The Head of the Institute of Legislative Ideas (ILI) emphasized of implementing asset recovery instruments into Ukrainian legislation

Current Ukrainian legislation significantly limits the application of civil confiscation of unjustified assets, making it impossible to recover property even in cases of clear disproportion between assets and lawful income. This was stated by Tetiana Khutor, Head of the Institute of Legislative Ideas, during the conference “Recovery of Unjustified Assets in Favor of the State.”

“Today, the civil confiscation mechanism is restricted by a narrow circle of subjects, limited grounds for application, and competition between civil and criminal instruments. As a result, the state is often unable to recover assets from other individuals, even when there are well-founded doubts regarding their lawful origin,” the expert explained.

As an example, she referred to the case of the head of the Khmelnytskyi Regional Medical and Social Expert Commission, in whose possession nearly $6 million in cash, branded jewelry, and valuables were discovered during searches. Despite the obvious discrepancy between income and assets, existing legal mechanisms do not always allow for effective civil confiscation.

“EU Directive 2024/1260 on asset recovery and confiscation, adopted on April 24, 2024, obliges Member States to implement its provisions by November 23, 2026. Ukraine has also undertaken to harmonize its legislation with European standards under the Rule of Law Roadmap by the second quarter of 2027,” Tetiana Khutor said.

In particular, she noted that Article 16 of the Directive provides for the possibility of confiscating property if a court is convinced that it was obtained through criminal activity within organized crime, even in cases where other types of confiscation cannot be applied.

“The court must consider all the circumstances of the case, including the disproportion between the value of the property and lawful income, the absence of a plausible lawful source, and the person’s links to a criminal organization. At the same time, the Directive guarantees the protection of the rights of bona fide third parties and establishes minimum standards, while allowing states to introduce broader mechanisms,” the Head of ILI explained.

Tetiana Khutor also referred to the United Kingdom’s experience with Unexplained Wealth Orders (UWO), in force since 2018. This instrument allows a court to require an individual to explain the origin of assets if there are grounds to believe that their lawful income was insufficient to acquire them.

“Failure to provide an explanation may lead to asset recovery, and providing false information may result in criminal liability. British practice demonstrates the effectiveness of this mechanism: in a number of cases, the state has recovered tens of millions of pounds sterling through out-of-court settlements or asset sales following the use of UWO,” the expert noted.

The Head of ILI stressed that Ukraine should implement a mechanism for confiscating unjustified enrichment linked to criminal activity, ensure coordination between civil confiscation and criminal proceedings, expand the range of persons to whom it may apply, and regulate the overlap between civil and criminal procedures.

“This will be an important step toward strengthening the state’s capacity to recover illicit assets and reinforcing the rule of law,” she concluded.