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Civil asset recovery

Parallel proceedings

Is there any restriction on civil proceedings progressing in parallel with, or in advance of, criminal proceedings concerning the same subject matter?

In general, there is no restriction in furthering civil proceedings in parallel with, or in advance of, criminal proceedings in relation to the same subject matter. Civil proceedings are normally furthered by the victim for restitution purposes, whereas criminal proceedings are primarily aimed at punishing the wrongdoer.

However, where parallel proceedings are promoted in order to exert undue pressure on a defendant for an ulterior purpose, such as achieving a settlement in a civil dispute, the furthering of parallel proceedings may be deemed abusive of the courts’ powers and processes. Courts may refuse to entertain parallel proceedings for the same subject matter when such proceedings are found abusive. The promotion of parallel proceedings is not regarded per se as abusive or oppressive conduct.

Forum

In which court should proceedings be brought?

Civil actions, such as claims for the recovery of assets (irrespective of their value), are brought in district courts, which have jurisdiction to hear at first instance any civil action unless the subject matter of the action falls within the exclusive jurisdiction of a special court, such as the Family Court or the Admiralty Court.

Limitation

What are the time limits for starting civil court proceedings?

Limitation periods for civil proceedings are mainly provided by the Limitation of Actions Law of 2012 (Law No. 66(I)/12) and are as follows:

  • tort: six-year limitation period from the date of accrual of the cause of action, except for cases of negligence, nuisance or breach of statutory duty where there is a three-year limitation period from the date the injured person became aware of the cause of action;
  • contract: six-year limitation period from the date of accrual of the cause of action;
  • mortgage or pledge: 12-year limitation period from the date of accrual of the cause of action;
  • bill of exchange, etc: six-year limitation period from the date of accrual of the cause of action; and
  • cause of action for which no particular provision is made: 10-year limitation period from the date of accrual of the cause of action.

In the case of civil proceedings for fraud or where the defendant has intentionally concealed any fact relevant to the cause of action, the limitation period only commences when the claimant discovers or could, with reasonable diligence, have discovered the fraud or concealment.

Jurisdiction

In what circumstances does the civil court have jurisdiction? How can a defendant challenge jurisdiction?

In general, district courts have civil jurisdiction to hear and decide any action on a first-instance level as follows:

  • when the subject matter of the action has wholly or partly arisen within the district of the court;
  • when the defendant, at the time of filing the action, resides or works within the district of the court;
  • when the subject matter of the action relates to immovable property within the district of the court; and
  • where there is a binding jurisdiction agreement between the parties.

Additionally, district courts may acquire civil jurisdiction from specific legislation, international treaties and conventions, including EU Regulation 1215/2012 and the Brussels and Lugano Conventions, which supersede local laws.

The defendant can dispute a court’s jurisdiction by filing a conditional appearance followed by an application to dismiss and set aside the proceedings, before taking any further steps in the proceedings.

If the defendant fails to act as provided above, then he or she may be deemed to have submitted himself or herself to the jurisdiction of the court, thereby waiving his or her right to dispute the jurisdiction of the court.

Time frame

What is the usual time frame for a claim to reach trial?

A claim in a district court usually reaches trial within two to four years from the filing of the relevant action.

This depends on, inter alia, any interim proceedings, such as applications for interim orders, which may be pursued within the time frame of the main proceedings, and the procedural behaviour of the parties during the period leading up to trial.

Admissibility of evidence

What rules apply to the admissibility of evidence in civil proceedings?

As a general rule, any oral, real or documentary evidence is admissible at court, provided it is relevant or connected to the matters in issue in the case.

Evidence that has been obtained by means contrary to the provisions of the Constitution of Cyprus, and evidence covered by privilege is inadmissible. Evidence obtained by illegal means, but not in contravention of the Constitution, may be admissible.

Opinion evidence is inadmissible; however, expert evidence and expert opinions are admissible where such evidence is required to determine an issue of scientific or technical nature.

Witnesses

What powers are available to compel witnesses to give evidence?

