory planning.)

2. The same penalties, according to each case, will be applied to the concealing or hiding of the true nature, origin, location, destination, movement of the goods, right or ownership over them, knowing that they derive from one of the crimes described in the previous paragraph or from the act of participation in them.3. If the deeds were perpetrated by serious negligence, the penalty will consist of detention from six months to two years and fine from simple to the triple.4. The defendant will be equally punished, even when the crime that originated the goods, or the acts incriminated in the previous paragraphs had been committed total or partially abroad.5. If the defendant had achieved any gains, they will be seized according to the rules of article 127 under this Code.

Subjects:

Active subject:

The money laundering crime is a common type of offence that anyone can carry out ("the one who..."), and yet the legislator has not established any conditions capable of modifying the width of this clause. Nevertheless, discussions did arise from the question whether the perpetrator or participant into a predicate crime is to be held responsible for the laundering of the goods their crime has originated.Other Codes have attempted to solve this problem, in the majority of cases by excluding the predicate crime perpetrators or accomplices from the scope of the active subjects; this is the case in Germany, Austria, Belgium, Colombia, Italy and Sweden, among others. However, there are states that specifically include the above mentioned in the scope of the active subjects as far as subsequent money laundering is concerned, this being the case in the US. In Switzerland, for instance, the situation is similar to the one regulated under our legislation.



In Spain, the Law 10/2010, dated April 28th, clearly stipulates, in its article 1.2 that: “It is still money laundering if those people carrying out the actions described at the previous letters are the same as those who committed the criminal activity that generated the goods”.

The Supreme Court Sentence (in what follows referred to as SCS) dated January 10th 2000 (RJ 2000\433) imposes an eight year prison sentence on the leader of an organization that laundered money obtained from drug trafficking, even if the same defendant had already been sentenced to twenty three years in prison for a drug trafficking crime pronounced in a previous trial.

In this sentence The Supreme Court argues that there is no exact temporal coincidence between the facts serving as base for the two sentences, because the money laundering network starts at the beginning of 1992 and the continuous crime against public health that makes the object of the sentence is carried out between 1989 and 1998.

We find the following reasoning in the sentence we are analyzing especially worth mentioning: “In order for the identity thesis postulated by the appellant to be accepted, there should be a complete identity between the authorship of the main crime – the selling of drugs- and the money laundering derived from it. In such cases we could say that it’s impossible to autonomously penalize the person who has been previously punished for the initial crime, sense in which we may quote art. 6 paragraph 1, letter b/ under the Convention on Money Laundering, monitoring, seizure and forfeiture of the proceeds of crime, drawn in Strasbourg, in 1990 November 8th 1990 –Official State Journal dated 1998 October 21st-.”

In this sense, the SCS dated September 18th 2001 also mentions the self laundering, exempt from punishment when the facts are exactly the same: “The question can only be raised when the perpetrator of the crime mentioned in articles 368 and the following is being charged, besides, with another money laundering crime whose object are the benefits derived from the previous crime, not when they are derived from another drug trafficking activity, different from the one that was sentenced.The only thing that can raise compatibility or «non bis in idem» issues is the sentencing for these two crimes on the person that only committed the drug trafficking crime and is laundering the money derived from it. Under such circumstances we could deal with a case of self concealment, exempt from punishment. But obviously this is not what happened in the case we are analyzing: in this case neither Mehmet nor Manuel got any benefit out of the illegal goods that were seized by the police”.



However, The Supreme Court has gone even further in some sentences it issued and admitted self laundering in cases of fact coincidence, for affecting different juridical goods.In this sense, The SCS dated February 24th 2005 argues that: “According to the appellant, «apart from the need for the defendant to know that the goods derive from a serious crime(...), it is necessary that the acts be perpetrated with intent », and, to this purpose, the question arising is ¿ with what intent did they buy the boat: laundering money or transporting drugs?; by stating, afterwards, that «the boat was never bought with the intent of giving a legal appearance to money that was illegally obtained ». «Should this “money laundering” conviction be confirmed –says the appellant–, we might run into the paradox of having convicted for two crimes, one referring to the money laundering, for placing the goods on their name knowing that they derive from drug trafficking and the other referring to a crime against public health, as their craft loaded with drugs appeared on a Granada beach ».This reason, undoubtedly, cannot be accepted. In this case we can deem the concurrence of the crime description elements is proved through indirect evidence. The indirect evidence is valid as in it there are all the elements that, according to jurisprudence, are necessary to destroy the accused’ presumption of innocence. And, in the case of the intention element, that is because the crime description applied (in art. 301.1, point one under the Criminal Code) what should be appraised is the behaviour of these who acquire goods «knowing that they are derived from a serious crime» (as, undoubtedly, is the case of drug trafficking), circumstance that concurs in the present case: the accused, in this case appellant, acquired a vessel and a trailer (undoubted fact), knowing that they had been paid with money derived from an organization who is in the drug trafficking business, as it can be inferred based on the following clues: their lack of economic means likely to allow him to acquire such goods –taking into consideration the fact that they were very expensive to buy (almost ten million pesetas) and to use–, the lack of a permit allowing him to operate them and his accredited connexion with the drugs environment (the vessel appeared stuck in the mud on a Granada beach together with eleven hashish bales, of an approximate four hundred kilos, and the same beach was used by other vessel owners known to be in touch with the drug trafficking environment). Therefore it is not necessary, in this crime description to have any other subjective element, both because the literal application of the precept makes it unnecessary and also because of the unquestionable fact that the Criminal Code admits the possibility of this crime being committed by imprudence, which is incompatible with the above mentioned requirement (see art. 301.3 CC).Consequently, there is no legal obstacle in the way of convicting the defendant for a money laundering crime and, at the same time for their participation in one or several money laundering activities, as they are different types of criminal offence and different protected juridical goods”.



Similarly, The Agreement undertaken by the non jurisdictional Plenary of the Second Panel within the Spanish Supreme Court ( Criminal Panel) , dated July 18 th 2006 ( JUR 2006\194934) , says that: "Art. 301 in the Criminal Code does not exclude in any case, the real concurrence with the predicate crime ".

Finally, the modification introduced by Act 5/2010, that have come into force in December 23th 2010 envisages that:” The one who should purchase, hold, transform or transmit goods, knowing that they derive from a criminal activity, committed by himself or by any other third party …”The “neutral consumer acts”: According to this theory, we should exclude from the money laundering categorization scope behaviours such as the mere enjoying the illicit benefit or its mere transformation into consumer goods that perpetrators or participants to a predicate crime might directly benefit from, given that under such circumstances the juridical interest- the loyal market competition- will not be endangered. Instead we shall apply a real concurrence between the predicate crime and the money laundering proper when the illicit gain is used as a base for an investment or commercial activity. Thus, the purchase of a sports car for the drug dealer to enjoy it does not qualify as money laundering, while if it is purchased with the aim of selling it abroad afterwards, so as to justify a wealth increase actually derived from criminal activities, that would definitely qualify as money laundering. In this sense, the Sentence issued by the Spanish Supreme Court dated 2007 October 1st states that the wife who enjoys the money and the various effects her husband brings into their home will not qualify as guilty of money laundering, although she knows those goods are obtained following inhabited house robberies. Nor will she be considered an accomplice if the stolen money will be used for paying the rent to a common place. [Sentence related to the concealment of stolen goods].

But the new tipification that has come into force in December 23th especially has introduced as punishable fact the mere use and possession of the assets, so thereafter is quite polemic to maintain the neutral consumer theory, since the moment the mere possession may be laundering.

Passive Subject: Taking about money laundering the State is the passive subject, as it is the owner of the juridical interest affected by this crime, the free competition. Obviously, we face a situation in which important socioeconomic factors are at stake, and it is ultimately up to the state to regulate it.

Material Object:



The material object associated to the basic money laundering is made up of crime derived goods. We are now going to better define these terms, by enlarging upon concepts such as "crime" and "goods", as well as the string "crime derived ".

The concept of «goods»:

As far as the various international documents are concerned the common denominator resides in the will to broaden the concept of the money laundering material object so as not to confine the diversity of things and rights which, having been through a process of subsequent transformations, are finally understood as the complex money laundering process. Thus, art. 1.q/ under the Vienna Convention defines the term “goods” as: “assets of every kind, whether corporeal or incorporeal, movable or immovable, tangible or intangible, and legal documents or instruments evidencing title to, or interest in such assets". Practically the same concept is conveyed by art. 1.b/ under the Council of Europe Convention in 1990 and also by art. 1 under the European Directive.

The Spanish Legislator has chosen the term «goods» to refer to the material object associated to this crime. By goods we may understand “any benefit which can be economically exploited ". Thus, the material object of money laundering is not to be confined solely to money, but it will extend to include things of all kinds (either movable items or real estate), or rights of all types. Just to give an example, a credit illegally constituted by the manager of a public society ( Crime envisaged in 295 Criminal Code), can be the material object of a money laundering crime. Thus, the concept of “goods” from a criminal perspective is even broader than it can be from a civil one, given that, according to art. 333 of the Civil Code: "All the things that are or can be appropriated will be considered as movable or immovable assets ". Under the criminal law, not only do we include the things, but also the rights.

These goods, in order to be seen as money laundering material object, must be susceptible of commercial trafficking. This requisite is implicit in the idea that is subjacent in the ratio legis of the infraction: the assets are circulating in the stream of legal economy. That’s why it explicitly refers to the person who “should acquire, transform or transmit goods”; Also explains precisely why the fine is fixed according to the economic value of the assets. The Spanish Legislator has not required that the goods reach a minimum value in order to qualify the action as a crime. The same punitive framework is set both for the one who launders small amounts and for the other who launders billions.

In this sense, the SCS dated October 5th 1992 (Ar. 7726), which convicts a wife for money laundering- at that time envisaged in art. 546 bis f/ PCc-, that invests in



household necessities part of the money her husband was earning as a consequence of selling small amounts of cocaine.

Finally, art. 1.2 under the Law 10/2010 establishes that: “According to this Law by crime derived goods we will understand any kind of assets, that are purchased or held subsequently to a crime, they be material or immaterial, movable or immovable, tangible or intangible, as well as the juridical documents or instruments regardless of their form, included the electronic or digital ones, accrediting the ownership of the above mentioned assets or the right that someone has over them, and also the defrauded amount in case of tax fraud crimes ”.

Predicate Crime.

General considerations:

Art. 301 CP require that the goods be derived from a criminal activity.

At this point the Spanish Legislator has provided a quite peculiar solution, given that, for the basic type, it envisages that any criminal activity can be qualified as € crime, but not referred to a concrete criminal fact that should be previously and exhaustively demonstrated. It is enough to be linked to a generic criminal activity. There is an aggravating type in case the predicate crime has to do with drug trafficking or other specially scheduled crimes.

To be specific, considering the basic type, paragraph one in art. 301 CC refers to the goods which are “derived from a criminal activity”, while the reference in the second paragraph is done to the "goods that are derived from one of the crimes referred to in the previous paragraph or from one act of participation in them".

On the other hand, we should also mention the fact that the imprudent or intentional character of the predicate crime is completely irrelevant in terms of considering it as a base for a subsequent money laundering crime.

In any case, is not necessary that the crime should pursue an economic benefit (paid murder, robbery, theft etc), because, as a criminal deed, it is enough that there may be a benefit or gaining derived from it, although having a profit it has not been set forth at all as a typical element, regardless the fact that from a criminological point of view some offences do generate illicit gains (drug trafficking) and other usually do not produce economic benefit (sexual offence).



The chained money laundering (money laundering preceding another money laundering offence):

As money laundering is a process, not only it is possible, but it is also absolutely usual that a new laundering is done based on goods already laundered at a previous moment. That is why the only effective way to fight the spacing out between the goods and their initial illicit origin consists on admitting that money laundering can also be the previous crime in money laundering offences.

Jurisprudence has had no problem in admitting the so called "chained reception ".

Logically, chained money laundering is preconditioned by the perpetration of an initial offence, different from the money laundering itself, but starting from that point, the cash flow initially submitted to the money laundering process can recurrently undergo money laundering phenomena. Let us imagine, for instance, the case someone starting a company, and afterwards buying shares from other companies, close to bankruptcy, that person then gets in touch with drug dealers who give this person large amounts of dirty money that he uses to refloat the companies, and subsequently he offers those shares to a group of investors who buy them knowing of his activity as money launderer. Speaking of this group of investors, it would be hard to prove that they are aware of the drug related activity carried out by those “represented” by the money launderer, but they do know he is in the business of laundering money, and so this offence can serve as a base for holding them responsible for a money laundering crime. Similarly, the payment the money launderer receives in exchange for his activity can serve as material object for a new money laundering offence.

Extraterritoriality of the predicate crime:

According to paragraph 4 under art. 301 Cc the money launderer will also be punished when the crime that generated the goods has been perpetrated abroad, entirely or partially. A similar provision is set forth under other legislations, such as paragraph three under art. 305 bis within the Swiss Criminal Code or §261.VIII within StGB, but, besides, these precepts require that the predicate crime should be punishable also at the place where it has been committed.

We therefore face a particular manifestation of the principle of extraterritoriality or ultra territoriality, also envisaged in the German Criminal Code.

There are certain problematic aspects to be mentioned:



- It is not clear whether the criminal activity qualifying as predicate crime in the money laundering offence according to art. 301.1 CC, should be defined according to the Spanish or the foreign legislation. Apparently, it seems coherent that our courts should apply the Spanish legislation in order to decide whether the crime qualifies as such, since, if not , we would go to the extreme, in which Spanish courts would find themselves forced to apply a foreign country’s legislation. Nevertheless the German doctrine extensively considers that the predicate crime should be qualified according to the legislation in force at the place where the money laundering is committed, to avoid a material extension of its own criminal law. In the contrary, the Canadian Criminal Code specifically stipulates that the deeds committed abroad should be qualified according to the Canadian’s law.

- But this could raise even further question; for example, we may wonder what happens in cases in which a crime, likely to serve as predicate crime for a money laundering offence, is not punishable according to the legislation of the country in which it was committed. Other legislations, such as the German or the Swiss, explicitly solve this problem, adding to the extraterritoriality principle the principle of double criminalization, but this is not the option the Spanish CC makes, because it does not contemplate any reference to this problem. Therefore we could argue that the Spanish court may qualify the acts that generated the laundered gains according to the Spanish legislation, as this seems to be the solution most in concordance with the silence of art. 301.4 CC, and with a systematic interpretation, as the principle of the double criminalization is not required by art. 23.4 of the Law of Judicial Organization in other cases in which the principle of extraterritoriality is applied on the basis of the tutelage of certain interest. Besides, if art. 301.4 CC explicitly admits that Spanish courts can punish money laundering even if it has been carried out in a country that does not contemplate it as such, it does not seem reasonable to use different criteria for qualifying the predicate crime. In this sense the SCS dated December 19th 2003 says: “ The discussions on the issue of the double criminalization are out of place, since, from a technical point of view, there is no need for the original crime generating the money to be convicted in order for the money laundering to be punished …”.

In the same line , Law 10/2010, under its art.1.2 says that: “The definition of money laundering will apply even when the activities generating the respective goods had been committed in the territory of another state”.

Degree of realization of the predicate crime:

The legislator has not directly approached this issue, but in the aggravated type set forth in art. 301.1º in fine Cc, that regulates the infraction of money laundering derived from drug trafficking, we are referred to articles 368 to 372 Cc for predicate



crime delimitation. Therefore, as art. 373 Cc envisaging provocation, proposal and conspiracy to committing these crimes has been excluded from this scope, it allows us to infer the legislator’s will not to let preparatory acts to be considered as a predicate crime or sufficient basis for money laundering offences. A sensu contrario, in those cases in which we can at least talk about the attempt of committing the fact, we shall consider that predicate crime exists, and so all the goods derived from it are likely to be the object of a money laundering offence. This option is possible, since there is no impediment whatsoever in considering that the term «crime» can also describe the attempt.

Limited accessorial liability:

According to art. 300 CP: "The dispositions under this chapter will apply even if the perpetrator or accomplice of the fact that have generated the profitable effects is irresponsible or personally exempted from punishment.”

This is actually the form limited accessorial liability takes.

Therefore the term «crime» accounted for in art. 301 CC must be interpreted as an action categorized and antijuridical , but neither culpability nor punisiblehment is mandatory. That is, money laundering will be punished even when the perpetrators or accomplices of the predicate crime were "irresponsible” (art. 19 and 20 Cc) or "they were personally exempt from punishment" (art. 268 Cc). From what we have showed so far we can infer that when we talk about «illicit origin of the goods » we do not mean a general kind of illicitness (such as civil or administrative), but rather the antijuridical character of the deed, which is the element that tinges with illicitness the origin of the goods.

Proof of the previous crime:

In order to evidence the relation existing between goods and the previous crime it is essential to prove that the crime has been committed. This proof can take two possible forms: a previous unappealable sentence attesting the perpetration of a typically and anti juridical deed, or letting the competent Court in money laundering cases to determine this extreme. This last option has been preferred by the Supreme Court, so that it is enough to irrefutably prove that the previous crime was committed, in the sense that a typical and anti juridical fact has been perpetrated, but it is not necessary to have a sentence for this previous crime , it is enough a



reference within the cause to the perpetration of a previous crime27. Even the identity of the previous crime’s perpetrators can be ignored.28.

