Author: Viktoriia Staryk, lawyer at F&P
The Law of Ukraine No. 263-IX dated October 21, 2019, introduced the procedure of civil confiscation, i.e., the recognition of assets as unjustified and their seizure if a public servant does not prove the legality of acquiring such property.
Assets are monetary funds (including cash, funds held in bank accounts or in custody with banks or other financial institutions), other property, property rights, intangible assets, including cryptocurrencies, the amount of reduction in financial obligations, as well as works or services provided to a person authorized to perform state or local government functions.
If the court establishes that the assets or funds for their acquisition were not obtained from legal income, such assets will be recognized as unjustified.
Assets may be considered unjustified if acquired by a person authorized to perform state or local government functions, provided that the difference between their value and the person’s legal income is between UAH 1,003,500 and UAH 9,841,000.
If the amount exceeds the specified threshold, criminal liability for the crime of “Illegal enrichment” under Article 368-5 of the Criminal Code of Ukraine is provided, instead of civil confiscation. Moreover, unjustified assets may only be recognized if they were acquired after November 28, 2019, i.e., after the date when the law on civil confiscation came into effect.
The identification of unjustified assets is authorized by the NABU, SAP, and, in certain cases, the DBR and OGP. These bodies are authorized to collect information by sending written requests without a court decision for the disclosure of bank secrecy concerning a person’s assets in a bank.
If the NAPC establishes that a civil servant has acquired unjustified assets and there are grounds for civil confiscation, the National Agency has the right to raise the issue with the SAP or OGP regarding the filing of a lawsuit for civil confiscation. If signs of unjustified assets are found as a result of a full verification of the declaration, the NAPC gives the declarant the opportunity to provide a written explanation with evidence within 10 working days. If the declarant does not provide written explanations and evidence within the specified period or provides them incompletely, the NAPC informs the NABU and SAP.
Judicial practice regarding the recognition of assets as unjustified and their seizure for the benefit of the state is still in the process of formation, but the VAKS has already highlighted the circumstances that need to be considered when reviewing such cases (VAKS decision of July 13, 2022, in case No. 991/366/22):
- whether the defendant (the person who acquired unjustified assets, according to the plaintiff) had the status of an authorized person to perform state or local government functions at the time of acquiring these assets;
- whether the provisions of Law of Ukraine No. 263-IX dated October 21, 2019, apply to the assets in question;
- whether there is a connection between the assets and the defendant;
- whether the person acquired the assets in one of the ways indicated in paragraph 2, part 8, Article 290 of the Civil Procedure Code of Ukraine (acquisition of ownership, acquisition of ownership by another person on behalf of the defendant, actions with such assets equivalent to exercising the right to dispose of them).
In the event of opening proceedings to recognize assets as unjustified and their seizure for the benefit of the state, it is extremely important to seek qualified legal assistance in a timely manner. Such cases are usually complex and require thorough analysis of evidence and proper interpretation of legislative norms.
The FEDORYSHYN & PARTNERS team is ready to provide the necessary legal assistance to reduce the risk of losing your property. Remember, timely consultation with a specialist is the key to effectively protecting your rights.
