FINDING AND TRACING OF UNJUSTIFIED ASSETS

Legal grounds for activity

According to Article 16 of the Law Asset Recovery and Management Agency of Ukraine (ARMA), on the basis of requests from pre-trial investigation bodies, the prosecution or the courts, takes measures to find and trace assets that may be subject to seizure in proceedings on recognition of assets as unjustified and their recovery to the State, and cooperates with these bodies with the aim of seizing such assets and recovering them to the State due to their recognition as unjustified assets.

According to the provisions of Article 290 of the Civil Procedure Code of Ukraine, a claim for recognition of assets as unjustified and their recovery to the State shall be filed and the representation of the State in court shall be carried out by a prosecutor of the Specialized Anti-Corruption Prosecutor’s Office (SAPO). In cases regarding recognition of assets as unjustified and their recovery to the State concerning the assets of an employee of the National Anti-Corruption Bureau of Ukraine (NABU), a prosecutor of SAPO or assets acquired by other persons in the cases provided for in this article, the claim shall be filed and the representation of the State in court shall be carried out by prosecutors of the Office of the Prosecutor General of Ukraine (OPG) on the instructions of the Prosecutor General.

A claim shall be filed in relation to:

• assets acquired after 28.11.2019 (the date the Law of Ukraine on amendments to certain legislative acts regarding the confiscation of illegal assets of persons authorized to perform state or local government functions and punishment for acquiring such assets entered into force), if the difference between their value and the lawful income of the person authorized to perform state or local government functions exceeds five hundred times the subsistence minimum for able-bodied persons established by law on the date of entry into force of the said Law, but does not exceed the threshold established by Article 368-5 of the Criminal Code of Ukraine;

• assets acquired after 28.11.2019 (the date the Law of Ukraine on amendments to certain legislative acts regarding the confiscation of illegal assets of persons authorized to perform state or local government functions and punishment for acquiring such assets entered entered into force), if the difference between their value and the lawful income of the person authorized to perform state or local government functions exceeds five hundred times the subsistence minimum for able-bodied persons established by law on the date of entry into force of the said Law, and the criminal proceedings under Article 368-5 of the Criminal Code of Ukraine, where these assets were the subject of the crime, have been closed on the grounds specified in paragraphs 3, 4, 5, 8, 10 of part one of Article 284 of the Criminal Procedure Code of Ukraine and the respective decision has become final;

• income obtained from the above assets.

To determine the value of the above assets, the acquisition value is applied, and in the case of acquisition free of charge or at a price lower than the minimum market value, the minimum market value of such or similar assets as of the date of acquisition is used.

A claim for recognition of assets as unjustified and their recovery to the State may be filed against a person who, being authorized to perform state or local government functions, has acquired ownership of the assets referred to in part two of this Article, and/or another natural or legal person who has acquired ownership of such assets on behalf of the person authorized to perform state or local government functions, or if the person authorized to perform state or local government functions may directly or indirectly perform actions in relation to such assets equivalent to the exercise of the right of disposal.

NABU and SAPO, and in cases provided for by law, the State Bureau of Investigation (SBI) and the PGO, take measures to detect unjustified assets and collect evidence of their unjustified nature.

In addition, according to paragraph 71 of part one of Article 11 of the Law of Ukraine on Prevention of Corruption, the powers of the National Agency on Corruption Prevention (NACP) include control and verification of declarations of declarants, storage and publication of such declarations, and monitoring of the lifestyle of declarants.

Thus, according to paragraphs 11 and 57 of part one of Article 12 of the Law on Prevention of Corruption, NACP has the right to:

receive, in accordance with the procedure established by law and upon written requests, from state authorities, authorities of the Autonomous Republic of Crimea, local self-government bodies, business entities regardless of ownership and their officials, and from citizens and their associations, information, including restricted information, necessary to fulfill its tasks;

if evidence that a person authorized to perform state or local government functions has acquired unjustified assets, or that such assets have been acquired by another person on their behalf or in other cases provided for by Article 290 of the Civil Procedure Code of Ukraine — refer the matter to SAPO or, in cases provided for by law, to the PGO regarding the filing of a claim for recognition of assets as unjustified and their recovery to the State.

Moreover, part eight of Article 12 of the Law on Prevention of Corruption provides that state authorities, authorities of the Autonomous Republic of Crimea, local self-government bodies, natural and legal persons shall provide the documents or information requested by NACP, including restricted information, within ten working days from the date of receiving the request, and in the case of a request made for conducting a special vetting — within three days.

In addition, according to parts one and three of Article 531 of the Law on Prevention of Corruption, NACP may identify signs of unjustified assets as a result of a full verification of a declaration.

ARMA on a permanent basis take participates in the development and implementation of the institution of civil confiscation — the recognition of assets as unjustified and their recovery to the State.

