Asset Forfeiture in Colombia: How It Works and How to Defend Against It

## What is asset forfeiture?

Asset forfeiture (extinción de dominio) is a constitutional action (article 34 of the Constitution) through which the State confiscates assets that have an illegal origin or were used for criminal activity, regardless of who currently holds title.

The key point: it's an action against the asset itself, not against a person. It's the asset that's judged — not an individual. That's why it doesn't require a prior criminal conviction or the classic presumption of innocence.

What assets can be forfeited?

Under Law 1708 of 2014 (the Asset Forfeiture Code):

• Assets acquired with proceeds from criminal activity (drug trafficking, money laundering, corruption, extortion)
• Assets that were the instrument of a crime (the vehicle used in a crime, the warehouse where it operated)
• Assets that represent the object of the crime or its economic benefit
• Assets mixed with lawfully-obtained assets (the illegal portion "contaminates" the mix)
• Assets whose lawful origin can't be proven

The process before the Prosecutor's Office

Initial phase (investigation) The Attorney General's Office (Fiscalía) investigates the origin of the assets. During this phase it can ask the judge for: - Precautionary measures: seizure, sequestration, suspension of the right to dispose of the asset - These measures are applied before the affected party is notified, to prevent assets from being moved out of reach

Notification Once the affected party (owner, possessor, or holder) is notified, their right to a defense begins.

Trial Before an Asset Forfeiture Judge (a specialized court). The affected party must prove the lawful origin of their assets.

Ruling If the judge orders the forfeiture, the assets pass to the Asset Management Fund (Special Assets Corporation — SAE).

The burden of proof: what must you show?

This is the most critical point: the burden partially shifts. Once the Prosecutor's Office shows reasonable indications of an illegal origin, the affected party must prove their assets are lawful through:

• Historical income and asset tax filings
• Purchase contracts, deeds, invoices
• Bank statements showing the source of the money
• Import declarations, loans, properly documented inheritances

Can a third party acting in good faith lose their assets?

Yes, but with nuances. If you acquired an asset in good faith without knowing it was illegally sourced, you can argue:

• Good faith free of fault: you made all reasonable inquiries and there were no warning signs
• You must prove you paid market price, that the seller appeared legitimate, and that you checked the asset's history

If the judge accepts the good-faith argument, you can recover the asset or receive compensation.

Defense strategies

1. Act from the precautionary-measures stage on — don't wait for trial; challenge the measures from the start
2. Meticulously document the origin of all assets
3. Separate lawful assets from anything connected to persons under investigation
4. Tax filings as key evidence — assets declared to DIAN are evidence that lawful resources existed
5. Forensic accountants to reconstruct historical cash flow

Did you receive an asset-forfeiture notice, or do you think your assets could be at risk? This process requires specialized, immediate defense. Contact us.

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