Any person within the jurisdiction of Cyprus may be compelled to appear in court to give oral evidence or furnish the court with documents, upon being served with a witness summons, namely a written direction by the court to appear at a specified time and date to give evidence. The court may issue a witness summons on its own motion, or further to an application by any of the parties, at any stage of the proceedings.

Additionally, the court may order any person who is present in the courtroom to give evidence, irrespective of whether said person has any connection with the proceedings, and that person will thereafter be regarded as having been summoned before the court by means of a witness summons.

The above are applicable to compellable witnesses; the classes of persons who are not compellable are very few.

If a person who has been summoned to give evidence and has been given reasonable notice of the time and place where he or she should appear for this purpose, fails to appear before the court and does not give sufficient reason for his or her failure, he or she may be compelled to appear before the court by means of an arrest warrant. Additionally, said person will be liable to imprisonment or a fine, and may be ordered to pay any expenses incurred as a result of his or her failure to appear in court.

If a person who appears before the court to give evidence, further to a witness summons or an arrest warrant, refuses to give evidence as requested and does not give sufficient reason for his or her refusal, he or she will be liable to imprisonment and a fine.

Publicly available information

What sources of information about assets are publicly available?

The primary sources of publicly available information about assets are the following:

  • the Registrar of Companies, which maintains registers of officers, registered offices, registered shareholders and registered charges of limited liability companies and other legal entities. The identity of the ultimate beneficial owners of companies is not recorded and is not publicly available;
  • the Intellectual and Industrial Property branch of the Registrar of Companies, which registers Cypriot trademarks, patents and industrial designs;
  • the Land Registry, which maintains records of the holders of the legal title of real property, as well as records of all registrable interests on real property including mortgages and charges;
  • the Department of Merchant Shipping, which maintains the Register of Cyprus Ships: where details of vessels registered under the Cyprus flag are recorded. The register includes the registered owner, details of the vessel and any mortgages registered on the vessel;
  • the Department of Civil Aviation, which maintains the Cyprus Aircraft Register where aircraft with Cypriot nationality are registered. The publicly available information includes the owner and operator of the aircraft, and details of the aircraft; and
  • the Road Transport Department, which holds details of the registered holders of licensed vehicles in Cyprus.

Cooperation with law enforcement agencies

Can information and evidence be obtained from law enforcement and regulatory agencies for use in civil proceedings?

There are no special rules or procedures for obtaining information and evidence from law enforcement and regulatory agencies for use in civil proceedings.

However, such evidence may be obtained via the normal routes of obtaining evidence in civil proceedings, such as by compelling witnesses to produce evidence at trial, or by pretrial disclosure orders.

Third-party disclosure

How can information be obtained from third parties not suspected of wrongdoing?

Third-party disclosure orders against innocent parties are available on the basis of the principle set out in the Norwich Pharmacal case.

A third-party disclosure order may be issued by a court when the following conditions are met:

  • a wrongdoing was carried out, or arguably carried out, by an ultimate wrongdoer;
  • the disclosure order is necessary to enable an action to be brought against the ultimate wrongdoer; and
  • the person against whom the order is sought must, as follows:
  • be involved so as to have facilitated the wrongdoing; and
  • be able, or likely to be able, to provide the information necessary to allow the ultimate wrongdoer to be sued.

Pre-action disclosure orders are unavailable, however, the Supreme Court has recognised a litigant’s right to raise proceedings against an innocent party solely for the purpose of pursuing the issuance of a disclosure order. Disclosure orders are normally sought together with gagging orders preventing the third party from notifying the ultimate wrongdoer of the disclosure proceedings and the prospective proceedings that may be brought against the ultimate wrongdoer.

Innocent third parties may also be compelled to give evidence as witnesses at trial.

Interim relief

What interim relief is available pre-judgment to prevent the dissipation of assets by, and to obtain information from, those suspected of involvement in the fraud?

