By Anagnostakis Law Team
The Greek Supreme Court’s recent decision in Case 3/2025 significantly tightens the conditions under which frozen criminal assets can be released, setting important precedents for asset recovery across Europe.
Executive Summary
In a landmark ruling that could influence asset forfeiture practices across the European Union, Greece’s highest criminal court (Areios Pagos) has established stringent new standards for the partial release of frozen criminal proceeds. The decision, rendered in Case 3/2025, addresses a critical tension in modern anti-money laundering enforcement: balancing the preservation of criminal assets for victim compensation against defendants’ operational and basic living needs.
Key Takeaway: Courts can no longer approve the release of frozen criminal proceeds for legitimate expenses without requiring strict proof that replacement funds come from post-freezing legitimate income sources.
Case Background: A €10 Million VAT Fraud Scheme
The Criminal Enterprise
The case centers on a sophisticated cross-border VAT carousel fraud operation allegedly orchestrated by:
- G.-P. Ch., individual defendant and company representative
- Anonymous Company A.E., a Greek corporation engaged in cosmetics retail
The scheme allegedly generated over €10 million in damages to EU financial interests, with the company alone responsible for at least €5.09 million in fraudulent VAT refunds through fake intra-community sales transactions.
Asset Freezing Implementation
Acting on credible evidence of money laundering and organized criminal activity, the Authority for Combating Money Laundering from Criminal Activities issued a comprehensive asset freezing order covering:
- All corporate bank accounts
- Investment products and securities
- Safe deposit boxes
- Real estate holdings
The Legal Battleground: Operational Needs vs. Asset Preservation
Initial Court Decisions
The legal dispute unfolded through multiple court proceedings:
First Decision (1977/2023): Athens Criminal Council allowed partial release of €500,000 for operational expenses, but imposed strict conditions:
- Funds must come from post-freezing legitimate business income
- Documented proof of commercial origin required
- Prohibition on opening new accounts
- Preservation of originally frozen amounts
Second Decision (256/2024): The same court later approved release of €3.35 million for tax obligations but removed the critical safeguards, allowing access to originally frozen criminal proceeds.
The Supreme Court Intervention
The Prosecutor General challenged the second decision through a “cassation in favor of the law” (αναίρεση υπέρ του νόμου) – a unique Greek legal mechanism allowing correction of legal errors without affecting the original parties’ rights.
Supreme Court Legal Reasoning: Protecting the “Confiscable Object”
Core Legal Principle
The Supreme Court’s majority opinion, delivered by 48 justices, established that asset freezing serves a dual purpose:
- Evidence preservation for ongoing criminal proceedings
- Asset protection for future confiscation and victim compensation
Critical Quote: “The legal order cannot endorse the enjoyment of a standard of living through the consumption of property that is subject to confiscation, whether as a product of criminal activity or as equivalent to that which was not lawfully acquired.”
The “Temporal Distinction” Requirement
The court mandated that any partial release of frozen assets must satisfy a temporal distinction test:
- Released funds must originate from post-freezing legitimate income
- Pre-freezing criminal proceeds must remain completely preserved
- Courts must impose verification mechanisms to ensure compliance
Policy Rationale: Preventing “Judicial Money Laundering”
The majority expressed concern about a dangerous precedent:
“Without proper conditions, defendants could repeatedly request releases for various needs, effectively allowing them to consume criminal proceeds through judicial decisions, creating a form of ‘judicial money laundering.'”
International Implications and EU Law Alignment
European Anti-Money Laundering Framework
The decision explicitly references compliance with:
- EU Directive 2014/42/EU on asset freezing and confiscation
- EU Directive 2024/1260 (upcoming replacement directive)
- Strasbourg Convention 1990 on money laundering
- UN Palermo Convention 2000 on organized crime
Comparative Law Perspectives
This ruling aligns Greece with the strictest international standards for criminal asset recovery, potentially influencing approaches in other EU member states facing similar challenges with sophisticated financial crimes.
Practical Implications for Legal Practitioners
For Defense Attorneys
- Strategic Planning: Applications for partial asset release require comprehensive documentation of legitimate income sources
- Timing Considerations: Early establishment of separate, monitored accounts for legitimate business operations becomes crucial
- Documentation Requirements: Meticulous record-keeping of post-freezing income sources essential
For Prosecutors and Asset Recovery Specialists
- Enhanced Powers: Courts now have clearer guidance for protecting criminal proceeds while accommodating legitimate needs
- International Cooperation: Decision strengthens Greece’s position in cross-border asset recovery cases
- Victim Protection: Improved prospects for meaningful compensation to defrauded parties
For Compliance Officers and Financial Institutions
- Enhanced Due Diligence: Stricter scrutiny required for accounts subject to partial freezing orders
- Reporting Obligations: More detailed transaction monitoring and reporting to judicial authorities
- Risk Management: Clearer guidelines for handling frozen account partial releases
The Minority Dissent: Alternative Judicial Philosophy
Nine justices dissented, arguing that:
- The law doesn’t explicitly require temporal distinction between pre- and post-freezing funds
- Strict application renders the “basic needs” exception practically meaningless
- The majority interpretation exceeds judicial authority and substitutes legislative judgment
This dissent highlights ongoing judicial debate about balancing enforcement effectiveness with individual rights protection.
Future Developments and Legislative Implications
Potential Reforms
The decision may prompt legislative clarification of:
- Explicit temporal requirements for asset release conditions
- Standardized procedures for monitoring partial releases
- Enhanced coordination between asset recovery authorities
European Union Considerations
As the EU continues harmonizing anti-money laundering enforcement, this decision provides a strict interpretation model that other member states may adopt or refine.
Conclusion: A New Era in Criminal Asset Recovery
The Greek Supreme Court’s decision in Case 3/2025 represents a significant tightening of asset forfeiture standards that prioritizes victim protection and asset preservation over defendant convenience. By requiring strict proof that released funds come from legitimate post-freezing income, the court has effectively closed a potential loophole that could have undermined the entire criminal asset recovery system.
For the international legal community, this decision offers valuable insights into balancing competing interests in complex financial crime cases while maintaining robust protections for criminal proceeds recovery.
Key Practical Outcome: Legal practitioners across Europe should expect similar judicial scrutiny when seeking partial releases of frozen criminal assets, with courts demanding comprehensive proof of legitimate fund sources and imposing strict monitoring conditions.
This analysis is based on publicly available court documents and should not be construed as legal advice. Legal practitioners should consult local counsel for jurisdiction-specific guidance on asset forfeiture matters.
