Can Confiscation of Assets in Line with European Standards Change the Rules of the Game?

For many Ukrainians, the confiscation of assets and imprisonment of corrupt officials are markers of justice. 

This expectation is reflected, in particular, in recently released recordings of wiretapped conversations between suspects in a major corruption case in the energy sector — one of the suspects expressed concern about using potentially illicit funds in the future. 

Screenshot from NABU video

Tenor: Well, I agree… But the problem is the money, the legalization of this money. So that it’s possible to use it. What’s the f**ing point of taking it? 

Roket: You’re sitting here saying: please tell me how to come up with something so that the whole world, all the intelligence services, FATF, f**king hell, are fighting this, and yet somewhere out there there’s some scheme lying right on the surface that would make all of them just f***k off, find nothing, and then I’d show up later and say — look what I’ve got, f**k…

These concerns are not incidental. According to a TI Ukraine sociological survey, more than half of respondents (60%) view the number of corrupt officials who are genuinely punished as the most telling criterion of effective anti-corruption efforts, and such punishment should involve imprisonment or asset confiscation. In other words, incarceration alone is not enough — people expect illicit wealth to be recovered. This expectation is reasonable, since personal enrichment is a core motivation for corruption.

Yet tax revenue from the sale of confiscated assets amounted to less than UAH 2 million in 2023, and only UAH 6 million in 2024. These figures come from the Ministry of Justice’s annual monitoring report, in which experts analyzed the problems with enforcing confiscation orders. In practical terms, Ukraine still sees almost no real benefit from confiscating criminally acquired assets.

Progress has also stalled on documents intended to fix the situation. The Asset Recovery Strategy for 2023–2025 is nearing its end — a strategy that was supposed to improve national confiscation mechanisms. For now, however, this objective appears unachieved and will likely need to be postponed.

Meanwhile, the European Commission, in its latest report, stressed the need to align Ukraine’s confiscation rules with Directive (EU) 2024/1260 on asset recovery and confiscation. The Rule of Law Roadmap already includes the relevant measure. 

So what exactly needs to change in enforcement practice and in the design of confiscation mechanisms? 

EU standards for confiscating criminal assets

On April 24, 2024, EU institutions adopted the aforementioned Directive (EU) 2024/1260, which establishes minimum rules for tracing and identifying, freezing, confiscating, and managing assets in criminal proceedings.

Through this Directive, EU member states effectively acknowledged that their existing frameworks were insufficient for the effective recovery of criminal proceeds. And since Ukraine must eventually implement these norms, they warrant thorough examination.

We have previously described Ukraine’s confiscation framework in detail. This time, several measures introduced by the Directive merit special attention:

• confiscation, 
• extended confiscation, 
• confiscation without a conviction, and
• confiscation of unexplained property linked to criminal activity.

Let us review them using an illustrative case involving a fictional Deputy Minister, Petro Chernenko, who is exposed while receiving another instalment of a bribe in an established scheme involving construction permits and the participation of several accomplices.

During the investigation, detectives established that while in office, Chernenko’s wife acquired three luxury apartments totalling 280 sq. m in central Kyiv for a symbolic UAH 800,000, despite a market value exceeding UAH 25 million. His student daughter became the owner of two land plots in the Carpathians (5 hectares in total), purchased for UAH 1.5 million instead of the market UAH 40 million. Chernenko also had roughly EUR 3 million in foreign bank accounts.

Some tools provided by the Directive are almost fully mirrored in Ukrainian legislation — such as confiscation and confiscation from third parties. However, important differences remain.

Confiscation under Article 12 of the Directive provides for the confiscation of instrumentalities and proceeds of crime after a final conviction. Member states must also enable the confiscation of property of equivalent value — either as an additional or alternative measure. In other words, under these provisions, the illicit benefit with which Chernenko was caught should have been confiscated. 

In Ukraine, however, confiscation as a form of punishment applies only to a person’s lawful property. Thus, even if Chernenko were convicted and sentenced to confiscation of assets, his wife and daughter would retain the wealth registered in their names — even if it clearly had criminal origins. 