Owing to section 32 of the Courts of Justice Law No. 14/1960, in exercising their civil jurisdiction, district courts have a wide discretion to issue any interim order or appoint a receiver when it is just and convenient to do so, provided that the following conditions are satisfied by the applicant or claimant:

  • there is a serious question to be tried at the hearing of the main proceedings;
  • it is probable that the applicant will obtain a favourable judgment in the main proceedings;
  • there is a great risk that, if the order is not issued, it will be difficult or impossible to do justice at a later stage; and
  • the balance of convenience is in favour of the applicant.

The unfettered discretion of the district court to issue any order it deems necessary has been acknowledged by the Supreme Court, although the law does not codify the particular types of orders that are available.

The following types of interim orders preventing the dissipation of assets, pending the final hearing of the case, have been recognised and are frequently issued by courts:

  • worldwide freezing injunctions prohibiting the defendant from disposing of, dealing with or otherwise reducing the value of his or her assets, up to the value of the claim;
  • Chabra orders prohibiting third parties who hold property belonging to the defendant, but against whom there is no cause of action, from disposing of, dealing with or otherwise diminishing the value of the assets of the defendant that are in their control or custody; and
  • receivership orders for the appointment of a receiver to hold, protect and preserve the assets of the defendant where there is cogent evidence to suggest that this is necessary under the circumstances.

As regards obtaining information from those suspected of involvement in fraud, the following types of orders have been recognised and are frequently issued by courts:

  • ancillary disclosure orders for the disclosure of assets covered by freezing injunctions;
  • Norwich Pharmacal orders for the disclosure of information that is necessary for instituting further proceedings; and
  • Anton Piller orders ordering a person to allow the applicant’s lawyers, a supervising lawyer, experts (if necessary) and other assisting personnel to enter premises, under his or her control, for the purpose of conducting a search in order to locate, collect and preserve evidence.

Non-compliance with court orders

How do courts punish failure to comply with court orders?

Failure to comply with a court order constitutes contempt of court. The court, following a finding of contempt of court, may order the imprisonment of, the sequestration of the assets of or the payment of a fine by (or all of the above) anyone who does not conform to a court order, including an interim order.

Courts have also been willing to issue debarring orders, known as ‘unless orders’, preventing a non-compliant defendant from defending himself or herself until he or she complies with a court order.

Obtaining evidence from other jurisdictions

How can information be obtained through courts in other jurisdictions to assist in the civil proceedings?

A request of a Cypriot court to a foreign court for assistance in gathering evidence in that jurisdiction for the purposes of civil proceedings pending in Cyprus may be made through letters rogatory or other letter of request, pursuant to the framework provided for in the Taking of Evidence Regulation 1206/2001 (where the foreign court is a European Union member state court), the Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters (where the foreign state is a signatory) or any other relevant international treaty or bilateral convention ratified by Cyprus.

Assisting courts in other jurisdictions

What assistance will the civil court give in connection with civil asset recovery proceedings in other jurisdictions?

Civil courts in Cyprus may give assistance in connection with civil asset recovery proceedings in other jurisdictions by granting interim protective measures in Cyprus in aid of such proceedings.

Courts have been willing to issue interim protective measures in aid of foreign proceedings on the basis of provisions found in local and European legislation, or other international treaties, expressly empowering the courts to do so (ie, article 35 of EU Regulation 1215/2012).

The courts’ power to grant interim protective measures in aid of foreign proceedings in circumstances when the court is not expressly empowered to do so by legislation or another treaty, has not yet been tested in Cyprus.

Courts may also provide assistance in connection with foreign proceedings by assisting in the gathering of evidence in Cyprus for the purposes of the foreign proceedings, on the basis of letters rogatory or other letters of request sent by the foreign court.

Additionally, it has been expressly recognised by the Supreme Court that hearing disclosure orders prior to hearings (ie, Norwich Pharmacal orders) can be sought in Cyprus for the purpose of collecting information and evidence to be used in proceedings in other jurisdictions.

Causes of action

What are the main causes of action in civil asset recovery cases, and do they include proprietary claims?

