The Application of Coercive Measures in Financial Crime Cases in Poland

The purpose of this chapter is to examine current trends and developments in the application of selected coercive measures that are particularly intrusive for clients suspected or accused of financial crimes in Poland. These measures include arrest (zatrzymanie), preventive measures (środki zapobiegawcze) such as pre-trial detention (tymczasowe aresztowanie) and financial bail (poręczenie majątkowe), and freezing of assets (zabezpieczenie majątkowe). Through its involvement in a wide range of white-collar crime cases, Fieldfisher Poland is well positioned to observe practical developments in the application of coercive measures by prosecutors and courts. The firm’s experience clearly suggests that awareness of the potential use of such measures enables both individuals exposed to the risk of criminal charges and their close relatives to prepare more effectively for the personal, professional and financial consequences they may face.

Arrest

Two forms of arrest may be used against individuals who are at risk of being charged with a criminal offence. So-called police arrest may be carried out by the police (or another law-enforcement authority vested with police powers) without a prior prosecutor’s order where there is a reasonable suspicion that an offence has been committed and at least one additional statutory ground is present, including the risk of flight, absconding, tampering with evidence or the inability to establish the suspect’s identity (Article 244, Section 1 of the Polish Code of Criminal Procedure).

Prosecutorial arrest, by contrast, is ordered on the basis of a prosecutor’s decision. A prosecutor may order arrest where there are reasonable grounds to believe that a suspect will fail to appear when summoned or will otherwise unlawfully obstruct the proceedings (Article 247, Section 1 of the Polish Code of Criminal Procedure). Arrest under this procedure may also be ordered where there is an urgent need to impose a preventive measure without delay (Article 247, Section 2 of the Polish Code of Criminal Procedure).

In the highest-profile financial crime cases the firm has handled, arrest was most commonly carried out within the framework of prosecutorial arrest. Experience suggests that arrest is also used in proceedings that have already been ongoing for several years, despite the evidentiary material having largely been secured and the individuals concerned being fully aware of the pending investigation. This demonstrates that even in such circumstances, the possibility of arrest cannot be excluded.

A particularly significant limitation on the right of defence is the possibility for the arresting authority to be present during consultations between the detained person and defence counsel (Article 245, Section 1 of the Polish Code of Criminal Procedure). Although such a restriction is, in principle, intended to be reserved for exceptional circumstances, practice suggests that officers who carried out the arrest frequently remain present during meetings between the suspect and counsel. Consequently, arrested individuals are often denied the opportunity to communicate with their lawyer in a fully confidential and unrestricted manner prior to their first questioning.

The importance of this issue is amplified by the fact that, under Polish criminal procedure, statements made by a suspect during the pre-trial stage may subsequently be relied upon in judicial proceedings and may contribute to the evidentiary basis of a conviction. For this reason, it is essential to undertake preparations for potential criminal proceedings and questioning as soon as the risk of such proceedings becomes apparent.

From the moment of arrest under either procedure, the prosecutor has 48 hours to decide whether to apply to the court for pre-trial detention or to release the suspect and, where appropriate, impose alternatives to pre-trial detention. The grounds for, legality of and manner in which the arrest was carried out may be challenged before a court. Filing such an appeal may facilitate claims for compensation in cases of unjustified arrest.

Preventive measures

Under Polish criminal procedure, coercive measures such as pre-trial detention, police supervision, financial bail and travel restrictions fall within the category of so-called preventive measures. Their principal purpose is to safeguard the proper course of criminal proceedings.

Pre-trial detention

Pre-trial detention undoubtedly constitutes the most severe preventive measure available under Polish criminal procedure. Although police supervision has, since 2005, been the preventive measure most frequently applied during the investigative stage, with pre-trial detention ranking second, concerns regarding the excessive use of pre-trial detention persist. In the practice of criminal justice authorities, allegations of financial (economic) crimes increasingly serve as a basis for pre-trial detention comparable to that applied in cases involving offences against life and health.

Statistical data demonstrate that, over many years, courts have granted approximately 90% of prosecutorial applications for pre-trial detention and around 95% of applications seeking its extension at the investigative stage. At the same time, appeals against detention orders have proved overwhelmingly ineffective: between 2018 and 2021, the success rate of appeals against district court detention decisions remained at approximately 3%, whereas appeals against circuit court decisions concerning pre-trial detention succeeded in less than 1% of cases.

Apart from the requirement of a high degree of probability that the suspect has committed the alleged offence (Article 249, Section 1 of the Polish Code of Criminal Procedure), the application of any preventive measure additionally requires the existence of at least one specific statutory condition, namely the risk of absconding, the risk of interference with the proper course of the proceedings or the risk of reoffending (Article 258, Sections 1 and 3 of the Polish Code of Criminal Procedure). The latter ground is confined exclusively to situations involving the risk of further offences against life, health or public safety.

The Polish Code of Criminal Procedure also recognises one additional specific ground that may justify the imposition of pre-trial detention: the severity of the potential penalty faced by the accused. In Poland, if the accused is charged with an offence punishable by a maximum term of imprisonment of at least eight years, or if a court of first instance has imposed a custodial sentence of no less than three years, the likelihood of a severe penalty may itself justify the imposition of pre-trial detention in order to secure the proper course of the proceedings (Article 258, Section 2 of the Polish Code of Criminal Procedure). In practice, Polish courts frequently treat this ground as an autonomous specific condition justifying pre-trial detention.

