Confiscation Measures and Sanctions in Corruption Cases in Kazakhstan

4. Application of different types of confiscation

Abstract

The chapter looks into the practice of application of different types of confiscation for corruption offenses based on available case-law, interviews with practitioners and the open sources. The chapter specifically spotlight identified deficiencies in the relevant judicial practice and recommends venues for improvement.

4.1 Confiscation of instruments of corruption offenses

In accordance with the UNCAC (United Nations, 2004[3]), each State Party is required to adopt, to the fullest extent possible within its domestic legal system, measures necessary to enable the confiscation of property, equipment, and other instruments used or intended for use in committing offenses recognised under this Convention (Article 31(1)(b)). This provision pertains to the confiscation of so-called instruments of crime – means and tools employed in committing corruption, which are objects that facilitate or simplify the commission of an offense.

The law mandates the confiscation of property that is used as an instrument or means of committing a criminal offense (Para 4 of Part 2 of Article 48 of the CC (2014[5])). Meanwhile, under Para 1 pf Part 1 of Article 118 of CPC (2014[6]), objects that have served as instruments or means of committing a criminal offense must be recognised as material evidence. However, both the CC and CPC lack definitions for what constitutes instruments and means of committing a crime.

An analysis of five guilty verdicts from the courts of Kazakhstan regarding high-level corruption cases from 2021 to 2023 revealed that none of these cases involved the confiscation of instruments used to commit such offenses. Additionally, an examination of the remaining 43 out of 48 analysed verdicts indicated that none referenced the confiscation of corruption offense instruments. While confiscation of the object of bribery in an active bribery scenario could be considered a form of confiscation, only three of the 48 verdicts pertained to the prosecution of individuals for active bribery under Article 367 of the CC (2014[5]), and none held the bribe recipient accountable. Out of these three cases, the court actually applied confiscation of the "object of the bribe" as "material evidence" in only one case, although it used the term "convert to state revenue" rather than "confiscate" (Case No. 3911–21-00-1/297). In the other two verdicts within this category, the object of the bribe was not confiscated (Case No. 1–336/2021, Case No. 7525-21-00-1/281), and both court rulings were silent on this issue.

The Baseline Report of the Fifth Round of Monitoring of Anti-Corruption Reforms in Kazakhstan (OECD, 2024[9]) cites two examples from 2023. In one case, upon the conviction of individuals for active bribery, mobile phones, SIM cards, and flash drives were confiscated for state revenue. In the second case, mobile phones were confiscated on the grounds they were used to commit the offense. Bribes were also confiscated.

Thus, from the reviewed judicial practice, it can be concluded that there have been no cases of confiscation of instruments of crime in high-level corruption cases, and in cases of other corruption offenses only a case of "conversion by the court to the income of the state of the object of a bribe" as "material evidence" in case of active bribery1 and two cases of conversion to the income of the state of the object of a bribe and cell phones, SIM cards and flash cards used in the commission of active bribery were found.

At the same time, as practice shows, the courts often do not refer to Para 4 Part 2 of Article 48 of the CC (2014[5]), which allows for the confiscation of property that is a tool or means of committing a crime. Instead, they apply Article 118 of CPC (2014[6]), which regulates issues related to decision-making on material evidence. According to Para 1 of Part 1 of Article 118 of CPC, objects are recognised as material evidence if there is reason to believe they served as instruments or means of committing a crime. In the studied court practices, there are instances where the decision regarding the fate of the object of a bribe in cases of active bribery is not made at all, with no explanation provided, meaning that confiscation of such a bribe in any form is not executed.

The reliance on the concept of material evidence and its conversion to state revenue instead of outright confiscation of instruments of crime, along with the failure to apply confiscation to the object of a bribe in cases of active bribery, is inconsistent with the approaches outlined in the UNCAC (United Nations, 2004[3]). This undermines the critical message that property, enabling and facilitating the commission of corruption offenses, is subject to unconditional confiscation.

One significant reason for this situation is the current model of criminal confiscation in Kazakhstan, which, as previously recommended, should be aligned with international standards. This means that instruments (means and tools) of crime must be clearly defined in the law or, at a minimum, established through consistent judicial practice, thus making them mandatory subjects of confiscation measures. Additionally, the duality of regulation, which currently mixes instruments as objects of confiscation with material evidence, should be addressed.

4.2 Confiscation of proceeds of crime

The UNCAC (United Nations, 2004[3]) obliges each State Party to adopt, to the fullest extent possible within its domestic legal system, measures that may be necessary to enable the confiscation of proceeds from offenses recognised as such under this Convention, or property the value of which corresponds to the value of such proceeds (Article 31(1)(a)). According to Article 2(e) of the Convention (United Nations, 2004[3]), “proceeds of crime” means any property acquired or obtained, directly or indirectly, as a result of the commission of any offense.

If the proceeds of crime have been transformed or converted, in whole or in part, into other property, confiscation measures apply to such property (Article 31(4) (United Nations, 2004[3])). If such proceeds of crime have been commingled with property acquired from lawful sources, confiscation applies to that portion of the property that corresponds to the assessed value of the commingled proceeds (Article 31(5)). Measures outlined in Article 31 of the Convention also apply to profits or other benefits derived from such proceeds of crime, from property into which such proceeds have been transformed or converted, or from property to which such proceeds of crime have been commingled, in the same manner and to the same extent as they apply to the proceeds of crime (Article 31(6)).

Judicial practice in corruption cases from 2021 to 2023 reveals that, in most cases involving criminal proceedings for corruption, the courts nevertheless consider, in one way or another, the issue of criminal confiscation or its equivalents within the legal framework of Kazakhstan.

In this context, three main types of verdicts can be identified:

• In bribery cases, verdicts often involve returning the object of the bribe as material evidence to the state or recovering the value of the undiscovered object of the bribe from the defendant for the state. The vast majority of the verdicts studied fall under this category.