Civil asset recovery cases are usually founded on causes of action in tort, contract and equity. The main causes of action in civil asset recovery cases are as follows:

  • fraud: a cause of action founded in tort that covers statements and representations made fraudulently for the purpose of defrauding a claimant who was in fact defrauded and as a result has suffered damage (codified under section 36 of the Civil Wrongs Law, Chapter 148);
  • conspiracy to defraud (deceit): a cause of action founded in tort that covers situations when two or more persons have made an agreement, the real and predominant purpose of which was to injure the claimant and the execution of the agreement caused damage to the claimant by lawful means, or one of the purposes of the agreement was to injure the claimant and the execution of the agreement caused damage to the claimant through unlawful means (common law tort of deceit acknowledged in Christoforou v Barclays Bank Plc (2009) 1 AAD 25);
  • breach of contract: a cause of action founded in contract that covers substantial breaches of agreements as a result of which the claimant has suffered damage (codified by Contracts Law, Chapter 149);
  • fraudulent misrepresentation: a cause of action founded in contract, which includes the presentation of an untrue fact as true, including the active negligent concealment of a fact (codified under section 18 of the Contracts Law, Chapter 149);
  • breach of fiduciary duty and trust: a cause of action founded in equity that involves the breach of a fiduciary relationship between the claimant and the fiduciary, whether a trustee or another professional, which caused damage to the claimant as a result (principle of equity codified under the Trustee Law, Chapter 193); and
  • action for unjust enrichment: where the defendant has enriched himself or herself at the claimant’s expense (usually failing a contract between the parties) and the enrichment is in all circumstances unjust (principle of equity).

Equitable causes of action such as breach of trust or unjust enrichment may entitle the claimant to proprietary remedies.

Remedies

What remedies are available in a civil recovery action?

In a civil recovery action, the usual remedy is an award for damages for losses suffered. Punitive damages may also be awarded at the discretion of the court, depending on the facts of the case.

Where damages are inadequate in all circumstances, perpetual injunctive relief, which prohibits the defendant from engaging in certain practices, or mandatory and specific performance orders for the performance of an action, may be issued.

Alternatively to the court awarding remedies to compensate the loss suffered by the claimant, the court may order the restitution of any gains, benefits and profits received by the defendant to the claimant, provided the court considers it suitable and fair in all circumstances.

Apart from remedies granted in personam, courts, pursuant to their proprietary jurisdiction, may make tracing orders for the recovery of property owned by the claimant, or impose a constructive trust over property for his or her benefit.

In addition, declaratory judgments may be issued on the rights and interests of the claimant, or obligations and liabilities of the defendant.

Judgment without full trial

Can a victim obtain a judgment without the need for a full trial?

Default judgments may be issued against a defendant for failure to file an appearance or a statement of defence in an action. Prior to entering a default judgment, the claim must be proved before the court, usually by the submission of an affidavit attaching all relevant exhibits.

Summary judgments are generally available in civil actions when the defendant does not satisfy the court that he or she has an arguable defence to the action on the merits, or disclose such facts as may be deemed sufficient to entitle him or her to defend.

A summary judgment is unavailable when fraud is alleged by the claimant.

Post-judgment relief

What post-judgment relief is available to successful claimants?

Courts have a wide discretion to issue any order, pending the execution of the judgment, including freezing injunctions, disclosure orders and orders for the appointment of a receiver.

The jurisdictional basis for issuing interim orders post-judgment is the same as for the issuance of interim orders pre-judgment. Accordingly, courts need to be satisfied that the necessary conditions have been met and that it is just and convenient in all circumstances for the interim orders to be issued.

Courts have also been willing, upon the issuance of a final judgment in proceedings to extend pre-judgment interim orders (that would otherwise be automatically cancelled) post-judgment in aid of execution.

Enforcement

What methods of enforcement are available?

