Ruling [DEU] ¦ Contamination Share Decides: BGH Sets Standards for Forfeiture in Mixed‑Funding Cases

Federal Court Reverses Property Forfeiture Order in Complex Drug-Proceeds Case — Sends Matter Back for New Hearing

On 13 February 2025 the Second Criminal Senate of the Bundesgerichtshof (BGH) set aside the Landgericht Aachen’s decision ordering the independent forfeiture (“selbstständige Einziehung”) of four real estate properties tied to proceeds from drug trafficking. The case raises key issues for financial-crime practitioners: when and how courts must establish that assets “derive” from criminal activity under the pre‑18 March 2021 statute, how mixed (legal/illegal) financing must be apportioned to determine the “contaminated” share, and the necessary depth of fact-finding to satisfy proportionality guarantees under Article 14 GG. The BGH sent the matter back to another chamber of the Landgericht for a new hearing and decision.

Case background and lower-court findings

The dispute concerns a wife (the “Einziehungsbeteiligte”) against whom the Landgericht Aachen ordered forfeiture of four properties, in one instance recognizing ownership under an Albanian community-of-property regime. The husband had a long-standing involvement in cocaine trafficking from at least 2004; he received a foreign conviction (Turin, 2004) and later, in December 2021, a German sentence from Landgericht Aachen for large-scale, gang-related drug trafficking, together with a monetary forfeiture of €1,500,000. The Landgericht found that from before 2010 the husband used proceeds from drug trafficking to finance property acquisitions, and that title had in practice been shifted to the wife to frustrate state recovery in the event of conviction.

Between 2010 and 2019 the couple acquired one single-family home and three multi-family rental properties. The purchases were largely funded by bank loans, but the court concluded that acquisition costs, incidental purchase expenses, ongoing financing and upkeep were essentially covered with funds originating from the husband’s drug business. The local public prosecutor opened an investigation into the wife for accessoryship and money laundering and seized the properties, but that investigation was discontinued under § 170(2) StPO in May 2022.

Procedural issues addressed by the BGH

The BGH first assessed whether a procedural bar existed — specifically whether the wife could be prosecuted for the predicate offences that justified forfeiture. The Senate concluded there was no procedural hindrance: it accepted the public prosecutor’s decision not to charge as reasonable because, on review, there was no sufficient basis to sustain criminal charges against the wife for accessoryship to the gang-related drug trafficking or for money laundering. The Senate therefore moved to substantive review of the forfeiture orders.

Applicable legal standard

Because the properties had been seized prior to 18 March 2021, the BGH held that the pre-18 March 2021 versions of § 76a StGB (the provision governing forfeiture of assets of unclear origin) and implementing transitional rules (Art. 316h and 316k EGStGB) apply. Under that legal framework a court may order forfeiture where it is convinced that the secured asset “derives” from criminal activity. The legislative aim is to allow confiscation of assets of unclear origin by linking the statutory term “herrühren” to the interpretation developed in the money‑laundering context. Importantly, the statutory formulation was to be read broadly to permit tracing of value through multiple replacements or intermediations — a functional, economic causation test rather than a narrow formal one.

Bastian Schwind-Wagner _Follow

"The Bundesgerichtshof decision makes clear that courts cannot order forfeiture of mixed‑financed real estate without quantified, asset‑by‑asset findings showing the share of funds that economically “derive” from criminal activity. Absent purchase prices, ancillary costs, loan disbursements and repayments, and post‑acquisition expenses, a proportionality review is impossible and confiscation risks being overturned.

Prosecutors must therefore assemble comprehensive financial records tying illicit inflows to each property, and judges must use those figures to calculate the contaminated share before exercising discretion. Defence counsel can effectively challenge forfeiture by demanding that courts perform this precise numeric analysis and weigh constitutional property protections against recovery aims."

