CHD ¦ Bill 8698: Luxembourg's Overhaul of Asset Recovery and Confiscation

Luxembourg prepares a broad overhaul of asset recovery and confiscation

Bill 8698 transposes Directive (EU) 2024/1260 on asset recovery and confiscation, which member states must implement by 23 November 2026. The Minister of Justice filed it on 2 February 2026, and it goes well beyond a minimal transposition. The new confiscation tools apply to all criminal offences, not only to the EU crimes the directive covers. Every seized asset passes automatically to a single state body, and that body receives wide powers to obtain information from banks, payment and e-money institutions, crypto-asset service providers, auditors and accountants. Opinions from the Chamber of Commerce, the Public Prosecutor General and the Bar of Luxembourg are in the file. The Council of State has not yet given its opinion.

Why the EU rewrote the rules

The directive replaces Directive 2014/42/EU and the older framework on asset recovery offices. The European Commission concluded that the existing rules had not achieved their aim of fighting organised crime by taking away its profits. The directive requires rapid tracing and identification of criminal assets, asset-tracing investigations whenever an offence is likely to generate substantial economic benefit, stronger asset recovery and asset management offices, the sale of frozen assets in certain cases, and a national asset recovery strategy by 24 May 2027 that is updated at least every five years. It also extends confiscation to assets held by third parties, to cases where no conviction is possible and to unexplained wealth.

According to the government, the law of 22 June 2022 on the management and recovery of seized or confiscated assets already anticipated much of this. New provisions are still needed on scope, non-conviction-based confiscation, unexplained wealth and the role of the asset recovery office and its access to information. The bill also closes gaps that practice has revealed in the management of seized property.

Bastian Schwind-Wagner _Follow

"Bill 8698 is far more than a technical transposition. Luxembourg applies the new confiscation tools to every offence, sends every seized asset to one office and gives that office the power to ask banks, crypto firms and auditors for information under a tipping-off ban and fines of up to €1.25 million.

For compliance teams the practical change is a new requester with its own legal basis and short deadlines, including preservation instructions that can freeze a position for up to seven working days. The Chamber of Commerce and the Bar both ask for reasoned requests and stronger safeguards, and the Council of State still has to give its view."

Four new or wider confiscation tools

Article 31 of the Criminal Code is rewritten. Value confiscation now also covers the instruments of an offence where they cannot be found. Extended confiscation applies to assets of a convicted person whose origin neither that person nor the owner can justify, where the offence can generate an economic gain and the assets can be presumed to come from crimes or misdemeanours punishable by a maximum of at least four years. The court takes all circumstances into account, such as a disproportion between the assets and the convicted person’s legal income.

Third-party confiscation reaches assets transferred to, or acquired by, someone who knew or should have known that the purpose was to avoid confiscation, subject to the rights of third parties in good faith. A transfer free of charge or for a manifestly disproportionate price, and a transfer to closely connected persons while the suspect keeps effective control, are listed as indications. Non-conviction-based confiscation becomes possible where illness, flight, death, deregistration or liquidation of the person, or limitation of the prosecution prevents a conviction, provided that a conviction would otherwise have been possible and the assets can be presumed to stem from the offence. Until now, confiscation without conviction was available only for money laundering.

Unexplained wealth without a conviction

According to the government, confiscation of unexplained wealth is one of the most important innovations. Where the other forms of confiscation cannot be applied, assets identified in an investigation can be confiscated if they derive from a crime or misdemeanour punishable by a maximum of at least four years that can generate substantial economic gain. The court may rely on a substantial disproportion between the assets and the person’s legal income, the absence of any plausible lawful source and a link between the person and people connected with a criminal organisation.

Article 324quater of the Criminal Code already punishes a person who cannot justify their resources while in habitual contact with offenders, but confiscation then follows only a conviction. Both instruments are kept. The directive limits unexplained wealth confiscation to criminal activity within a criminal organisation. The bill treats that link only as one indication, arguing that many corruption and embezzlement cases involving public officials have nothing to do with a criminal organisation and that the condition would have deprived the tool of practical effect. The Chamber of Commerce notes that this departs from strict transposition. The bill also does not limit the measure to assets that were previously frozen.

One office for tracing and managing assets

The asset recovery office, currently part of the Luxembourg public prosecutor’s office, merges with the asset management office into a Bureau de gestion et de recouvrement des avoirs (BGRA) under the Minister of Justice, with one department for management and one for recovery. Asset recovery thus leaves the judiciary and becomes an administrative task. At the request of a prosecutor, a European Delegated Prosecutor or an investigating judge, the BGRA carries out asset-tracing investigations. It also traces assets after conviction at the request of the Public Prosecutor General, traces assets of persons and entities under restrictive measures to help detect sanctions offences, answers requests from other EU asset recovery offices and from third countries, and prepares the national strategy.