• In cases of theft2 and abuse of office, court verdicts often involve the confiscation of property owned by the convicted individual that was obtained through criminal means or purchased with proceeds from criminal activities, as an additional penalty under Part 1 of Article 48 of the CC (2014[5]). For example, in three high-level corruption cases (No. 7135-23-00-1/338, No. 7199‑23‑00-1a/210 and No. 7511-20-00-1/223), the property was recognised as obtained through criminal means or purchased with criminal proceeds based solely on the temporal sequence - the acquisition of the property occurred after the commission of the offense. Two additional examples, following the same approach in criminal cases of theft, are detailed in the Baseline Report of the Fifth Round of Monitoring of Anti-Corruption Reforms in Kazakhstan (OECD, 2024[9]). In such cases, a civil claim may also be satisfied, or "damages" may be fully compensated at the investigation stage under "voluntary return".

• In cases of theft and abuse of office, court verdicts regarding compensation for damages caused by corruption offenses are often made through the satisfaction of a civil claim within the criminal case or directly from the seized assets of the defendants. For instance, in case No. 7511‑20‑00‑1/223, the court ruled to jointly recover damages from all 21 defendants.

The judicial practices from 2021 to 2023 indicate that the provisions of Para 1 Part 2, Article 48 of the CC, which mandate the confiscation of money and other property obtained as a result of the crime, as well as any income derived from them, are virtually not applied by the courts to corruption revenues. Specifically, in cases of passive bribery, bribes are primarily treated by the courts as "tools of the crime" and "material evidence" under Article 118 of CPC (2014[6]). In such instances, the courts often lift the seizure from previously arrested property of the defendants, citing the absence of established criminal origin for the property, i.e., that it was obtained through criminal means or purchased with proceeds derived from criminal activities, as required by Part 1 of Article 48 of the CC (2014[5]) (cases No. 7150–22-00-1/91 and No. 7141‑23-00-1/852).

Following is a typical formulation found in the studied verdicts for criminal cases of bribery, particularly passive bribery: "There are no grounds for imposing an additional penalty in the form of confiscation of property, as provided by the sanction of the article, and for the application of Article 48 of the CC (2014[5]), since the investigative body did not establish property obtained through criminal means and therefore subject to confiscation, in accordance with the requirements of Article 48 of the CC.”

The accepted bribe is not considered by the courts as proceeds from crime. The dispositive part of the verdict states that material evidence, funds in the amount of [specified amount] tenge, stored in the custody of the Anti-Corruption Service, shall be confiscated for state revenue (verdict of 25 April 2022, case No. 7525–22-00-1/97). This approach diverges from the generally accepted international standard regarding confiscation the proceeds of corruption offenses, as well as any profits or other benefits derived therefrom.

Moreover, some verdicts revealed that, in principle, a court did not decide on the merits of the criminal proceeds, such as the confiscation of the bribe itself in passive bribery (even as "material evidence") or its equivalent value (e.g., cases No. 3140-20-00-1/108, No. 910-21-21-00-1/257, No. 3111-21-21-00-1/375 and others).The use of the concept of material evidence and its conversion into state revenue instead of confiscation of criminal proceeds, as well as the non-application of confiscation to the object of the bribe (proceeds of corruption in case of passive bribery), is not in line with the approach of the UNCAC and does not transmit the necessary message that any property acquired or obtained, directly or indirectly, as a result of the commission of a corruption offense, as well as any profit or other benefits therefrom, is subject to unconditional confiscation in such cases.

In cases of other corruption offenses, such as embezzlement and abuse of office, the judicial practice in Kazakhstan applies the concept of “damage” from the crime rather than “benefit from corruption offense”. In these cases, courts typically confiscate only the property acquired after or during the commission of the crime solely on this basis, and recognising such property as meeting the requirements of Part 1 of Article 48 of the CC (2014[5]). For instance, in one case, the property of two convicted individuals was confiscated under Part 1 of Article 48 of the CC due to its acquisition after the crime, despite the verdict confirming that the entire incriminated 'damage' from theft was fully compensated by the defendants before the verdict was issued (Case No. 7199-23-00-1a/210).

In some cases, the court allows property to remain under further seizure to ensure the enforcement of a civil claim regarding compensation for damages caused by the crime (e.g., case No. 7511–20-00-1/223). However, such property was of a symbolic nature. In the aforementioned case, only a 1999 Daewoo Nexia vehicle was seized, while the total amount of damages to be jointly compensated was KZT 6 503 045 293.

A typical example of the judicial approach can be seen in the court’s verdict in case No. 7511–20-00-1/223. The court established that during the commission of the offense, the defendant acquired property using funds generated through criminal means, making it subject to confiscation for state revenue. Specifically, the defendant acquired two cars. However, no further justification was provided to establish a link between these assets and the income from the alleged crime, apart from their purchase occurring during the ongoing criminal activity.

It should be noted that the international concept of confiscation of proceeds of crime, as stated in Article 31(1)(a) of the UNCAC (United Nations, 2004[3]), requires the existence and proof of a link between the property (either direct or indirect, through conversion or transformation) and the corresponding income‑generating offense. The mere acquisition of property after or during the commission of a crime does not automatically establish such a connection.

For assets without a proven link to a specific crime, an alternative regime for confiscation exists, such as expanded confiscation in criminal proceedings or other procedures. Therefore, the legal concept and application of criminal confiscation to proceeds of crime in Kazakhstan should be aligned with international standards in this regard. Notably, only one verdict out of the 48 involved the confiscation of proceeds from a specific corruption offense (embezzlement).

Box 4.1. Confiscation of proceeds from a specific corruption offense

The defendant, A, had a 2012 Mercedes-Benz SL 500 confiscated by court order as one of the proceeds of embezzlement, they were convicted of. The court explained in its ruling that "the difference received as inflated cost of project works for the relocation of engineering networks was used by A, as the sole founder of the LLP, for personal purposes, acquiring two expensive vehicles, 2012 Toyota Land Cruiser 200, purchased on 24 July 2014, for KZT 15 788 000 (the car had already been sold to a bona fide purchaser by the time of sentencing), and a 2012 Mercedes-Benz SL 500, bought on 15 September 2014, for KZT 22 005 000”. The court held that the Mercedes-Benz SL 500 was purchased with funds obtained from A's criminal activities (committed embezzlement) and, therefore, is subject to confiscation for the benefit of the state.

Source: Court verdict in the case No. 7198-20-2-1/72, dated 28 May 2021.

This approach appears to be fully consistent with internationally recognised approaches to confiscation of proceeds of crime.

