Three different effects
In FATF terminology, freezing prevents specified dealings with property while the measure applies. Seizure also permits an authority or court to take control. Freezing or seizure alone does not transfer ownership to the state.
Confiscation, also called forfeiture, permanently removes property rights through legal authority. These are definitions of different powers, not a fixed sequence for every case.
Source: FATF: Freeze, seize, confiscation and non-conviction based confiscation.
Read the Australian power
Australian legislation uses specific terms and conditions. The Proceeds of Crime Act 2002 provides for restraining orders and different forfeiture orders. Some forfeiture powers do not require a criminal conviction.
For example, section 47 concerns conduct constituting serious offences and has its own conditions. Section 48 provides a separate conviction-based route. Neither route allows a business to decide for itself that a customer’s property is forfeited.
Source: Federal Register of Legislation: Sections 19, 47 and 48.
- Freeze
Restrict dealings while the measure applies.
- Seize
Place the property under official control.
- Confiscate
Permanently remove property rights under legal authority.
Freezing, seizure and confiscation: the differences
Compare the legal effects. This is not a required sequence, and a temporary measure does not itself transfer ownership.
Separate evidence questions. An answer to one does not settle the others.
Invented example: the order controls the record
In a fictional training case, an asset record says only that funds are frozen. The reviewer obtains the relevant order or legal instrument. They identify which dealings it restricts, who controls the property and whether ownership has changed.
The reviewer does not assume that a temporary restriction proves guilt or permits transfer to another person. A later decision needs its own record.
Source: FATF: Freeze, seize and confiscation.
Keep sanctions separate
Sanctions can impose asset-freezing duties outside a proceeds-of-crime recovery case. Use the targeted financial sanctions article for that customer-control subject. Get advice on the applicable instrument before acting on a specific asset.
Source: AUSTRAC: Overview and what to do if a person is designated.
What is the difference between seizure and confiscation?
Seizure allows an authority or court to take control of property. It does not by itself transfer ownership to the state. Confiscation permanently removes property rights through the applicable legal process. Do not use the two terms as interchangeable labels.
Source: FATF: Freeze, seize, confiscation and non-conviction based confiscation.
Does confiscation always require a criminal conviction?
No. Australian proceeds-of-crime law provides different forfeiture powers, including routes that do not require a conviction. Each route has specific conditions. A business must not infer that it can confiscate property itself.
Source: Federal Register of Legislation: Sections 19, 47 and 48.
What should a small business record about an asset restriction?
In a suggested training exercise, record the relevant order or instrument, the assets it covers, the dealings it restricts and the person responsible for the response. Seek advice about a real order. A screening label alone does not establish the power, prove guilt or determine ownership.
Source: FATF: Freeze, seize and confiscation.