What Happened
On April 14, a group of MPs filed draft law No.3335 “On Amendments to Certain Legislative Acts of Ukraine to Improve the Effectiveness of the National Agency of Ukraine for finding, tracing and management of assets derived from corruption and other crimes” with the Parliament.
This draft law will enable long-awaited changes to the legislation concerning management of seized assets and their sale. The document also stipulates changes to the Civil Procedural Code of Ukraine, the Code of Administrative Justice of Ukraine, the Economic Procedural Code of Ukraine, the Criminal Procedural Code of Ukraine, laws of Ukraine “On the National Agency of Ukraine for finding, tracing and management of assets derived from corruption and other crimes” and “On State Registration of Corporeal Rights to Real Estate and Their Encumbrances.
What It Is Like Now
The National Agency of Ukraine for finding, tracing and management of assets derived from corruption and other crimes (hereinafter ARMA, or the National Agency) was created in 2015 designed after ARO/AMO agencies functioning in EU countries and worldwide.
The ARMA is a central body of executive power with a special status, authorized to form and implement the national policy in the sphere of finding and tracing of assets which can be seized in a criminal proceeding, as well as management of seized assets.
The ARMA received its first assets for management at the end of October 2017. During the time of its activity, the National Agency has encountered legislative collisions, lack of effective management mechanisms for certain assets, difficulties with establishing a transparent sale process and blockage of the Agency’s work.
What Is Proposed
The proposed draft law is based on a comprehensive, systematic approach to bridging the existing gaps in the legislative framework governing the National Agency. Here are the most important changes:
- to introduce planning before property transfer to the National Agency, which will provide for more effective and rapid management of seized assets;
- to grant the ARMA with powers to store property which cannot be managed effectively for objective reasons and which does not lose economic value (such as a building under construction, land, etc.);
- to introduce a separate mechanism for management of assets if there is a risk of extreme or dangerous situations or other negative consequences for third parties (it is proposed to transfer such an asset to the management of an enterprise under the jurisdiction of a respective ministry or other central body of executive power based on a decision by the Cabinet of Ministers);
- to introduce a clear, transparent mechanism of asset sales through involving the leaders of the bidding organization market;
- to better guarantee the rights of honest buyers of assets sold by the ARMA;
- to make it impossible to block the work of the National Agency.
In addition, the following provisions are proposed:
- to regulate the ARMA’s access to information sources;
- to establish the process of receipt of assets for management by the ARMA in greater detail;
- to introduce tools for transfer of part of the interest accrued on the ARMA’s account and the interest from asset sale to the Ukrainian national budget;
- to eliminate the discrepancies between the Specialized Law and the Criminal Procedural Code.
Conclusion
The asset management activity of the ARMA is meant to assist with the objectives of a criminal proceeding, namely, protect the interests of the government and the owner of the assets. The National Agency must exercise this function by guaranteeing the preservation of the asset value. The problems encountered by the ARMA in certain cases, though, prevent it from preserving and increasing the value of property in the course of management.
In the first years of the ARMA’s work a number of shortcomings and inconsistencies emerged, which are not resolved by the current legislation. The proposed draft law is the first long-awaited step to improve the effectiveness of the National Agency.