4.3 Confiscation of derivative income

In the 48 judicial verdicts reviewed, there were no instances of the confiscation of derivative (indirect) proceeds from corruption crimes, profits, or other benefits derived from them during the period from 2021 to 2023. It aligns with the findings of the country monitoring conducted by the OECD after that period (2024[9]), revealing that the country did not provide any examples of confiscation of derivative proceeds from corruption.

However, it appears that the current wording of the relevant legal provisions includes key elements that should permit the confiscation of at least derivative proceeds from corruption crimes. Thus, Paras 1 and 2 of Part 2 of Article 48 of the CC (2014[5]) stipulate that confiscation applies to money and other property:

• Obtained as a result of committing a criminal offense, along with any income from that property, except for which is to be returned to its lawful owner.

• Into which, property obtained as a result of committing a criminal offense, as well as income from that property, has been partially or fully transformed or converted.

It would be advisable to enhance the existing formulation by including a reference to any other benefits (beyond profits) derived from such proceeds.

Box 4.2. Failure to confiscate indirect benefit from a corruption offense

The owner and manager of a LLP was convicted of active bribery for paying bribes to two inspectors from the Transport Control Department to facilitate the transportation of cargo with violations of cargo parameters, avoid administrative fines for the drivers of her company, and generally protect her business. The two inspectors from the Transport Control Department were convicted of passive bribery.

The court ruled to confiscate the value of the undiscovered objects of the crime (the bribes) from the recipients (the public officials). However, the issue of confiscating indirect benefits from corruption from the manager of the LLP was not raised by anyone in the case. Specifically, this concerns the sums of administrative fines that were not imposed by the state for violations of cargo parameters during her business operations, despite the systematic nature of these violations.

Such approaches to identifying and confiscating any benefits from corrupt crimes, including indirect benefits, should be implemented in practice. A positive aspect highlighted in this case is that the court ordered the confiscation of the amounts related to the undiscovered tools of crime.

Source: Court verdict in the case No. 5910-22-00-1/297, dated 7 March 2023.

4.4 Confiscation of mixed proceeds

According to Article 31(5) of the UNCAC (United Nations, 2004[3]), if proceeds of crime have been intermingled with property acquired from legitimate sources, such property may be confiscated up to the assessed value of the intermingled proceeds.

The CC (2014[5]) and CPC (2014[6]) do not provide for the concept of mixed proceeds of crime. Mixed proceeds were confiscated by none of the 48 court verdicts for the period from 2021 to 2023. It is in line with the findings of the Baseline Report of the Fifth Round of Monitoring of Anti-Corruption Reforms in Kazakhstan (OECD, 2024[9]), which states that in 2023, there were no cases of confiscation of mixed proceeds of corruption offenses and profits from them in Kazakhstan.

Interviews with investigators and prosecutors conducted as part of this study revealed that the issue of mixed assets, where proceeds of crime are often mingled with legal income, poses significant challenges in practice, particularly concerning mixed corporate or business assets. Respondents emphasised the need for legislative recognition of this concept, along with rules for the confiscation of such proceeds. Furthermore, there is a call for subsequent training of law enforcement officers and judges to ensure correct application in practice. In this regard, it is recommended that the legislation of Kazakhstan include provisions for the confiscation of mixed proceeds of corruption, based on international standards and best practices.

4.5 Value-based confiscation

Value-based (equivalent) confiscation is a legal instrument whereby, if there is no actual possibility of confiscating illegally obtained assets (due to them being misplaced, alienated, etc.), other property whose value corresponds to the value of the proceeds from the corruption offense, along with any profits or other benefits derived from it, shall be subject to confiscation.

According to Part 3 of Article 48 of the CC (Republic of Kazakhstan, 2014[5]), if confiscation of a specific object specified in Parts 1 and 2 of Article 48 is impossible at the time a court decision is made due to its use, sale, or for other reasons, the court decision shall instead order the confiscation of a sum of money equal to the value of that object.

Analysis of the judicial practice has indicated that in practice, the equivalent confiscation is primarily applied by the courts of Kazakhstan in cases of conviction for passive bribery. Usually, courts use the following wording: “to recover from the defendant the value of the undiscovered item of bribe KZT (value of bribe)”. However, there are a significant number of instances where courts do not decide on the recovery of the undiscovered item of a bribe in similar cases (for example, cases No. 5910-23-00-1/46, No. 1910‑21‑00‑1/257 and No. 3111-21-00-1/375).

In some cases, the court decides to recover from the defendant “the value of the undiscovered bribe object” while simultaneously removing the seizure of their property, citing that “its criminal origin has not been proved”. For example, in case No. 1956-21-00-1/15, the court ruled to recover from the defendant the value of the undiscovered bribe object (KZT 24 000) and to return KZT 22 200 seized from him during the pre‑trial investigation. Thus, courts, instead of applying Part 3 of Article 48 of the CC (2014[5]), which is seemingly applicable to such situations, return the seized assets to the defendants. In such circumstances, applying Part 3 of Article 48 of the CC would ensure guaranteed execution of the decision regarding the recovery of the value of the undiscovered item of bribe.

A slightly different approach was applied by a court in the verdict in another case. A defendant was convicted of taking bribes totalling KZT 5 333 000 (approximately USD 10 800). During the investigation, the defendant was searched, resulting in the seizure of money amounting to USD 11 001 and KZT 1 036 700. In the court ruling, the court decided “to recover for the state” from the defendant the undiscovered item of the bribe in the amount of KZT 5 333 000 (approximately USD 10 800), and chose not to impose confiscation under Article 48 of the CC (2014[5]). The court reasoned that “since it has not been established that the money, seized during the search, is an object of bribery or obtained by criminal means, the court, by virtue of Article 48 of the CC, cannot convert it into state income, as requested by the defendant's counsel”. The court also held that, based on Article 166 of CPC (2014[6]), it deemed it necessary to confiscate the money belonging to the defendant, seized during the search, to enforce the sentence. The reasoning behind the court's reference to Article 166 of CPC (which addresses civil claims in criminal proceedings, typically not relevant in bribery cases) instead of Part 3 of Article 48 of the CC remains unclear.

