A bill amending Cyprus's anti-money laundering law introduces additional tools for tracing, freezing and confiscating assets linked to organised crime. The bill aims, among other things, to bring Cypriot law into line with EU Directive 2024/1260 on asset recovery and confiscation.
One of the most significant new provisions concerns the confiscation of unexplained wealth linked to benefits individuals have gained from activities tied to organised crime. The bill creates a dedicated chapter providing that, where other confiscation measures cannot be applied for legal or practical reasons, a court may, on application by the Attorney General, order the confiscation of property identified during a criminal investigation.
This requires evidence indicating that the property stems from criminal conduct carried out within an organised crime group capable of generating substantial financial gain. In assessing a case, the court may consider whether the value of the property is substantially disproportionate to the person's lawful income, whether there is no reasonable lawful source for the assets, and whether the person is linked to individuals connected to an organised crime group.
Notably, this procedure does not require proof of specific criminal offences. At the same time, the provision does not create standalone criminal liability. It can also apply even where the criminal conduct in question predates the amendment's entry into force, under the bill's specific terms.
The new powers come with judicial safeguards. The rights of third parties acting in good faith are preserved, and a court may decline to apply the procedure where doing so would be manifestly unreasonable or disproportionate. In such cases, it must give reasons for its decision.
Sale or liquidation before a final ruling
Another significant change is the ability to sell or liquidate assets before a final court ruling on their confiscation, under specific conditions. This applies where assets are perishable, at risk of losing value or becoming rapidly obsolete, where storage or maintenance costs are disproportionate to their value, or where managing them requires special conditions or expertise. The provision comes with procedural safeguards. Courts must take into account the interests of affected parties, and, except in urgent cases or where a person has absconded or cannot be located, notice and an opportunity to be heard must be given before any sale. A right of objection is also provided, and, in the event of an appeal, the first-instance court may suspend the sale if there is a risk of irreparable harm. Proceeds from any sale remain secured until a confiscation order is issued and enforced.
New tools
The bill introduces procedures for tracing and identifying assets. Police are required to take measures to swiftly identify the proceeds and instruments of criminal activity, as well as property that could become subject to freezing, preservation or confiscation. This tracing capability can continue even after a final conviction or other confiscation proceedings have concluded.
At the same time, an Asset Recovery Service is being established within the Police, tasked with facilitating cross-border cooperation and the exchange of information for tracing property. The service is expected to work with other competent authorities, EU bodies, the European Public Prosecutor's Office and, where required, corresponding authorities in third countries. The bill also sets out rules on access to information, data exchange and deadlines.
In the same vein, management of frozen and confiscated assets is being strengthened. The Asset Management Service, linked to the Insolvency Department, will take on responsibility for managing property and enforcing confiscation orders. It may proceed with sale or liquidation, before or after a final ruling, either directly or through specialised public or private bodies. Provision is also made for asset valuation, where justified, aimed at limiting any loss of value.
The rights of victims are also taken into account. Claims arising from criminal offences must be factored into the tracing, freezing and confiscation process, and the Asset Recovery Service may provide courts with information relevant to compensation, restitution or the return of assets.
Oversight
The relevant authorities, including the Police, the new unit and other bodies, are also required to keep records on the effectiveness of freezing and confiscation measures. This data covers the number of decisions issued, the estimated value of frozen and recovered assets, cross-border requests, and sales carried out before a final ruling. This information is to be reported to the European Commission annually. At the same time, a central register of frozen and confiscated assets is being established, to be maintained by the Asset Management Service.
