Legal Protection of Creditors over Fiduciary Collateral Seized or Forfeited in Money Laundering Cases

Abstract

Seizure and forfeiture of fiduciary collateral can impair both asset recovery and lawful creditor interests. This article examines the status of secured creditors and develops a protection framework through normative legal research. It combines statutory interpretation, a structured comparison of scholarship, reported domestic cases, and an official comparative case summary. The analysis distinguishes the historical Criminal Procedure Code from the framework introduced by Law Number 20 of 2025. Evidentiary seizure does not itself resolve the validity of security, whereas final forfeiture may leave a creditor with only a personal debt claim. Courts should distinguish direct and transformed proceeds, instrumentalities, mixed property, and legitimate encumbered assets. Registration must be considered alongside financing chronology, commercial reality, and creditor knowledge. The proposed framework integrates asset classification, a verifiable good-faith inquiry, and a proportionality assessment of legitimate aim, suitability, necessity, and final balancing. Notice, a hearing, and a reasoned ruling should precede irreversible disposition of a disputed third-party interest. Return, payment from sale proceeds, and compensation require an applicable legal basis. The principal contribution is a conditional model for protecting provable secured interests without sheltering criminal value. The domestic examples provide doctrinal context and do not constitute a representative empirical dataset.