In other categories of cases (embezzlement, abuse of official powers), courts mainly issue verdicts "to recover material damage to the state income", while the received benefit from such crimes is not identified, the use of received income is not monitored, part 3 of Article 48 of the CC (2014[5]) is not applied (the condition of the CC that confiscation is impossible due to the use, sale of property or for any other reason is not checked and not applied), the equivalence of the received income/benefit is not analysed, and compensation is not applied. This data was confirmed by findings of the country monitoring that covered 2023 (OECD[9]) – Kazakhstan did not provide any examples of application of confiscation of the equivalent of instruments or proceeds of corruption offenses for 2023.

Only the verdict in case No. 7198-20-2-1/72, dated 28 May 2021, provided for equivalent confiscation in its international legal sense. The court confiscated from the defendant, A., with reference to Part 2 and Part 3 of Article 48 of the CC (2014[5]), the equivalent value of the car Toyota Land Cruiser 200 acquired as a result of committing a corruption offense (embezzlement). The court's verdict substantiated that A., being the sole founder of a LLP, used the received difference of the cost of design works on removal of engineering networks for his personal needs, having purchased two expensive cars, including Toyota Land Cruiser 200, bought on 24 July 2014 for KZT 15 788 000. The court further noted that the said car was subsequently (in 2018 and 2019) resold several times and ruled that “considering that [the said car] was repeatedly sold to actually bona fide purchasers, the court considers it necessary to recover the value of the sold car in monetary equivalent, which totals KZT 15 788 000, from A. to the state income”. Such judicial practice appears to be fully consistent with the internationally recognised approaches to confiscation of the equivalent of the proceeds of crime.

Representatives of non-governmental stakeholders interviewed noted that law enforcement and courts do not apply equivalent confiscation and could not recall such cases in corruption cases that they were aware of, particularly high-level corruption cases.

Interviews with investigators, prosecutors, and judges revealed that opinions on the possibility of applying equivalent confiscation in practice vary considerably. Some investigators and prosecutors believe that equivalent confiscation works in practice in Kazakhstan (mostly referring to decisions on the return of undiscovered bribe items to the state), while others believe that if the property was acquired before the crime was committed, it cannot be confiscated in any way, even under the equivalent confiscation regime, and that such confiscation would be, in their opinion, unfair. They believe that sole dwellings and legitimate assets cannot be confiscated, and that illegal assets should automatically be those acquired after or during the commission of the offense charged. It appears that the problem most likely lies in the lack of practitioners' familiarity with international norms and standards on equivalent confiscation, and it is recommended that this gap be addressed through capacity-building measures (training activities).

4.6 Confiscation of property of informed third parties

The UNCAC (United Nations, 2004[3]) does not contain any detailed rules on the application of confiscation to assets belonging to informed third parties. In accordance with Article 31(9) of the Convention, the provisions of this article shall not be interpreted in such a way as to prejudice the rights of bona fide third parties.

Much more developed provisions are contained in the Directives of the European Union in the relevant area, in particular the Directive (EU) 2024/1260 of the European Parliament and of the Council of 24 April 2024 on asset recovery and confiscation (European Union, 2024[7]). Although it is not binding for Kazakhstan, this can serve as an example of best practices. According to Article 13 of the Directive, EU member states must implement measures to allow for the confiscation of income or property transferred, directly or indirectly, by a suspect or accused person to a third party or acquired by a third party from the suspect or accused.

Confiscation is permissible when a domestic court determines that the relevant third parties knew or should have known that the transfer's purpose was to evade confiscation. Relevant indicators include: (a) the transfer or acquisition occurred without payment or for an amount significantly lower than the market value of the property, or (b) the property was transferred to close relatives while effectively remaining under the control of the suspect. These provisions must not affect the rights of legitimate third parties. Furthermore, under Article 24(7) of the Directive (European Union, 2024[7])., third parties maintain the right to claim recognition of ownership or other property rights, including in cases covered by Article 13.

As defined in Part 1 of Article 48 of the CC (2014[5]), one object of confiscation may include property owned by the convicted person or items that are instruments used for committing a crime. Para 5 of Part 2 of Article 48 of the CC specifies that confiscation can include instruments, means, and proceeds of crime that the convicted person has transferred to others. However, this key article does not provide detailed circumstances or grounds for confiscation from third parties, which may limit its application.

First, this definition may limit the scope of application of that provision regarding property owned by individuals who are neither suspects nor accused. Problems may arise when property is alienated before seizure, a common occurrence in corruption cases after the investigation has been started.

Second, the current legal framework may hinder the effective confiscation of assets owned by "informed third parties" or nominal owners. It is increasingly common for public officials, aware of corruption risks, to attempt to conceal their ill-gotten gains using intermediaries. Unfortunately, the Kazakhstani legal framework may not be sufficiently robust to address the confiscation of such assets, despite the provisions found in Para 5 of Part 2 of Article 48 of the CC (2014[5]).

This creates loopholes, as property may be transferred by individuals who are not yet convicted at the time of transfer, or actual transfers might not occur at all if assets are immediately registered to a front individual (nominee). Such loopholes undermine the effectiveness of confiscation laws.

The authorities indicate that when the criminal prosecution body identifies income derived from criminally obtained property, including property held by third parties, this leads to the registration of a criminal case under Article 218 or 218-1 of the CC (2014[5]), which addresses money laundering. The sanctions outlined in these articles allow for the confiscation of property, including the proceeds from criminally obtained assets. This serves as an additional method for confiscating property transferred to the nominal or actual ownership of corrupt officials.

Criminal law provides certain guarantees for bona fide third parties. Specifically, Part 3 of Article 113 of CPC (2014[6]) states that the relevance of the property to the subject of confiscation must be established. This means that to apply confiscation, it is necessary to prove that the property was obtained illegally, either through committing a criminal offense or as a result of the proceeds from such property. Additionally, it must be shown that the property was used, or intended to be used, as an instrument or means of committing a criminal offense. The Supreme Court of Kazakhstan has clarified (2015[14]) that, when deciding on the confiscation of property, including property registered to third parties, courts must necessarily verify the evidence that substantiates the origin of the property and the means with which it was acquired.