In this sense, SCS 1501/2003, dated December 19th, states that: “The discussions on the issue of the double criminalization are out of place, since, from a technical point of view, there is no need for the original crime generating the money to be convicted in order to finally punish money laundering ”. Indeed, paragraph 4 under art. 301, envisages that «the defendant will be equally punished even if the crime having generated the goods or the acts to be convicted according to the previous chapters had been committed abroad, entire or partially » It is equally recognized that “the prevalent tendency so far ruling in the doctrine and the jurisprudence set up that the element of the predicate crime does not necessarily presuppose the existence of a previous unappealable sentence. Therefore a minimum accessorial liability criteria is set for the application of the money laundering offence”. Similarly, the SCS 928/2006 dated 5.10 ( RJ 2007\29) , says that "the criminal origin of the goods is obviously an element of the objective criminal type with all the consequences derived from it. An important element in the crime description must be the object of the proof, and in this sense no special rule shall be applied. Therefore, the principles quoted in the Constitutional Court Sentences 174/85 , 175/85 and 229/88 are applicable to the proof of “the criminal origin of the goods” , according to which the presumption of innocence is not opposable to the possibility that during a trial a judicial conviction may be corroborated on the basis of indirect evidence ". The predicate crime that has originated the goods can be proved based on circumstantial evidence. Besides, neither it is necessary a judicial sentence proving it in a previous trial - as shown in art. 301 CC- , nor the person accused of the crime mentioned in art. 301 CC must be the perpetrator of the predicate crime.” Similarly, SCS 59/2008, dated January 25th, establishes that: “ we must remind that, in money laundering cases like the present one, this indirect proof, taking into account that there is no need a previous conviction for the predicate crime having generated the money , (SCSentences dated January 27th 2006 [RJ 2006\1795] and June 4th 2007 [RJ 2007\4743] , among others), appears to be the most appropriate way to prove the commission of the crime and, in most cases, it is the only way to prove it (as confirmed in SCS dated July 4th 2006 [RJ 2006\4730] and February 1st 2007 [RJ 2007\3246] , for instance). The most commonly used circumstantial evidence used for this kind of offences are: a) the importance of the amount of money laundered; b) the connection launderers have with illicit activities or people involved in them; c) unusual or unexpected wealth increases; d) nature and

27 ? SCS dated July 11th 1986.28 ? SCS dated July 12th 1989.



characteristics of economic operations where for example large quantities of cash are used; e) no licit justification for incomes to sustain such operations; f) weakness of the explanations given on the licit origin of these cash flows; or g) the existence of the so called "shell" companies or financial frameworks that do not rely on irrefutably licit economic activities …”.It can even sometimes happen that the previous crime has prescribed, according to the SCS 198/2003, dated February the 10th: “ and so in money laundering cases no previous conviction for the predicate crime that have generated the goods is needed, since this kind of offence is evidenced by the mere existence of the goods or gains derived from one of the crimes mentioned under articles 368 to 372 CC, goods that someone, knowing where they come from, should acquire, transform or transmit or perform upon them any act that is meant to conceal their illicit origin or help the respective offenders escape the legal consequences of their acts (see SCS dated September 29th 2001 [RJ 2001\8105]).This allows us to deduce the autonomous nature of this type of offence from those crimes that have generated the laundered goods, in such a way that even if these latter crimes were finally be fully identified and specified, or even sentenced, the activity of concealing their illicit fruits by carrying out one of the typical actions mentioned in art. 301 acquires criminal substance in itself, regardless the crime that has generated the laundered goods (aside from the case when the author of both crimes is the same person –as already contemplated in the sentence pronounced by this panel on January 10th 2000 [RJ 2000\433] –). Consequently to the above, we can conclude it is irrelevant to speak of the date at which the husband of the accused wife committed the drug trafficking crimes for which he was convicted by the sentences quoted in the «factum» of the appeal, as it is utterly irrelevant in terms of her money laundering offence prescription”. Indeed, admitting the consideration that the existence of the predicate crime constitutes the objective (normative) element within the crime description and that its proof is equally intrinsic, by no means does jurisprudence demand that a previous unappealable convicting sentence had been issued, it is actually enough to conclude that the active subject knew the goods derive from a typical and anti juridical fact (SCS 19.9.2001, 19.12.2003 [RJ 2004\2128] , and 23.12.2003 [RJ 2003\9348] ). It is not even considered necessary for the previous crime authorship to be specified (SCS 23.2.2005 [RJ 2005\7468] ), as this exigency would make money laundering tipification impossible to be applicable in practical terms.

It is particularly interesting to underline the linguistic issue: In Spain, although the current Penal Code in its redaction before December 23th of 2010 referred to the word “crime”, The Supreme Court has actually chosen to interpret that the previous crime did not need to be specifically identified, as we have seen, nor do its authors, and besides, no previous conviction for the predicate crime is needed in order for the money laundering to be convicted. Basically, the Spanish Supreme Court interpreted



the crime description according to the International Conventions, in the sense that the element required is the pre-existence of a criminal activity. That’s why the revised Spanish PC (after Law 5/2010) echoed this interpretation when it says: “ crime derived from CRIMINAL ACTIVITY”, without requiring that there be a previous conviction for the predicate crime. That is nothing but the recognition of a consolidated jurisprudential interpretation.

Scope of the expression « have its origin in criminal activity”:

The legislator has left it to the interpretation to set a connection between the previous crime and the goods susceptible of being the material object of the subsequent money laundering offence, as it has not given the precise parameters according to which we should judge if certain goods are “crime derived”.

At this point there are various possibilities.

Goods directly derived from the predicate crime:

As we have said, the goods that constitute the material object of the money laundering offence have been themselves generated as a consequence of a crime. The following can have their origin directly in a crime: price, reward or promise made in order for someone to commit the crime, the product derived from its commission ( it should be of licit trade), the gain obtained by the perpetrator or the accomplice of the criminal activity, and the material object of the crime.

The product of the crime:

The goods that the crime generates, previously inexistent, the so called producta scaeleris, can take the shape of the material object of the money laundering offence if they are susceptible of commercial trade.

The gains obtained as a consequence of committing the crime:

The gain the offender obtains through crime commission, the so called scelere quasita, is also susceptible of being material object of the money laundering offence, and this is the most frequent case from a criminological point of view.

The crime price:

There is a large consensus in our doctrine in terms of considering elements such as price, promise or reward as goods directly derived from a crime, and consequently, as possible money laundering material object. We consider this position is correct,



since there is no reason whatsoever for giving a different treatment to the price obtained for committing a crime form the one we give to any form of gaining.

The material object of the predicate crime:

As can be deduced from the above stated, the material object of the predicate crime can, for its part, be the material object of the money laundering offence

Instruments with which the crime was perpetrated:

On the contrary, the instruments used for committing the crime, instrumenta sceleris, do not have their origin in the respective crime. This is what we derive from the literal understanding of the expression « crime derived », as well as from a teleological interpretation, since it would be absurd, for instance, to consider that buying the knife that was used for committing a murder qualifies as money laundering. This is not the objective the legislation anti money laundering aims at.

Goods indirectly derived from the predicate crime. Substitution:

Because the Code only requires that these goods have “their origin” in a crime, it actually acknowledges the laundering of goods that have replaced those initially derived from a crime. The following can be argued in favour of this thesis:

- The use of the word «goods» in art. 301 Cc, instead of the word «effects», which is used in other precepts in which the legislator does not admit such a replacement, as in art. 127 Cc (forfeiture regulation), art. 298 Cc (reception offence), or articles 234 and 235 Criminal Procedure Act (regarding the body of the crime).

- If we look at the United Nations Convention of 1988 that served as base for introducing this crime in the Spanish law we see that in art. 1.p, «product» "means the goods obtained direct or indirectly from committing a crime ".

- In any case and considering that money laundering is also a crime, nothing discards the possibility to consider that the goods that have already undergone one or various substitutions can be the material object of this basic crime description, as in this case the previous money laundering would qualify as predicate crime.

Therefore, any goods derived from the substitution of the goods initially originated in a crime, will be «marked», and will be susceptible of being money laundering material object, and if those goods were to be replaced again, it could be considered



that they are derived from a crime29. Replacing some goods by others can take place by any legal trade means, which involves exchange, such as buying and selling, swap and even mortgaging.

Typical behaviour:

Art. 301 Cc accounts for a series of behaviours, sanctioned with the same punishment, making up the basic crime description, that we could schematize as follows:

1º.- Acquire, use, posses, transform or transmit goods knowing that have been derived from a crime.

2º.- Carry out any act aimed at:a) concealing or disguising their illicit origin,b) assisting those people involved in committing the predicate crime to

escape the legal consequences of their acts.3º.- Conceal or disguise the true nature, origin, location, destination,

movement, rights or ownership of those goods.

This schema the current money laundering regulation fits into is inspired, even though with important variations, in its direct precedent, namely art. 3.b/ under the Vienna Convention of 1988.

This is obviously a mixed alternative type, and the realization of more than one of the behaviours we have described is penally irrelevant.

Acquiring, transforming, transmitting goods of illicit origin:

The genuine money laundering behaviours, which are the only ones that strictu sensu should make up the basic crime description, consist of acquiring, converting or transmitting illegally obtained cash flows. Conversion and transmission constitute the fundamental money laundering cases. They are the simpler schema to make the assets circulating with the intention of making the others lose track of their illegal origin, by fully incorporating them into the legal economy and thus insuring their carefree use. Indeed, prohibiting the illicit goods of being acquired, transformed or transmitted has the goal of separating the criminal output from the legal economy.

Therefore, subjects who acquire, transform or transmit the goods, knowing that they are crime derived, comply with all the typical requirements if – although this is not

29 ? SC Sentences dated October 31st 1994 (Ar. 9076) and October 5th 1992 (Ar. 7726).



enlarged upon in the basic crime description -, their intention is to disguise the illicit origin of the goods or assist third parties. In this sense art. 1.2.a) under Law 10/2010 establishes that: “ the purpose to conceal or disguise the illicit origin of the goods or assist people involved in illicit activities in escaping the legal consequences for their acts”.

Acquiring goods of illicit origin:

The acquisition supposes incorporating the goods to a new estate through any title, may it be free or onerous. So this term refers to a whole range of situations, and maybe some of them do not deserve to receive a penal response as severe as including them in the scope of money laundering. Nevertheless, the mere possessing or holding can be included, as envisaged in art. 1.2.C under Law 10/2010:”The acquisition, possession or use of goods of which, at the time of their reception, the person knows they are derived from a criminal activity or from having participated to a criminal activity”. Anyway, the new redaction of article 301 has expressly included the term use and the term possession.

Transforming goods of illicit origin:

Transformation involves changing the goods in assets of any type, or transmuting them into others. This approach is crucial in money laundering, because many times this offence is characterized by recurrent transformations that the goods derived from the predicate crime undergo. Thus, the money obtained through a prostitution network is transferred to a simple bank entry, then it becomes a window check, it is then replaced by a promissory note and finally it is turned into bearer shares.

Its inclusion is especially useful for those cases in which goods circulate through the market, with no ownership change, given that normally these acts are unilateral. Thus the money in a current account in Spain becomes a fixed-term deposit in Switzerland, but at the name of the same owner that ordered the transfer.

Obviously, this idea of immaterial conversion- which is the legislator’s main concern when it has included this provision in the crime description- , does not discard, cases of material conversion, such as, for instance, the conversion of jewellery in gold ingots. And obviously, it is irrelevant whether mutation is reversible (transforming cash in bearer cheque) or not (transformation of a historic jewel into gold). Conversion is possible by adding or suppressing part of the whole, provided that the above mentioned action should mutate its nature.

Transmitting goods of illicit origin:



The derogated Criminal Code used the term «transfer».

Transmission of goods is carried out by means of any type of capital transfer or cession to third parties. Acquisition and transmission seem to be the two extremes of the same patrimonial displacement, because in order to transmit, one has to have acquired first, and in order to receive the transmitted goods one acquires them.

On the other hand, transmission not only can be material or factual , but also juridical. This last type allows for a change in the ownership of a certain right, but it does not involve a factual displacement of the object on which that right falls.

Carrying out any act aimed at disguising the goods’ origin or assisting perpetrators of the predicate crime:

One of the main novelties brought in by art. 301.1 CC is the inclusion of the expression "carry out any other act...". This allows for the introduction in the basic crime description of an open list of behaviours. Obviously carrying out «any other act » must refer to goods whose illicit origin is known to the person in question. Nevertheless, we do not think that on the basis of art. 301.1 Cc we could derive the necessity for this act to be in any way similar to the acts of acquiring, converting or transmitting. For instance, providing a safe-deposit box for the purpose of keeping cash derived from a crime, constitutes a punishable fact due to this article, but, on the other hand, the idea of depositing cannot be considered similar to the act of acquiring, transforming or transmitting, because the goods are not circulated through the licit economic traffic, quite the contrary, and yet help is provided for the money launderer to escape the legal consequences, as keeping the money or goods in his/her possession is always a risk.

So the law requires that the subject «carry out any other act » with the following mention: aimed at concealing or disguising the goods’ illicit origin, or at helping perpetrators to escape the legal consequences for their acts.

We could think that the expression "carry out any other act" excludes omission. But aside from this defect in the crime description, it would be illogical to eliminate the perpetration by omission in these cases, especially if we think of the duty some of the financial sector intermediates have to communicate suspicious operations. Even some legal systems have explicitly envisaged administrative duties omission in money laundering prevention as an aggravated type of this crime.

Concealing or disguising goods:



When the illicit origin is concealed or disguised, that makes it difficult to discover de offence and therefore help is provided for perpetrators to escape the legal consequences for their acts.

There is no clear delimitation between «conceal » and «disguise» the goods’ origin. Both words are actually synonymous to hiding, dissimulating, camouflaging, covering up or disguising the trail, the connection between the goods and their illicit origin.

Obviously all of this can be accomplished by acting, as in the case of destroying documents or electronic folders, or by omission, as in the case of a financial entity employee failing to register a certain operation. Based on the perpetrating by omission general theory, it is necessary that the subject should have a guarantor position, derived, for instance, from the special legal duties certain financial intermediates have by law.

Assisting offenders in escaping the legal consequences for their acts:

In this case the legislator describe behaviours that can concur with the concealing offence (art. 451 Cc). In this case the concurrence rule envisaged by Art.8.4 CC. will be applied.

Concealing or disguising the true nature, origin, location, destination, movement, rights or ownership over these goods:

According to art. 301.2 Cc: "With the same punishment , depending on the case, the following will be penalized: concealment, disguise of the true nature, origin, location, destination, movements, rights or ownership over the goods, when there is awareness that they derive from any of the crimes mentioned in the previous paragraph or from the act of participation in them ".

This precept refers to the perpetration of subsequent money laundering operations, also known as "concealing or disguising money laundering" or "double masking".This idea initially appeared in the UN Convention of 1988, based on the division of phases within the process of money laundering.

The SCS 483/2007, dated June 4th comes to corroborate the above mentioned, when it states: “It is true that these behaviours can overlap with the ones set forth at number two under the above mentioned precept and the fact is that the difference between both two does not necessarily reside in the type of operation carried out but in the consecutive phase in which the money laundering takes place. The important thing is for the criminal law to proceed, regardless of the subsequent destinations the goods may reach. Therefore number two is applicable in cases of successive money laundering operations. Under such circumstances it is only appropriate to speak of an



authorship for this crime that is independent from the one corresponding to the first operation, if those intervening in the different phases were to be separate individuals”.

Let us now analyze in more detail the specific manifestations of the goods, as they are expressed in the behaviour described under art. 301.2 Cc:

a) «Nature» means the goods’ attribute or quality. b) «Origin» refers to the criminal origin the goods derive from. We have

already dealt with the interpretation of this concept in the context of another behaviour included in the basic crime description.

c) «Location» refers to the place where the goods are situated. The person, who conceals the goods’ location, conceals the goods themselves. It seems to actually designate a physical, material aspect, therefore not applicable to rights.

d) «Destination» can be interpreted in a double sense, either as the aim to which the asset serves or as the place it is headed for. As the utility given to the asset is irrelevant for money laundering, this is rather more a space reference completing the previous one (location) and the subsequent one (movement).

e) «Movement» also allows for a double interpretation, it can either refer to the act of moving something or "numerical alteration in the status or account for a determined period ", namely a countable displacement of the assets.

f) By «rights over the goods” we will understand any legal power a person has over an economic value. It applies to renting, mortgage, etc.

g)«Ownership» is "the right to have and to hold something " (art. 348 Cc).

Other Behaviours:

Using or holding assets while being aware that they are of illicit origin:

Art. 344 bis i/ under the derogated Criminal Code explicitly penalized the individuals who hold or use the assets knowing, at the moment of receiving them, that they are derived from a crime related to drug trafficking (the only offence likely to serve as predicate crime in the previous Code) On the contrary, the legal text of 95' has removed this reference. Still, art. 1.2.C) under Law 10/2010, serves as interpretative element, establishing that “holding or using the goods, knowing at the moment of receiving them, that they are derived from a criminal activity or from participation in a criminal activity” qualifies as money laundering. Finally, the modification operated by Law 5/2010 has retrieved this tipification.

The idea of including possession or making use of the illicit goods in the money laundering scope has its origin in the Vienna Convention of 1988, which is its art. 3.c/, envisages that the following had to be punished: "under the reserve of their



constitutional principles and of the fundamental concepts of their legal framework: i) acquisition, possession and use of the goods, knowing, at the moment of their reception, that they are derived from one of the crimes categorized according to letter a) of the current paragraph of from the act of participation to such a crime or crimes ". This idea is reproduced in art. 1 of the Directive, which sanctions " the acquisition, possession or use of property, knowing, at the time of receipt, that such property was derived from criminal activity or from an act of participation in such activity ".

