The European Commission has decided today to refer Luxembourg to the Court of Justice and to request the Court to order the payment of financial penalties for failing to notify all national measures necessary to transpose EU rules on the freezing and confiscation of proceeds of crime (Directive 2014/42/EU).
These rules make it easier for Member States' authorities to recover the profits that criminals make from serious and organised crime. Freezing and confiscating revenues and property acquired through a criminal offence deprives criminals of their illegally acquired assets. It is a crucial tool to break criminals' business models and combat organised crime. It is also a way to stop the proceeds of crime being laundered and reinvested in legal or illegal business activities. It helps protect the economy against criminal infiltration and corruption and return criminal profits to public authorities providing services for citizens. The Directive also introduces specific safeguards and judicial remedies to guarantee the fundamental rights of persons affected.
Member States were required to transpose the Directive by 4 October 2016. The Commission launched the infringement procedure against Luxembourg in November 2016 and followed up with a reasoned opinion in March 2019. To date, Luxembourg has not notified the Commission of the full transposition of the Directive into its national law.
Serious and organised crime is one of the greatest threats to the security of the European Union. Today only about 2% of criminal proceeds are frozen and 1% confiscated in the EU, meaning organised crime groups can often retain and invest their illegally acquired profits into expanding their criminal activities and infiltrating the legal economy. Freezing and confiscating criminal assets is key to ensure that crime does not pay.
By failing to adopt all the laws, regulations and administrative provisions necessary to comply with the Directive on the freezing and confiscation of criminal assets (Directive 2014/42/EU) or, in any event, by failing to notify such provisions to the Commission, Luxembourg has failed to fulfil its obligations under Article 12 of this Directive.
Under Article 260(3) of Treaty on the Functioning of the EU (TFEU), if a Member State fails to transpose a Directive adopted by the EU legislator into national law within the required deadline, the Commission may call on the Court of Justice to impose financial sanctions. They take into account:
-the seriousness of the infringement,
-the duration of the infringement,
-special "n" factor (which varies between Member States and takes into account their Gross domestic product, GDP, in millions of euros and number of seats of the Member State concerned in the European Parliament).
The financial sanctions proposed by the Commission in this case consist of a daily penalty payment (to penalise the continuation of the infringement after the Court's judgment).
For More Information
On the key decisions in the April and June 2021 infringements package, see full MEMO/21/2743
On the general infringements procedure, see MEMO/12/12
On the EU infringements procedure