FINDING AND TRACING FOR ASSETS OF SANCTIONED PERSONS

Legal grounds

According to Article 9 of the Law, one of the functions of ARMA is to carry out measures to find and trace assets at the request of an investigator, detective, prosecutor, court (investigating judge) or central executive authorities within the limits of their powers as defined by law.

Part eight of Article 5 of the Law of Ukraine ‘On Sanctions’ establishes that measures to find and trace the assets of individuals and legal entities specified in the relevant decisions of the National Security and Defence Council of Ukraine shall be taken by the central executive authority responsible for implementing state policy in the field of recovering the assets of persons subject to sanctions for the state.

The central executive authority responsible for implementing state policy in the field of recovery of assets of persons subject to sanctions to the state revenue has the right to involve other state authorities and local self-government bodies in the Finding and tracing for such assets. These bodies shall assist the central executive body responsible for implementing state policy in the field of confiscating the assets of persons subject to sanctions for the benefit of the state in finding and tracing for such assets within the limits of the rights and powers granted to them by the legislation governing the status and organization of their activities.

In accordance with paragraph 1 of the Regulations on the Ministry of Justice of Ukraine, approved by Resolution of the Cabinet of Ministers of Ukraine No. 228 of 2 July 2014, the Ministry of Justice of Ukraine is the main body in the system of central executive authorities that ensures, in particular, the implementation of state policy in the field of confiscation of assets of persons subject to sanctions for the benefit of the state.

For the purpose of implementing the provisions of the Law of Ukraine ‘On Sanctions’, in accordance with parts one and eight of Article 5, Article 5-1 of the Law of Ukraine ‘On Sanctions’, paragraph 9 of part one of Article 9, paragraphs 6, 11 of part one of Article 10, part two of Article 15 of the Law, paragraphs 1, 9, 10 of the Regulations on the Ministry of Justice of Ukraine, approved by Resolution of the Cabinet of Ministers of Ukraine No. 228 of 02.07.2014, the Ministry of Justice of Ukraine, together with ARMA, has determined the necessary aspects of interagency cooperation in order to ensure the involvement of ARMA in the Finding and Tracing for assets of individuals and legal entities specified in the relevant decisions of the National Security and Defence Council of Ukraine

By order of the Ministry of Justice of Ukraine, ARMA dated 29.06.2022 No. 2703/5/140, registered with the Ministry of Justice of Ukraine on 29 June 2022 under No. 710/38046, approved the Procedure for providing ARMA with information upon requests from the Ministry of Justice of Ukraine in the implementation of state policy in the field of recovery of assets of persons subject to sanctions to the state.

In accordance with the provisions of the said Procedure, the Ministry of Justice of Ukraine takes measures to find and trace assets of individuals and legal entities specified in the relevant decisions of the National Security and Defence Council of Ukraine, including the Finding of previously unblocked assets.

The Ministry of Justice of Ukraine has the right to involve ARMA in the Finding and Tracing for such assets by sending a request to ARMA.

ARMA assists the Ministry of Justice of Ukraine in finding and tracing for relevant assets by taking measures to process the request and providing a response based on the results of the measures taken to finding and tracing assets.

Procedure for finding and tracing the assets of sanctioned persons

Taking into account the practical experience of applying sanctions, in order to improve the quality of the materials attached to the Ministry of Justice of Ukraine's statement of claim to the High Anti-Corruption Court, an updated mechanism for interaction between the Ministry of Justice of Ukraine and ARMA was introduced in 2023, according to which the Ministry of Justice, based on the results of analysing information received from responses from state authorities, local self-government bodies, law enforcement agencies, banks and other financial institutions, enterprises, institutions and organisations of all forms of ownership regarding the availability of information on the assets of sanctioned persons, may apply to the High Anti-Corruption Court with a request to apply sanctions to the relevant natural or legal person, provided for in paragraph 11 of part one of Article 4 of this Law of Ukraine ‘On Sanctions’, if necessary, to take additional measures to find and trace assets, has the right to involve ARMA by sending an additional request to ARMA for the purpose of enforcing the sanction.

As a result of the interaction between ARMA and the Ministry of Justice of Ukraine, this procedure was reflected in Order No. 3686/5/234 of the Ministry of Justice of Ukraine and ARMA dated 18 October 2023 ‘On Amendments to the Procedure for Providing ARMA with Information upon Requests from the Ministry of Justice of Ukraine in the Implementation of State Policy in the Field of Recovery of Assets of Persons Subject to Sanctions to the State,’ registered with the Ministry of Justice of Ukraine on 20 October 2023 under No. 1837/40893.

Example of finding and tracing assets of sanctioned persons

The ARMA received a request from the Ministry of Justice of Ukraine regarding sanctioned persons, in particular, one of the largest russian holding companies that supplies pumping, block and other equipment for the oil and gas industry, thermal and nuclear power, metallurgy, chemical industry and shipbuilding for the russian military-industrial complex. The holding company's activities are controlled by the Ministry of Industry and Trade of the russian federation. In addition, during the processing of the request, it was established that the sanctioned persons are the ultimate beneficial owners of a number of Ukrainian enterprises, including one of the largest enterprises in the machine-building complex of Ukraine, which specialises in the manufacture of pumping equipment.

Information about the found assets has been forwarded to the Ministry of Justice for the purposes of implementing state policy in the field of asset recovery from persons subject to sanctions.