Effective as of 24 May 2022, the Ukrainian sanctions legislation was amended to allow expropriation without compensation of assets owned directly or indirectly by the sanctioned individuals and legal entities that pose a significant threat to the national security, sovereignty or territorial integrity of Ukraine, or facilitate such actions being committed by other persons.

Grounds for expropriation

From 24 May 2022, and until martial law in Ukraine is lifted, the Ukrainian courts are allowed to expropriate without compensation assets of the sanctioned persons whose property is blocked by the National Security and Defense Council of Ukraine after 24 May 2022, upon application by a special state body if, among other things, such sanctioned individuals are engaged in the following:

(i) Decision-making on and participation in the armed aggression against Ukraine

• Making decisions on the armed aggression against Ukraine (including through financing and material and technical support of various events)
• Organizing (including planning, management and coordination, public funding and logistics) the preparation of armed aggression against Ukraine
• Participating in the armed aggression against Ukraine
• Making decisions on the establishment of occupation administrations, organization of self-proclaimed bodies or holding illegal elections/referendums on the temporarily occupied territory of Ukraine
• Providing the aggressor state with territory, infrastructure (roads, premises, etc.) and military equipment

(ii) Financing the armed aggression against Ukraine

• Paying taxes and duties to the aggressor state, if the total amount of such payments (excluding customs fees) for the last four consecutive tax (reporting) quarters exceeds the equivalent of UAH 40 million (approximately USD 1.3 million)[1] for a legal entity and UAH 3 million (approximately USD 102,000) for an individual[2]
• Making donations, charity contributions, sponsorship, etc., in favor of state bodies or the military administration of the aggressor state, legal and physical persons that take actions or make decisions referred to above, or providing funding for such activities, if the aggregate yearly amount of such funds or the value of the property equals or exceeds UAH 750,000 (approximately USD 25,641)
• Investing in governmental bonds of the aggressor state, if the yearly aggregate amount of investments equals or exceeds UAH 3 million (approximately USD 102,000)

(iii) Informational support for the armed aggression against Ukraine in the public media and on the internet

• Justification, recognition as lawful and denial of the armed aggression against Ukraine and the occupation of the territories of Ukraine
• Incitement to armed aggression against Ukraine, genocide of Ukrainian people and discrimination on the grounds of Ukrainian citizenship
• Support for the policy of the aggressor state regarding the non-recognition of Ukrainian people for self-identification and self-determination, distortion of the identity of the Ukrainian people and their aspiration for independence
• Incitement of hatred toward the Ukrainian people, Ukrainian culture, Ukrainian language and national identity

New screening requirements

In addition, the economic sanction on the freezing of assets introduced after 24 May 2022 on particular individuals/legal entities will cover not only the assets directly owned by them, but also the assets in respect of which such individuals/legal entities may directly or indirectly (through other individuals or legal entities) carry out actions identical to the right of disposal. This requires changes to the ordinary practice of screening against the Ukrainian sanctions introduced after 24 May 2022. 

[1] Hereinafter all amounts in USD are calculated based on the official exchange rate of UAH to USD of the National Bank of Ukraine (NBU) as of 24 May 2022 which equals UAH 29.25 per USD 1.

[2] Based on the NBU weighted average official exchange rate for the same period.