A money judgment may be enforced, directly after issuance, in one or more of the following ways:

  • writ of movables: permits the seizure of movable property owned by the judgment debtor. The movable property may then be sold to satisfy the judgment debt;
  • writ of attachment (garnishee proceedings): attaches funds or property held by a third party on behalf or for the benefit of the judgment debtor (deposits in bank accounts, etc), and orders the third party to pay the same to the judgment creditor against the judgment debt;
  • memo: registration in the Land Registry of the judgment as a legal charge on the title of immovable property located in Cyprus and owned by the judgment debtor. The judgment debt shall be settled upon the sale of the property;
  • writ of sale: orders the sale of immovable property located in Cyprus and owned by the judgment debtor. The sale proceeds are applied towards the judgment debt;
  • charging order: attaches shares owned by the judgment debtor in a Cyprus company. An order for the sale of shares in satisfaction of the judgment debt is normally ordered simultaneously;
  • order for the appointment of a receiver by way of equitable execution: orders a receiver to hold, preserve and ultimately sell in satisfaction of the judgment debt property owned by the judgment debtor. This means of execution is available where the ordinary means of execution fail, such as in cases where the judgment debtor is not the legal but rather the beneficial owner of property; and
  • application for examination of judgment debtor: orders the judgment debtor to attend the court for examination for the purpose of ascertaining the amount he or she can pay per month in satisfaction of the judgment debt. Thereafter, an order for the repayment of the judgment debt via monthly instalments may be made.

A money judgment may be enforced outside the jurisdiction against property situated abroad pursuant to the provisions of EU Regulation 1215/12, by means of a European Enforcement Order in agreement with the provisions of EU Regulation 805/2004, by way of a European Order for Payment pursuant to the provisions of EU Regulation 1896/2006, or under the provisions of another international treaty or convention ratified by Cyprus.

Funding and costs

What funding arrangements are available to parties contemplating or involved in litigation and do the courts have any powers to manage the overall cost of that litigation?

Funding of litigation proceedings is normally undertaken by the parties. A lawyer may negotiate the legal fees of litigation proceedings and can reach any special arrangement or retainer freely with his or her client.

The permissibility of conditional or contingency fee agreements and damages-based agreements has not yet been examined by the courts; however, such arrangements are in general not permissible because of offending the equitable principle against champerty: an agreement where a person who maintains an action takes, as a reward, a share in the property recovered in the action. Accordingly, lawyers involved in the conduct of litigation are precluded from taking a share in the property recovered in the action pursuant to a conditional fee agreement or a damages-based arrangement.

Additionally, there is no regulated framework or availability of after-the-event insurance.

Where a party is in financial difficulty as regards funding litigation proceedings, it may apply to the court for legal aid. However, such an application can only be made in criminal cases, family cases and cases on the infringement of human rights.

Courts do not have any cost-management powers other than the power to make costs orders at the end of proceedings or stages in the proceedings. The court has a wide discretion and power to grant different awards; however, the general rule is that the losing party bears the costs of the proceedings.

Costs orders are made on the basis of fixed-fee scale rules that are based on the financial value of the claim. The rules set out in detail the minimum and maximum costs for each particular step and describe the service provided throughout the proceedings.

Costs recoverable under the court scales usually only cover a very small portion of the actual costs incurred in the litigation as legal fees. This applies especially in commercial litigation and civil assets tracing actions where the value of the claim is very high and the work to be undertaken is substantial and complex.

Criminal asset recovery

Interim measures

Describe the legal framework in relation to interim measures in your jurisdiction.

The legal framework for the issuance of interim measures in criminal proceedings before courts is founded in the Prevention and Suppression of Money Laundering Activities Law (L 188(I)/2007) and the Criminal Procedure Law, Chapter 155.

The Prevention and Suppression of Money Laundering Activities Law sets the framework for issuing interim freezing and charging orders in relation to the realisable assets of a person where criminal proceedings for the commission of a primary offence (as defined in the legislation) have commenced or are about to commence against him or her; or the Unit for Combating Money Laundering (MOKAS) has information that creates a reasonable suspicion that criminal proceedings for the commission of a money laundering offence can commence against him or her, and in either case the court is satisfied that there is reasonable cause to believe that he or she has gained benefit from the commission of a primary offence.

