What happens when you buy land or a house that comes onto the radar of the State Bureau for the Verification and Confiscation of Unjustifiable Assets as potentially unjustifiable property? Third parties are the most sensitive aspect of civil asset confiscation, which is why international standards require a specific approach towards them. Under the current Draft Law, buyers may also be subjected to asset verification in specific cases
Imagine the following situation. When a woman buys an apartment from her cousin, the process generally unfolds as follows: the parties conclude a contract before a notary, the buyer completes the transaction through a bank, and the new owner registers the property in her name.
However, if the state initiates proceedings to verify the assets of the former owner—the cousin—on suspicion that he cannot justify the legality of the wealth he accumulated over the years, the apartment may be confiscated through civil proceedings, even though the new owner now legally owns it. Consequently, she faces the risk of her property being subjected to interim measures or confiscation.
Kosovo currently recognises asset confiscation only within criminal procedure. However, since 2021, efforts have been underway to establish a new mechanism for civil asset confiscation through the State Bureau for the Verification and Confiscation of Unjustifiable Assets.
For six years, the party in power, Vetëvendosje, has been attempting to enact civil confiscation into law. The Draft Law has gone through several changes and debates. After it was adopted, the draft law was struck down twice. The Constitutional Court struck it down once for its content and once for the procedure followed for its adoption. The latest version has been submitted for public consultation. Following the constitution of the Assembly and the formation of the Government, it is expected to be submitted to the Assembly for adoption.
Combating unjustifiable assets is a legitimate public interest. No one should be allowed to conceal unlawfully acquired assets by transferring them to relatives, friends, or associates. However, no one should face legal consequences simply because of their connection to a person whose assets go through verification. This is precisely where one of the main challenges of the Draft Law on the State Bureau for the Verification and Confiscation of Unjustifiable Assets lies.
When an ordinary transaction triggers verification
Property constantly changes hands in daily life. An apartment is sold, a property is inherited, a plot of land is gifted or a business is transferred from one partner to another. However, the current wording of the Draft Law creates the possibility that the transfer of property alone may be sufficient to extend the verification process to the person who acquired it.
This does not mean that third parties should not be subject to verification. Officials may conceal their property precisely by transferring it to close associates. However, a lawful transaction cannot be treated in the same way as a fictitious transfer. Simply acquiring property should not automatically make a recipient subject to verification.
When should the verification of a third party begin?
The burden of proof should rest with the Bureau. Prior to subjecting a third party to verification, the authority must demonstrate specific circumstances rendering the asset transfer suspicious. Such circumstances may include a transfer made without payment, a sale at a price significantly below market value, a transfer to a close associate immediately before or during the verification process, or the former owner’s continued control over the property. While such facts do not automatically render a transfer unlawful, they may establish reasonable grounds to initiate verification. This approach differs substantially from implicating a third party in proceedings based purely on the nominal transfer of ownership.
And this is the approach supported by international standards. The Venice Commission requires, at a minimum, grounds for a reasonable suspicion that the transfer was not made in good faith. United Nations and European Union standards likewise require the protection of third parties acting in good faith.
Who actually qualifies as bona fide purchaser (Buyer in good faith)?
The Draft Law ties good faith primarily to the price paid for the property, but price cannot be the sole criterion. A property may be sold below market value due to its physical condition, an urgent need for liquidity, or other legitimate circumstances. Conversely, a buyer might pay full market price while still knowing the transaction is being used to conceal assets.
Moreover, restricting protection to a bona fide purchaser is too narrow. Third parties do not acquire property solely through purchase; property may be inherited, received as a gift, acquired through an exchange, or divided following a divorce. If the goal is to protect third parties who acted in good faith, that protection cannot be limited exclusively to buyers.
Finally, a crucial question remains: what does it mean for a person to have “known or ought to have known” that assets were unjustifiable? Should every citizen be expected to investigate the source of the assets belonging to the person with whom they enter into a contract? Or should this standard be linked strictly to specific, objective circumstances that would make the transaction appear suspicious to any reasonable person?
The law should enable verification of those who participate in concealing assets while simultaneously protecting citizens who have acted in good faith. The strength of such mechanism is measured not only by its ability to confiscate assets, but also by its ability to distinguish between someone who assists in concealing them and someone who has simply entered into a lawful transaction.
The law must enable the verification of those who actively participate in concealing assets while simultaneously safeguarding citizens who act in good faith. The strength of such a mechanism is measured not only by its ability to confiscate illicit assets, but also by its ability to protect legitimate, lawful transactions.
Translated from Albanian using artificial intelligence
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