Other countries in our area also penalize these behaviours.

Simple unjustified possession of goods:

There is an unjustified possession of goods, similar to the case previously discussed, but the difference resides in the fact that their illicit origin cannot even be demonstrated.

The Vienna Convention in 1988 establishes in its art. 5.7º: "each party shall contemplate the possibility of reversing the burden of proof with regard to the illicit origin of the supposed product or the other goods subject to confiscation, to the extent to which this is compatible with the principles of their internal Law and with the nature of their judicial and other procedures ". A possibility mentioned by the Resolution issued in December 16th 1993 by the European Parliament and by the 1995 Report issued by The International Committee for Narcotics Fiscalization of the United Nations. Some legal systems, such as the Argentinean, Canadian, Cuban, that of Ecuador, the United States, France or Great Britain, following this guideline, have sanctioned the unjustified increase of assets presumably attributed to commission of crime. Finding its inspiration in the Vienna Convention, the Italian legislation has also allowed for confiscation of goods in the case of the convicted that cannot justify the origin of goods. And even before the Vienna Convention existed, the Courts of some countries in our surrounding area were already applying this solution. For instance the Sentence of the Swiss Federal Court dated February 18th 1985.

Subjective element in the crime description:

Knowing that the goods derive from a crime:

Intention implies awareness of all the elements included in the crime description, as well as awareness while performing the behaviour as it appears in the crime description, as well as the fact that this is anti juridical. In the case of money



laundering offences there is one such element that is particularly enhanced by the legislator: the knowledge of the fact that the goods are proceeds of a crime.

Indeed, in the first paragraph of art. 301 Cc the legislator requires that the active subject should carry out the typical behaviour "knowing that they [the goods] are derived from a criminal activity ". The second paragraph within the same article insists in this requisite when it envisages that certain forms of money laundering will be penalized when their authors act "knowing that [the goods] are derived from one of the crimes...". There is no reason why we should consider that this is an element that differs from the one established for the basic crime description, since, as we have mentioned, the difference in wording ( «crime derived » is replaced by «proceeds of crime») is due only to stylistically reasons.

The function this provision has is to highlight that the cognitive element-also called intellective or intellectual- included in the intention it entails the need that the author should know the predicate crime which is the source of the goods. Nevertheless it would not have been necessary, if we look other legal systems: Thus, the §257 under the StGB –on the receiving offence – does not explicitly require the subject be aware of the commission of the predicate crime, nor of the illicit origin of the goods and yet the doctrine is unanimous in mentioning that the author’s intention must include the knowledge of such circumstances. Similarly, art. 648 bis under the Italian Cc only requires the illegal origin of the laundered goods and yet nobody doubts that the intention must include knowledge of the commission of the predicate crime and of the illicit origin of the goods. In our law, the administrative legislator has also established this reference when defining money laundering in the Law 10/2010 ( art. 1.2.a).Regarding the degree of knowledge, "no precise juridical categorization is required, «a parallel profane appraisal will be enough »". Regarding the knowledge of the illicit origin, this is conveyed in the words "knowing", "for" and "knowingly" under art. 301 in its paragraphs 1 and 3. This knowledge requires certainty as far as the origin is concerned, although there is no need of an exact knowledge of the predicate crime in all its details (SCS 1070/2003 dated 22.7 [RJ 2003\5442]), though mere suspicion is not enough. Regarding the knowledge of the drug derived origin of the goods, the legal reference is conveyed by the word "knowing" which in normal language is the equivalent of be aware or be informed. So it does not imply knowledge (in the strict sense) as the one based on scientific observation of a phenomenon, or on the direct involvement of someone, in his/her position as a protagonist, in doing something; it refers to practical knowledge, that is acquired based on experience and that allows for the representation of something as being the most likely explanation under the given circumstances. It is what usually, in daily life, allows people to discern, establish differences, guide their behaviour, know what they should expect from a certain person (SCS 2545/2001 dated 4.1 [RJ 2002\1183] ).



The crux of the matter is that no precise knowledge of the predicate crime is required in the subjective area (which usually only occurs when people become part of extensive criminal organizations with a certain distribution of the offending tasks); it is enough to have an awareness of the abnormality of the operation and to harbour the reasonable inference that it is derived from an offence , for instance based on elements such as amount, protective measures, reward offered, etc. Thus, SCS 1637/2000 (sic) dated 10.1 underlines that the only intention require to the perpetrator and the one that should be objectified by the Sentencing Panel is precisely the existence of data or clues sufficient enough to confirm the subjects’ knowledge of the criminal origin of the goods (SCS 2410/2001 dated 18.12 , or from drug trafficking, e.g., when the aggravated crime subtype envisaged in art. 301.1 is applied, taking into account that eventual intention has been admitted as a form of culpability (SCS 1070/2003 dated 22.7 , 2545/2001 dated 4.1.For example, it is not important if such elements, as the form the offence takes, the place or the time it has been committed at are not known30, and the same could say about whom the exact victims are or the nomen iuris attributed to that crime31. What is required is knowledge of a fact in its basic circumstances 32

On the other hand, it is not necessary to have a precise knowledge of the type of predicate crime; it is enough to know that the fact is included in the category of crime.

The situations so called “deliberate ignorance” are special interest. Subjects argue that they did not know of the origin of the assets and they base this argument on the fact that they did not have a privileged situation within the criminal organization. In such cases, reasonable doubts about the source of the money sustain the concurrence of the subjective type, because, as stated in the SCS dated January 10th 2000 (Ar. 433): “the fact that in an organization there is no communication between the various layers, so as to prevent that the inferior circles ever get to know the superior ones is in perfect accordance with its clandestine nature. Such a situation serves as an elementary precaution measure in view of the possible police investigations, since the more one restricts the knowledge of the investigated subjects, the less data they will be able to provide, should they be detained”. This doctrine is particularly important in really big money laundering operations, given that the professionals in charge of managing huge amounts of dirty money are usually quite far away from the crimes that generated it.This doctrine is entitled principle of the deliberate ignorance, and is extremely useful in proving the subjective element of the crime. Thus, the SCS dated December 28th 2009 says: “In Sentence 33/2005, dated January 19th, it is specified that no direct intention is required, the eventual one is enough or, as it is highlighted in the court

30 ? SCS dated February 13th 1996.31 ? SCS dated February 5th 1990. 32 ? SCS dated April 2nd 1993, and SCS dated December 15th 1992.



sentence, it is enough to place oneself in the position of deliberate ignorance. Namely, who is able to know the nature of the act or collaboration that is asked of his/her, and remain in a position of refusing any knowledge, and yet offer their collaboration, thus bringing upon him/herself the penal consequences derived from his/her anti juridical actions. Reference is made to this principle in the jurisprudence of this Court, among others in the SCSentences 236/2003 dated February 17th, 628/2003 dated April 30th or 785/2003 dated May 29th”. This is an element that will be proved, unless the subject himself unequivocally recognises it, through circumstantial evidence capable of revealing his knowledge, as it has been suggested in the 1988 UN Convention and in EEC Directive 91/308/33, but it is not possible to presume its concurrence, unless "between the proven fact and the one to be deduced, there should be a direct and specific bond according to the human criterion rules " (art. 1253 Civil Code). This has been the position adopted by our Courts regarding this matter. In this sense, The Criminal Panel within the Spanish National Audience and within the Spanish Supreme Court have considered that there are two circumstances that can be used as basic circumstantial evidence for proving the illicit origin of the goods34:A) Unjustified wealth increase.

B) Carrying out irregular financial or commercial operations: we may quote, among others:

a) Recurrent creation and extinguishment of different companies35.b) Managing unusually high amounts in cash36.c) Using dummy corporations and figureheads that make it hard for authorities to

identify the individuals that really control the operations37.d) Not celebrating the Shareholders’ meetings in the case of the “shell

corporations”, which makes it clear that these companies are not managed by the formal shareholders38.

33

34 The jurisprudential doctrine developed around this topic has a clear starting point in the Sentence issued by the Court of Appeal dated September 27th 1994 ("Nécora" case) and the SCA dated November 23rd 1995, both referring to the application of art. 546 bis f/ in the derogated Criminal Code, that contained this very element. Subsequently other sentences have confirmed this doctrine, such as the SC Sentences dated May the 23rd 1997 (Ar. 4292), and April 15th 1998 (RJ 1998\3805)35 The SCS dated February 25th 2004 says (Ar. 1843): “the pace at which corporations were created and at which their contracts were concluded turned these companies in entities that generated transactions and contracts appearing and then disappearing, as in an agitated drama plot”.36 The SC has considered that the keeping of important amounts of cash qualifies as " handling unusual cash amounts " (several millions of pesetas) in shoe boxes or half open envelopes. In any case we shall have to resort to normal commercial practice as reference point in order to qualify a certain operation as unusual. SCS dated April 15th 1998 (Ar. 3805). In the same sense, vid. SCS dated January 10th 2000 (Ar. 433).37 SCS dated February 25th 2004 (Ar. 1843).38 SCS dated February 25th 2004 (Ar. 1843).



e) The existence of irregular registers in their accounting documents.f) Depositing money in banks in a fractioned manner, that does not obey a

reasonable dynamic, for instance the instantaneous transfer of an amount that had just been deposited minutes ago39.

g) The use of fake papers documenting inexistent imports.h) The opening of successive bank accounts at short intervals.

This is the so called circumstantial evidence, supported by article 9.2.C) of the Warsaw Convention, that establishes: “Knowledge, intention or purpose as element envisaged as an element of crime (money laundering) may be deduced form factual and objective circumstances”.

It is particularly important to add to these circumstantial pieces of evidence “the verification of some connection with individuals or groups "involved in illicit activities generating gains40. It is not necessary a previous sentence for these activities. The Warsaw Convention of May 16th of 2005, in its art.9.5, establish: Each Party shall ensure the imposition of a conviction for money laundering without prior or simultaneous conviction for the principal offense.

Obviously defendants must not prove the legal source of the money they want to justify through a certain legal commercial activity, as this would suppose an inversion of the burden of proof, instead prosecution will have to demonstrate the laundered goods are not derived from the legal economy, for instance, by showing how the business used by the launderer as a cover up did not have enough merchandise to sustain its sales volume, or that it did not remain open to the public during commercial opening hours, etc. Obviously, the complete absence of licit business, likely to justify the important capital the person handles will be particularly relevant41.

The SCS dated February 25th 2004 requires a collaboration duty : “The transparency of the financial system, for the benefit of the commercial environment, requires that, when facing an administrative or criminal accusation on the illegal source of capitals, the investigated individuals provide the data that unequivocally should prove their legal origin. This does not involve reverting the burden of proof, nor does it imply forcing people to accomplish impossible, diabolic or costly activities just to prove an extreme, as easily provable as attesting the source of money can be. The right to keep silent or one’s refusal to admit the own responsibility have nothing to do with providing data which, without engaging in self incrimination, may allow fiscal authorities or judges and courts to verify whether the facts that constitute the object

39 SCS dated February 25th (Ar. 1843) and January 10th 2000 (Ar. 433).40 SCS dated April 15th 1998 (Ar. 3805), and May 23th 1997 (Ar. 4292).41 Vid. SCS dated January 10th 2000 (Ar. 433).



of the investigation, are accredited or not. The juridical assessment of this reluctant attitude is linked to the fact that the accused has refused to provide a datum that only he can provide, in a unique and irreplaceable way. Exoneration is up to the accused, they can achieve it by proving the money is clean and transparent”.

The indirect valuation of the accused silence is permitted according to the Jurisprudence o the European Courts of Human Righsts, Cases Murray ( February 8th 1996) and Telfner ( March 20th 2001): “... is also evident to the Court that such bans can not and should not impede taking into account the silence of the interested person, in situations that require an explanation for sure, to assess the persuasive force of the elements of charge....Is derived from this interpretation of the “right of silence" that the question of whether this right is absolute must be responding negatively.No one could say, therefore, that the decision of an accused to remain silent from the beginning to the end of a criminal proceeding would necessarily be devoid of any effect once the trial judge is appreciating the elements of charge. In particular, as the Government pinpoints, the established international Conventions, although enshrining the right to remain silent and the prohibition of contributing to own self-incrimination, keep silent at this point”.In the same sense, Telfner: “As the evidence presented during the process were a formidable indictment against the accused, the Court held that drawing these conclusions from the silence of the accused, conclusions, moreover, that were subjected to important procedural safeguards, did not violate Article 6, taking into account the circumstances...”.

The time when the property illicit origin must be made known.

The intention, except the cases of actio libera in causa, must coincide with the action moment. Therefore, the time when the property’s illicit origin is known must be simultaneous with the Money laundering behavior.42 Nevertheless, the legislator in ’95 has not expressly introduced this provision, unlikely of what happened with article 344 bis i/ ACp. In the compared law it is frequent to require that the information regarding the property’s illicit origin must be made available at the time when this property is obtained. This is perhaps reflecting the zeal with which this requirement is envisaged in the international conventions.

The money laundering crimes extra-territoriality:

42 ? SCS on 25th January 1994, related to the crime of receiving, even if the argument can be extended to money laundering.



According to paragraph 4º in art. 301 Criminal Code: "The culprit will be equally punished even if the crime producing the property or the acts punished in the previous paragraphs were committed, totally or partially abroad".

We are already analyzing the possibility that the previous crime was committed abroad, but the relevance of this precept goes beyond, given that it includes the ultra-territorial application rule of the Spanish law. Besides, a precept included in the substantial criminal normative – the criminal code – has developed the cases in which the criminal law extra-territoriality is applicable, regulated in art. 23 in the Organic Law of the Judicial Power. With this, following the line suggested by article 2 in fine of Law 10/2010, our legislator have applied the universal justice principle to this crime.

Moreover, our legislator has gone beyond this, so that it has attributed the competence to send to trial any crime of money laundering, committed in any place in the world, by the citizens of any country. Therefore, it was hypothetically possible that a Spanish court convicted to a punishment that could reach nine years, a citizen of a country whose legislation did not include the crime of money laundering (or that does not consider money laundering the concrete behavior that this subject has committed), and even if the crime was committed in a place abroad where this behavior is not prohibited.Nevertheless, the reform of the art. 23.4 in LOPJ has established a limitation to the universal prosecution: it is necessary for the supposedly responsible persons to be found in Spain or for the victims to be of Spanish nationality. Moreover, it is at least necessary for the case to have any relevant connection to Spain. Besides, no procedure, actual investigation or prosecution of that particular case should have been initiated by any international court or any competent country.

The punishment for the mentioned resolution forms:

Art. 304 Criminal Code stipulates that "provoking, plotting and suggesting to commit one of the crimes provisioned in articles 301 - 303 will be punished with a one or two grades inferior penalty".

Thus, art. 3.1.c/ in the United Nations Convention of 1998, suggests the incrimination of "instigation, plotting or incitation to crime" according to "its constitutional principles and fundamental principles of its juridical legislation". The «instigation to crime» is understood as provocation by our doctrine; the «incitation to crime» has as well been equaled to provocation. With regards to «plotting», it can be identified with conspiracy.



The Council of Europe’s Convention in 1990 suggests sanctioning the «agreement» to commit a crime of money laundering. For this term, the doctrine has understood a reference to conspiracy. EEC Directive in 1991 stipulates in its art. 1 that «instigating» to commit the offence of money laundering is also a money laundering crime. Equally, art.1.2.D) in Law 10/2010 defines as Money laundering: “The participation to any of the activities mentioned at the previous letters, the association to commit this type of acts, the tentative to perpetrate them and the fact of helping at, instigating to or advising somebody to perform or facilitate its commission”.

Scope of application for art. 304 Criminal Code:This article extends the punishment for the provocation, plotting and proposing to anybody the crimes described in articles 301 - 303 Criminal Code.

The possibility to sanction the tentative of money laundering:

All the international documents referring to money laundering have particularly emphasized that an efficient intervention against money laundering requires the tentative incrimination. Thus, the United National Convention in 1988 suggests in its art. 3.1. c/ iv/ the punishing of the money laundering tentative, according to its constitutional principles and its fundamental concepts in its juridical legislation. Similar provisions are contained in the Council of Europe’s Convention in art. 6.1. d/ in the Council of Europe’s Convention in 1990 and in art. 1 in the EEC Directive in 1991.

Similarly, most of the juridical legislations around us expressly stipulate its punishment: §261, paragraph III, in StGB provisions the possibility to punish the tentative, despite that in Germany the tentative is punishable only for serious crimes, and it is only punished for the less serious crimes when the Law expressly provisions it (§23 StGB), as it happens precisely in the case of money laundering. In USA, Sections 1956 and 1957 in 18 U.S.C. tentative is inclusively equaled to consummation.

Therefore, it is not strange that has become generalized in our doctrine the idea that punishing the tentative is absolutely necessary within a prevention policy for this type of criminality, an idea which is also fully assumed by our legislator, which has gone so far as incriminating certain forms of preparatory acts, as we have already commented.

MONEY LAUNDERING BY IMPRUDENCE:

Money laundering by serious imprudence:



The lack of a ample consensus to the necessity of punishing the negligence commission of this crime is reflected in the international texts on money laundering, given that this type of documents either avoid giving a decision on this issue (such as the Untied National Convention in 1988 or the European Directive in 1991), or they try to balance, offering the possibility, even if not making it compulsory, to sanction money laundering by imprudence (thus, art. 6.3 a/ in the Council of Europe’s Convention in 1990 or the sixth Recommendation of GAFI). Thus, it can be understood why there is no consistent regime in the compared law, as there are countries such as Germany or Luxembourg where the Money laundering by imprudence is incriminated, while there are others, such as France or Italy, where such behavior are still not envisaged.

