Procedure for ARMA’s Acceptance of Seized Assets for Management: Legal Analysis

A joint order issued by ARMA and the Office of the Prosecutor General has approved the Procedure for ARMA’s Acceptance of Seized Assets for Management. 

This procedure is one of the key elements of secondary regulation needed to launch ARMA’s updated asset management model. It substantially supplements the previous asset transfer mechanism that existed before the ARMA reform law took effect, and it should ensure procedural compatibility between the actions of prosecutors and the Agency.

Transparency International Ukraine has already analyzed a number of secondary acts adopted to implement the updated law, so we are also providing an assessment of this regulation.

How it used to be

Before Law No. 4503-IX took effect, the procedure for accepting assets was governed solely by the ARMA law, and only in general terms. The old model suffered from a number of problems, such as:

• the absence of a unified mechanism for prior asset identification — the ARMA effectively accepted “whatever was offered” for management, with no opportunity to fully assess whether it could manage the asset effectively;
• vague deadlines for accepting assets, which generated conflicts between prosecutors and ARMA over the moment of actual transfer and the shift of responsibility for the asset’s preservation;
• the absence of a procedure for examining (inspecting) the asset with the participation of the prosecutor or persons authorized by them, which created the risk of accepting assets in poor condition for management without proper documentation.

How it is now

The new Procedure introduces a substantially different model, built on the following key elements.

1. Asset identification as a precondition for acceptance

While the Procedure itself does not regulate identification (which is the subject of a separate secondary act), it does take its results into account. Paragraph 7 of Section I provides that, if the investigating judge’s ruling contains no reference to the transfer of the asset to ARMA management, the Agency conducts the asset’s identification at the prosecutor’s request to determine whether it can be managed effectively.

2. Clear deadlines for processing requests

These provisions align with the third paragraph of Article 19(1) of the Law, which sets a general 10-day deadline for accepting an asset, with the option of extending it to 30 business days.

3. A differentiated approach based on asset type

For the first time, the Procedure provides detailed regulation of how an asset is accepted for management:

• movable and immovable property — with mandatory examination (inspection) at the asset’s actual location, with the participation of persons proposed by the prosecutor;
• securities — through the appointment of a securities account administrator and engagement with a depository institution;
• non-cash funds — through payment instructions, with the option of placing them on a deposit account;
• cash funds — through the cash desk of a state bank branch;
• bank metals — through an individual safe deposit box at a state bank.

4. Asset examination as a mandatory element

Subparagraph 1 of paragraph 4 of Section II introduces a mandatory procedure for inspecting the asset with the participation of “at least one of the persons proposed by the prosecutor in the request” (an investigator, detective, or specialist). This is a fundamental innovation intended to ensure proper documentation of the asset’s condition at the moment of transfer and to reduce the risk of subsequent disputes between the prosecutor and ARMA over the asset’s condition at the time of acceptance.

5. The option to call in the police

The Procedure expressly grants ARMA Interregional Territorial Department staff the right to call in police officers, under a joint order issued by ARMA and the Ministry of Internal Affairs, “where there are reasonable grounds to believe that there is a threat to the life and health of individuals and to public safety.” This is an important safety safeguard, given that assets are often in the actual possession of suspects or persons linked to them.

What problems may arise?

Overall, the greatest challenges are likely to arise where there are discrepancies between the actual and the legal condition of the seized property. Paragraph 6 of Section I of the Procedure provides that the prosecutor may submit proposals to the draft acceptance and transfer act within four business days, which ARMA must then review within one day. However, the Procedure does not specify what is to be done if ARMA rejects the prosecutor’s proposals. This creates a risk of “endless approvals,” where the 10-day deadline is formally observed, but the actual transfer of the asset drags on through iterative revisions, which is inconsistent with the very nature of seizure.

In addition, the Procedure assumes that an opinion on the feasibility of managing the asset already exists at the time of the prosecutor’s request. Yet it does not address the situation where, during the asset’s examination at its actual location, the property is found to differ substantially from the data on which that opinion was based. 

There is also uncertainty regarding the timing of the actual asset inspection. For example, no rule covers the case where a person proposed by the prosecutor cannot participate within the timeframe set by ARMA, leaving it unclear whether the inspection may proceed in their absence, and if so, on what conditions.

The ARMA accordingly needs to work all of this out in cooperation with the prosecution authorities, and these issues can be effectively resolved by drawing on the general principles of criminal proceedings and the relevant departmental standards. Where needed, the Procedure can be amended to formally regulate ways of overcoming these challenges.

Conclusion

The Procedure for ARMA’s Acceptance of Seized Assets for Management, approved by the joint order of the ARMA and the Prosecutor General’s Office, is a necessary step in implementing Law No. 4503-IX. It closes one of the key gaps in the secondary regulation of the new model for handling seized assets.

At the same time, practice may reveal individual problems that will require amendments to some of its provisions, so the ARMA should monitor this and respond promptly — including by initiating changes to the regulations.