Legal framework that determines the proof of origin of criminally acquired property complies with the Constitution
On Friday, 14 March, the Constitutional Court adopted a judgment in case no. 2022‑32‑01. The Constitutional Court established that the provisions of the Criminal Procedure Law which govern proving of the origin of criminally acquired property in proceedings on criminally acquired property derived from criminal proceedings on money laundering comply with the Constitution. The Court emphasised that the legal framework for proceedings concerning criminally acquired property must strike a fair balance between the principle of equal opportunities for the parties and the public interest, so that the criminally acquired property could be effectively confiscated, thus ensuring the restoration of the rule of law.
Article 124(6) of the Criminal Procedure Law states that the criminal origin of property shall be considered proven if there is reason to believe that the property is most likely of criminal rather than lawful origin. Article 125(3) of the Criminal Procedure Law provides for the presumption of criminal origin of the property with which money laundering activities have been carried out. Besides, Article 126(31) of the Criminal Procedure Law establishes the obligation of a person involved in criminal proceedings to prove the legality of the origin of property.
The case was initiated on the basis of constitutional complaints from several private individuals and an application by the Court of Economic Affairs. The applicants believe that the aforementioned provisions of the Criminal Procedure Law (the contested legal framework) reduce the opportunities for the person related to the property to effectively challenge the recognition of the property as criminally acquired and place them in a significantly worse position compared to the person directing the proceedings. This allegedly violates the principle of equal opportunities for the parties enshrined in the first sentence of Article 92 of the Constitution.
To determine whether the contested legal framework ensures a fair balance between the principle of equal opportunities for the parties and the public interest to ensure an effective confiscation of property obtained through criminal means, namely, its removal from civil circulation, the Constitutional Court assessed whether the person related to the property may be required to prove the legal origin of the property in such proceedings, as well as whether the person, when assessing the proceedings as a whole, has been provided with procedural guarantees enabling them to prove the legal origin of the property.
The Constitutional Court concluded that the contested legal framework does not shift the burden of proof solely to the person related to the property. It provides for a shared burden of proof of the origin of the property between the person directing the proceedings and the person related to the property. Namely, evidence that substantiates the assumption of the criminal origin of the property must be provided by the person directing the proceedings, while evidence of the legal origin of the property must be provided by the person related to the property. The Constitutional Court recognised that, in such circumstances, the person related to the property may be required to prove the legal origin of the property.
The Constitutional Court examined whether, in proceedings concerning criminally acquired property, the person related to the property, when assessing the proceedings as a whole, has been provided with procedural guarantees so that they can prove the legal origin of the property. The Constitutional Court recognised that the standard of proof of “preponderance of probabilities” is permissible in proving the criminal origin of property and that this in itself does not confer significant advantages on the person directing the proceedings. The person related to the property has the right to inspect the evidence that substantiates the assumption of the person directing the proceedings regarding the criminal origin of the property. The Constitutional Court also found that the contested legal framework allows for the connection between the property and a criminal offence to be proven both by establishing a connection of the property with a specific predicate criminal offence and on the basis of circumstantial evidence. The Constitutional Court emphasised that the court must be convinced based on the evidence submitted by the person directing the proceedings that the property was most likely obtained from a criminal offence. This prevents any arbitrariness in the confiscation process.
The contested legal framework also provides the person related to the property with a reasonable period within which they can submit evidence regarding the legality of the origin of the property. The contested legal framework does not set out the requirements regarding the form and content of the evidence to be provided. The evidence to be submitted would depend on the person related to the property, and they are not deprived of the essence of the right to submit evidence. The fact that the contested legal framework does not limit the time period regarding which a person related to the property may have to submit evidence does not in itself deprive the person of the essence of the right to submit evidence.
The Constitutional Court emphasised that a court examining materials on criminally acquired property must ensure compliance with the principle of equal opportunities for the parties and, among other things, must also ensure that the burden of proof imposed on the person related to the property is not disproportionate in each specific case. The person related to the property is provided with the opportunity to participate in the proceedings concerning criminally acquired property either personally or through a representative, including participating in court sessions, where the person related to the property and the person directing the proceedings are guaranteed equal rights. The person related to the property also has the right to appeal against the decision of the district (city) court, by which the property has been recognised as criminally acquired, to the regional court, which repeatedly reviews the materials on the criminally acquired property on the merits. Thus, the person related to the property has been provided with the appropriate procedural guarantees to be able to prove the legal origin of the property.
Consequently, the Constitutional Court found that the contested legal framework ensures a fair balance between the principle of equal opportunities for the parties and the public interest to ensure the effective confiscation of criminally acquired property, and that it complies with the first sentence of Section 92 of the Constitution.
The judgment of the Constitutional Court is final and not subject to appeal; the judgement shall enter into force as of the date of its publication in the official gazette Latvijas Vēstnesis.
Linked case: 2022‑32‑01