Paragraph three in art. 301 Criminal Code set forth that: "If the facts are committed by serious imprudence, the punishment will be prison between six months and two years and a fine of three times the sum (laundered).

The goal of incriminating negligent money laundering is to reinforce the special due diligence that the financial intermediaries are compelled to fulfill in the prevention of money laundering. They are in a privileged position to detect the origin of their clients’ money. As an alternative , there is an idea, defended by other juridical legislations, such as the American or the Swiss ones, where, instead of having a crime of Money laundering by imprudence, the preventive control obligations infringement are directly typified, as abstract danger crime, no matter what the consequences of such infringement might be43.

The Supreme Court has understood it the same way. In this sense, the SCS on 17 th

June 2005 states that: “The reference to the serious imprudence must be related to the subjects that have a special obligation or task to act with certain care. Not any negligence will determine the criminal responsibility, but only the one that, besides being serious, compose an activity of money laundering that allows its inclusion in the criminal type. The criminal reproach made to the appellant in the sentence is exclusively based on the omission of the care obligation. Imputation should normally be done for the intent, including the extensive amplification to the behavior with possible intent, but it arises serious problems when the imputation should be done, such as in the current case, for serious imprudence. The jurisprudence has shown reticence when the subjects do not have a special professional responsibility- that also have been called" an intensified diligence task"-, that could derive in an authentic "professional negligence" such as it happens in the cases of imprudence

43 ? That is, a legislation technique which is similar to the one used in art. 8 in Law 40/1979, on the Juridical Regime for Change Control, which sanctions the subjects who violate their control tasks when their negligence facilitated the commission of a monetary crime.



imputation for the subsidies fraud in the German law. The type in article 301.3 in the Criminal Code has been seriously questioned by the jurisprudence considering it exaggerated as it does not give any specifications regarding to the active subject. An excessive opening up of the serious imprudence for all types of subjects intervening in the crime of money laundering is contrary to the principle of minimum intervention. As an important sector of the jurisprudence has pointed outs, the impunity of the behaviors in which there is an error regarding the type should be the general rule, and it doesn’t mean the generalization of impunity at all in cases like the present one, in with an administrative file have been initiated and the sums of money have been retained, confiscated and sanctioned. The special diligence task to detect the signs that could lead to a suspicion regarding the money’s illicit origin should be required to those who have special functions as civil servants or professional qualifications. It is not extended and it is difficult to configure this type for the individual persons who transfer cash in suitcases or otherwise. In these cases the persons accepting this operation must compulsory guess or know the illicit origin of this money, even if generically or abstractly. The contact established between the person providing the Money and the one performing the transport cannot be solved with a mere imputation for imprudence, always implies a agreement of wills that locates the transporter in the nucleus of an intentional action, as the typical behavior defined in article 301… SCS 959/2007, on 23rd November, follows the line of restringing the types of subjects, especially the obliged ones: “there is a special Law on Money laundering, 10/2010 on 28th April, that prescribes certain measures for the prevention of these crimes and to prevent the usage of the financial system or other regulators of the economy life in favor of these activities, imposing certain specific tasks on this matter to the credit entities, insurance companies, stock agencies, collective investments societies, casinos, real estate promoters, notaries, registrar employees, lawyers, solicitors. The violation of these obligations imposed to the juridical persons and individuals can constitute the serious imprudence stipulated in art. 301.3 CP . When there is a violation of these specific obligations, the commission of this type of crimes is difficult. To the individuals we can say – if not as an absolute rule, at least as a general criterion – the criminal punishment according to this norm in our code is not possible. Anyway, for such a conviction it is required to have clearly expressed in the convicting sentence how exactly this violation of the due diligence that is always inherent to the concept of imprudence has taken place. That is, it must be said what the accused could have done in these cases of inexcusable negligence, how he could have got to know in this particular case the criminal origin of the property that was laundered. AGGRAVATING TYPES:



AGGRAVATION FOR THE PROPERTY’S ORIGIN:

The second entry in art. 301.1 Criminal Code stipulates that "the punishments will be imposed in their superior half when the properties derive from one of the crimes related to trafficking toxic drugs, narcotics or the psychotropic substances described in articles 368 - 372 in this Code"44 , bribery, influence peddling, embezzlement, illegal taxation, negotiation forbidden to civil servant, crimes against territory planning.

AGGRAVATION CAUSED BY THE ACTIVE SUBJECT CIRCUMSTANCES:

Articles 302 and 303 in the Criminal Code comprise various aggravating circumstances on basis of certain characteristics of the active subject. This is going to be the focus of our approach.

Aggravation by belonging to an organization dedicated at laundering money:

Art. 302 aggravates the punishments depriving of freedom provisioned in the previous article, imposing them in their superior half, in those cases when the author belongs to an organization dedicated to the purposes described in the mentioned article45.

Thus, SCS on 19th January 1995, repeats the idea that the organization "requires before anything else that the perpetrators belonged to a structure characterized by a decision centre and various hierarchical levels, in which substituting ones with the others can be done through a substitution network that allows the criminal project to survive, no matter the people who are part of the organization. This hampers extraordinarily the criminal prosecution of the crimes they committed, and, at the same time, increases the possible damaged persons. The organization existence does not depend on the number of people who are part of it, even if it will be influenced by the criminal plan features" ( although there is a minimum). In some sentences for money laundering in which our court has applied the aggravating type of organization, an appeal was made to the concept adopted by the Criminal Procedure Code in its article 282bis46. That is, an association of more than two people who act repeatedly and with a vocation of permanence.

44 The quoted articles regulate the basic type of drugs trafficking (art. 368 Criminal Code) and their aggravating types (articles 369 - 370 Criminal Code), as well as the precursors trafficking (art. 371 Criminal Code) and the aggravations on basis of the active subject dedication (art. 372 Cp).45 That is, an organization that specifically aims at laundering money. 46 SCS on 25th February 2004 (Ar. 1843).



For being the chief, the administrator or the responsible person for a criminal organization:

In case the perpetrator is the organization leader (chief, administrator or responsible person), a second aggravation is established: a punishment of a superior grade, meaning prison from six to nine years.

"The chiefs, the administrators or the responsible people" will be the ones having the capacity to make decisions in such organizations, therefore being ultimately responsible for its activities.

a) «The chief» is the one who can give orders, and belongs to the high hierarchy, acting upon basis of «his own authority».

b) «The responsible person» is part of the middle decision-making level, sending over the orders from the chiefs to the executive level. This is a very ample level, including the ones who perform tasks of management not in the upper level, but somewhere in the organization’s middle level.

c) «The Administrator» is the one who is in charge with controlling and deciding over the organization’s financial planning.

Aggravation due to the perpetrator’s profession:

Article 303 Criminal Code, almost identical with art. 372 Criminal Code47, in its turn inspired from the second paragraph in art. 648bis in the Italian Criminal Code, imposes the punishment of special prohibition to work or acquire a public position, profession or task, either industrial or commercial, between three and ten years, provided that whoever performs during his professional life the acts provisioned in the previous articles and belongs to the following categories: businessperson, commissioner in the financial sector, civil servant, social worker, professor or educator. On the other hand, a second group of professionals these norms also

47 The only two differences are that art. 372 Criminal Code refers to the Chapter that includes it, and requires that the authority or the agent act while exerting their professional responsibilities, while art. 303 Criminal Code refers to the acts provisioned in the previous articles and it does not require that the authority or the agent act while exerting their professional responsibilities. Both norms have a direct precedent in art. 344 bis c/ in the Previous Criminal Code.

To justify this normative similarity in fields that are so different such as the public health and the social and financial order, it can only be concluded that the legislator has also transferred the norm to the money laundering environment, based on the existence o fan aggravating type for the property’s origin for a crime of narcotics trafficking, but he has forgotten that some of these qualifications are sensible only in the field of drugs trafficking.



make reference to are any of them who have "authority or are authority agents". The punishment provisioned for this category is the absolute prohibition for ten to twenty years. In this case the infraction does not expressly require that the fact is committed during the performance of their duties.

- «The businessperson» will be both the holder and the person leading the company. Jurisprudence has appreciated the inclusion of this concept into the Criminal Code, instead of others more archaic, such as the one of trader.

- «The commissioner in the financial sector» will be the any person who is authorized from the administrative point of view to act on the financial markets. Thus, there are to be applied the dispositions in art. 39 in Law 26/1988, on 29 th June, related to the Intervention Discipline in the Credit Entities and in articles 70 and the following in Law 24/1988, on 28th June, related to the Stocks Markets.

- The same article 303 in the Criminal Code offers the legal definition for «facultative» to these purposes48, including in this category the "doctors, psychologists, the people who possess sanitary titles, vets, chemists and their assistants".

- According to art. 24.2 Criminal Code, " public official is any person who, by immediate law or disposition or by being elected or appointed by the competent authority, takes part in exerting public functions".

- The term "social worker" embraces the person who is qualified in social work.- «Teacher» and «Educator» are anyone who has a teaching or educating

position. - Authority: According to art. 24.1 Criminal Code "In the criminal sense,

anyone having on their own or as a member of a corporation, court or college body, faculties to give orders or to exert their own jurisdiction will be considered an authority. In all case, the members of the Deputies Congress, the Senate, and the Communities Legislative Assemblies will be considered an authority.

GERMANY

48 In the Code there are other definitions for «facultative», such as for example in art. 222 Criminal Code, a wider definition than the one concerning us at the moment.



Section 261 GERMAN CRIMINAL CODE

Money laundering; hiding unlawfully obtained financial benefits

(1) Whosoever hides an object which is a proceed of an unlawful act listed in the 2nd sentence below, conceals its origin or obstructs or endangers the investigation of its origin, its being found, its confiscation, ist deprivation or its being officially secured shall be liable to imprisonment from three months to five years. Unlawful acts within the meaning of the 1st sentence shall be1. felonies;2. misdemeanours under(a) Section 332 (1), also in conjunction with subsection (3), and section 334;(b) Section 29 (1) 1st sentence No 1 of the Drugs Act and section 19 (1) No 1 of the DrugPrecursors (Control) Act;



3. misdemeanours under section 373 and under section 374 (2) of the Fiscal Code, and also in conjunction with section 12 (1) of the Common Market Organisations and Direct Payments (Implementation) Act;4. misdemeanours(a) under section 152a, section 181a, section 232 (1) and (2), section 233 (1) and (2), section233a, section 242, section 246, section 253, section 259, sections 263 to 264, section 266, section 267, section 269, section 271, section 284, section 326 (1), (2) and (4), section 328(1), (2) and (4) and section 348;(b) under section 96 of the Residence Act and section 84 of the Asylum Procedure Act and section 370 of the Fiscal Code which were committed on a commercial basis or by a member of a gang whose purpose is the continued commission of such offences; and5. misdemeanours under section 89a and under section 129 and section 129a (3) and (5), all of which also in conjunction with section 129b (1), as well as misdemeanours committed by a member of a criminal or terrorist organisation (section 129 and section 129a, all of which also in conjunction with section 129b (1)). The 1st sentence shall apply in cases of tax evasion committed on a commercial basis or as a gang under section 370 of the Fiscal Code, to expenditure saved by virtue of the tax evasion, of unlawfully acquired tax repayments and allowances, and in cases under the 2nd sentence no 3 the 1st sentence shall also apply toan object in relation to which fiscal charges have been evaded.(2) Whosoever1. procures an object indicated in subsection (1) above for himself or a third person; or2. keeps an object indicated in subsection (1) above in his custody or uses it for himself or a third person if he knew the origin of the object at the time of obtaining possession of it shall incur the same penalty.(3) The attempt shall be punishable.(4) In especially serious cases the penalty shall be imprisonment from six months to ten years. An especially serious case typically occurs if the offender acts on a commercial basis or as a member of a gang whose purpose is the continued commission of money laundering.(5) Whosoever, in cases under subsections (1) or (2) above is, through gross negligence, unaware of the fact that the object is a proceed from an unlawful act named in subsection (1) above shall be liable to imprisonment of not more than two years or a fine.(6) The act shall not be punishable under subsection (2) above if a third person previously acquired the object without having thereby committed an offence.(7) Objects to which the offence relates may be subject to a deprivation order. Section 74a shall apply. Section 73d shall apply if the offender acts on a commercial



basis or as a member of a gang whose purpose is the continued commission of money laundering.(8) Objects which are proceeds from an offence listed in subsection (1) above committed abroad shall be equivalent to the objects indicated in subsections (1), (2) and (5) above if the offence is also punishable at the place of its commission.(9) Whosoever1. voluntarily reports the offence to the competent public authority or voluntarily causes such a report to be made, unless the act had already been discovered in whole or in part at the time and the offender knew this or could reasonably have known and2. in cases under subsections (1) or (2) above under the conditions named in no 1 above causes the object to which the offence relates to be officially secured shall not be liable under subsections (1) to (5) above. Whosoever is liable because of his participation in the antecedent act shall not be liable under subsections (1) to (5) above, either.

Prevention of money laundering:



3. Asset recovery – legal framework (national, EU), best practices

ROMANIA

The National Office for Crime Prevention and Cooperation for Asset Recovery

2011 marked the start of operation of a multidiscipline structure with the Ministry of Justice with competences in the field of recovering the assets resulting from offense: the National Office for Crime Prevention and Cooperation for Recovery of Assets Resulting from Crime. The structure has been notified to the EU since May and it actually cooperates with the similar European structures. Thus, Romania implements the provisions of Decision 2007/845/JHA of the Council of 6 December 2007 on the cooperation between the Asset Recovery Offices in the Member States in the field of prosecuting and identifying the proceeds of offenses or other assets related to crime.



The Office has three key functions: Exchange of data and intelligence, dissemination of best practice and development of public policies.

1. Exchange of data and intelligence. During 2011 the Office solved a number of 83 requests, of which one quarter was initiated upon request of the Romanian authorities (National Anticorruption Directorate – DNA, Directorate for Investigating Organized Crime and Terrorism – DIICOT, General Inspectorate of the Romanian Police – IGPR); Reported to the performance indicators the Office within the Ministry of Justice is at the average of the similar structures in the EU; Types of crimes predominantly invoked in the intelligence requests: participation in a group of organized crime, money laundering, fraud, theft, digital crime; The most frequent exchange of data and intelligence goes on with France, Hungary, Poland, the UK and the Netherlands; It is to be noted that the Office ensures cooperation in the CARIN Network being thus able to cooperate with similar structures outside the EU, e.g. USA and Switzerland. In order to achieve its main function, the Office has direct access to most domestic databases held by the competent institutions in the field of prosecuting and identifying property and indirect access to other databases.

2. Dissemination of best practice Initiated in March 2011, based on the cooperation with the US Department of Justice and the British Ministry of Justice, the professional training programme of the Office was consolidated through new international assistance projects. The Ministry of Justice is currently implementing a European training programme, the main beneficiaries being prosecutors, judges and police officers. Budget 264,532 Euro (80% - ISEC). The project partners are the similar structures from Germany, France and Spain. The details for three new international projects are being finalized, with the objective to consolidate the capacity of the Romanian authorities to recover the assets deriving from crime. The Ministry of Justice took steps regarding the STAR INITIATIVE (Joint initiative of the World Bank and the UN Office on Drugs and Crime) in order to develop a training programme for police officers, prosecutors and judges with regards to asset recovery. The programme can be implemented in partnership with the National Institute of Magistracy.

3. Development of public policies The Ministry of Justice initiated and completed the process of drafting the new National Anticorruption Strategy (NAS). NAS 2012 – 2015 has a holistic and



multidisciplinary nature and is addressed to all public institutions that represent the executive, legislative and judiciary power, local public authorities, business environment and civil society. In consequence of the need of regulations identified in the field of asset recovery the Office initiated legislative projects for the regulation of extended forfeiture and capitalizing the forfeited property prior to ruling the sentence of conviction; these regulations have already been adopted.

The new structure has succeeded in establishing itself internationally through their prompt way of solving the requests for data and intelligence, gaining the trust of the similar structures and of the national agencies, such as DNA and DIICOT. This is reflected by the high level of requests solved in 2011 (one quarter formulated by the Romanian agencies), and by their involvement as a partner in European and international programmes of technical assistance (European Programmes – ISEC, bilateral programme with the U.S. and Switzerland, cooperation World Bank, the Konrad Adenauer Project, etc.)

I. ASSET RECOVERY MECHANISMS (FORFEITURE) AND INTERIM MEASURES; THIRD PARTY ASSET RECOVERY AND ASSET RECOVERY AGAINST LEGAL PERSONS

At the seminars of the project the participants had as discussion topics to present the issues seizure/forfeiture raises in the Romanian legal system, as follows:1. Setting up seizure vs. Third party patrimony.2. Enforcing the existing provisions of the law that allow: Third party forfeiture Extended forfeiture Forfeiture without conviction in case the prosecutor decides not to prosecute. 3. Receptiveness with regards to the European standards that require to abandon certain traditional interpretations.

A. Applicable legislation: The legal framework with regards to freezing the proceeds of the offense, after the amendment of the Code of Criminal Procedure by Law no. 356/2006.

According to art. 118 letter e of the Criminal Code, the following are subject to special forfeiture: property gained through committing the act set forth by the criminal law, if such property is not returned to the injured person and to the extent it is not used for compensating said person.

