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  • Writer's pictureKW KRUK I WSPÓLNICY

Recovery of defrauded funds in bank account in Polish criminal proceedings


Author: Ph.D. Stanisław Michałowski - advocate, partner

In recent months we can observe in Poland a peculiar exchange of opinions between the Supreme Court and the Public Prosecutor’s Office, which concerns the relationship between funds in bank account and material evidence in criminal proceedings. This dispute should be approached in a pragmatic way, i.e. we should consider to what extent it can help victims in asset tracing and recovery. In a nutshell, I will explain what the indicated dispute is about and how it can help victims.

It has been a long-standing practice of the Polish Public Prosecutor's Office to consider proceeds from crime accumulated in bank accounts as material evidence, as a result of which these funds were transferred to the Public Prosecutor’s Office's bank account and awaited the development of the case. In this way, the Public Prosecutor's Office facilitated its work, as it did not have to meet the requirements of banking and anti-money laundering regulations. Without going into the details of these regulations, it is worth noting that the Prosecutor's Office had to issue a decision on securing property or a decision on material evidence within 6 months. Suspension of transactions or blocking account is cancelled, if the Public Prosecutor's Office fails to perform these actions within the indicated period. It should be remembered that as a rule, the property security can be applied only after presenting someone with criminal charges. In our practice, the period of 6 months (and sometimes even less) is often far too short to bring charges against a perpetrator, especially in white-collar crimes, not to mention if the perpetrator is hiding. Thanks to recognizing funds accumulated in a bank account as material evidence, the Prosecutor's Office did not have to worry about the inexorably approaching deadline.

However, the courts were reluctant to follow the practice applied by the Public Prosecutor's Office. This reluctance is closely related to the way the concept of material evidence is understood. There is a definite inconsistency between what funds credited to a bank account are and how these relate to material evidence in a criminal case. Some courts have begun to emphasize that it follows from the very nature of physical evidence that it must be object of individual identity. However, the practice in this respect was not uniform. The situation changed at the end of 2021, when the Supreme Court issued two resolutions disapproving the practice of the Public Prosecutor’s Office. In these resolutions, the Supreme Court emphasized the guarantee function of the regulations discussed above, as well as ruled that funds accumulated in a bank account do not have the characteristics of material evidence, as they do not exist as objects, but are merely records in an IT system. The first of the resolutions concerned the regulations on anti-money laundering, while the second referred to the banking law. These are, respectively, the resolutions of October 13, 2021. (I KZP 1/21) and of November 9, 2021. (I KZP 3/21).

The position of the Supreme Court must not have been to the liking of the Public Prosecutor’s Office. In the course of the Parliamentary work on the bill amending certain acts in connection with the establishment of the Central Bureau for Combating Cybercrime, a number of provisions were suddenly introduced in response to the content of the Supreme Court's resolutions. Originally, the bill of the aforementioned law did not provide for any regulations in the discussed scope. However, on December 1, 2021, the Sejm again referred the bill to the Committee on Administration and Internal Affairs for consideration of amendments tabled at the second reading. After considering them at a meeting on December 2, 2021, the Committee on Administration and Internal Affairs requested, among others, adoption of the amendments proposed by the Law and Justice Parliamentary Club. By way of reminder, the General Prosecutor is in Poland at the same time the Minister of Justice and an important member of the said Law and Justice Parliamentary Club. The amendments proposed, among other things, the addition of Article 236b to the Code of Criminal Procedure, which assumes that the thing or object is also the funds in the bank account, and the decision on material evidence may concern such funds, if they have been retained as evidence in the case. In addition, the ability to stop transactions and block bank accounts in the Banking Law and the Anti-Money Laundering and Countering the Financing of Terrorism Law was extended and made more flexible. These provisions came into effect on January 12, 2022, which critically reviewed the resolutions of the Supreme Court.

Leaving aside a number of issues related to the dispute described above, let's consider what all this means for victims who have lost their assets as a result of fraud using the banking system? I believe that the change is beneficial for them. If we are victims of crime and our money circulates between different bank accounts, there is a chance that it will be blocked. If this happens in Poland, we have a chance to get the money back. If it is not possible to recover these funds through interbank arrangements, then most likely the Public Prosecutor's Office will be involved. How then can we recover these funds? The primary way is to obtain security for the assets. In this case, however, we will wait for the seized funds until the final judgment in the criminal case. The situation looks similar to injunctions in a civil case. In Polish practice we may have to wait for many years. If we accept the position of the Supreme Court and do not introduce new regulations in this respect, the victim would not be able to do much more.

Considering funds in a bank account as physical evidence gives the victim more options. It is in the interest of the victim that the lost funds are treated like cash found in a purse snatched by a thug from the proverbial poor widow. This is because the Code of Criminal Procedure indicates that seized items should be returned to an authorized person immediately after they are determined to be unnecessary for criminal proceedings. The authorized person does not necessarily have to be the person who handed over the item or from whom the item was taken. Our poor widow should recover her purse containing the stolen money immediately after all necessary procedural steps have been taken. The poor widow should not have to wait for her money until the case is finally settled. There is undoubtedly a collision of interests between the potential perpetrator and the victim, but we consider our problem here from the perspective of the victim's interests. If as a result of fraud, our funds went to another account, and the case is obvious (bank records and circumstances of the case do not raise any doubts), then why treat this money differently than the said purse? After all, the legislator has already literally stated that funds in a bank account constitute a thing and should in fact be treated as cash. When would the Article 236b to the Code of Criminal Procedure be applicable, if not in our example? I will say more, the situation of the victim is better in the situation of the funds in the account than in the case of our poor widow. Well, the snatched purse undoubtedly has significant evidentiary value. Such a purse contains significant forensic traces! The question arises, however, what evidentiary value do the funds in the bank account have that would warrant keeping these funds in the Public Prosecutor's Office account? The answer is - none. What do the funds in the account tell us about the case that we are not able to decipher from the bank records? The above reasoning is also supported by the arguments presented in the above mentioned resolutions of the Supreme Court. It may no longer be up-to-date as far as the possibility to consider funds in a bank account as material evidence is concerned. Nevertheless, the resolutions retain their significance when it comes to the evidentiary value of such funds for criminal proceedings. To paraphrase the Supreme Court, funds on an account do not constitute important evidence material to a case, because such evidence consists of documents confirming the deposit of certain funds in a bank account and their disposal. This refers to deposit or withdrawal confirmations, account statements and other similar documents, which may also be in the form of a digital record. They contain specific data illustrating operations on the account. As far as documentary evidence is concerned, it is a matter of getting acquainted, through reading, with the contents contained therein. Funds gathered on a bank account do not exist as things – as objects, they are only records in an IT system. They are only records in the computer system, which does not correspond to any concrete object - banknote, which could be subject to visual inspection.

Since the seized items should be returned to the authorized person immediately after they are found to be unnecessary for criminal proceedings, this should be done practically as soon as these funds are recognized as material evidence in the case. It is sufficient to determine the victim from whose account the funds were originally transferred, and then the funds should be returned to that person. Finally, a potential perpetrator who has had funds taken from him in this manner always has civil remedies available. It may be debatable whether the interests of the victim deserve greater protection than those of the potential perpetrator. Undoubtedly, however, the interest of the victim is more important than that of the Public Prosecutor’s Office.


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