The role of ARMA in the procedure of finding and tracing assets that may be subject to seizure in cases on recognition of assets as unjustified and their recovery to the State is regulated by joint orders with other competent bodies operating in this field.

By Order of ARMA and the PGO dated 30.09.2021 No. 383/308, registered by the Ministry of Justice of Ukraine on 20.10.2021 under No. 1363/36985, the Procedure for considering requests to ARMA on identification and tracing of assets that may be subject to seizure in cases on recognition of assets as unjustified and their recovery to the State was approved.

By Order of ARMA and SBI dated 27.10.2021 No. 420/570, registered by the Ministry of Justice of Ukraine on 15.11.2021 under No. 1497/37119, the Procedure for interaction when considering SBI requests to ARMA on assets that may be subject to seizure in cases on recognition of assets as unjustified and their recovery to the State was approved.

By Order of ARMA and NACP dated 15.07.2024 No. 267/198/24, registered by the Ministry of Justice of Ukraine on 19.07.2024 under No. 1094/42439, the Procedure for interaction between ARMA and NACP regarding the identification of unjustified assets was approved.

Subjects entitled to submit requests in cases on recognition of assets as unjustified and their recovery to the State

The subjects entitled to submit requests in such cases according to their powers defined by the Civil Procedure Code of Ukraine and the Law on Prevention of Corruption are:

• prosecutors of the Prosecutor General Office,

• prosecutors of the Specialized Anti-Corruption Prosecutor’s Office,

• heads of prosecutor’s offices,

• the Director of the State Bureau of Investigation (or acting director), their authorized deputy,

• directors of territorial departments of the SBI (or acting directors) or their authorized deputies,

• authorized officials of the SBI whose powers are confirmed by a relevant document (a copy must be attached to the request),

• authorized officials of the NACP.

The request must be made in writing and personally signed by the authorized official.

Consideration of appeals in cases concerning the recognition of assets as unfounded and their recovery as state revenue

1. ARMA ensures the implementation of requests from the Prosecutor GeneralOffice, Specialized Anti-Corruption Prosecutor’s Office, State Bureau of Investigation, and National Anti-Corruption Bureau of Ukraine as soon as possible, but no later than within 3 working days from the date of their receipt, or within another longer period specified in the request.

ARMA takes measures to find and trace assets based on the content of the request, within the powers defined by law and taking into account the degree of actual access to data sources held by third parties.

The consideration and decision-making based on the information set out in ARMA’s response is carried out under the procedure established by Ukrainian legislation by the body that submitted the request.

2. ARMA ensures the implementation of NACP’s requests and provides responses within 10 working days from the date of receipt.

For proper processing of NACP’s request, ARMA carries out international cooperation with the relevant authorities of foreign states in terms of exchanging information related to identifying and tracing assets of the person specified in the request.

Example

Finding and tracing of unjustified assets following a request from NACP

NACP, in accordance with Ukrainian legislation, conducts lifestyle monitoring of declarants.

During these activities, NACP found sufficient grounds to believe that a person authorized to perform state or local government functions had acquired unjustified assets in the territory of a foreign state. The established facts indicated a legal link between the declarant and a specific foreign jurisdiction.

Based on the request received from NACP regarding information on assets with signs of unjustified origin and which may be subject to seizure in a case on recognition of assets as unjustified and their recovery to the State, ARMA staff, within the framework of international cooperation in the field of identification and tracing of assets, prepared and sent a corresponding request to the foreign jurisdiction to obtain information about the declarant’s assets. As a result, it was established that during the full-scale invasion of Russia into Ukraine, in March 2022, the official purchased five apartments in the resort cities of Batumi and Bakuriani (Georgia). The total area of these properties ranged from 37 to 85 square meters.

To obtain additional data, ARMA staff sent a follow-up request to the competent authorities of Georgia asking them to provide information on the value of the assets at the date of their acquisition by the declarant.

The response confirmed the registration dates of ownership rights to these properties. It was also established that the value of the acquired assets ranged from USD 30,000 to 82,000, which significantly exceeded the official’s lawful income.

The materials on the identified assets obtained within international cooperation were submitted to NACP for further action.

Reference: According to the check, the official also purchased several vehicles at undervalued prices between 2021 and 2023 and resold them at significantly higher prices, gaining substantial profits. Close relatives of the declarant were involved in this scheme.

In total, the expenditures of the official and his family on acquiring movable and immovable property amounted to almost UAH 20 million, while NACP established the absence of lawful income that could justify such expenditures.

The materials on the official were sent to the Prosecutor General Office for further registration in the Unified Register of Pre-Trial Investigations under Article 368-5 of the Criminal Code of Ukraine (illicit enrichment).