Article 118 of CPC (2014[6]) provides detailed provisions regarding the resolution of “the issue of material evidence.” According to Part 3 of Article 118 of CPC, when a court decides to terminate a criminal case or issue a sentence, it must address the status of material evidence. Specifically, if instruments or means of committing a criminal offense belong to a person who did not know, or should not have known, that their property was being used illegally, that property should be returned to them. Additionally, money and other property obtained by criminal means or funded through such means, excluding property and proceeds from criminal activity, should also be returned.

If there is a dispute over ownership of these items, it must be resolved through civil proceedings.

However, this provision applies only to material evidence. Not all instruments and proceeds of crime qualify as such and should not be treated as material evidence for the purposes of criminal confiscation. Additionally, the legal standards that govern criminal confiscation will always take priority.

Para 1-1 of Part 3 of Article 118 of CPC (2014[6]) specifies that third parties may only have their instruments and means of committing a crime returned if they were unaware of the illicit use of their property. In contrast, Para 4 of Part 4 of Article 118 of CPC addresses money and other property obtained criminally but fails to provide the same criteria for returning items to their rightful owners. This part mandates that such property be returned to the state, except for property and proceeds that are not subject to confiscation.

The Supreme Court of Kazakhstan, in its Normative Decision № 4 (2015[14]), clarified these provisions, stating: "When handling material evidence, the court must determine ownership and whether the owner was aware of the illegal use of their property. If the owner did not know and should not have known about the unlawful use, the property shall be returned to them”. This clarification also applies to instruments of crime as material evidence but does not pertain to assets that are proceeds of crime.

Ultimately, the regulatory framework governing the confiscation of property from informed third parties, both natural and legal persons, remains a legislative concern. This issue requires a legislative update to align with international standards and best practices in this area.

The existing regime for third-party confiscation in Kazakhstan was already evaluated by the OECD, covering the period from 2014 to 2016. The relevant monitoring report (OECD, 2017[8]) recommended that the country allow confiscation from third parties who knew or should have known about the criminal origin of property. Additionally, it called for protections for bona fide purchasers of property subject to confiscation.

In 2015, Kazakhstan amended Article 48 of the CC (2014[5]) to include property transferred by a convicted person to others. This change partially addresses the IAP recommendation for confiscation from third parties. Furthermore, in its September 2016 Interim Report, Kazakhstan referenced civil law provisions (namely, Article 261 of the Civil Code (1994[15]) concerning bona fide purchasers). However, these civil law provisions did not seem applicable to confiscation proceedings under criminal law.

The report subsequently recommended that Kazakhstan legislate further measures to facilitate confiscation from third parties aware of a property’s criminal origin, as well as continue to protect bona fide purchasers of such property.

The Baseline Report of the Fifth Round of Monitoring of Anti-Corruption Reforms in Kazakhstan (OECD, 2024[9]) found that, in 2023, there were no instances of confiscation of instruments or proceeds from corruption offenses transferred to informed third parties. While a few cases of third-party property confiscation appeared in court verdicts, they do not conform to internationally recognised standards regarding confiscation.

Analysis of 48 court verdicts, issued from 2021 to 2023, revealed that only two cases involved confiscation of assets acquired in the names of third parties, such as relatives and friends of the defendant. In both cases, the courts did not verify whether the third parties were aware of the criminal origins of the assets or if the defendants had actual control over the assets. Both cases pertained to high-level corruption, but only one resulted in the confiscation of assets related to a high-ranking official's close associates.

Box 4.3. Confiscation from third parties: Case 1

On 1 February 2021, a court convicted an individual X, the Chairman of the unit of a public body, along with 21 other individuals, of embezzlement. The court found that during the commission of the crime, the defendants A, B and C acquired property using money obtained through criminal means, which is subject to confiscation for state revenue.

Specifically, B acquired two vehicles:

• a "Land Rover Range Rover Sport," purchased on 17 November 2018, in the name of D,

• a "Mercedes-Benz S500," purchased on 23 November 2018, in the name of E.

However, the verdict did not clarify the relationships between D and E and the convicted businessman B. Furthermore, it failed to explain the circumstances under which the cars were registered in their names, their awareness of this registration, and any evidence connecting the vehicles to the criminal activities mentioned, aside from the timing of their purchase.

In the same ruling, the court decided to lift the arrest on an apartment belonging to the defendant F, as it was found to have been purchased by his parents. The verdict did not provide a rationale for why this apartment was not confiscated to secure compensation for F's share in the embezzlement. Additionally, there were no references to Article 48 of the CC (2014[5]) or Article 118 of CPC (2014[6]) concerning the confiscation of third-party property.

Source: Court verdict in the case No. 7511-20-00-1/223, dated 1 February 2021.

Below is another example from the judicial practice of Kazakhstan regarding confiscation from third parties.

Box 4.4. Confiscation from third parties: Case 2

In 2023, the court convicted a Vice-Minister of Kazakhstan of abuse of office. During the court hearing, the Vice-Minister admitted that after his dismissal, he acquired shares in 13 companies.

With the dividends from one of these investments, he purchased a 2021 "Mercedes-Benz Maybach S580" and a 2021 "Bentley Bentayga V8," registering the vehicles in the names of his father and mother‑in‑law. He also acquired land plot No. 24, adjacent to plots No. 23 and No. 27, with residential buildings on them. New land plot was registered in the name of his father. These plots collectively constituted a single territory encompassing the residence in which the Vice-Minister lived.

Court ruled that, since this property was obtained during the commission of crimes and funded by illicit means, it was necessary to confiscate it for state revenue. The Vice-Minister acknowledged that the vehicles, registered to his father and mother-in-law, actually belonged to him. For the land plots No. 23 and No. 27, no evidence was presented other than the fact that the Vice-Minister lived in the house located there.

Source: Court verdict in the case No. 7135-23-00-1/338, dated 27 October 2023.

In the aforementioned example, the criteria used by the court to decide on the confiscation of property from third parties, specifically two vehicles and two land plots, are not clearly discernible. It appears that the primary factor was the acquisition of this property during the commission of the crime, rather than the identities of the legal registrants or the circumstances of the registration. Additionally, the subjective views of the de jure owners regarding that registration were not considered.

