We represented clients, companies registered in Cyprus and the British Virgin Islands belonging to a group of companies, securing a final and favourable regional court decision in a case concerning criminally acquired property, whereby the court found that approximately EUR 11 million, which had been frozen in a bank in Latvia in the criminal proceedings, did not constitute criminally acquired funds.
Representing our clients in the first instance at the Economic Court, we succeeded in convincing the court that the seized funds were not of criminal origin; accordingly, the court ruled in our clients’ favour, ordering that the proceedings regarding criminally acquired property be terminated. The investigator and the prosecutor appealed the first-instance court’s decision to the regional court, arguing that the transactions carried out by the clients lacked an economic rationale and fit the typologies of money laundering. However, the regional court upheld the decision of the court of first instance, fully agreeing with the court’s conclusions that the investigator and prosecutor had failed to prove the criminal origin of the property.
The clients’ core business consists of holding investments, as well as providing financing and support services in connection with real estate development projects carried out by other companies within the group. In this case, the police and the prosecutor’s office considered the clients’ business activities in multiple jurisdictions, which do not conform to the typical Latvian business model, to be illogical and unclear; therefore, the funds were seized in the criminal proceedings regarding possible money laundering, and a request was filed with the court to confiscate them.
In this case, the regional court emphasised that the fact that the transactions are, in the investigator’s view, economically illogical or atypical is not sufficient to presume that the funds are of criminal origin. The case must contain direct or indirect evidence that sufficiently and credibly points to the criminal origin of the funds. The court must assess not the correctness of the transactions from a business perspective, but rather whether the body of evidence provides sufficient grounds to conclude that the origin of the property is most likely criminal.
The regional court also noted that, in such proceedings, the lower standard of proof does not mean that it is sufficient merely to present the investigator’s assumption that unspecified hypothetical criminal acts have occurred and that the property is of criminal origin. Such an assumption must be based on specific evidence in the case. Similarly, the court emphasised that these proceedings do not address the question of whether the laundering of criminally acquired funds has occurred and who is to blame for it. This is a special proceeding in which the sole issue decided is whether the seized property is of criminal origin. This proceeding does not assess or decide whether, given the possible criminal origin of these funds, laundering of criminally acquired funds also occurred.
As a result of the case, the regional court found that the evidence did not provide grounds for assuming that the initial origin of the funds was from criminal activity. The fact that the transactions were, in the investigator’s view, economically illogical or atypical is not sufficient to support the assumption that the funds were of criminal origin. The regional court held that the court of first instance had reasonably concluded that the holding structure and transactions could be explained by genuine economic activity.
The regional court’s decision is final and has taken effect, thereby ensuring a favourable outcome for the clients.
We continue to be pleased with the positive outcomes achieved for our clients in court proceedings regarding criminally acquired property. We achieve this through close collaboration between our attorneys specialising in both criminal law and financial law.
Our team and involvement
In this case, the clients were represented by the head of the Corporate Crime Investigation and Compliance Practice at the firm’s Latvian office, partner, attorney-at-law Dr. iur. Violeta Zeppa-Priedīte, attorney-at-law in the Finance and Insurance Practice Group, Agneta Rumpa, and an assistant attorney-at-law in the Corporate Crime Investigation and Compliance Practice Group, Krista Niklase.
