The court rules to release frozen funds and terminate criminal proceedings against COBALT’s client for confiscation of property

Two court instances have ruled in favour of COBALT’s client whose funds were seized by the Economical Police on suspicion of a criminal origin. Throughout the litigation, COBALT secured favourable ruling for the client that resulted in release of the frozen funds and dismissal of the criminal proceedings, which had been initiated due to suspicions regarding the criminal origin of more than EUR 888,000.

The Criminal Division of Riga Regional Court agreed with the argumentation of COBALT and rejected the position of investigation and prosecution, concluding that the entirety of evidence presented in the case does not give grounds to believe that the seized property might be of criminal origin. On 16 February 2024 Riga Regional Court delivered a ruling upholding the Economic Court’s decision of 2 August 2023, by which the first instance court terminated criminal proceedings for confiscation of criminally acquired property. The decision of the appeals court is now final.

The Court concluded that an uncertain provenance of funds does not inherently indicate their criminal origin. No definitive conclusions can be drawn solely on the fact that the origin cannot be precisely proven.

This ruling strengthens the case law that the participation of shell companies in commercial activities does not, by itself, indicate handling of proceeds of crime or other criminal activities. Similarly, transfer of property to a shell company does not automatically render the transaction fraudulent, in particular if the transfer is part of genuine business transaction.

Representation of the client before all court instances was ensured by COBALT Managing Partner Lauris Liepa, Senior Associate Gabriela Šantare and criminal defence lawyer Krišjānis Krasovskis.