According to art. 25 of Law no. 656/2002, the property gained through the offense of money laundering is subject to special forfeiture. In order to guarantee that the



forfeiture of property is completed, the seizure set forth by the Code of Criminal Procedure is mandatory – see art. 163 par. (1) of the Code of Criminal Procedure

The provisions of art. 241 and art. 25 of Law no. 656/2002 set forth the obligation of seizure in case of the offense of money laundering, as follows: The possibility of forfeiture by equivalent, as well as of the revenue or other gained benefits – the proceeds. If the property subject to forfeiture cannot be individualized from that gained legally, property up to the equivalent of the value of property subject to forfeiture shall be forfeited. The previous provisions apply accordingly also to revenue or other material benefits gained from the property subject to forfeiture, that cannot be individualized from that gained legally.

The amendment of the Code of Criminal Procedure by Law no. 356/2006 pursued to solve an issue encountered frequently in practice, related to completing the special forfeiture that is included in the Criminal Code among the safety measures, listed in art. 112, being regulated both in art. 118 of the Criminal Code and in a number of special laws.

Law no. 28/2012 on the amendment and supplement of certain normative acts with regards to improvement of the activity of capitalizing the seized property or, on a case by case basis, the one that according to law entered into the private property of the state, published in Official Gazette no. 189/2012, amends the contents of art. 166, art. 1681, art. 1682, art. 1683, art. 1684 of the Code of Criminal Procedure, with regards to capitalizing seized property by the end of the criminal trial.

By Law no. 63/2012 on the amendment and supplement of the Romanian Criminal Code and of Law no. 286/2009 on the New Criminal Code, published in Official Gazette, Part I no. 258 of 19 April 2012 the institution of extended forfeiture was introduced in the law. Thus, the provisions regarding extended forfeiture (art. 1182

of the Criminal Code) specify that property means also amounts of money, and in establishing the difference between the lawful revenue and the value of gained property, the value of gained property on date of acquiring such property and the costs of the convicted person, persons set forth in par. 3 shall be taken into account. If the property subject to forfeiture is not found, instead of such property, up to its value, money and goods shall be forfeited. The property and money gained from the exploitation and use of property subject to forfeiture shall also be forfeited. The forfeiture cannot exceed the value of property gained in the period set forth in par. 2, that exceeds the level of illicit revenue of the convicted person.

So, extended forfeiture is ordered if the following conditions are met cumulatively:



a) the value of property gained by the convicted person, during a period of 5 years prior, and if that is the case, after the moment of committing the offense, up to the date of issuing the deed of notification of the Court, exceeds obviously the lawfully gained revenue; b) the Court is convinced that such property comes from criminal acts of the kinds set forth in par. 1.

In order to enforce the provisions of par. 2 the value of property transferred by the convicted person or a third party to a family member, to persons the convicted person has established relations of the kind between spouses or between parents and children, in case they live together with said person, to legal person controlled by the convicted person, is also taken into account.

By the way, the ECHR standards also allow the forfeiture of property third party that is not part of the trial (ECHR, Salabiaku vs. France and Pham Hoang vs. France):• courts may grant evidence value to an actual presumption, which, in case of illicit wealth is the fact that the difference between the real patrimony and the lawful revenue comes from further, income-generating offenses, although this presumption does not have to operate automatically. • the reversal of the burden of proof does not mean in these cases eluding the presumption of innocence: in light of ECHR jurisprudence it has been noted that there are at least 3 situations when the burden of proof is reversed: (a) in case of offenses committed by fault; (b) in case of issuing a forfeiture order; (c) in case of offenses for which the burden of proof is explicitly revered.

B. Another topic for debate was the issue whether the property of LEGAL PERSONS can be seized/forfeited along a criminal trial, and whether the property of third party LEGAL PERSONS – not participating in the trial can be forfeited.

They brought some clarification on certain aspects interpreted differently by Courts regarding the enforcement of seizure with the aim to forfeit the proceeds of crime.

The issues from practice have been identified regarding the forfeiture of property deriving from crime in third party patrimony.

Thus, the merits of certain Decisions of the Bucharest Tribunal and Bucharest Appeals Court49 were considered, by which the seizure disposed over the property of

49 Criminal Sentence no. 1269 of 25 September 2007 of the Bucharest Tribunal and Criminal Decision no. 1664/R of 26 November 2007, published in Pandectele Române n0. 2/2008, p.214-218



a person not indicted, accused or civil liability party in the criminal trial, was revoked in order that such property be forfeited, ruling issued after the amendment of the Code of Criminal Procedure by Law no. 356/2006.

When the merits of certain Decisions of the Bucharest Tribunal and Bucharest Appeals Court were discussed, by which the seizure disposed over the property of a person not indicted, accused or civil liability party in the criminal trial, was revoked in order that such property be forfeited, the circumstance was highlighted that the doctrine makes reference to the derogatory regime of seizure and forfeiture within the offense of the money laundering50.

By Decision no. 1304 of 26.09.2006, issued by the Bucharest Appeals Court, Criminal Section 151, it was stated that the seizure in view of forfeiture of property allegedly gained through offenses of money laundering, set forth in art. 24 1 of Law no. 656/2002 as amended and supplemented cannot be ordered in violation of the rules set forth in art. 118 letter e of the Criminal Code, which shows that the following is subject to special forfeiture: property acquired through the committing the offense set forth in the criminal law, unless they are returned to the injured person and to the extent that it does not serve to compensate said person.Enforcing seizure of the property of other persons derives from the specifics of the offense of money laundering, pertaining to the essence of such offense the placement of property gained fraudulently in the patrimony of several persons, with the aim of hiding such property52. The possibility of forfeiting the property gained through the criminal act is admitted when such property was alienated to a third party, as shown also in the doctrine53, the distinction being made depending on the bona or mala fide of the sub-acquirer third party, and on the burden-carrying or free nature of the alienation.

50 See also George Dorel Matei „Regimul derogator al sechestrului asigurător şi al confiscării în cadrul infracţiunii de spălare a banilor” (The derogatory nature of seizure and forfeiture within the offense of money laundering), published in Dreptul (The Law) Magazine no. 6/2008, p. 268-270.51 Published in Culegerea de practică judiciară în materie penală a Curţii de Apel Bucureşti (Compendium of Judiciary Practice in criminal matters of the Bucharest Appeals Court) (2006) Ed. Wolters Kluwer, Bucharest 2008, p. 378-388.52 Dorel George Matei, „Regimul derogator al sechestrului asigurător şi al confiscării în cadrul infracţiunii de spălare a banilor”, (The derogatory nature of seizure and forfeiture within the offense of money laundering), published in Dreptul (The Law) Magazine no. 6/2008, p. 27053 Daniel Niţu „Modificările aduse în materia confiscării de prevederile Legii nr. 278/2006” (Changes regarding forfeiture, by provisions of Law no. 278/2006), published in Caiete de Drept Penal (Papers on Criminal Law) no. 3/2006, p.59.



In the recent practice of the Bucharest Tribunal and Bucharest Appeals Court it was instated that in order to apply the safety measure of special forfeiture, set forth by art. 25 of Law no. 656/2002 on prevention and sanctioning money laundering, and for putting in place measures for the prevention and combating the financing of terrorism, it is not necessary to establish the quality of civilly liable party of a subject by law, in whose patrimony formally entered amounts of money, considering that both forfeiture, and seizure meant to guarantee the former measure, have a special nature, which derogates from the general provisions of art. 163 of the Code of Criminal Procedure54.

C. Regarding the criminal liability of the legal person

Regarding this aspect the following theoretical and practical issues have been tackled, discussed and studied:

a) The nature of liability of the legal person in the Romanian legal system (art.191 Criminal Code, art.135 New Criminal Code), which may be:• General considering the sphere of offenses that can be committed• Direct, the legal person is liable for their own act

b) Material imputability criteria• Committing the offense in performing the object of activity• Committing the offense in the interest of the legal person• Committing the offense on behalf of the legal person

54 See Bucharest Tribunal, Criminal Section 1, sentence no. 632 of 4 May 2007, published in Iulia Ciolcă, “Infracţiuni economice” (Economic crime) (Culegere de practică judiciară) (Compendium of Judiciary Practice), Ed. Hamangiu, Bucharest, 2008,p. 440-445 Thus, sentence no. 632 of 4 May 2007, pronounced in file no. 2332/3/2007 of the Bucharest Tribunal, Criminal Section 1, dismissed as without merit the complaint filed by plaintiff B.P. AG against Ordinance no. 692/D/P/2005 of the Prosecutor’s Office by the High Court of Cassation and Justice, Investigation of the Offenses of Organized Crime and Terrorism Directorate. A similar solution was ruled also in criminal prosecution file no. 692/D/P/2006 of the High Court of Cassation and Justice with regards to property belonging to a third party not participating in the trial, namely FIFT INV SUA, the complaint of plaintiff, with a motivation similar to the previous one, being dismissed by criminal sentence no. 624/2007 of the Bucharest Tribunal, final sentence through criminal decision no. 1163/2007 of the Bucharest Appeals Court (Dorel George Matei, „Regimul derogator al sechestrului asigurător şi al confiscării în cadrul infracţiunii de spălare a banilor”, (The derogatory nature of seizure and forfeiture within the offense of money laundering), published in Dreptul (The Law) Magazine no. 6/2008, p. 269)



c) The subjective element according to art.191 of the Criminal Code

• “... if the act was committed with the form of guilt set forth by the criminal law”

d) Transfer of liability according to art. 151 of the New Criminal Code• (1) In case of losing legal personality through merger, absorption or splitting up after committing the offense, the criminal liability and its consequences shall be applied to:• a) the legal person created by merger;• b) the absorbing legal person;• c) the legal persons that were created through splitting up or that acquired parts of the patrimony of the divided legal person. • (2) In the case set forth in par. (1), when individualizing the punishment, the turnover, and the value of patrimonial assets of the offender legal person shall be taken into account, as well as the part of their patrimony that have been conveyed to each legal person participating in the offense.

D. Judicial practice

During the implementation of the project various relevant cases were discussed regarding the issued deriving from practice with regards to identification of property, such as the deed of 9 September 2011 of the Bucharest Tribunal, Criminal Section 2, by which it was instated that:

Note no. 53673/20.06.2011, to the International Law and Judicial Cooperation Directorate – Office of International Judicial Cooperation in Criminal Matters within the Ministry of Justice transmitted the request of International Rogatory Commission in Criminal Matters, formulated by the Civil and Criminal Tribunal of Palermo – Seizure Section, on the subject of enforcing judiciary seizure of the entire share capital, namely of the movable and immovable assets of the following companies: “AGENDA 21 SA” with formal headquarters in Bucharest, 49 Tunari Street, Sector 2, currently with headquarters at “FINECO INSOLVENCY” with headquarters Bucharest, 56 Calea Şerban Vodă, Sector 4; SC ECOREC SA with headquarters Popeşti Leordeni, Şoşeaua de Centură, Glina Warehouse, no. 2, Ilfov County, and SC “ALZALEA” SRL with registered offices at 1 Baloteşti, ground floor, office no. 2, Ilfov County, with administrative headquarters in Bucharest, 32 Regina Maria Blvd., Sector 4, the measure being ordered by the Civil and Criminal Tribunal of Palermo – Seizure Section through decision of 26.05. 2011, the note being recorded at this Court with no. 50918/3/2011.



The TRIBUNAL ruled to write notes to the National Office of the Trade Registry for the identification of the headquarters and activity of the three companies over the patrimony of which seizure was ordered, as well as to the Economic Directorates, Office of Local Taxes and Dues within the Mayor’s Offices where said companies have their headquarters, requesting the record of the movable and immovable assets in the patrimony of said companies, and for which they pay taxes and dues.

FRANCE

Seizure and forfeiture in the French Law:The judicial regime of seizure has its origins in that of the forfeiture: everything that can be forfeited according to the Law in force at the moment of the decision of the Court is susceptible to seizure in the investigation phase prior to the trial. The Law of 9 July 2010 consecrated this principle and defined in art. 706-148 and the following of the Code of Criminal Procedure the applicable special procedures for each type of seizure: seizure of the real estate property, seizure of intangible assets (payments receivable, balances of bank accounts, life insurances, trade funds, equity shares ...), seized without dispossession seizure of the value;

This Law of 9 July 2010 transposed in the domestic law the framework decision of 6 October 2006 on mutual recognition of the decisions of forfeiture, and that introduced the principle of systematic division of the assets (art. 713-32 of the Code of Criminal Procedure, issued according to the Law of 9 July 2010) and created the Agency for the Management and Recovery of Seized and Forfeited Assets (A.G.R.A.S.C.), appointed on 25 April 2011 as Asset Recovery Office (ARO) in the sense of Decision no. 2007/845/JHA of 6 December 2007 of the Council of the European Union.

Art. 131-21 (regarding natural persons) and 131-39 (regarding legal persons) of the French Criminal Code sets the reference texts in matter of forfeiture. In their current version these texts are fundamentally stipulated by the Law of 5 March 2007 that transposes in the French law the Framework Decision of the Council of the European Union of 24 February 2005 on forfeiture.

Forfeiture may refer to all assets, regardless of their nature, movable or immovable, tangible or intangible, divided or undivided. This forfeiture that represent an additional punishment, does not have a mandatory nature in principle, except for a special provision of the law, unless the object is qualified as dangerous or harmful according to law or regulations, or holding it is illicit.



a) Forfeiture of the proceeds, subject of the offense, or of the tool that helped in committing it:For the offenses punished with more than one year in prison (except for the Media offenses), forfeiture refers by full law to the proceeds of such offense (illicit gain), to the subject of this offense or to the tool that helped committing the offense or was meant to help committing the act.

Regarding the proceeds or subject of the offense, the law does not impose any condition of ownership of the convicted of said property, which means that such property can be forfeited from a third party who is not prosecuted: the Appeals Court accepted for example that the proceeds of prostitution invested on behalf of a company may be forfeited, even if the company itself is not indicted (see infra “relevant case law”). The only limit imposed on this principle seems to be observance of the rights of bona fide third parties. Even if art. 2276 of the Civil Code sets forth that “... the one that lost a thing or it was stolen from them, may claim it over a three year period starting with the day of loss or theft from the person in whose property said good is found”, it seems that the sale of the proceeds of the offense to a bona fide buyer induces a transfer of the ‘illicit claim’ of the proceed over its price. The subject of the offense then is no longer the forfeitable proceed (the stolen object for example), but its selling price, which is the only one that can be forfeited.

Regarding the tool and with the exception of a special text, the law does not allow forfeiture, unless the convicted is the owner or ‘disposes freely’ of it, the legislator considering by this new concept the very frequent situations when the offenders hide ownership of goods by using schemes (borrowed, front company).The judicial regime of the forfeiture of proceeds, subjects and tools of the offense is that of the proof. In order to achieve the forfeiture of the proceeds of the offense, the public ministry has to report a double proof: first that the prosecuted offense generated gain to its perpetrator, and then that the property or money to be forfeited corresponds to such proceeds. The law gives though the possibility of forfeiting the value that, in case the property or the value of illicit origin disappears, will regard assets or amounts of equivalent value. The forfeiture of the equivalent value may not even receive a ‘patrimonial impact.’ If the offender does not hold any assets, they shall be convicted to the payment of an amount of money, separately from the fine, with no patrimonial grounds.

Forfeiture of the elements of patrimony without any connection with the prosecuted offense

- Forfeiture of property with unjustified origin:Art. 131-21 par. 5 of the Criminal Code sets forth that in the prosecution of an offense punished by at least five years in prison, and that brought profit to the offender,



forfeiture shall regard any asset belonging to the convict or of which the offender ‘disposes freely’ (see above), and the origin of which they cannot prove.The legal regime in this case is that of the simple presumption of illicit origin. If the offender can prove the licit origin of the property or its financing, forfeiture shall not be ordered.

- Forfeiture of whole or part of patrimony:Art. 131-21 par. 6 of the Criminal Code sets forth that when the Law so provides, forfeiture can also refer also to all assets or a part of these belonging to the offender, or of which offender ‘disposes freely’. Certain texts set forth this possibility for the most profitable offenses (drug dealing, money laundering ...) or for those that require important financing in order to be committed (terrorism).The legal regime is that of the ‘legality’ (as the forfeiture of all assets or a part of them is only possible if set forth by a special law) makes totally inoperable for the offender to prove the legit origin of said asset. The Court has sovereign power in choosing the punishment, and thus in setting the limits of the forfeiture. The only limit refers to the judges observing the principle of proportionality to the seriousness of the prosecuted offense, thus this regime of legality is sometimes de facto related to that of irrefutable presumption of illicit origin.



GERMANY

Interim measures: THE GERMAN CODE OF CRIMINAL PROCEDURE

Section 111b [Securing of Objects]

(1) Objects may be secured by seizure pursuant to Section 111c if there are grounds to assume that the conditions for their forfeiture or for their confiscation have been fulfilled. Section 94 subsection (3) shall remain unaffected. (2) If there are grounds to assume that the conditions have been fulfilled for forfeiture of equivalent value or for confiscation of equivalent value of the object, attachment in rem may be ordered pursuant to Section 111d in order to secure such equivalent value.