Prosecutors and investigating judges must order asset tracing whenever an offence is likely to generate substantial economic gain. The BGRA gets direct or indirect access to a long list of registers, including the trade and companies register, the register of beneficial owners, the register of trusts, the land register, the central electronic system of payment and bank accounts made available by the CSSF, tax data and data from cash controls at the border. Requests from asset recovery offices in other member states must be answered within seven calendar days, or within eight hours for urgent requests concerning information in databases to which the BGRA has direct access.

What banks, crypto firms and auditors will have to provide

The BGRA can ask financial institutions, payment service providers, e-money issuers and crypto-asset service providers for information on loans, foreign exchange transactions, securities, transfers and account balances, as well as on crypto-asset accounts and transfers. It can ask auditors, audit firms, chartered accountants and accounting professionals for information on companies’ annual financial statements. The professionals, their managers and employees must answer without delay and may not tell the client about the request, which mirrors the tipping-off prohibition familiar from AML/CFT. Breaches carry a fine of €1,250 to €1,250,000.

Two further powers stand out. If a post-sentencing investigation finds assets, the BGRA can instruct a professional subject to AML/CFT obligations to make them available up to the outstanding confiscation amount. Where there is an imminent risk that traced assets will disappear, it can instruct a professional to take immediate steps to preserve them. That instruction lapses automatically at midnight on the seventh working day after notification unless a judicial seizure or a freezing order follows. Separately, a prosecutor can ask the investigating judge to order AML/CFT professionals to produce the same categories of information without opening a judicial investigation.

All seized assets go to the BGRA

Under the current law, the asset management office handled only cash, account balances, claims and virtual assets by default. Other property was entrusted to it at the judge’s discretion, which in practice remained rare. The bill reverses this. Police officers transfer seized cash and account balances to the Caisse de consignation, move seized crypto-assets to a wallet managed by the BGRA and hand over other property once it has been examined. Financial instruments and claims stay with the bank or other third party holding them unless the BGRA instructs otherwise.

The BGRA can sell seized assets before a final confiscation decision when they are perishable or depreciate quickly, when storage or upkeep costs are disproportionate, or when management requires special conditions and expertise that are hard to find. Judicial authorities can object within ten working days, and the persons concerned can submit observations, ask to be heard and challenge a sale decision before the president of the district court within ten days. A third party holding seized assets can invoke an “obstacle to transfer” based on a security interest created before the seizure, and secured creditors can ask the investigating judge for permission to enforce. Professionals who receive confiscated assets on behalf of the BGRA are exempted from reporting suspicions about those assets to the CRF and from customer due diligence towards the BGRA.

Criticism from the Chamber of Commerce and the Bar

The Chamber of Commerce welcomes the single office and the obstacle-to-transfer mechanism. It understands that the BGRA can only trace assets at the request of a judicial authority and wants information requests to be reasoned and open to challenge when manifestly disproportionate. It asks for a definition of “information on annual financial statements”, a reasonable deadline for replies, compensation for costs, a limit on how far back requests may reach given the usual ten-year retention period, and a graduated system of fines. It also criticises the financial statement for giving no figures for the twelve new posts, the premises and the software.

The Bar accepts the objectives but warns that applying the new tools to all offences calls for stronger safeguards. It wants a general proportionality clause, an express rule that the prosecution bears the burden of proof and that presumptions are rebuttable, better procedural rights for third parties and a clearer “should have known” test. It notes that the bill applies limitation of the prosecution more broadly than the directive, adds deregistration and liquidation, and relies on a presumption where the directive requires the court to be convinced. On asset management, it asks who is liable for losses, points out that the ten-day judicial objection does not apply to financial instruments, claims and crypto-assets, and questions charging management costs to a defendant who may later be acquitted.

Questions from the Public Prosecutor General

The Public Prosecutor General’s office raises no major objections and welcomes the systematic transfer of all seized property to the BGRA. It asks for a definition of “substantial economic gain”, since almost any profit-driven offence could meet the test once asset tracing becomes a legal duty. It also finds the degree of proof required for unexplained wealth confiscation unclear, including what a link to a criminal organisation means, and warns that requiring prosecutors first to exhaust all other forms of confiscation may lengthen proceedings. Finally, it points out that the BGRA has no legal personality, which raises the question of how it can bring court actions.

What compliance teams should prepare for

For banks, payment and e-money institutions, crypto-asset service providers, auditors and accountants, the bill creates a new administrative requester with its own statutory powers, short response expectations, a ban on informing the client and fines of up to €1,250,000. Firms will need a process to recognise BGRA requests, route them to the right team, answer quickly and keep them confidential, and to act on preservation instructions that last at most seven working days. Custodians of seized securities and claims should prepare for the BGRA’s role in managing those assets and, where they hold prior security, for the obstacle-to-transfer procedure. The Council of State’s opinion and possible amendments may still change the details before the transposition deadline of 23 November 2026.

Dive deeper

• CHD ¦ Projet de loi 8698 – Dossier consolidé (modification du Code pénal, du Code de procédure pénale et de 15 autres lois en vue de la transposition de la directive (UE) 2024/1260 relative au recouvrement et à la confiscation d’avoirs) ¦ Link