Stages of confiscation:

1. The NSDC blocks the assets of a person by its decision. The President puts its decision into effect by a decree and deprives the person of the right to dispose of the assets.

2. The Ministry of Justice prepares a statement to the HACC on the application of a sanction to the person in the form of confiscation of assets.

3. The Anti-Corruption Court considers the application within 30 days from the date of its receipt.

4. After the decision is adopted by the court of first instance, it can be appealed with the HACC Appeals Chamber (HACC AP). It must begin to consider the complaint within 15 days from the date of receipt of the complaint.

5. If the Appeals Chamber confirms the decision of the HACC on the confiscation of assets, then such assets are transferred to the management of the SPFU.

Risks:

1. Possible appealing of the confiscation to international authorities due to non-compliance with international standards. In particular, the terms for submitting a withdrawal and an appeal are too short.

2.  Potential recognition of the HACC as unconstitutional in accordance with Article 125 of the Constitution, which provides that the judiciary in Ukraine is built on the principles of territoriality and specialization and is determined by law.

3. The mechanism cannot be applied to the assets of persons who were sanctioned in the form of blocking of assets before the entry into force of the updated Law “On Sanctions” (24.05.2022). Such assets must be “re-blocked.”

4. Circumvention of sanctions is not criminalized in Ukraine.

How to offset them?

1. To provide due process rights to all participants in the case. In particular, to extend the terms for submitting a withdrawal and an appeal against the decision of the first instance.

2. Consider the possibility of authorizing the administrative court to hear sanction cases instead of the HACC.

3. Provide that the confiscation mechanism can be applied to assets that were blocked even before the entry into force of the updated law.

All listed assets are transferred to the management of the SPFU.

Where confiscated funds can go:

Fund for the Liquidation of the Consequences of Armed Aggression of russia. As of July 31, 2023, UAH 114,110,900 has been transferred to the Fund.

Stages of confiscation:

1. The Cabinet of Ministers prepares a draft decision on the forced seizure of property rights of russia and its residents and submits it to the National Security and Defense Council.

2. The NSDC decides to forcibly seize a number of objects of property rights in Ukraine, after which the President of Ukraine signs a decree that puts this decision into effect.

3. No later than 6 months from the date of the end of martial law, the Verkhovna Rada shall approve the decree of the President by the relevant law.

4. Subsequently, the objects of property rights are seized and transferred to economic management on a temporary or permanent basis or to the management of specialized state enterprises, institutions, organizations, and business associations, in whose authorized capital more than 50% of the shares (stakes) are owned by the state.

5. The ownership of the seized objects is registered in the person of the Cabinet of Ministers on the part of Ukraine.

Risks:

1. Non-compliance with the requirements of the European Convention on Human Rights (ECHR). The law does not contain any mechanism for protecting the rights of legal entities (for example, through a legal process) whose property will be seized. This could potentially constitute a violation of Article 13 of the European Convention on Human Rights, which guarantees the right to an effective remedy.

2. Contesting the law in the Constitutional Court. The law provides for the seizure of objects of property rights without any compensation, which is contrary to Article 41 of the Constitution of Ukraine.

How to offset them?

Provide for a judicial or administrative process for the seizure of property.

Transferred for management:

Assets of banks — to the Deposit Guarantee Fund, Ministry of Finance, SE National Investment Fund.

Where confiscated funds can go:

The Fund for the Liquidation of the Consequences of Armed Aggression of russia. It has been transferred to the Fund:

– In 2023 — UAH 8,811,502,122.91;

– In 2022 — UAH 17,000,670,592.28.

It is used only in combination with the main punishment: deprivation of liberty, arrest or correctional labor (for serious and especially serious acquisitive crimes, as well as for crimes against the foundations of national security of Ukraine and public security, regardless of their severity).

Stages of confiscation:

1. The verdict on the person comes into force.

2. The court appeals to the State Executive Service with a letter for the enforcement of the verdict.

3. Property is confiscated into the property of the state.

Risks:

1. The expiration of the terms of prosecution, and therefore the impossibility of applying punishment in the form of confiscation of property.

2. Speed. Criminal proceedings may continue for years.

In this case, the assets are transferred to the management of the Asset Recovery and Management Agency (ARMA). However, for the assets to be transferred to the ARMA, they must meet three criteria:

– such assets are recognized as material evidence in criminal proceedings;

– they are worth more than 200 subsistence minimums for able-bodied persons;

– they can be transferred to the National Agency with the written consent of the owner, and in case of its absence — by a court decision.

At the same time, in case of lifting the seizure or closure of criminal proceedings, the management of the seized property is terminated.

Where confiscated funds can go:

To the state budget.

According to the data received from the State Judicial Administration for 2022, in 1,282 criminal proceedings, a decision was adopted to apply confiscation in the amount of UAH 160,463.95. Including:

– in cases of crimes against the foundations of national security: 102 (of which 85 — for high treason);

– in cases of crimes against public security: 56 (of which 41 — on creation of a terrorist group or terrorist organization);

– in cases of crimes against peace, human security, and the international legal order: 4.

 We may assume that these cases are related to Russian aggression against Ukraine, but we do not have the opportunity to know their essence for sure. Neither is the information on which assets were confiscated within these proceedings available.

Stages of confiscation:

1. The NBU decides to withdraw a systemically important bank from the market.

2. The NBU submits a proposal for the participation of the state represented by the Ministry of  Finance of Ukraine in the withdrawal of a systemically important bank from the market.

3. The Cabinet of Ministers adopts an appropriate decision.

4. The Cabinet of Ministers concludes an agreement on the acquisition of the bank for UAH 1 with the Deposit Guarantee Fund.

5. The Ministry of Finance of Ukraine becomes the corporate rights’ management body for the bank’s shares.

6. The bank becomes the property of the state.

Risks:

Potential appeal of nationalization of banks to international authorities due to non-compliance with international standards.

The bank becomes the property of the state and is managed by the Ministry of Finance of Ukraine.

However, after the end of martial law, it is planned that the Ministry of Finance should sell the bank to private investors.