The mixed finance (Teilkontamination) challenge

A central legal and factual difficulty in cases like this is mixed financing: bank loans and legitimate income were used alongside illicit proceeds. The BGH reiterated that the mere presence of bank financing does not preclude forfeiture. Where legal and illegal funds mix, courts must apply principles developed in money‑laundering jurisprudence to determine the contaminated share. The decisive question becomes whether the portion of value traceable to criminal proceeds is, in economic terms, not “wholly insignificant”. If the criminally derived portion is meaningful, forfeiture can be ordered — but courts must be attentive to proportionality and the constitutional protection of property.

Why the BGH quashed the Landgericht’s decision

The BGH found legal and procedural shortcomings in the Landgericht’s approach. Although the lower court had established broadly that the couple’s lawful income could not plausibly account for the property acquisitions and upkeep, and that the properties were substantially financed with the husband’s illicit proceeds, the Landgericht failed to perform the required property-by-property, arithmetic-focused analysis. It did not set out purchase prices, incidental purchase costs, borrowing amounts, subsequent renovation or maintenance expenses and the precise timing and amounts of when illicit funds entered the economic cycle. The BGH emphasized that these figures are necessary to compute the “Bemakelungsquote” — the proportion of each property’s total expenditures that can be attributed to criminal funds at the time the illegal money was introduced.

This detailed quantification matters for two reasons.

First, it operationalizes the “herrühren” assessment in mixed-finance scenarios: only by measuring how significant the criminal share is relative to the whole can a court decide that the asset economically derives from the crime.

Second, the Bemakelungsquote is a core input for the proportionality assessment required under the constitutional guarantee of property.

The BGH noted that proportionality can take into account the level of bad faith of the third party (here, the wife), the contaminated share, the current market value of the asset, and whether illicit funds were merely used to feed loan repayments (which might nevertheless perpetuate contamination via derived economic benefits such as rental yields).

The BGH also criticized the Landgericht for relying on general indicia of contamination rather than making separate findings for each property and each acquisition episode, including the precise roles of loans, repayments, rent income and any modernization costs. As the sentencing chamber’s factual basis was incomplete, the BGH was unable to conduct a meaningful review of the exercise of discretion to determine whether it was lawful and proportionate.

Practical implications for practitioners and investigators

This decision clarifies and reinforces several important points for prosecutors, defence counsel, judges, and asset recovery practitioners:

Seizure and later forfeiture based on unclear-origin legislation will require detailed, asset-specific accounting where a property was financed by a mixture of legal and illegal funds. Prosecutors should assemble full documentation: purchase price, acquisition costs, loan contracts, disbursement schedules, repayments (including special repayments), rent rolls, renovation and operating costs, and the chronological link to suspected illicit inflows.

Courts must quantify the contaminated share (“Bemakelungsquote”) at the time illicit funds were introduced and consider how subsequent cash flows (e.g., rental income applied to loan servicing) affect ongoing contamination. This quantification is indispensable for both establishing “herrühren” and performing a constitutionally required proportionality analysis.

The BGH’s reasoning confirms that a broad economic causation approach governs “herrühren”, but that breadth is constrained in practice by due process and proportionality — particularly where third parties with limited independent resources hold formal title.

Defence strategies can legitimately focus on forcing the prosecution and court to make clear, numeric showings at the property level and to address how legal financing instruments interacted with the alleged dirty funds. Demonstrating that the criminally derived share is de minimis or that a proportionality analysis weighs heavily against forfeiture may be decisive.

Conclusion

The BGH did not hold that forfeiture could never be ordered in cases of mixed financing. Rather, it vacated the Landgericht’s blanket findings because those findings lacked the necessary asset-specific quantification and proportionality analysis. By requiring rigorous calculation of the contaminated share and a structured proportionality assessment, the Senate has reinforced procedural safeguards and clarified the evidentiary path prosecutors must follow in complex financial-crime forfeiture cases. The matter returns to the Landgericht for renewed fact-finding and discretion-guided decision-making consistent with the BGH’s principles.

Dive deeper

• BGH ¦ Az. 2 StR 419/23 Einziehungsverfahren ¦ Link