Crime does not pay: confiscating and reusing criminal proceeds.

One of the main motives for engaging in organized crime is to make money. Therefore, a good way of increasing the risks and reducing the benefits of criminal activity is to confiscate the proceeds of crime. Countries of the Western Balkans are adopting measures to increase their capacity to systematically confiscate, seize and reuse the assets of crime, but challenges remain.

Millions of euros flow through the Western Balkans every year as IFFs – money stemming from organized crime, corruption and tax evasion. These IFFs discourage public and private investment in infrastructure, pervert local economies and deprive governments of badly needed resources for sustainable development.¹ They also erode criminal justice systems, weaken state institutions and further fuel corruption.²

In recent years, all six countries of the Western Balkans have taken significant steps to address IFFs. Special focus has been put on improving anti-money laundering (AML) measures.³ Most countries of the region have introduced relevant AML legislation, created specialized departments and strategies and conduct money laundering risk assessments. As a result, the Financial Action Task Force on Money Laundering has removed the Western Balkan countries from its blacklist, although many countries remain subject to enhanced/expedited follow-up procedures, not least because of continued low awareness of AML risks among reporting entities and a general lack of implementation of AML legislation.

Following the principles laid out in the United Nations Convention against Transnational Organized Crime (also known as the Palermo Convention) and in line with the EU acquis, they have also adopted measures to enable the identification, tracing, freezing and seizure of proceeds of crime like property, ‘moveables’ (e.g. boats or cars), cash and other assets. The confiscation of criminal assets is important to prevent them from being laundered into the formal economy or reinvested into other illegal activities, while reducing the rewards of organized crime and corruption. It also has a psychological and symbolic effect: it shows that crime does not pay.

Government efforts to promote the confiscation of assets from organized crime and corruption can be divided into (and evaluated against) three main aspects: first, the countries’ legislation that sets the foundation for government action; second, the implementation of financial investigations and court procedures that lead to the confiscation of assets; and third, the adequate reuse of confiscated assets.

All countries of the Western Balkans have laws enabling the confiscation of illegally gained assets. However, Albania is the only country in the region that has thus far also included provisions on the confiscation of assets in its anti-organized crime laws (on the model of the Italian Rognoni-La Torre law of 1982),⁴ which shifts the burden of proof from the prosecution to the defendant and enables authorities to act against criminal assets and not just criminal actors.⁵ In addition, all countries except Bosnia and Herzegovina have laws in place that allow for extended confiscation of assets, which enables the confiscation of property belonging to a convicted person when the crime is liable to give rise to economic benefit and/or the circumstances of the case indicate that the property is derived from criminal conduct. All six Western Balkan countries have established bodies mandated to administer confiscated assets and publish statistics on the confiscation of cash and assets; in Bosnia and Herzegovina, the agencies work on the entity and not the national level.

Figure 2 Asset confiscation in the Western Balkans.

Based on information available on the current legislation on asset recovery in each country and a review of reports on its implementation. See also The AIRE Centre and Regional Anticorruption Initiative, Combating Corruption in the Western Balkans: Strengthening regional cooperation in the field of asset recovery, 2021, http://www.rai-see.org/php_sets/uploads/2021/02/2nd-edition-AR-Report-WB-EN-final.pdf.

However, despite having the relevant legal frameworks in place, most countries of the region have little practical experience with asset confiscation. The financial and economic aspects of organized crime are frequently neglected in the criminal justice process. EU progress reports continuously emphasize the protracted nature of financial investigations and note that asset seizure and confiscation are not used systematically.⁶ Furthermore, the general willingness to confiscate assets remains low and some cases seem to simply disappear. Interviewees from the region suggested that even convicted criminals seldom forfeit their ill-gotten gains, as asset confiscations are disproportionately low compared to the gravity of the crimes.⁷ The overall value of assets confiscated in Western Balkan countries cannot be established, given that every country has a different system of measuring and presenting its data.

After the confiscation, the relevant institutions decide how to use the funds. In general, recovered assets are either used by the state or given to civil society. In practice, assets (like vehicles or other movables) that are seized often sit in warehouses for years, where they depreciate. In other cases, there is a lack of transparency about what happens to assets that are recovered.

However, there are some positive experiences that are worth highlighting. Albania has considerable experience with the social reuse of assets. For example, it has created a special fund to use money earned from renting out confiscated properties to support civil society, anti-trafficking activities and victims of organized crime. Through an initiative called Confiscated Assets Used for Social Experimentation, which is supported by the European Union, civil society organizations from Albania have partnered with organizations from Italy to successfully transform three confiscated assets into social businesses: a cafe/library in Durres, a bakery in Fier and a handicraft shop and studio in Saranda.⁸ A fourth project is expected to be launched soon in Elbasan.

KeBuono, a bakery in Fier, Albania, which was established on a property confiscated from the proceeds of organized crime.

Photo: KeBuono

Elsewhere in the region, Bosnia and Herzegovina reported that it bestowed part of the confiscated cash and movable assets on charitable organizations for children and veterans.⁹ Serbia adopted a new law in 2016 that set out that 30% of all confiscated assets shall be used for social and healthcare projects, with a specific focus on those organizations that work against human trafficking. In addition, it provides property and vehicles to community centres or government organizations.¹⁰ Such good practices show that the Western Balkans are on the right track, but more can be done – especially in North Macedonia, Kosovo and Montenegro, which appear to have the least experience on social reuse of assets.

Moving forward, it is crucial that existing laws and procedures on asset confiscation are implemented in an efficient, transparent and timely manner. Awareness needs to be raised on the importance of asset confiscation as a mechanism to reduce the incentives for and rewards of organized crime and corruption.

Greater regional cooperation would also be beneficial. At the moment, countries of the Western Balkans have different levels of expertise and experience on asset confiscation and different methods of gathering information and reporting on confiscated assets. There is greater scope for cooperation and sharing of good practices. For example, the work of the Balkan Asset Management Interagency Network (BAMIN) could be expanded to increase the effectiveness and timeliness of national asset management processes.¹¹ Thus far, BAMIN includes 18 members from the Western Balkans and beyond who serve as an expert group on asset management topics. They come together to provide training to national prosecutors, law enforcement officials and asset managers to strengthen the effective implementation of knowledge exchange, cooperation and networking initiatives.

Furthermore, since IFFs involving tax evasion, corruption and the proceeds of crime which have been generated by citizens of the Western Balkans are hidden or laundered outside the region, while some foreign criminals launder their money in the Western Balkans, full use should be made of the type of international cooperation for the purpose of confiscation that is laid out in the Palermo Convention.

Finally, the symbolic and psychological effect of the social reuse of confiscated assets should be highlighted by showcasing how giving back buildings, companies or parks to communities affected by organized crime not only redistributes ill-gotten gains for public benefit, but it also undermines the strength and image of criminal and corrupt actors as being rich and untouchable.

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