An analysis of judicial practices generally supports the earlier conclusions about the shortcomings of the current legislation of Kazakhstan concerning the criminal confiscation of property owned by informed third parties, whether individuals or legal entities. None of the reviewed verdicts indicated instances of criminal confiscation from legal entities as third parties. Moreover, there are no maintained official statistics on criminal confiscations involving third parties, either natural or legal persons.

Interviews conducted for this research with legal practitioners – Investigators, prosecutors and judges, as well as representatives from interested non-governmental organisations, confirmed ongoing issues with this type of criminal confiscation in practice. Law enforcement officials noted that government officials often avoid registering property in their own names or the names of their close relatives. They reported that “officials submit income declarations, and there are declarations of their family members (spouses, children), but no one declares assets in their own name or in the name of close relatives. Any official has many close associates (“cronies”) who rely on them”.

It was also emphasised that, in cases involving the seizure and confiscation of property from third parties, establishing a criminal connection is essential. Previously, this was demonstrated by properties being acquired after the commission of a crime; however, recent court rulings now require prosecutors to prove a specific link to a crime. If an official registers property in the name of a driver, the act of "transfer of property" must be proven. It was noted that while proving this connection is generally not a problem at the central office, regional courts may occasionally reject such claims.

All practitioners interviewed were of the same opinion that, in practice, challenges arise when applying property seizure and confiscation to affiliated third parties, such as drivers and friends of officials. Representatives from non-governmental organisations remarked that they could not recall any high-profile corruption cases that involved the confiscation of assets registered in the names of third parties. They further noted that in ongoing criminal investigations, "no one seems to care when assets have been transferred to classmates, friends, and so on”.

4.7 Procedure for criminal non-conviction‑based confiscation

Kazakhstan's legislation provides for a special procedure for pre-conviction confiscation proceedings in the Chapter 71 of Section 15 of CPC (2014[6]). A detailed analysis of the legal regulation of such confiscation is provided in subchapter 2.2 of this study.

The analysis of court practice for 2021–2023 does not reveal any court decisions on confiscation of criminally obtained property in cases of corruption offenses before conviction (in accordance with the procedure of Chapter 71, Section 15 of CPC (2014[6])). This is confirmed by the Baseline Report of the Fifth Round of Monitoring of Anti-Corruption Reforms in Kazakhstan (OECD, 2024[9]), which did not identify cases of non-conviction‑based confiscation of instruments and proceeds of corruption offenses in Kazakhstan in 2023. Practitioners interviewed for the purposes of this study were aware of cases where this tool has been used in other categories of cases (theft, smuggling, etc.), but noted that these are still rather rare in practice. There are no separate statistics available to distinguish confiscation data in such cases.

The interviews conducted during this study confirmed the existence of issues in practice with the application of this type of confiscation. Thus, investigators noted that initiating confiscation proceedings without conviction following the termination of criminal proceedings on the basis of Para 11 of Part 1 of Article 35 of CPC (2014[6]) (death of a defendant, except when the proceedings are necessary for the rehabilitation of the deceased) is challenging in practice. It requires the consent of relatives, and relatives often do not agree with the termination of the case and demand further legal proceedings seeking rehabilitation of the deceased. This is often related to issues of inheritance, as the relatives want to inherit the seized expensive property. It also involves concerns about their future employment, since the termination of the criminal case due to death is a non-exonerating ground that may impact the employment rights of these relatives. Virtually all practitioners recognised during the interviews that pre-trial confiscation does not function normally in practice in Kazakhstan, in particular in cases of corruption offenses. In this regard, the opinions of non-governmental stakeholders were in full agreement.

Practitioners noted that pre-conviction confiscation is not applied on other grounds (a defendant is on internationally wanted list, termination of criminal case due to amnesty or due to expiration of statute of limitations). This is due to courts being extremely reluctant to apply it in practice on other grounds. Practitioners also noted that if a wanted person (in criminal proceedings) or a deceased person (in criminal proceedings for their exoneration) is later acquitted (on any grounds), then assets confiscated in pre‑conviction confiscation proceedings will have to be returned to that person (in the former case) or to their relatives (in the latter case). Thus, such confiscation proceedings are directly dependent on the outcome of the underlying criminal proceedings.

The analysis of the provisions of Chapter 71 of Section 15 of CPC (2014[6]) and the results of interviews allow for the conclusion that the most probable reasons for the ineffectiveness of the existing regime of non-conviction‑based confiscation in Kazakhstan are as follows:

• The criminal confiscation of property obtained through illegal means is dependent on the primary criminal proceedings against the individual before a verdict is issued. In cases of the individual’s death, relatives typically insist on the continuation of these proceedings, especially when substantial property is involved. If the individual is acquitted for any reason, the confiscation of property may be subject to review and cancellation.

• The standard of proof in confiscation proceedings requires a "beyond reasonable doubt" threshold. The elements that must be proven for confiscation are the same as those needed for the conviction of the individual for the crime, as outlined in Part 2 of Article 113 and Article 668 of CPC (2014[6]).

• There is a limited scope of application for confiscation. It applies only to property obtained illegally, while tools or means used to commit the crime may not qualify. Additionally, the equivalent of criminal proceeds does not fall under this category.

• There are challenges in applying confiscation to the property of third parties. In such cases, it is necessary to contest transactions in civil proceedings, which can significantly complicate and prolong the process. According to Part 3 of Article 668 of CPC (2014[6]), if there is evidence of the suspect or accused hiding property by transferring it to others, the investigator must submit a motion to the prosecutor. This motion requests a decision on whether to file a civil lawsuit to invalidate transactions (such as sales, gifts, leases, or trusts) in the interest of the state or victims.

It is recommended to consider introducing special rules that allow for the confiscation of criminally derived property regardless of the status of the principal criminal case. This could include provisions for temporary confiscation while the criminal case is pending, to prevent further loss or decline in the value of the seized property.

Furthermore, it would be advisable to strengthen the legal provisions regarding the protection of property rights for individuals whose property is subject to confiscation without a conviction. The current CPC (Republic of Kazakhstan, 2014[6]) stipulates that the prosecutor who filed the motion participates in the court hearing (Part 3 of Article 669 of CPC). Other individuals may also be summoned to provide testimony regarding the motion if requested by the defence counsel of the suspect or accused (Part 4 of Article 669 of CPC). However, the provisions of Chapter 71 of Section 15 of CPC do not explicitly require the summoning of the defence counsel or attorney of the individual whose property is at risk of confiscation without a conviction.