Moreover, confiscating funds in foreign bank accounts would be impossible unless the prosecution proved their illicit origin. Such property could only be seized through special confiscation — which requires proof that it constitutes proceeds of crime. Yet special confiscation remains underused in practice and is evidence-heavy.

As for confiscation from third parties, the Directive allows confiscation if the nominal owner knew or should have known that the property was transferred to avoid confiscation. By contrast, Ukrainian criminal code requires the court to establish that the owner knew about the illicit origin. 

This creates a higher standard of proof and undermines effective confiscation. In Chernenko’s case, his daughter might not have known the details of her father’s schemes but could reasonably suspect that the land did not come to her by chance.

Extended confiscation under Article 14 of the Directive applies when the offense is capable of generating economic benefit and the court is convinced that the property originates from criminal activity. The court considers all case circumstances, including the mismatch between lawful income and the value of assets, even if the specific underlying offense remains unidentified.

If Petro Chernenko were tried in an EU country that fully implemented the Directive, the court would assess whether his total assets corresponded to his lawful income. If not — and if there were evidence of prior criminal behaviour — the assets could be confiscated, including funds held abroad.

In Ukraine, a similar mechanism exists only in the procedural code (Article 100(9), para 6-1 of the CPC), without parallel provisions in substantive criminal law. This creates legal uncertainty and makes it impossible to seize such assets even to secure potential future confiscation — a deficiency highlighted by the European Commission in its enlargement report.

Confiscation without a conviction, established in Article 15 of the Directive, is allowed when no formal conviction is possible due to illness, flight, death, or the expiry of limitation periods (shorter than 15 years). It applies only to crimes capable of producing substantial economic gain and to property directly or indirectly linked to the offense under investigation.

In Ukraine, expired limitation periods often derail anti-corruption cases. And even if illicit origin is established, the property cannot be confiscated because the Criminal Code excludes such cases from special confiscation. 

If Ukraine had a convictionless confiscation mechanism aligned with EU standards, the state could petition the court to confiscate assets by proving their connection to criminal activity — regardless of whether the case was closed. The court would examine whether sufficient evidence existed to link the property to the crime and whether the proceedings could have ended in conviction absent procedural obstacles.

Confiscation of unexplained property linked to criminal activity under Article 16 of the Directive is proposed as a measure of last resort where other forms of confiscation are impossible. It applies to property discovered during investigations into organized criminal activity if the court is convinced of the illicit origin of the assets. Judges must consider a substantial mismatch between the value of assets and lawful income; the absence of plausible lawful sources; and the individual’s links to the criminal organization.

In Chernenko’s case, if investigators discovered additional assets belonging to members of the criminal group that could not be confiscated under earlier mechanisms, the state could still confiscate them after reviewing all criteria.

This mechanism exerts the strongest pressure on criminals: even when assets are “artfully” shielded through proxies and offshore structures, the state may confiscate them by demonstrating the broader pattern of criminal conduct and the clear discrepancy between lifestyle and official income.

What needs to change?

Comparison of EU standards with Ukraine’s current legislation reveals critical gaps that can and should be addressed to improve the effectiveness of fighting organized crime and corruption.

1. Introduce full-fledged extended confiscation. The Criminal Code must include a separate provision enabling confiscation of all property belonging to individuals convicted of profit-driven offenses if the court is convinced of its illicit origin, based on the mismatch between asset value and lawful income. The law must also allow seizure of such assets.

2. Expand grounds for special confiscation without conviction. Special confiscation should be permitted by court order when a person is relieved of criminal liability due to expiration of limitation periods.

3. Introduce confiscation of unexplained property as a last-resort tool against organized crime. This mechanism should complement civil confiscation and apply exclusively to property linked to organized criminal activity, where assets substantially exceed lawful income and lack plausible legitimate sources.

The example of our hypothetical deputy minister demonstrates how applying European standards would ensure that all criminal assets are confiscated, significantly diminishing incentives for corruption. Such reforms truly have the potential to change the rules of the game. These changes represent only one element of a broader effort to improve confiscation mechanisms — an effort that must respect human rights safeguards. But it is crucial to remember that corruption itself harms human rights, and recent revelations only reinforce this truth.