Freezing injunctions prohibit any transactions with the realisable property of the person against whom the order was issued. Charging orders create a charge over the interest of the person against whom the order was issued in realisable property, comprising of real property, stocks in Cyprus, property under trust, units under trust in Cyprus or funds in court. At any time after the issuance of a freezing order, the court may appoint a receiver to take possession, manage or otherwise deal with the property affected by the freezing order. Additionally, following an application from a public interrogator, the court may issue a disclosure order for the provision of information in relation to an offence under investigation, including information relating to the recovery of proceeds of crime.

Proceeds of serious crime

Is an investigation to identify, trace and freeze proceeds automatically initiated when certain serious crimes are detected? If not, what triggers an investigation?

A court that has convicted a person for a specified crime but that has not yet imposed a penalty for the conviction, further to a relevant application by the Office of the Attorney General, investigates whether the defendant has obtained any proceeds from illegal acts or from the commission of a money laundering offence.

The Office of the Attorney General has the discretion to decide whether to apply for an investigation.

Confiscation – legal framework

Describe the legal framework in relation to confiscation of the proceeds of crime, including how the benefit figure is calculated.

The Prevention and Suppression of Money Laundering Activities Law provides the legal framework that regulates the confiscation of the proceeds of crime.

A confiscation order is issued with regard to the product of a specified offence, which is in the possession of the defendant, or the defendant’s proceeds from illegal acts or from the commission of a money laundering offence, or both. The product of an offence is the financial advantage deriving directly or indirectly from a specified offence, including any investment or conversion of direct products.

Proceeds of the defendant from illegal acts or from the commission of a money laundering offence are the total amount of payments or remuneration that have been paid towards him or her, or the product of the illegal acts or money laundering offence.

In ascertaining the amount of income obtained as a result of the commission of illegal acts or the commission of a money laundering offence, the court will assume, unless the contrary is proved or the court considers it unjust to so assume in all the circumstances, the following:

  1. that any property obtained by the defendant after the commission of the said offence, or obtained during the preceding six years before the commencement of the criminal proceedings against him or her, constitutes income, payment or remuneration from illegal acts or from the commission of a money laundering offence;
  2. that any property obtained by the defendant under (i) was obtained by him or her free of any charge or interest for the benefit any other person; and
  3. that any expenditure the defendant incurred during the period referred to in (i) was paid from the income, payment or remuneration the defendant obtained from illegal acts or from the commission of a money laundering offence.

However, in case the court considers that the amount of the defendant’s property that can be realised is less than the amount that the court has calculated as proceeds from illegal acts or from the commission of a money laundering offence, then the amount to be confiscated shall be the amount that can be obtained from the defendant’s realisable property.

Confiscation procedure

Describe how confiscation works in practice.

Upon the conviction of a defendant, the Office of the Attorney General may submit an application to the court for an investigation of the defendant’s proceeds from illegal acts or from the commission of a money laundering offence, together with a report providing facts and evidence relevant to the defendant’s proceeds or to the ‘product of the offence’.

The defendant may dispute or admit the content of the report submitted by the Office of the Attorney General. In case the defendant disputes the report, she or he will be required to submit a report in response, detailing the reasons for the dispute and presenting evidence relevant to the amount that may be confiscated from his or her realisable property.

The court may then fix a date for the purpose of conducting the investigation.

Upon the conclusion of the investigation, the court issues a relevant judgment. In case the court concludes that the defendant has obtained proceeds from the commission of illegal acts or a money laundering offence, it shall issue a confiscation order before imposing a penalty on the defendant. Upon the issuance of an order for confiscation, the court shall specify whether the defendant will need to pay the amount to be confiscated immediately, sometime in the future or via instalments.

Agencies

What agencies are responsible for tracing and confiscating the proceeds of crime in your jurisdiction?

The agency that is responsible for receiving, requesting and analysing suspicious transactions and other information relevant to money laundering is the MOKAS. It provides the police and other governmental authorities with information whenever this is deemed necessary.

Powers conferred to the MOKAS by the Prevention and Suppression of Money Laundering Activities Law include conducting searches for locating and tracing proceeds of crime and other property that may be the subject of a confiscation order.