This deficiency was also identified during the Fourth round of monitoring of Kazakhstan under IAP. The monitoring report (OECD, 2017[8]) highlighted the need to strengthen guarantees for protecting the interests of individuals whose property is confiscated prior to a conviction. Specifically, it should be mandated that the defence counsel of the suspect or accused must be summoned to the court hearing. Additionally, the absence of these individuals, provided they have been properly notified, should not hinder the judicial proceedings or the consideration of the confiscation motion. This shortcoming in the legal framework needs to be addressed.

The legal institution of criminal confiscation prior to the issuance of a verdict in Kazakhstan has the potential to serve as a model of best practices in the Central Asian region. However, effective implementation of this mechanism in practice is essential. If the recommendations from this study are followed and improvements are made to this tool, the likelihood of its successful application will significantly increase.

4.8 Extended confiscation in criminal proceedings

The UNCAC (United Nations, 2004[3]) contains a soft recommendation urging State Parties to consider establishing a requirement that individuals who have committed a crime demonstrate the lawful origin of such alleged proceeds of crime or other property subject to confiscation, to the extent that such a requirement aligns with the fundamental principles of their domestic laws and the nature of judicial and other proceedings (Article 31(8).

At the same time, the Directive (EU) 2024/1260 of 24 April 2024, regarding the recovery of assets and confiscation (European Union, 2024[7]) explicitly obliges all EU member states to implement criminal extended confiscation into their legislation (Article 14). According to this provision, EU member states must take necessary measures to ensure the confiscation, in whole or in part, of property belonging to an individual convicted of a crime, where such property is directly or indirectly related to the obtaining of economic benefits and where the national court concludes that such property has been acquired through criminal conduct. In determining whether the disputed property was obtained from criminal behaviour, all circumstances of the case should be considered, including specific facts and available evidence, such as the fact that the value of such property does not correspond to the lawful income of the convicted individual. For the purposes of this article, the term "crime" should include at least (criminal) offenses listed in Paras 1–3 of Article 2, in cases where they entail a penalty of imprisonment for a term of not less than four years. Additionally, Article 16 of the Directive provides for the confiscation of unexplained wealth associated with criminal behaviour as an alternative (i.e., these are two distinct legal instruments; thus, the institution of extended criminal confiscation should not be confused with civil confiscation as provided by the Law of the Republic of Kazakhstan “On the Return of Illegally Acquired Assets to the State”, dated 12 July 2023 (2023[10]).

Even not being binding for Kazakhstan, the EU Directive 2014/42/EU of the European Parliament and of the Council on the freezing and confiscation of instruments and proceeds of crime in the European Union (European Union, 2014[4]) may serve as an example of best practices. It should also be noted that the EU Directive establishes minimum necessary standards for EU member states in the relevant area, and countries may go further by establishing even stricter regimes of extended criminal confiscation. Among the countries of Central Asia and Eastern Partnership, extended criminal confiscation is provided for in the Criminal Code of the Republic of Moldova (Article 106-1) (Republic of Moldova, 2002[16]).

The GRECO stated (2022[11]) that neither the CC nor CPC provide for the transfer of the burden of proof in cases of criminal confiscation. GRECO noted that it is increasingly common for states to have legislation that stipulates that in criminal confiscation proceedings, where an individual has been convicted of a profit‑generating crime and it has been proven that they possess property for which there is no identified lawful explanation, that individual bears the burden of proving that the property is not criminal proceeds. A conviction and the absence of an identified lawful explanation for the sources of the property, which the offender is proven to own, are circumstances from which, when considered together, it may reasonably be inferred that such property constitutes proceeds of crime. In such a situation, the requirement that the offender was required to demonstrate the legitimacy of the source of origin of the property does not appear unreasonable. After all, the origin of their property is a fact entirely within their knowledge. Moreover, the allocation of the burden of proof in this way does not necessarily entail the application of any particular standard of proof to the offender. In this regard, GRECO recommended that Kazakhstan consider reviewing the burden of proof required in relation to conviction in order to provide a better opportunity to apply confiscation in corruption cases effectively.

The majority of law enforcement practitioners interviewed agreed on the feasibility of implementing the institution of extended confiscation within the criminal process, whereby the burden of proof for the lawful origin of property could be placed on the convicted individual in cases involving profit-generating crimes. Many practitioners believe that this would be highly beneficial for them and consider such an approach consistent with international standards. There were also opinions expressed that Kazakhstan is not yet ready for the approaches outlined in the Directive (EU) 2024/1260 of the European Parliament and of the Council of 24 April 2024 on asset recovery and confiscation (European Union, 2024[7]), and that the implementation of extended criminal confiscation should occur gradually, after the launch of a universal income and property declaration system for citizens (scheduled for 2025–2026). Arguments were presented that “since Soviet times, accountability for citizens' incomes has been lost” and that “during that time there were undeclared but lawful incomes,” which would be difficult to prove. However, overall, the idea of the feasibility of introducing such a tool (criminal extended confiscation) in one form or another received support from all.

The analysis of the current legislation of Kazakhstan regarding criminal confiscation, international standards in this area, best practices from EU countries and the region, reports from international organisations, and the outcomes of interviews with law enforcement practitioners, judges, and governmental stakeholders allow for the recommendation that the authorities of the Kazakhstan consider the possibility of incorporating the institution of extended criminal confiscation into its legislation and practice based on the provisions of Directive (EU) 2024/1260 of 24 April 2024 regarding asset recovery and confiscation (European Union, 2024[7]), as well as best practices from countries in the region.

4.9 Recovery of assets from abroad through criminal confiscation

In the responses to the Questionnaire for this study, it was indicated that from 2021 to 2023, there was not a single instance of confiscation and return of assets to Kazakhstan from abroad through criminal confiscation. Similarly, the responses provided in the Questionnaire revealed no requests for legal assistance related to the application of criminal confiscation to property abroad during this period, including in criminal cases concerning corruption (enforcement abroad of final court decisions from Kazakhstan regarding criminal confiscation.)