(3) If there are no cogent grounds, the court may revoke the order in respect of the measures referred to in the first sentence of subsection (1) and in subsection (2) after a maximum period of six months. Where certain facts substantiate the suspicion of the offence and the time limit referred to in the first sentence is not sufficient given the particular difficulty or particular extent of the investigations or for another important reason, the court may, upon application by the public prosecution office, extend the measure provided the grounds referred to justify their continuation. Unless there are cogent grounds, the measure shall not be continued for longer than a period of twelve months. (4) Sections 102 to 110 shall apply mutatis mutandis. (5) Subsections (1) to (4) shall apply mutatis mutandis insofar as forfeiture may not be ordered for the sole reason that the conditions under section 73 subsection (1), second sentence, of the Criminal Code apply.

Section 111c [Effecting Seizure]

(1) Seizure of a moveable asset shall be effected in the cases referred to under Section 111b by impounding the asset or by indicating the seizure by seal or in some other way. (2) Seizure of a plot of land or of a right subject to the provisions on compulsory execution in respect of immovable property shall be effected by making an entry concerning the seizure in the Land Register. The provisions of the Act on Compulsory Sale by Public Auction and Compulsory Administration in respect of the extent of seizure on compulsory sale by public auction shall apply mutatis mutandis. (3) Seizure of a claim or any other property right not subject to the provisions on compulsory execution in respect of immovable property shall be effected by attachment. The provisions of the Civil Procedure Code on compulsory execution in respect of claims and other property rights shall apply mutatis mutandis. The request to make the declarations referred to in section 840 subsection (1) of the Civil Procedure Code shall be linked to seizure. (4) Seizure of ships, ship constructions and aircraft shall be effected pursuant to subsection (1). The seizure shall be entered in the Register in respect of those ships, ship constructions and aircraft that are entered in the Register of Ships, in the Register of Ship Constructions or in the Register of Liens on Aircraft. Application for such entry may be made in respect of ship constructions or aircraft that have not been, but are capable of being, entered in the Register; the provisions governing an application by a person who is entitled to request entry in the Register by virtue of an executory title shall apply mutatis mutandis in this case. (5) Seizure of an object pursuant to subsections (1) to (4) shall have the effect of a prohibition of alienation within the meaning of section 136 of the Civil Code; the prohibition shall also cover other directions besides alienation. (6) A moveable asset that has been seized may



1. be handed over to the person concerned against immediate payment of its value or 2. be retained by the person concerned, subject to revocation at any time, for further use in the interim until conclusion of the proceedings. The sum paid pursuant to the first sentence, number 1, shall be substituted for the asset. The measure pursuant to the first sentence, number 2, may be made dependent on the person concerned providing security or fulfilling certain conditions.

Section 111d [Attachment for Equivalent Value; Fine or Costs]

(1) Attachment in rem may be ordered by virtue of forfeiture or of confiscation of equivalent value, by virtue of a fine or of the anticipated costs of criminal proceedings. Attachment may only be ordered by virtue of a fine or of the anticipated costs if judgment has been passed against the defendant imposing punishment. Attachment shall not be ordered to secure execution costs or negligible amounts. (2) Sections 917 and 920 subsection (1) as well as sections 923, 928, 930 to 932, and 934 subsection (1) of the Civil Procedure Code shall apply mutatis mutandis. (3) If attachment has been ordered by virtue of a fine or of the anticipated costs, an enforcement measure shall be revoked upon application by the defendant if the defendant needs the object of attachment to pay the costs of his defence, his maintenance or the maintenance of his family.

Section 111e [Order for Seizure or Attachment]

(1) Only the court, and in exigent circumstances also the public prosecution office, shall be competent to order seizure (Section 111c) and attachment (Section 111d). Officials assisting the public prosecution office (section 152 Courts Constitution Act) shall also be competent to order seizure of a moveable asset (Section 111c, subsection (1)) in exigent circumstances. (2) If the public prosecution office has ordered seizure or attachment, it shall apply for court confirmation of the order within one week. This shall not apply when seizure of a moveable asset has been ordered. In all cases the person concerned may apply for a court decision at any time. (3) The public prosecution office shall inform the person who is aggrieved as a result of the act without delay of enforcement of the order for seizure or attachment, insofar as his identity is known or becomes known during the course of proceedings. (4) If notifying each aggrieved person individually would result in a disproportionate amount of effort or if it may be assumed that other yet unknown aggrieved persons have claims arising from the act, notice may be given of the seizure or attachment by insertion once in the electronic Federal Gazette. In addition, notice may also be published in some other suitable manner. Personal particulars may only be published insofar as their provision is essential for enabling the aggrieved persons to access



the secured assets in order to enforce their claims. Once the security measures have been concluded the public prosecution office shall initiate the deletion of the publication inserted in the electronic Federal Gazette.

Section 111f [Effecting Seizure and Enforcing Attachment]

(1) Effecting seizure (Section 111c) shall be incumbent upon the public prosecution office and, in the case of moveable assets (Section 111c subsection (1)), also upon the officials assisting it. Section 98 subsection (4) shall apply mutatis mutandis. (2) The required entries in the Land Register as well as in the registers referred to in Section 111c subsection (4) shall be made upon application by the public prosecution office or by the court that ordered seizure. The same shall apply mutatis mutandis to the applications referred to in Section 111c subsection (4). (3) If enforcement of attachment is to be effected pursuant to the provisions on attachment of moveable assets, this may be effected by the authority designated in section 2 of the Ordinance on Recovery of Claims of the Judicial Authorities, by the court bailiff, by the public prosecution office, or by the officials assisting it (section 152 of the Courts Constitution Act). Subsection (2) shall apply mutatis mutandis. The public prosecution office or, upon the application of the public prosecution office, the court that ordered the attachment shall be competent to order attachment of a registered ship or ship construction and to order attachment of a claim arising out of the attachment pursuant to Section 111d. (4) Section 37 subsection (1) shall apply to service, subject to the proviso that the officials assisting the public prosecution office (section 152 of the Courts Constitution Act) may also be assigned the task of implementing the order. (5) The person concerned may at any time apply for a decision of the court in respect of measures taken in the course of enforcing the seizure or attachment.

Section 111g [Compulsory Execution; Enforcement of Attachment by the Aggrieved Person]

(1) Seizure of an object pursuant to Section 111c and the enforcement of attachment pursuant to Section 111d shall not take effect against a disposition made by the aggrieved person, by way of compulsory execution or enforcement of attachment on the basis of a claim arising from the criminal offence. (2) Compulsory execution or enforcement of attachment pursuant to subsection (1) shall require the approval of the court which is competent to order seizure (Section 111c) or attachment (Section 111d). The decision shall be given in the form of an order that may be contested by the public prosecution office, the accused and the aggrieved person by means of an immediate complaint. Approval shall be refused if the aggrieved person cannot furnish prima facie evidence that the claim arose from the criminal offence. Section 294 of the Civil Procedure Code shall apply.



(3) The prohibition of alienation pursuant to Section 111c subsection (5) shall apply from the moment of seizure also for the benefit of aggrieved persons who, during seizure, pursue compulsory execution in respect of the object seized or who enforce attachment. Entry of the prohibition of alienation in the Land Register for the benefit of the state shall also apply, for the purposes of section 892 subsection (1), second sentence, of the Civil Code, as an entry for the benefit of those aggrieved persons who, during seizure, are entered in the Land Register as beneficiaries of the prohibition of alienation. Proof that the claim arose from the criminal offence can be furnished to the Land Registry by submission of the order granting approval. The second and third sentences shall apply mutatis mutandis to the prohibition of alienation in the case of ships, ship constructions and aircraft referred to in Section 111c subsection (4). The legal force of the prohibition of alienation for the benefit of the aggrieved person shall not be affected by revocation of seizure. The first and fifth sentences shall apply mutatis mutandis for the effect of the lien which arises in respect of the moveable assets through the enforcement of the attachment (Section 111d). (4) If the object seized or distrained by virtue of attachment is not subject to forfeiture on grounds other than those referred to in section 73 subsection (1), second sentence, of the Criminal Code, or if approval was wrongfully granted, the aggrieved person shall be obliged to compensate third parties for the damage caused to them due to the fact that the prohibition of alienation applies for his benefit pursuant to subsection (3). (5) Subsections (1) to (4) shall apply mutatis mutandis if forfeiture of an object has been ordered but the order has not yet become binding. They shall not apply if the object is subject to confiscation.

Section 111h [Prior Satisfaction of Claims of the Aggrieved Person on Attachment] (1) If the aggrieved person applies for compulsory execution in respect of a claim arising from the criminal offence or if he enforces attachment in respect of a plot of land where attachment has been enforced pursuant to Section 111d, he may demand that his right shall have priority over the collateral mortgage established by enforcement of that attachment. The priority of such right shall not be lost by virtue of revocation of the attachment. The consent of the owner shall not be required for the change of priority. In all other respects section 880 of the Civil Code shall apply mutatis mutandis. (2) The change of priority shall require approval by the judge who is competent to order attachment (Section 111d). Section 111g subsection (2), second to fourth sentences, and subsection (3), third sentence, shall apply mutatis mutandis.



(3) If approval was wrongfully granted, the aggrieved person shall be obliged to compensate third persons for the damage caused to them due to the change of priority. (4) Subsections (1) to (3) shall apply mutatis mutandis if attachment pursuant to Section 111d is enforced in respect of a ship, a ship construction or an aircraft as defined in Section 111c subsection (4), second sentence.

Section 111i [Maintenance of Seizure]

(1) The court may order that seizure pursuant to Section 111c or attachment pursuant to Section 111d be maintained for a maximum period of three months, as long as the proceedings pursuant to Sections 430 and 442, subsection (1) are confined to the other legal consequences and the immediate revocation would be unjust in respect of the aggrieved person. (2) If the court did not order forfeiture simply because claims of an aggrieved person within the meaning of section 73 subsection (1), second sentence, of the Criminal Code present an obstacle to this, it may state this in the judgment. In such a case, it shall describe what was acquired. Insofar as the preconditions for section 73a of the Criminal Code apply, the court shall determine a sum of money equivalent to the value of what was acquired. Insofar as 1. the aggrieved person has already taken action by way of compulsory execution or enforcement of attachment, 2. it is proven that the aggrieved person was satisfied out of assets that were not seized or pledged by way of enforcement of attachment, or 3. what was acquired was delivered to the aggrieved person pursuant to Section 111k, this is to be deducted as part of the assessment to be made pursuant to the second and third sentences. (3) Insofar as the court proceeds pursuant to subsection (2), it shall maintain, in its order, the seizure (Section 111c) of what was acquired within the meaning of subsection (2), second and fourth sentences, as well as the attachment in rem (Section 111d) up to the amount of the sum determined pursuant to subsection (2), third and fourth sentences, for three years. Time shall start to run with effect from the binding judgment. Secured assets shall be listed in the order. Section 917 of the Civil Procedure Code shall not apply. If it is proven that the aggrieved person was satisfied out of assets that were not seized or distrained by way of enforcement of attachment, the court shall revoke the seizure (Section 111c) or attachment in rem (Section 111d) upon application by the person concerned. (4) The court shall notify the person aggrieved by the act without delay of the order made pursuant to subsection (3) as well as the fact of its entry into force. With the notification, attention is to be drawn to the consequences listed in subsection (5) and to the option of enforcing claims by way of compulsory execution or enforcement of



attachment. Section 111e subsection (4), first to third sentences, shall apply mutatis mutandis. (5) Upon expiry of the time limit specified in subsection (3) the state shall acquire the assets listed in accordance with subsection (2) pursuant to section 73e subsection (1) of the Criminal Code, as well as a right to payment in the amount of the sum assessed pursuant to subsection (2), unless 1. the aggrieved person has in the meantime already taken action by way of compulsory execution or enforcement of attachment in respect of his claim, 2. it is proven that the aggrieved person was satisfied out of assets that were not seized or distrained by way of enforcement of attachment, or 3. objects have in the meantime been delivered to the aggrieved person or deposited pursuant to Section 111k, or 4. objects pursuant to Section 111k would have had to have been delivered to the aggrieved person and he applied for their delivery prior to expiry of the time limit specified in subsection (3). At the same time, the state may realize the lien based on enforcement of attachment in rem in accordance with the provision of Part Eight of the Civil Procedure Code. The proceeds as well as any money deposited as security shall fall to the state. Upon realization the right to payment which arose pursuant to the first sentence shall also expire insofar as the proceeds of realization do not exceed the amount of the claim. (6) The court of first instance shall issue an order confirming the occurrence, and extent, of the acquisition of rights by the state pursuant to subsection (5) first sentence. Section 111l subsection (4) shall apply mutatis mutandis. The order may be challenged by way of immediate complaint. Once the order has legal force the court shall initiate the deletion of the publications in the electronic Federal Gazette initiated pursuant to subsection (4). (7) Insofar as the person convicted or affected by the seizure or attachment in rem satisfies the claims of the aggrieved person secured thereby after expiry of the time limit specified in subsection (3), he may demand compensation up to the amount received by the state for the realization. The right to compensation shall be excluded 1. insofar as the state’s right to payment pursuant to subsection (5), first sentence, taking into account the proceeds received by the state, precludes it or 2. if three years have passed since expiry of the time limit set out in subsection (3). (8) In the cases referred to in section 76a subsection (1) or (3) of the Criminal Code, subsections (2) to (7) are to be applied mutatis mutandis to the proceedings pursuant to Sections 440 and 441 in conjunction with Section 442 subsection (1).

Section 111k [Return of Moveable Assets to the Aggrieved Person]

Moveable assets which have been seized or otherwise secured pursuant to Section 94 or which have been seized pursuant to Section 111c subsection (1) shall be handed over to the aggrieved person from whom they have been taken as a result of



the criminal offence if his identity is known, if the claims of third persons do not present an obstacle and if the assets are no longer required for the purposes of the criminal proceedings. Section 111f subsection (5) shall apply. The public prosecution office may obtain a decision of the court if the rights of the aggrieved person are not evident.

Section 111l [Emergency Sale]

(1) Objects which have been seized pursuant to Section 111c, as well as objects which have been attached (Section 111d), may be sold before the judgment becomes final if they are subject to deterioration or substantial reduction of their value, or if their preservation, care or maintenance would result in disproportionately high costs or difficulties. In the cases referred to in Section 111i subsection (2), assets which have been attached (Section 111d) may be sold after the judgment has become binding, if this appears expedient. The proceeds shall be substituted for the objects. (2) The emergency sale shall be ordered by the public prosecution office in the preparatory proceedings and after the judgment has become final. The officials assisting it (section 152 of the Courts Constitution Act) shall have the authority to order such sale if there is a danger that the object will be subject to deterioration before the decision of the public prosecution office can be obtained. (3) Upon preferring public charges the order shall be made by the court seized of the main proceedings. The public prosecution office shall have the authority to make such order if there is a danger that the object will be subject to deterioration before the decision of the court can be obtained; subsection (2), second sentence, shall apply mutatis mutandis. (4) The accused, the owner and other persons who have rights in relation to the object shall be heard prior to the order. The order, as well as the time and place of the sale, shall be made known to them as far as this appears to be practicable. (5) The emergency sale shall be carried out in accordance with the provisions of the Civil Procedure Code concerning the use of an attached object. The public prosecution office shall take the place of the court responsible for execution (section 764 of the Civil Procedure Code) in the cases referred to in subsections (2) and (3), second sentence; in the case of subsection (3), first sentence, the court seized of the main proceedings. The use admissible pursuant to section 825 of the Civil Procedure Code may be ordered at the same time as the emergency sale or subsequently, either proprio motu or upon application of the persons designated in subsection (4), or in the case of subsection (3), first sentence, also upon application by the public prosecution office. If it appears expedient, an emergency sale may be ordered in some other manner and by a person other than the bailiff. (6) The person concerned may request a decision by the court competent pursuant to Section 162 regarding orders of the public prosecution office or the officials



assisting it. Sections 297 to 300, 302, 302 to 306, 311a and 473a shall apply mutatis mutandis. The court, and in urgent cases the presiding judge, may order suspension of the sale.

Final measures:



- Measures against natural persons: GERMAN CRIMINAL CODE

Section 73

Conditions of confiscation

(1) If an unlawful act has been committed and the principal or a secondary participant has acquired proceedsfrom it or obtained anything in order to commit it, the court shall order the confiscation of what was obtained. This shall not apply to the extent that the act has given rise to a claim of the victim the satisfaction of whichwould deprive the principal or secondary participant of the value of what has been obtained.(2) The order of confiscation shall extend to benefits derived from what was obtained. It may also extend to objects which the principal or secondary participant has



acquired by way of sale of the acquired object, as a replacement for its destruction, damage to or forcible loss of it or on the basis of a surrogate right.(3) If the principal or secondary participant acted for another and that person acquired anything thereby, the order of confiscation under subsections (1) and (2) above shall be made against him. (4) The confiscation of an object shall also be ordered if it is owned or subject to a right by a third party, who furnished it to support the act or with knowledge of the circumstances of the act.

Section 73a

Confiscation of monetary value

To the extent that the confiscation of a particular object is impossible due to the nature of what was obtained or for some other reason or because confiscation of a surrogate object pursuant to section 73(2) 2nd sentence has not been ordered, the court shall order the confiscation of a sum of money which corresponds to the value of what was obtained. The court shall also make such an order in addition to the confiscation of an object to the extent that its value falls short of the value of what was originally obtained.

Section 73b

Assessment of value

The scope of what was obtained and its value as well as the amount of the victim’s claim the satisfaction of which would deprive the principal or secondary participant of that which was obtained may be estimated.

Section 73c

Hardship

(1) Confiscation shall not be ordered to the extent it would constitute an undue hardship for the person affected. The order may be waived to the extent the value of what was obtained is no longer part of the affected person’s assets at the time of the order or if what was obtained is only of minor value.(2) As to conditions of payment section 42 shall apply mutatis mutandis.