Secondary proceeds

Is confiscation of secondary proceeds possible?

The criminal confiscation regime is a value-based system, as a confiscation order does not attach particular assets or property received by the defendant. The process is rather that the court calculates the value of the benefit the defendant received as proceeds of crime, and issues a confiscation order for the confiscation of any available property of the defendant equalling the value of this benefit.

For the purposes of establishing the value of the benefit received by the defendant as the proceeds of crime, the court will take into account any reinvestment or transformation of direct proceeds and any valuable benefit the defendant obtained as a result of the commission of crime.

Third-party ownership

Is it possible to confiscate property acquired by a third party or close relatives?

It is possible to confiscate any property of the defendant that is held by a third party or a member of his or her family where the same was unlawfully transferred to them by the defendant.

Property is regarded as being unlawfully transferred as follows:

  • where the defendant has transferred the property as a gift to a third party during the past six years before the commencement of the criminal proceedings against him or her, or at any time after the commencement of the criminal proceedings against him or her;
  • where the defendant has transferred as a gift to a third party property that the defendant has previously accepted as a gift for the commission of a primary criminal offence, which was committed by himself or herself or another; or
  • where the defendant has transferred the product of crime, directly or indirectly, to another who knows or ought to have known that the purpose of the transfer was to avoid the confiscation of said property, and this can be inferred from particular circumstances, including that the transfer was effected without consideration or with consideration that was significantly lower than the market price of the property.

In addition, in case no sufficient explanations have been provided for the manner in which members of the defendant’s family acquired certain property during a summary inquiry process for ascertaining the benefit received by the defendant as proceeds of crime, the court is entitled to assume that any property owned by the defendant’s family for which no sufficient explanations were provided, and that was transferred to members of the defendant’s family during the preceding six years before the commencement of the criminal proceedings against the defendant, have been transferred to them from the defendant as gifts to avoid the law.

Expenses

Can the costs of tracing and confiscating assets be recovered by a relevant state agency?

Costs to the MOKAS for receiving, requesting and analysing suspicious transactions and tracing proceeds of crime, inter alia, for the purposes of applying for confiscation orders are not recoverable.

Costs of the court-appointed receiver for the purpose of executing a confiscation order in case the defendant does not comply with the same are paid with priority from the property confiscated by the receiver during the of execution of the confiscation order.

Value-based confiscation

Is value-based confiscation allowed? If yes, how is the value assessment made?

See question 26.

Burden of proof

On whom is the burden of proof in a procedure to confiscate the proceeds of crime? Can the burden be reversed?

Generally, the burden of proof in a procedure to confiscate the proceeds of crime rests on the Office of the Attorney General.

However, pursuant to article 7(2) of Law No. 188(I)/2007, there is a rebuttable presumption that any property obtained by a defendant after the commission of an offence, or during the preceding six years before the commencement of the criminal proceedings against him or her, constitutes income, payment or remuneration from the commission of the offence. The Office of the Attorney General, therefore, bears the burden of proving that property was obtained by the defendant after the commission of the offence or during the preceding six years before the commencement of the criminal proceedings against him or her; following which, the defendant bears the burden of proving that the property in question does not constitute proceeds from crime, that it would be unjust for the above presumption to apply or that his or her realisable property is less than the proceeds he or she received from the commission of crime.

Using confiscated property to settle claims

May confiscated property be used in satisfaction of civil claims for damages or compensation from a claim arising from the conviction?

In general, the confiscated property cannot be used in satisfaction of civil claims for damages or compensation from a claim arising from the conviction. At the same time, the issuance of a confiscation order does not preclude the victim or the complainant from raising a civil claim for damages against the defendant. However, the Office of the Attorney General may not submit an application for confiscation or proceed with the execution of a confiscation order where the victim or the complainant has raised civil proceedings for damages against the defendant.

Confiscation of profits

Is it possible to recover the financial advantage or profit obtained through the commission of criminal offences?