These findings are supported by the earlier OECD report (OECD, 2024[9]), which noted the absence of incidents involving the return of corrupt income from abroad in 2023. However, the Report revealed information from authorities indicating that, during 2021 and 2022, two requests for mutual legal assistance were sent regarding in a criminal case to the Swiss Confederation. Kazakh authorities sought the enforcement of a default judgement (in absentia) rendered by a court in Kazakhstan on 29 December 2020, convicting of embezzlement, money laundering and other crimes an individual who had fled justice and was residing in Canada. The court found that the defendant embezzled and laundered assets belonging to a national company amounting to KZT 11 billion. The defendant was sanctioned with confiscation of funds totalling EUR 9 661 948.79 and USD 2 448 977.48, located in Switzerland. As of 2024, these requests for legal assistance were still under consideration by Swiss authorities.

The analysis of 48 court verdicts concerning corruption offenses from 2021 to 2023 revealed a lack of decisions regarding the criminal confiscation of property belonging to convicted individuals or informed third parties located abroad.

Interviews with practitioners and non-governmental stakeholders conducted for this study confirmed the absence of practical instances of recovering proceeds of corruption from abroad through criminal confiscation in recent years. Investigators and prosecutors highlighted the fairly long execution of requests for legal assistance abroad as a primary issue in this area. However, the absence of verdicts involving the confiscation of corrupt proceeds from abroad over the past three years at national level suggests deeper underlying issues.

It appears that the root of the challenge lies in the current design of the criminal confiscation system in Kazakhstan, which does not fully align with minimal international standards or best practices in the region. The recommendations provided below for enhancing the country’s criminal confiscation regime, if properly implemented, are expected to significantly improve the situation regarding the seizure, confiscation and recovery of corrupt proceeds from abroad, particularly in cases involving high-level corruption.

Recommendations

• Ensure the autonomy of criminal non-conviction‑based confiscation proceedings (Chapter 71 of Section 15 of CPC (2014[6])) so that they do not depend directly and automatically on the progress and outcomes of the primary criminal proceedings. The termination of the case against the individual or their acquittal in the primary proceedings should not entail the automatic cancellation of confiscation within the criminal non-conviction‑based confiscation.

• Ensure that the legal framework for criminal non-conviction-based confiscation covers a broad range of objects, including instruments (tools and means) of the crime, proceeds from crimes, profits or other benefits derived from them, commingled proceeds, and value-based confiscation.

• Apply the criminal non-conviction-based confiscation framework effectively to assets registered in the names of informed third parties, without the necessity of resorting to legal remedies such as the annulment of transactions in civil proceedings.

• Formalise the concept of "instruments, tools, and means of committing a crime" as a mandatory object for confiscation, while ensuring a clear distinction between their confiscation and the disposition of material evidence.

• Formalise the concept of “proceeds from crime”—including direct and derivative proceeds, as well as any subsequent profits and benefits derived from them—as mandatory objects for confiscation, provided there is a proven link to the specific crime through which they were obtained. Additionally, ensure their confiscation is distinguished from the disposition of material evidence.

• Ensure that, during the prosecution of corruption offenses, instruments (tools and means) used to commit such crimes, direct and derivative proceeds, any subsequent profits and other benefits derived from the commission of corruption offenses are systematically identified, seized, and confiscated in practice, specifically in their capacity as such.

• Ensure a consistent transition in practice from the currently prevailing concept of "damage" from corruption crimes to the conceptualisation of corrupt income or benefits as objects of confiscation in cases of corruption offenses that generate such income or benefits, such as bribery, abuse of power, and embezzlement.

• Provide in legislation for the confiscation of mixed proceeds from crimes as a separate object, aiming to facilitate the confiscation of property corresponding to the assessed value of the associated criminal proceeds, including any subsequent profits and benefits derived therefrom.

• Enhance the capacity of investigators, prosecutors, and judges specialising in the prosecution and judicial review of corruption cases, ensuring that the confiscation of property (the value of which corresponds to the value of direct and indirect proceeds from corruption offenses), is systematically applied in practice.

• Include in the law detailed provisions on the criminal confiscation of property belonging to informed third parties (both individuals and legal entities). These provisions should include clear criteria for applying such confiscation and appropriate safeguards to protect the rights of genuine third parties.

• Ensure that during the prosecution of corruption offenses, assets registered in the names of nominal (informed) third parties, including in high-level corruption cases, are systematically identified, seized, and confiscated, while the rights of bona fide third parties are upheld in practice.

• Improve the legal framework for criminal non-conviction‑based confiscation (Chapter 71 of Section 15 of CPC (2014[6])). This can be achieved by ensuring the autonomy of this process from the primary investigation. The relevant steps may include establishing a lighter burden of proof, limiting the elements to be proven, broadening the range of objects of confiscation (including instruments, direct and indirect proceeds from crimes, mixed proceeds, equivalents, etc.), ensuring effective confiscation of assets registered to informed third parties, and enhancing the right to protection for individuals whose property is considered for confiscation.

• Introduce the framework for extended criminal confiscation into the legislation of Kazakhstan based on the provisions of Directive (EU) 2024/1260 (2024[7]) regarding asset recovery and confiscation, as well as best practices from countries in the region.

Notes

← 1.  Referring to cases where only the bribe-giver was prosecuted (under Article 367 of the CC - active bribery), cases where both a bribe-giver and a bribe-taker were prosecuted are not analysed in this section, since the proceeds of the crime (passive bribery) must be confiscated from the bribe-taker.

← 2.  In the criminal law of Kazakhstan, "theft" (хищение) is defined as the unlawful appropriation or conversion of another's property for personal gain, carried out without compensation, resulting in harm to the owner or other possessor of that property (Para 17 of Article 3 of the CC (2014[5])). Depending on the nature of the unlawful act, "theft" may manifest as larceny, fraud, robbery, embezzlement, misappropriation, etc. Para 3 Part 3 of Article 189 of the CC provides for liability for the misappropriation or embezzlement of property entrusted to the offender, committed by a person authorised to perform public functions, or a person equivalent to such, or by a public official, or by a person holding a responsible state position, if these acts are accompanied by the misuse of their official position.