Extended confiscation – what is it?

Extended confiscation – what is it?
Marek Cieślak

Marek Cieślak

CEO CGO Finance

The aim of the extended confiscation is to facilitate the prosecution of criminals in order to deprive them of the material benefits derived from the acts committed. Who really should be afraid of it? In the article below, we discuss in detail its nature. We invite you to read!

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Extended confiscation

What is extended confiscation?

It is a legal process where authorities seize property linked to illegal gains. This applies to traditional material assets such as houses, cars, or luxury items. But it also concerns businesses and shares in companies if they were used to commit crimes. It applies to both the violator and third parties who received the assets.

What is the purpose of extended confiscation?

The main purpose is to deprive criminals of material benefits. This often forms the basis of their activities and is the main motivation to commit crimes. The legislator assumes that losing illegally obtained goods can be a more severe punishment than losing freedom.

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What is the nature of extended confiscation?

It is an extraordinary criminal measure. It can only be ordered by a court in exceptional cases. In addition, it cannot:

  • lead to a significant disproportion between the value of the confiscated property and the gravity of the committed crime,
  • violate the rights of third parties, e.g., co-owners of the confiscated property.

What are the conditions for applying extended confiscation?

Upon convicting a violator who, even indirectly, gained substantial financial benefits from a crime, the court may order forfeiture of:

  • an enterprise owned by the violator,
  • or its equivalent.

The conditions for applying extended confiscation are:

  • the use of the enterprise to commit a crime or conceal the benefits obtained from it,
  • obtaining a significant financial benefit – directly or indirectly from the crime.
FeatureExtended ConfiscationForfeiture
Moment of decisionMay be ordered before sentencing, during criminal proceedings, or even after their conclusionOrdered in the sentencing verdict
SubjectIncludes property derived from the crime, even if not owned by the violatorIncludes property that constitutes a financial benefit from the crime, was used to commit it, or derives from it
EvidenceBased on the presumption that the property stems from the crime. The case must prove otherwiseRequires evidence of the property’s connection to the crime
Differences between Extended Confiscation and Forfeiture – Table

When can extended confiscation be applied?

It can be applied in the case of a conviction of the violator for a crime:

  • from which he obtained a benefit of a value higher than 200 000 PLN,
  • from which a financial benefit has been or could have been obtained, even indirectly, which is punishable by imprisonment with an upper limit of not less than 5 years,
  • committed in an organized criminal group.

How does extended confiscation work?

It allows for the seizure of property from a person convicted of a crime, even if it is not their property. Its purpose is to increase the effectiveness of fighting crime. It particularly concerns organized crime. Here is how it works:

  • the court orders extended confiscation in a conviction judgment,
  • the court specifies in the judgment which property is subject to confiscation,
  • the convicted person can appeal against the judgment regarding extended confiscation,
  • if confiscation is legally and finally imposed, the goods and benefits become the property of the State Treasury.

To whom does the extended confiscation apply?

It concerns an enterprise owned by the violator. Its application requires the use of enterprise in committing a crime or concealing its benefits. The obtained financial benefit must be of significant value. Confiscation may concern an enterprise not owned by the violator if:

  • the owner indirectly or directly allowed the violators to use his company,
  • the owner is guilty of misconduct,
  • the violator obtained a financial benefit of significant value.

Enterprise within the meaning of extended confiscation regulations

An enterprise is an organized set of intangible and tangible components intended for economic activity. Extended confiscation of an enterprise may cover all assets, including:

  1. Tangible assets:
    • Real estate, such as buildings, land, and commercial premises
    • Machinery and equipment
    • Stacks of raw materials and materials
    • Finished goods and semi-finished goods
    • Means of transport
    • Furniture and equipment
    • Other items used for business purposes
  2. Intangible assets:
    • Trade name and logo
    • Patents and utility models
    • Trademarks
    • Know-how and trade secrets
    • Databases
    • Software
    • Licenses and concessions
    • Good name and reputation
  3. In addition, it may cover:
    • shares and stocks in companies that are part of the enterprise
    • receivables rights, i.e., receivables from contractors
    • liabilities, i.e., company debts

However, it is worth noting that it does not include:

  • personal property of the convicted person, e.g., clothes, everyday items
  • items of negligible value
  • property that was not acquired from the benefits of a crime.
Extended confiscation

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Extended confiscation without a court’s judgment– is it possible?

The risk of confiscating a company does not arise only after a lengthy lawsuit. You can face it already at its early stage. The prosecution may secure the potential confiscation of a company even during investigation. It may take the form of:

  • securing shares or stocks. The company’s authorities lose then the possibility of its sale, and there is a risk of losing market credibility.
  • appointment of a compulsory management board. This means that the authorities cannot manage the company and continue business plans.

What are the consequences of applying extended confiscation?

The consequences include:

  • loss of control over the enterprise,
  • difficulties in conducting business,
  • risk of losing market credibility,
  • risk of bankruptcy.

Is it possible to avoid extended confiscation?

Avoiding is difficult, but not impossible. It can be done, among other things, by demonstrating that:

  • the property does not come from a crime,
  • the property was not used to commit a crime,
  • a third party acquired the property in good faith,
  • a relevant agreement was reached with the prosecutor or before the court.

Extended confiscation – summary

It is a powerful tool in fighting against crime. Its potential in fighting organized crime and depriving criminals of gains should be appreciated.

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FAQ – frequently asked questions about: Extended confiscation

What is extended confiscation?

It is a legal mechanism for seizing financial gains from a convicted individual, even if gains do not come directly from the crime. The court can confiscate property bought with suspicious funds, even if legally acquired.

Who can be subject to extended confiscation?

It concerns individuals convicted of intentional crimes punishable by imprisonment exceeding 5 years. This includes e.g. crimes against life and health, corruption, and economic and drug-related offences.

What property can be subject to extended confiscation?

It can apply to property of significant value, e.g. real estate, luxury cars, yachts, jewellery, works of art.

What are the conditions for applying extended confiscation?

To apply it, the court must establish that:
– the convicted person committed an intentional crime punishable by imprisonment exceeding 5 years,
– the property subject to confiscation was acquired within 5 years before committing the crime or during the process
– there is a causal relationship between the committed crime and the acquired property.

How can one defend against extended confiscation?

By proving that the property subject to confiscation was acquired from legal sources. Presenting evidence such as invoices, contracts, bank statements, etc. will be helpful.

Is extended confiscation legal?

It is consistent with Polish and EU law. It was introduced into the Polish Penal Code in 2017.

Where can I find more information about extended confiscation?

You can find more information about the subject on the websites of the Ministry of Justice, the National Public Prosecutor’s Office, and district courts.

Featured expert

Marek Cieślak

CEO CGO Finance