The absence of an effective mechanism for management of seized assets with the aim of preserving their economic value in criminal proceedings, insufficient effectiveness of asset recovery with the aim of their seizure by law enforcement agencies and recommendations of the European Commission as part of the negotiations around the visa liberalization regime all led to the establishment of the National Agency for finding, tracing and management of assets obtained through corruption and other crimes, or Asset Recovery and Management Agency (ARMA).
The specialized law on the ARMA was adopted on 10 November 2015. At the end of October 2017, the ARMA accepted its first assets for management and started fulfilling its key functions of asset recovery and management.
It should be noted that MPs were adopting the specialized Law in the situation of effective absence of regulatory framework for management of assets seized in criminal proceedings to restore their economic value in Ukraine.
Analyzing the activity of the ARMA in management of assets obtained through corruption and other crimes as of June 2019, we can observe that the legislation in this sector needs improvement. The following areas are a priority:
The ARMA needs to get a legal status in the criminal process as a participant of the criminal and court proceedings. Today, the ARMA cannot participate in judicial hearings where motions on transfer of seized assets to the ARMA are reviewed. The ARMA cannot dispute cancellation of asset seizure, etc. This burden falls on prosecution, which does not always make sense.
The ARMA is excluded from discussions in criminal proceedings before the potential seizure and transfer of assets in order to establish the purpose, scope and management method of certain assets. This leads to situations where the ARMA receives assets that cannot be managed or even sold. In some cases, the location of assets cannot be established. Sometimes, before assets are seized and transferred, they need to be studied and analyzed, because their management requires special knowledge.
MPs were adopting the specialized Law in the situation of effective absence of regulatory framework for management of assets seized in criminal proceedings to restore their economic value in Ukraine.
The ARMA’s asset management activity is sometimes blocked when assets have been transferred to the ARMA as a security measure. For instance, a court decision can prohibit the ARMA to execute any asset management measures.
This means that the priority principle must be legislative established in criminal proceedings and blocking of the ARMA must be rendered impossible.
It should also be pointed out that discussions around the Agency lead to the idea of a possible change of purpose of asset management by the National Agency. The possibility of a social focus in the management activity should be discussed, where assets would be transferred to the society in special cases. For instance, Mezhyhiria is an economically unattractive asset for potential managers due to a number of risks, but active citizens view it as highly important and it should thus be preserved with the option to visit it and organize social and anti-corruption events there.
I believe that the aforementioned problems are the most important ones; however, this list is not exhaustive. Certain provisions of the Law on the ARMA should be changed, and the Criminal Procedural Code should be brought in agreement with it. Discussions around the social focus in th ARMA’s work should also continue.
This publication has been prepared with the financial support of the European Union. Its content is the sole responsibility of Transparency International Ukraine and does not necessarily reflect the views of the European Union.
Transparency International Ukraine works with the National Agency within the project Enhancing the Role of Civil Society in Public Finance Oversight, financed by the European Union. The project aims at empowering civil society and journalists with effective anti-corruption, asset recovery and anti-money laundering tools to perform the public finance oversight, support the launch of Asset Recovery and Management Agency (ARMA) and to update the list of Politically Exposed Persons. Find out more at https://goo.gl/Jgr9ic