Section 73d

Extended confiscation



(1) If an unlawful act has been committed pursuant to a law which refers to this provision, the court shall also order the confiscation of objects of the principal or secondary participant if the circumstances justify the assumption that these objects were acquired as a result of unlawful acts, or for the purpose of committing them. The 1st sentence shall also apply if the principal or secondary participant does not own or have a right to the object merely because he acquired the object as a result of an unlawful act or for the purpose of committing it. Section 73(2) shall apply mutatis mutandis.(2) If the confiscation of a particular object has, after the act, become impossible in whole or in part section 73a and section 73b shall apply mutatis mutandis.(3) If after an order of confiscation pursuant to subsection (1) above, due to another unlawful act which the principal or secondary participant committed before that order, a decision must again be taken as to the confiscation of objects of the principal or secondary participant, the court in doing so shall take into account the previous order.(4) Section 73c shall apply mutatis mutandis.

Section 73e

Effect of confiscation

(1) If the confiscation of an object is ordered title to the property or the right confiscated shall pass to the state once the order becomes final if the person affected by the order has a right to it at the time. The rights of third parties in the object remain unaffected. (2) Prior to its becoming final the order shall have the effect of a prohibition to sell within the meaning of section 136 of the Civil Code; the prohibition shall also cover dispositions other than sales.

Measures against legal persons: Act on Regulatory Offences

Section 29a Forfeiture

(1) If the perpetrator has gained something for an act or arising out of an act which may be sanctioned by a regulatory fine, and if a regulatory fine has not been assessed against him for the act, forfeiture of a sum up to the amount of the pecuniary advantage gained may be ordered. (2) If the perpetrator of an act which may be sanctioned by a regulatory fine has acted for another, and that person has gained something thereby, forfeiture of a sum up to the amount designated in subsection 1 may be ordered against him.



(3) The extent of what has been acquired and its value may be estimated. Section 18 shall apply mutatis mutandis. (4) If no regulatory fining proceedings are initiated against the perpetrator, or if they are discontinued, forfeiture may be ordered in its own right.

Section 30 Regulatory Fine Imposed on Legal Persons and on Associations of Persons

(1) Where someone acting 1. as an entity authorised to represent a legal person or as a member of such an entity, 2. as chairman of the executive committee of an association without legal capacity or as a member of such committee, 3. as a partner authorised to represent a partnership with legal capacity, or 4. as the authorised representative with full power of attorney or in a managerial position as procura-holder or the authorised representative with a commercial power of attorney of a legal person or of an association of persons referred to in numbers 2 or 3, 5. as another person responsible on behalf of the management of the operation or enterprise forming part of a legal person, or of an association of persons referred to in numbers 2 or 3, also covering supervision of the conduct of business or other exercise of controlling powers in a managerial position, has committed a criminal offence or a regulatory offence as a result of which duties incumbent on the legal person or on the association of persons have been violated, or where the legal person or the association of persons has been enriched or was intended to be enriched, a regulatory fine may be imposed on such person or association. (2) The regulatory fine shall amount 1. in the case of a criminal offence committed with intent, to not more than one million Euros, 2. in the case of a criminal offence committed negligently, to not more than five hundred thousand Euros. Where there has been commission of a regulatory offence, the maximum regulatory fine that can be imposed shall be determined by the maximum regulatory fine imposable for the regulatory offence concerned. The second sentence shall also apply where there has been commission of an act simultaneously constituting a criminal offence and a regulatory offence, provided that the maximum regulatory fine imposable for the regulatory offence exceeds the maximum pursuant to the first sentence. (3) Section 17 subsection 4 and section 18 shall apply mutatis mutandis. (4) If criminal proceedings or regulatory fining proceedings are not commenced on account of the criminal offence or of the regulatory offence, or if such proceedings



are discontinued, or if imposition of a criminal penalty is dispensed with, the regulatory fine may be assessed independently. Statutory provision may be made to the effect that a regulatory fine may be imposed in its own right in further cases as well. Independent assessment of a regulatory fine against the legal person or association of persons shall however be precluded where criminal offence or the regulatory offence cannot be prosecuted for legal reasons; section 33 subsection 1 second sentence shall remain unaffected. (5) Assessment of a regulatory fine incurred by the legal person or association of persons shall, in respect of one and the same offence, preclude a forfeiture order, pursuant to sections 73 or 73a of the Penal Code or pursuant to section 29a, against such person or association of persons.

Section 130 (VIOLATION OF OBLIGATORY SUPERVISION IN OPERATIONS AND ENTERPRISES)

(1) Whoever, as the owner of an operation or undertaking, intentionally or negligently omits to take the supervisory measures required to prevent contraventions, undertaking, of duties incumbent on the owner and the violation of which carries a criminal penalty or a regulatory fine, shall be deemed to have committed a regulatory offence in a case where such contravention has been committed as would have been prevented, or made much more difficult, if there had been proper supervision. The required supervisory measures shall also comprise appointment, careful selection and surveillance of supervisory personnel. (2) An operation or undertaking within the meaning of subsection 1 shall include a public enterprise. (3) Where the breach of duty carries a criminal penalty, the regulatory offence may carry a regulatory fine not exceeding one million Euros. Where the breach of duty carries a regulatory fine, the maximum regulatory fine for breach of the duty of supervision shall be determined by the maximum regulatory fine imposable for the breach of duty. The second sentence shall also apply in the case of a breach of duty carrying simultaneously a criminal penalty and a regulatory fine, provided that the maximum regulatory fine imposable for the breach of duty exceeds the maximum pursuant to the first sentence.

4. Relevant case law

ROMANIA

1. The “Corduneanu Clan” Case – Organized crime, money laundering



Criminal activities carried out in Romania consisted of offenses of extortion, fraud in real estate by obtaining bank loans, trafficking, privation of freedom, robbery, money laundering.

Criminal activity conducted outside Romania consisted of creating a network of “thieves”55 to ensure the transfer of the money gained in Romania, “investing” the money in Romania,

The benefits gained from the criminal activity amounted to 1,650,000 Euro, while the money “invested” by the criminal group as expenses for financing activities was 70,284 Euro. These amounts were established only after analyzing the data from the documents obtained from various institutions. In fact, the amount is much higher, as the money was circulated in other ways than through specialized institutions.

Regarding the structural and evolutionary characteristics of the group, the criminal investigation revealed that it has a domestic origin, being initially formed on the criterion of family, but it subsequently became a mafia-like network and operated in Romania and in other 34 states. As mentioned, the criminal spectrum approached was the most diverse.With regards to functional characteristics of the criminal group, we point out the following: homogeneous hierarchical relationships on two levels: leadership, decision-making echelon, executive echelon conspiracy internal sanction system mobility, “vigilantes” interest to penetrate the public institutions or police structures in order to gather information on any possible investigation that might be going on pursuing their members

Charges of money laundering were brought in the case for the offense of money laundering, as it was found that: there were a series of economic and financial techniques and methods by which the money or other property derived from illicit activity, fraud is derived from their origin in order to be then given an apparent legally and economically justified origin. it aimed a wide range of areas of the socio-economic of life

55 “thief” – generic term used to denominate the persons sent abroad to commit offenses, the range of these being varied, including theft, robbery, fraud by using electronic means of payment



the mechanism of money laundering targeted especially the field of real estate, namely the purchase of land and buildings at low prices followed by an immediate sale but priced much higher, and the acquisition of property that is in a precarious condition, renovating them using illicit money, followed by sale at a higher price. Buildings were also built and then sold successively in order to lose track of them. Various real estates were acquired by fraudulent means, followed by successive fictitious sales and then sold such real estates to bona fide people obtaining the market price. it supposed a prerequisite offense generating assets in the generic sense, namely money, the laundering of which is being pursued the offenders of money laundering knew the illicit origin of such money, or that it is the proceeds of an offense and attempted to hide its origin by various laundering procedures.

In this case, the essential parts capable of supporting the scaffold of evidence were the following: undisputed existence of a network of thieves that operated in the European Union and beyond; evidence of acts committed in other states by the members of the network and we consider here the data provided regarding the judiciary proceedings undertaken by foreign authorities with regards to the members of the network; to be noted that par. 7 of art. 9 of the Convention provides that each State will ensure that the predicate offense covers also the activities that are offenses, performed in another state and that is an offense in that State, while in this case data regarding convictions in other states of the members of the network of thieves have been obtained, convictions for theft, robbery, acts that are obviously incriminated by the Romanian legislator too; proof regarding the money sent in the country to the members of the group and we refer to those persons about whom there is clear evidence arising even from their own statements, that on the territory of those states they had performed criminal activities and not other kind of activities, in relation to which there might be doubts of being illicit; clear evidence with regards to the fact that the addressees of the money knew that it came from crime; All these elements fulfill jointly the demands imposed by the Romanian legislator on the conditions (and in terms of the Convention Romania has assumed) that must be met for a person to be brought to Court.

The preventive and safety measures taken into account were the following: Preventively arrested persons – 18 Prosecuted persons – 27 Investigated persons – 170



Criminal prosecution is in progress with regards to 143 persons Seized property (villas, apartments, land) – 28 The value of the seized property is approximately 2 million Euro

2. The Rompetrol Case – organized crime, money laundering, manipulation of the capital market

Criminal sentence no. 860 of July 14, 2006, issued by the Bucharest Tribunal, Criminal Section 2 admitted the complaint filed by the plaintiff TRG Olanda in SC R.R. S.A. Constanta and, consequently, the dissolution of the procedures for enforcement of seizure was ordered56. In fact, the text of art. 163 par.1 of the

56 Studying the filed complaint, the Tribunal started, taking into account that the ordinance of 21 February 2002 was partly infirmed through the resolution of 1 June 2006 of the head of directorate prosecutor at the Investigation of Organized Crime and Terrorism Directorate, from the arguments of this last resolution. It was considered that the precautionary measure based on the provisions of art. 163 of the Code of Criminal Procedure, taken with regards to the shares held by T.R.G. Olanda at S.C. R.R. S.A. Constanţa, in order to ensure the damage produced by the offense, it is not legal, as the civil suit is governed by the principle of availability, so introducing in the case of the civilly liable party can only be achieved upon the explicit request formulated by the civil party. While in the case it was found that the plaintiff T.R.G. Olanda dod not have, on date of instating the seizure, the quality of civilly liable party, no such request being filed to this extent by the civil party. The legality of enforcing seizure was still found, reported to the provisions of art. 24 1

and art. 25 of Law no. 656/2002, that sets forth the obligation of taking precautionary measures in case of the offense of money laundering. The first instance has also shown, embracing totally the above stated point of view (regarding the lack of civilly liable quality of T.R.G. Olanda), that coincides totally with the defences formulated by the plaintiff, that it is yet to be studied to what extent is possible to enforce seizure based on the provisions of Law no. 656/2002. According to art. 25 par. (1) of Law no. 656 of 7 December 2002 on prevention and sanction of money laundering, in case an offense of money laundering or financing of terrorism has been committed, the provisions of art. 118 of the Criminal Code shall apply with regards to special forfeiture, in the last paragraph it is specified that for completing the forfeiture of property it is mandatory to instate seizure set forth by Code of Criminal Procedure. Thus, based on the purpose for ordering this precautionary measure, scope explicitly set forth by law – special forfeiture – the Tribunal found that, unlike the precautionary measure ordered to repair the damage caused by the offense, that may be taken over the property of the accused/defendant and of the civilly responsible party, in the studied case this can only be ordered on the defendant’s property. According to art. 118 of the Criminal Code, special forfeiture is a safety measure, and the safety



Code of Criminal Procedure, with regards to seizure, underwent and amendment regarding the scope for which seizure can be ordered, so that besides restoring the damage produced by the offense and guaranteeing the enforcement of the punishment of fine, it is also pursues guaranteeing the special forfeiture. Though in the doctrine it is noted that this is a minor change, some authors show that this amendment was still necessary as the pursued scope by enforcing seizure is amongst the conditions of admissibility with regards to taking such measures, and on the other hand, it was necessary to solve an issue encountered frequently in practice, related to completing the special forfeiture that is amongst the safety measures in the

measures, together with sanctions and educational measures, are criminal sanctions. The impossibility of seizure for the execution of criminal sanctions on other property than the of the defendant or of the accused is also consecrated at the legislative level. To this extent, as an expression of the above stated principle, art. 163 par. (3) of the Code of Criminal Procedure shows that the “precautionary measures to ensure the execution of the sanction of fine is taken only over the property of the accused/defendant.” As compared to the scope of seizure regulated by art. 163 of the Code of Criminal Procedure, ensuring the repair of the damage caused by the offense and the guarantee of execution of the sanction of fine – it is natural that the legislator did not refer to the other criminal sanctions too. The fundamental principle of personality of such sanctions preclude the enforcement of the provisions of art. 25 of Law no. 656/2002, over other property than that in the patrimony of the accused in present case, and as such, it is impossible to take the measure of special forfeiture of property held by the petitioner (namely shares), freezing of said shares for forfeiture being illegal.An appeal was declared against this decision, within the legal deadline, by the Prosecutor's Office beside the High Court of Cassation and Justice – Investigation of Organized Crime and Terrorism Directorate – criticizing it as being unlawful and without merit. In the motivation of the appeal, the following are envisaged to the judicial control Court: The file covers the acts committed by defendants PDC, SGP, HCR and others who, since 1998, have set up a transnational organized crime group that aimed to perform actions misleading the Romanian authorities with the conclusion and performance of privatization contracts of companies, acquisition of money owed to the state budget, money laundering and externalization of funds gained as proceeds of criminal activity.By Ordinance of 21 February 2006, the precautionary measure was taken and effectively enforced over a number of 546,171.3040 shares held by T.R.G. Olanda at S.C. R.R. S.A. Constanţa, according to the minutes of 28 February 2006. In what concerns acquirement by T.R.G. Olanda of the ownership of the shares issued by S.C. R.R. S.A. Constanţa (former P. SA), the documents and papers of the file show that T.R.G. acquired said shares through assignment of ”payment receivable L.”.



Criminal Code, listed in art. 112, being regulated both in art. 118 of the Criminal Code, and in a large number of special laws, among them Law no. 656/200257.

We consider however that according to art. 25 of Law no.656/2002, the property that is the object of money laundering is forfeited, and in order to guarantee the completion of the forfeiture the precautionary measures set forth in the Code of Criminal Procedure are taken, i.e. it is mandatory to enforce seizure, according to art. 241 of Law no. 656/2002, amended and supplemented.

So, we cannot base the opinion or Court Decision, according to case, referring only to art. 118 of the Criminal Code, or to art. 163 of the Code of Criminal Procedure,

Studying the documents and papers of the file, the Court appreciated the appeal as without merit, based on the following arguments:The Prosecutor’s Office had the possibility to freeze the shares or equity shares of the defendants in various companies, but the situation is not valid in case the shares subject to seizing are not owned by the defendants but by companies where the defendants are shareholders. Otherwise the patrimony of the companies would be confused for the personal patrimony of the defendants, situation incompatible with the provisions of the law on force (art. 44 of the Constitution of Romania and the principle of personal criminal liability, consecrated by the provisions of art. 9 of the Code of Criminal Procedure).Whereas, according to art. 24 par. (3) of the Code of Criminal Procedure, the civilly liable party is called in the criminal trial to be held liable according to law for the damages caused through the act of the accused or defendant. These provisions are corroborated with the imperative norm enforced by the provisions of art. 163 par. (5) of the Code of Criminal Procedure that states that the measures of seizure can be taken upon request of the civil party or ex officio. Both provisions report to the provisions of art. 17 par. (1) of the Code of Criminal Procedure that sets forth the exemptions when the civil suit is initiated and exercised ex officio (namely, when the injured party is a person who lacks the capacity of exercising their rights or have restricted capacity to exercise their rights).The analysis of the ordinance of the Prosecutor's Office beside the High Court of Cassation and Justice, D.I.I.C.O.T., of 21 February 2006 shows that seizure was ordered over a number of 5,461,713,040 shares held by T.R.G Olanda, the legal representative of which was the administrator, P.D.C.Neither until the date of issue of the disputed ordinance, nor later, up to the moment of sending the accused P.D.C to trial, the civilly liable quality of the responding party, T.R.G Olanda, has been noted.As the provisions of exception of art. 17 alin. (1) of the Code of Criminal Procedure are not met either, the Court considered that seizure had been ordered against a person that did not have the quality required by law in order that their patrimony to be subject to such seizure.



both of a general nature, since there is a special text (art. 241 and art. 25 of Law no. 656/2002), which applies with priority.

