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Seized crypto problem for Luxembourg crime cash law
cryptocurrency

Seized crypto problem for Luxembourg crime cash law

by Emery P. DALESIO 2 min. 07.10.2021
Lawmakers mull how to preserve value of wildly fluctuating tokens impounded from suspected crimes
Tracking cryptocurrency prices
Tracking cryptocurrency prices
Photo credit: Shutterstock

Volatile cryptocurrencies which swing sharply up and down in values are creating a new wrinkle in Luxembourg's effort to join the rest of the EU in lawfully managing seized riches suspected to have come from crime.

The country's parliament is in the second year of honing a law on managing assets that have been seized but before courts decide they can be confiscated because they come from criminal profits. Confiscated property in Luxembourg and most other EU countries is then used for public interest or social purposes, according to the European Commission.

The commission criticised Luxembourg in 2019 for its delay in fully implementing a 2014 EU directive meant to bring the 27 member states into unison on how and when the illegal proceeds are stripped from criminals.

On Wednesday, lawmakers grappled with the government's responsibility to preserve confiscated assets to make sure innocents don't suffer while also recognising that seized cryptocurrencies could quickly soar or plummet in value. For example, the price of Bitcoin rose last year by 250% to more than €16,800 before falling by 13% on a single day in November. The best-known cryptocurrency then surged to €36,500 in February and has climbed since then to €46,700 as of Thursday morning.

A projected new government asset management office tasked with preserving the value of seized assets was expected to sell virtual assets and convert them into euros as soon as they are impounded, lawyers for the Justice Ministry, which would oversee the office, told lawmakers.

Bitcoin logo on a coin
Bitcoin logo on a coin
dpa

"In the case of cryptocurrencies, given the high volatility of prices, the state is not able to ensure the preservation of their value," the ministry lawyers told lawmakers according to a summary on the parliament's web site.

Some parliament members pointed out that Luxembourg risked being held accountable for financial losses suffered by someone whom courts determined should have his assets restored only to find that cryptocurrencies were sold at a loss.

Anonymous cryptocurrencies are especially favoured as payment in ransomware attacks or other online crimes.   

Europe's more than 5,000 organised crime groups generate about €110 billion per year in illegal profits, EU crime-fighting agency Europol estimates. In Luxembourg, illegal drugs and organised cargo theft generate more than €160 million in illicit revenues per year, a 2015 report by university researchers estimated.

Only about 2% of those criminal proceeds are frozen and 1% are eventually stripped and confiscated by EU states, the European Commission said in a report last year.   

"The confiscation of criminal proceeds is an essential component of the fight against serious and organised crime, since it deprives criminals of their financial gains and ensures that crime does not pay," the Commission's report said.


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