Through Ruling C-327 of August 19, 2020, the Colombian Constitutional Court (the “Constitutional Court”) established that Sections 10 and 11 of Article 16 of Law 1708 of 2014 (the Asset Confiscation Code), which describe the State's faculty to confiscate licit origin assets, only proceed when the titleholder of the asset is the same person involved in illegal activities. Hence, a lawful property's confiscation shall not proceed if the owner is a third party to criminal activities.
The Constitutional Court's analysis considered that the action of confiscating assets of licit origin is justified to the extent that they are part of the increase of patrimony due to illegal activities. Hence, the State is entitled to pursue the assets that make up the patrimony of the person who incurred in illegal activities. Therefore, the State shall exclude the assets that lack any appearance of illegality from the confiscation action to the extent that the actual owner demonstrates good faith and due diligence, considering that actual owners shall not respond to the unlawful activities of the previous owners.
The purchaser of the property must demonstrate due diligence. However, due diligence refers only to the good itself. A detailed investigation of the seller and his activities cannot be considered a requirement of good faith. Therefore, the purchaser does not need to inquire about the person's history or personal conditions transferring the respective property. For example, if the purchase object is a real estate property, the purchaser would prove due diligence with a title search that establishes the chain of tradition of such property. Otherwise, pursuing assets of lawful origin of a person who did not participate in criminal activities obstructs business and imposes unreasonable burdens on individuals, contradicting constitutional grounds. Mostly if the State has not proven that the previous title holder was involved in illegal activities.
Adicionalmente, The Constitutional Court clarifies that the State's faculty to pursue property of lawful origin with a lien, for example, a mortgage, is maintained unless the lien's beneficiary demonstrates due diligence and a qualified good faith.