Empirical research conducted by the Helsinki Foundation for Human Rights points to excessive reliance on the “severity of punishment” ground in financial crime cases, due to the relative simplicity of its application. The firm’s experience leads to similar conclusions. Courts often rely primarily on the statutory penalty attached to the offence in question, without engaging in a more thorough assessment of risks such as absconding or interference with the course of justice.

Given that many financial offences under Polish criminal law, including different forms of bribery and corruption (Article 228, Sections 1 and 3–6, Article 229, Sections 1 and 3–6, Article 230, Section 1, Article 230a, Section 1, Article 271, Section 3, Article 296a, Section 4 and Article 305, Section 3 of the Polish Criminal Code), money laundering (Article 299, Sections 1–2 and 5–6), fraud (Article 286, Sections 1–2), aggravated invoice forgery (Article 277a, Section 1) and aggravated forms of offences involving conduct to the detriment of a company (Article 296, Section 2–3), are punishable by statutory maximum penalties of eight years’ imprisonment or more, the severity of the punishment may serve as a justification for the application of pre-trial detention in such cases.

In financial crime cases, the risk of interference with the course of justice is also frequently relied upon as a ground for the use of pre-trial detention, as well as alternatives to pre-trial detention. In the view of prosecutors and courts, the mere fact that offences were allegedly committed in co-operation with others, particularly where the legal classification includes participation in an organised criminal group, is often regarded as sufficient to substantiate the existence of such a risk.

The expansive interpretation of the aforementioned conditions for pre-trial detention constitutes one of the factors contributing to the excessive length of pre-trial detention. In the financial criminal cases in which the firm has represented clients, the duration of pre-trial detention ranged from two months to as long as almost two years. Under Polish criminal procedure, pre-trial detention may last up to 12 months during the investigative stage of the proceedings and up to two years until the delivery of the judgment by the court of first instance. A significant difficulty, however, is that these statutory time limits are not absolute, as appellate court are empowered to extend pre-trial detention beyond those limits.

Financial bail

One of the alternatives to pre-trial detention most frequently applied in financial crime cases is financial bail. Legislative amendments introduced several years ago have, however, given rise to a number of practical difficulties. Under the current legal framework, the object of financial bail may not originate from a gain obtained by the defendant or by another person posting bail for that purpose. Moreover, the court or prosecutor may condition the acceptance of bail on the requirement that the person providing it demonstrates the lawful origin of the funds (Article 266, Section 1a of the Polish Code of Criminal Procedure). The notion of “gain” in this context has been interpreted inconsistently in practice, giving rise to three principal approaches.

The first, and most restrictive, assumes that an unlawful gain exists whenever the funds used for bail originate from third parties other than the person posting the bail, including funds obtained through loan agreements or donations. The second approach allows the use of funds obtained under a loan agreement, on the basis that a loan entails an obligation to return the funds within an agreed period and therefore does not constitute a definitive financial benefit. The third, and most liberal, interpretation limits the concept of “gain” exclusively to benefits derived from unlawful sources.

The firm’s experience suggests that the second approach is currently the one most commonly accepted in prosecutorial practice. The introduction of the “gain” criterion has significantly increased the importance of properly documenting the origin of funds used for financial bail, whether provided by the defendant or by a third party.

Freezing of assets

Under the Polish Code of Criminal Procedure, freezing of assets may be imposed once criminal charges have been formally brought against a specific individual, and there is a genuine risk that, without such measures, the enforcement of future financial penalties, confiscation orders, or compensation claims could become impossible or substantially hindered (Article 291, Section 1 of the Polish Code of Criminal Procedure). In practice, prosecutors routinely use asset-freezing measures in financial crime cases and, owing to the wide statutory grounds governing their application, successfully challenging the justification for such measures before a court may prove particularly demanding.

Asset freezing constitutes one of the most intrusive coercive measures from the perspective of clients. Polish law permits the freezing of a wide range of assets, including bank accounts, real estate, company shares, vehicles and intellectual property rights. In practice, a significant difficulty for clients stems from the fact that, in financial crime cases, asset freezing is frequently imposed simultaneously with high financial bail. For that reason, it is particularly important to undertake protective steps long before the commencement of any criminal investigation that could mitigate the potential impact of freezing orders, such as separating joint bank accounts held with a spouse and maintaining clear documentation concerning the origin and ownership of assets.

One of the most problematic aspects of asset freezing in Poland is also the potentially prolonged duration of such measures. Under Polish law, assets may remain frozen throughout the entirety of criminal proceedings, which, in complex financial crime cases, may extend over several years.

Summary

The application of coercive measures in criminal proceedings against individuals suspected of financial crimes is typically multilayered and highly intrusive. Suspects face not only the risk of deprivation of liberty for the purposes of the ongoing proceedings, but also the freezing of assets imposed on their property, which may significantly disrupt their everyday personal and professional functioning. For that reason, early preparation for potential criminal proceedings is of particular importance. Awareness of both the course of the proceedings and the risk that specific coercive measures may be applied makes it possible to undertake preventive steps capable of mitigating the future consequences of such measures.