Financial advantage or profit obtained as a result of the commission of a criminal offence for which the defendant was convicted may be subjected to confiscation.

Non-conviction based forfeiture

Can the proceeds of crime be confiscated without a conviction? Describe how the system works and any legal challenges to in rem confiscation.

A non-conviction confiscation order may only be made where the suspect is outside the jurisdiction or deceased.

There is no other basis for non-conviction based confiscation and no legal framework for in rem confiscation.

Management of assets

After the seizure of the assets, how are they managed, and by whom? How does the managing authority deal with the hidden cost of management of the assets? Can the assets be utilised by the managing authority or a government agency as their own?

In case timely payment under the confiscation order is not effected by the defendant, the court may appoint a receiver to take possession of any proceeds of crime, liquidate any property owned by the defendant, receive any realisable property of the defendant held by another person, or execute a charging order by disposing, selling or liquidating the property subject to the charging order, or all of the above. Accordingly, the property confiscated is under the management of the court-appointed receiver who holds, manages, sells and liquidates the same.

After the conclusion of the liquidation process, the funds held by the receiver are applied against the amount payable under the confiscation order, provided the fees and expenses of the receiver are paid, including the expenses for the management of the property. In case the liquidated proceeds of crime are not sufficient to satisfy the fees and expenses of the court-appointed receiver, the government pays the same.

Making requests for foreign legal assistance

Describe your jurisdiction’s legal framework and procedure to request international legal assistance concerning provisional measures in relation to the recovery of assets.

By virtue of the Prevention and Suppression of Money Laundering Activities Law, freezing, charging and confiscation orders issued by Cypriot courts in relation to property located in a country outside Cyprus are transmitted to the competent authorities of the said country for execution, or service by MOKAS through the Ministry of Justice. With regard to EU member states, the relevant order should be transmitted together with a prescribed form, and can be transmitted directly by MOKAS to the relevant foreign authorities.

Complying with requests for foreign legal assistance

Describe your jurisdiction’s legal framework and procedure to meet foreign requests for legal assistance concerning provisional measures in relation to the recovery of assets.

The Prevention and Suppression of Money Laundering Activities Law provides that a provisional order of a foreign court relating to the recovery of assets in the context of criminal proceedings may be enforced in Cyprus, following an application for enforcement submitted by the requesting state to the Ministry of Justice. The Ministry of Justice then forwards the application to the MOKAS, which may then submit the order to a Cypriot court for recognition and registration if it deems appropriate under the circumstances. Upon the registration of the order, it becomes enforceable within the jurisdiction. With regard to EU member states, the relevant order of a foreign court should be transmitted together with a prescribed form and can be transmitted directly to the MOKAS by the relevant foreign authorities.

The Prevention and Suppression of Money Laundering Activities Law sets out detailed rules and procedures with respect to requests of legal assistance by EU member states, whereas special procedures for requests of legal assistance may apply with respect to specified states, in accordance with bilateral or international conventions, which supersede the above-mentioned provisions of national law.

Treaties

To which international conventions with provisions on asset recovery is your state a signatory?

Cyprus is a signatory to the following international conventions:

  • the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances 1988;
  • the European Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime 1990;
  • the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism 2005;
  • the United Nations Convention against Transnational Organized Crime 2000;
  • the United Nations Convention against Corruption 2003;
  • the treaty between the government of Cyprus and the government of the United States of America on Mutual Legal Assistance in Criminal Matters Nicosia, 20 December 1999; and
  • the European Criminal Law Convention on Corruption 1999.

Private prosecutions

Can criminal asset recovery powers be used by private prosecutors?

Criminal asset recovery powers cannot be used by private prosecutors. The Prevention and Suppression of Money Laundering Activities Law grants extensive powers to the MOKAS for the purpose of receiving, requesting and analysing suspicious transactions and other information relevant to money laundering in Cyprus, including conducting investigations and exchanging information with government bodies and the police. Additionally, applications for the issuance of freezing, charging and confiscation orders may only be made by the Office of the Attorney General, whereas asset disclosure orders may only be obtained following a public interrogator’s request.