Consequently, in agreement with the viewpoint of the Prosecutor’s Office, we consider that it was possible to enforce seizure of the shares of T.R.G Olanda, taking into account that such shares were evidently acquired for committing offense. The money was obtained by the embezzlement of ‘payment receivable L’ by the defendants P.D.C. and S.G.P., H.C.R. being an accomplice, the money being integrated in the circuit of money laundering, according to the findings of the Office for Prevention and Control of Money Laundering. The fact that the shares are in the patrimony of T.R.G Olanda is irrelevant, under the conditions that the legal

With regards to the imperative provisions of art. 25 of Law no. 656/2002 that, in the opinion of the Prosecutor’s Office, would justify the seizure aiming for forfeiture of the property that is the object of the offense of money laundering, the Court noted that these are indeed special norms, but they are not derogatory from the common rule set forth in art. 118 of the Criminal Code, to which said provisions make explicit reference. The enforcement of seizure with the aim of forfeiture of property that is allegedly gained from crime, set forth in art. 241 of Law no. 656/2002, amended and supplemented, cannot be ordered breaking the norms set forth in art. 118 letter d) of the Criminal Code. The property owned by another person than the one set forth in art. 163 of the Code of Criminal Procedure cannot be frozen without violating the features of the property rights.One last remark is necessary regarding the nature of the ordered seizure. Thus, by the ordinance of 21 February 2006 of the Prosecutor's Office beside the High Court of Cassation and Justice, D.I.I.C.O.T., the freezing of the previously mentioned shares was ordered, by measure of seizure, in order to repair the damage assessed as being produced by defendants P.D.C, S.G.P. and C.R.H., committing a number of economic offenses, and that allegedly caused a prejudice of approximately 1,994,500,000 RON to the Ministry of Public Finance.Later on, by the resolution of 1 June 2006 issued by the Prosecutor's Office beside the High Court of Cassation and Justice, D.I.I.C.O.T., the criminal judicial body that ordered the freezing of the shares in question, considers as without merit the legal basis of freezing, in the sense that the provisions of art. 163 of the Code of Criminal Procedure could only produce effects over the property of the defendants, the accused and civilly liable parties, the plaintiff T.R.G. Olanda not being in any of these categories. Nonetheless, the nature of seizure is aimed to be changed by this resolution, in the sense that freezing was carried out with the purpose of special forfeiture, set forth in art. 5 of Law no. 656/2002, and not with the purpose of repairing any potential damage produced through offense.In the opinion of the Court the provisions of art. 241 of Law no. 656/2002 does not derogate from the rules of common law set forth in art. 118 of the Criminal Code and of art. 9 of the Code of Criminal Procedure. Criminal liability is



representatives of this company are the accused P.D.C. and S.G.P., signatories of the contract of assignment of receivables for the amount of 85 million USD.

The judge that had a different opinion in that case appreciated correctly that according to art. 241 of Law no. 656/2002, amended and supplemented, in case the offense of money laundering or financing of terrorism has been committed, it is mandatory to enforce measures of seizure.

The analysis of case file revealed that the defendants P.D.C., S.G.P., H.C.R. and other persons are investigated who, beginning with 1998 set up a group of transnational organized crime that aimed to mislead the Romanian authorities, with the conclusion and performance of contracts for the privatization of companies, acquisition of money owed to the state budget, money laundering and externalization of funds obtained in the course of criminal activity.

It also results that the precautionary measure was taken and enforced effectively over a number of 5,461,713,040 shares held by the company TRG Olanda in SC R.R. S.A. Constanta, according to the minutes of February 28, 2006, to cover the damage caused to the state budget and estimated at 1,994,500 RON, resulting from the illegal acquisition of the so-called “payment receivable”.

personal, and the forfeiture of property can only be performed if the nature of said property as proceeds of criminal acts is established by Court Ruling. While it is obvious that the provisions of art. 241 and art. 25 of Law no. 656/2002 is completed, as their text explicitly sets forth, with the norms of art. 118 of the Criminal Code and art. 9 of the Code of Criminal Procedure, and not with the provisions of art. 163 of the Code of Criminal Procedure, which did not fundament the measure of seizure ordered regarding the shares held by the responding plaintiff so that, it is considered that the measure was not taken in observance of the pertinent legal provisions, the solution of the first instance, to relieve the seizure and dissolve the procedure of enforcing such measure, as being correct.Taking into account all these considerations, based on art. 3851S point 1 letter b) of the Code of Criminal Procedure, the Court dismissed, as without merit, the appeal declared by the Prosecutor’s Office besides the High Court of Cassation and Justice, D.I.I.C.O.T., against criminal sentence no. 860 of 14 July 2006, issued by the Bucharest Tribunal, Criminal Section 1.57Gheorghiţă Mateuţ „Modificările aduse părţii generale a Codului de procedură penală prin Legea nr. 356/2006 şi OUG nr. 60/2006. Virtuale elemente progresiste sau o veritabilă întoarcere spre trecut?” (“Amendments of the general part of the Code of Criminal Procedure through Law no. 356/2006 and Government Emergency Ordinance. 60/2006. Virtual elements of progress or a true return to the past?” ) published in Caiete de drept penal no. 3/2006, p. 160-161.



It is to be pointed out that the provision required by art. 241 of Law no. 656/2002 is mandatory and aims attachment of assets (securities, etc.), until the final resolution of the case, when a decision will be made regarding the recovery of the damages, through several versions (direct payment, restitution in kind or special forfeiture set forth in art. 118 of the Criminal Code).

It thus results that the reporting of the provisions of art. 241 of the special law to provisions of art. 118 of the Criminal Code, it should be done only in the moment of the decision, when the court orders the potential forfeiture to cover the damage, otherwise voiding of efficiency the provisions of art. 241 of Law no. 656/2002, as amended and supplemented.

Thus, it also resulted as possible, but necessary, the seizure of the shares of TRG Olanda, Taking into account that said shares – as alleged by the prosecutor – were obtained through the embezzlement of “payment receivable L” by defendants PDC and SGP, in complicity with HCR, the money being integrated into the money laundering circuit, in compliance also with the findings of the Office for Combating Money Laundering, being irrelevant the fact that the shares are in the patrimony of the company TRG Olanda, under the conditions that the legal representatives of this companies are defendants PDC and GSP, the signatories of the contract of assignment of claim in the amount of $ 85 million USD.

Regarding these considerations, it was considered that the appeal filed by the Prosecutor's Office attached to the High Court of Cassation and Justice – Investigation of Organized Crime and Terrorism Directorate – against criminal sentence no. 860 of 17 April 2006 of the Bucharest Tribunal, Criminal Section 1 has merit, and will be treated in accordance with the provisions of art. 38515 point 2 letter d of the Code of Criminal Procedure.

FRANCE

a. The possibility of cumulating qualities (the perpetrator of the predicate offense and the perpetrator of the offense of money laundering)

Laundering, as concealment, being an offense of consequence, for which it is necessary to prove the appropriate constitutive elements (a predicate offence and holding, in awareness, the proceeds of the predicate offense), we are tempted to resonate by analogy regarding these offenses.

Yet, the issue of cumulating qualities was raised early on: can self-laundering be



prosecuted and convicted, i.e. the laundering committed by the perpetrator of the predicate offense? For concealment, the answer is of course negative, the Criminal Section considering for a long time the offence of concealing cannot be charged to the perpetrator of the theft58.

With regards to laundering, the Court of Cassation detached the analogy with concealment in order to allow cumulating qualities, due to the autonomous nature of laundering: The Criminal Section, in a Decision of 25 June 2003 (Sediki Case), consecrated the thesis according to which the ‘quality of perpetrator of the predicate offense was not exclusively that of the perpetrator of the consequent offense of money laundering’59 ; One year later, in the Decision of 14 June 2004, it restated their position, considering that “art. 324-1 par. 2 of the Criminal Code is applicable to the perpetrator of the laundering of the proceeds of an offense they themselves have committed”60 This decision given only based on the second paragraph of art. 324-1 of the Criminal Code leaves the issue of cumulating qualities of the perpetrator of the laundering and the perpetrator of the predicate offense in the hypothesis considered by art 324-1 par. 1 of the Criminal Code, as well as in that set forth in the description of the first phrase of art. 222-38 of said Code. The issue was regulated by the Criminal Section in a decision of great importance, of February 20, 2008 (Talmon Decision): In this case, the defendant was convicted of laundering the proceeds of a tax fraud that he had committed himself, and the Court of Cassation confirmed this conviction, given however based on par. 1 of art. 324-1 of the Criminal Code. It is thus clear that from now on cumulating qualities is possible both based on par. 2, and on par. 1 of art. 324-1 of the Criminal Code.

b. The possibility to prosecute laundering tax fraud, including in the act, when the tax fraud is not prosecuted

I have just quoted the Talmon Decision of the Criminal Section of 20 February 2008,

58 See for example the Decision of the Criminal Section of the Appeals Court of 15 December 1949, Bull., no. 350 and Decision of the Criminal Section of the Appeals Court of 6 June 1979, Bull., no. 193.59 Decision of the Criminal Section of the Appeals Court, 25 June 2003, no. 02-86.182 ; Rev. sc. crim. 2004, p. 351, chron. R. Ottenhof ; Dr. pén. 2003, comm. 142, obs. M. Véron ; Gaz. Pal. 2004, I, doctr., p. 790, obs. C. Ducouloux-Favard.60 Decision of the Criminal Section of the Appeals Court of14 January 2004, no. 03-81.165 ; Bull. crim. 2004, no. 12 ; D. 2004, p. 1377, note Ch. Cutajar ; JCP éd. G 2004, II, 10081, note H. Matsopoulou; Gaz. Pal. 2004, I, p. 1171, note O. Raynaud ; Dr. pen. 2004, comm. 48, obs. M. Véron.



which is an extremely important decision, as it became the subject of a circular signed by the Minister of Justice on 27 July 2009.

Given the judicial consequences of the autonomy of the offense of laundering, the Criminal Section decided in this case: that an offender can be prosecuted and convicted for the laundering of a tax fraud, including in the absence of prosecution of the tax fraud. Indeed, in France such prosecution is subordinated, according to art. L.228 of the Handbook of Tax Procedures, to a prior complaint from the tax administration, which can only be filed with compliance notice of committing the tax fraud (CIF).Or the Court of Cassation ruled that in laundering the tax fraud the prior complaint of CIF as filter was not applied (“Given these enunciations, without failure and contradictions, and considering that the prosecution of laundering, general offense, distinct and autonomous, is not subject to the provisions of art. L.228 of the Handbook of Tax Procedures”); that the prosecution for laundering could be initiated by starting an investigation in the act. Indeed, the Criminal Section considered that “consequent to the regular controls within a traffic control, the officers of the judiciary police have identified apparent indications of criminal behaviour, which showed that offenses were or have been committed, which justified the action according to the procedure of in the act offense”.The Court of Cassation starts an in the act investigation for the first time regarding insider trading, in the present case, following a traffic control. This decision is important from the moment when the predicate offence becomes of secondary importance. Thus, the mere finding of the impossibility of a person to justify quickly, upon request of the investigators within traffic control, the origin of the property they have in possession is from now on sufficient for constituting apparent indications of laundering within an in the act investigation61.

This possibility to prosecute and convict a person for laundering based on a tax fraud – even if not prosecuted – offense, is evidently major progress in repressing money laundering in France, especially in the cases where the predicate offence at the true origin of the funds is not easy to describe.

A regime of independent prescription

61 The Appeals Court of Aix en Provence noted as apparent indications in the conditions of the raid committing the offense of laundering, the value of a vehicle (a Mercedes with large displacement) driven by the defendant that was not the owner of the care, lack of any visible revenue, possession of large amount of cash, the origin of which could not be justified and the fact that during the previous months he had been in prison, retained for possession and use of fire arms.



The prosecution of money laundering does not matter if the original offense is covered by prescription. This is one of the effects researched by the French legislator since 1915 when they transformed concealment into a distinct offense, yet one of consequence.

In principle the regime of prosecuting money laundering is not aligned to that of the predicate offence: the prosecution of the offenses of money laundering does not observe the rules of prosecuting the predicate offense when the rules are derogations in the common law, as it happens in cases of terrorism, tax fraud, insider trading or military offense.

However, in view of repressing, the legislator took these derogatory elements into account in the definition of the offense of money laundering in drug dealing, as the prosecution, instruction or decision of the Court observe the same rules set forth for drug dealing; thus the prescription of the public action on case of laundering the proceeds of the offense or the offense of drug dealing is 20 years (similarly, the punishment is also prescribed in 20 years).

For the same reasons of anti-crime policy, it would be advisable to apply also in case of money laundering the solutions identified for concealment, and with the same limits. For example, as starting point for the prescription of the laundering of a product of abuse of social assets, the solution given by the Criminal Section in the Decision of 6 February 1997 should be applied, the Mouillot, Noir and others case: concealment of proceeds resulting from abuse of social goods (abuse of trust) is not prescribed before the offense it derives from occurs and found, under the conditions that allow the performance of public action.

In fact, if the law, as the jurisprudence have evolved in general in the sense of the independence of the offense of laundering in order to favour repression, the most recent texts – also considering improvement of the repression – refer more and more to the predicate offenses in the most varied areas in order to make in certain aspects the laundering of the proceeds of said offense subject to a more severe procedure.

In particular regarding genetic fingerprints (CPP, art. 706-55 ), terrorism (C. pén., art. 421-1-6° ; CPP, art. 706-16 à 706-25-1 and especially regarding organized crime, it will be the same for the surveillance, infiltration, detention, search, intercepting, sound, image or conservation (CPP, art. 706-73 , 14 and 706-75 to 706-106, drafted L. no. 2004-204, 9 March 2004 . Hence the additional importance for establishing and determining the nature or seriousness of the offense of origin.

c. Forfeiture to the prejudice of a prosecuted third party: Through a Decision of 26 November 2009 (editor’s note: appeal 08-86386 –



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unpublished), the Court of Cassation considers that the proceeds of the regular tolerance of prostitution have been forfeited, proceeds deposited in the bank accounts of a company that was neither prosecuted, nor convicted.

GERMANY

a) Money laundering

BGH (Federal Supreme Court) Sentence of 21.06.1995 - participation in the predicate offence:Kidnapping 2 Mio DM ransom - Perpetrator of ML potentially involved in predicate offense is no obstacle for money laundering conviction (§ 261 Abs 2 StGB p. 9).OLG (Provincial Court of Appeal) Karlsruhe, Sentence of 20.01.2005 (“Flow Tex”):Surrogates, which are only partly derived from a crime are still objects of money laundering.BVerfG (Cosntitutional Court), Sentence of 30.03.2004 (“German Kings Club”): - Unconstitutional a restrictive interpretation of § 261 II No. 1 of the Criminal Code: Only with certain knowledge, that fees are derived from an offence, defense lawyer can be perpetrator of a ML offence.- But not a complete exemption from the criminal defense lawyer of the threat of § 261 II of the Criminal Code

BGH (Federal Supreme Court) Sentence of 04.02.2010 (not defense lawyer):Lawyers enforcement in assets derived from criminal acts is basically no money laundering

b) Asset Recovery

BGH (Federal Supreme Court) Sentence of 21.03.2002 (5 StR 138/01) - Bribery of the planning commission in the City of Hildesheim- The principle of netting must be reduced by paid taxes- The derived goods have to be seen not in the whole proceeds of the sold land, but in the undue profit made by the seller

BGH Sentence of 05.12.2005 (5 StR 119/05) - The Köln garbage scandal- The derived goods are not the total amount (proceeds) of the contract, but only the expected profit- Loss and insolvency at the end of the contract has to be decided in respect to section 73c StGB (hardship) - no confiscation

BGH Sentence of 27.01.2010 (5 StR 224/09) - Stock market insider trade, the



“Freenet case”- the whole proceeds of the trade after a wrong ad-hoc message is not subject of confiscation (Section 73 StGB) but the difference between the stock market value of the shares before and after the offence

BGH Sentence of 21.08.2002 (1 StR 115/02) - Embargo offence by paper mill company- Total revenue, not only additional profit (30 %), has to be confiscated, because the whole contract (delivery of tobacco paper to Serbia 1992-1995) was obtained from the offence

5. Recommendations for practitioners (judges, prosecutors, police officers)

The last section is proposed to include some recommendations for practitioners on how to deal with ML cases and how to seize and confiscate the illicit incomes of perpetrators, as well as methods to improve cooperation between Assets Recovery Offices.

ROMANIA



The Romanian law is aligned to the international standards regarding prevention and fight against money laundering and forfeiture of property deriving from crime. From the discussions of the Romanian magistrates at the seminars where German, French and Spanish magistrates participated, it was shown that there is an appropriate legal framework for international cooperation according to the European standards of cooperation, but some inconsistencies still occur in the implementation, either due to lack of knowledge of the legal provisions, or in consequence of non-uniform judicial practice. Thus, as a conclusion of the discussions carried out at the seminars in the programme, it is recommended to:

1. Continue the training programmes of the magistrates in joint sessions with judges, prosecutors, law enforcement, in order to identify the best practice that has to be taken into account in order to interpret and uniformly enforce the legislation regarding the prevention and combating of money laundering.2. Strengthen the inter-institutional domestic cooperation for a faster transfer of information.3. Consolidating the Assets Recovery Office (ARO) within the Ministry of Justice.4. Extending the mandate of ARO at international level, also for the support of prosecution and police units in national cases.5. Developing an integrated tool for monitoring the interim measures and confiscation orders issued in serious crime cases, as well as for managing and selling of seized/confiscated assets.6. An efficient management of seized and confiscated assets and the possibility of using such assets for programmes on crime prevention.7. Filling the real estate database kept by the National Agency for Cadastre and Publicity for Real Estate (ANCPI).

GERMANY

Professional training for all members of the judiciary about the legal base of ML and AR should be provided The professional training should be organized together at the same time for all professional groups in order to initiate professional contacts and discussions In the first phase of investigation it has to be focused not only on gathering evidence in respect to the criminal offence, but also on assets being derived from these kind of criminal offences The “track” of money has to be detected The management of seized assets has to be organised in a way, that investigation bodies get help from professionals of administrative bodies Even if full evidence - for conviction - concerning the ML offence is very difficult to get, use that offence to require for investigation measures



International cooperation has to be focused more in trainings for all professional groups; the cross border investigation in has to become an ordinary part of the daily work.



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