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WHAT TO DO IF THERE IS NO CONFIRMATION OF ORIGIN OF FUNDS?

Most Ukrainians have kept their money (savings) in cash at home for many years. We have a situation where people are used to paying for most services and goods in cash, hryvnia or dollars.

A client with such a problem turned to Prikhodko & Partners Law Firm. After the divorce from her husband, in accordance with the agreement on the division of property of the spouses, the wife received cash in cash. The property division agreement was the usual written one, without a notarization. It is cheaper, and the law does not require that such an agreement be notarized. The man later died.

After some time, the wife decided to invest the funds received after the divorce, but faced the problem of financial monitoring. The financial institution refused to accept the money, citing the fact that the person had not confirmed the source of the funds.

Next, the lawyers went to court

According to Article 328 of the Civil Code of Ukraine, the right of ownership is acquired on grounds not prohibited by law, in particular from transactions. The right of ownership is considered acquired lawfully, unless otherwise expressly provided by law or the illegality of the acquisition of property rights has not been established by a court.

According to Part 1 of Article 316 of the Civil Code of Ukraine, the right of ownership is a person’s right to a thing (property), which he exercises in accordance with the law of his own free will, regardless of the will of others.

Part one of Article 317 of the Civil Code of Ukraine stipulates that the owner has the right to own, use and dispose of his property.

According to the first part of Article 319 of the Civil Code of Ukraine, the owner owns, uses, disposes of his property at his own discretion.

According to Article 392 of the Civil Code of Ukraine, the property owner may file a lawsuit for recognition of his property right, if this right is disputed or not recognized by another person, as well as in case of loss of a document certifying his property right.

According to Article 55 of the Constitution of Ukraine, human and civil rights are protected by the court. Everyone has the right to protect his rights and freedoms from violations and unlawful encroachments by any means not prohibited by law.

Protection of civil rights are the ways of protection of civil rights provided by law in case of their violation or real danger of such violation.

Under the methods of protection of subjective civil rights understand the statutory substantive measures of coercive nature, through which the restoration (recognition) of violated (disputed) rights and influence on the violator.

According to Article 16 of the Civil Code of Ukraine, every person has the right to go to court to protect their personal non-property or property rights and interests, in particular, with a claim for recognition of property rights.

According to Article 321 of the Civil Code of Ukraine, the right of ownership is inviolable. No one may be unlawfully deprived of this right or restricted in its exercise.

Article 1 of the First Protocol to the Convention for the Protection of Human Rights and Fundamental Freedoms states that every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

In paragraph 37 of the Resolution of 07.02.2014 №5 “On judicial practice in cases of protection of property rights and other property rights” Plenum of the Supreme Specialized Court of Ukraine for Civil and Criminal Cases notes that lawsuits for recognition of property rights filed under Article 392 of the Civil Code are related with the uncertainty of the plaintiff’s ownership of his property. Subject to the provisions of part one of Article 15 and Article 392 of the Civil Code, the property owner has the right to sue for recognition of his property right if this right is disputed or not recognized by another person, as well as in case of loss of a document certifying his property right.

Given that the ownership of the money is questionable and therefore not recognized, the claims for protection of their property rights are legal and reasonable.

The principle of inviolability (inviolability) is enshrined in Articles 319 and 326 of the Civil Code of Ukraine.

The decision of the Grand Chamber of the Supreme Court of 22.08.2018 in case № 925/1265/16 states that the subject of the violated right may use not any, but a very specific way to protect their rights. In addition, the Grand Chamber of the Supreme Court has repeatedly pointed out that the application of a particular method of protection of civil law depends on both the content of the right or interest sought by the person and the nature of its violation, non-recognition or challenge. Such rights or interests shall be protected by a court in a manner that is effective, that is, consistent with the content of the relevant right or interest, the nature of the violation, non-recognition or challenge, and the consequences thereof.

Similar legal conclusions are formulated, in particular, in the decisions of the Grand Chamber of the Supreme Court of 05.06.2018 in case № 338/180/17, of 11.09.2018 in case № 905/1926/16, and of 30.01.2019 in case № 569/17272 / 15-c.

In addition, the court found that the agreement on the division of joint property of the spouses between PERSON_1 and PERSON_3 from December 15, 2008 was not notarized.

According to Article 9 of the Family Code of Ukraine, spouses have the right to conclude family agreements between themselves. In this case, the spouses may settle their relationship by agreement (contract), if it does not contradict the requirements of the IC of Ukraine, other laws and moral principles of society. Individuals living in the same family may also settle their family relationship under a written agreement. Such an agreement is binding if it does not contradict the requirements of the Family Code, other laws of Ukraine and the moral principles of society.

Part 1 of Article 64 of the Family Code of Ukraine stipulates that a wife and husband have the right to enter into all agreements that are not prohibited by law, both in respect of property that is their personal private property and in respect of property that is subject to the right of joint joint property of the spouses.

According to Article 69 of the Family Code of Ukraine, a wife and husband have the right to share property belonging to them on the right of joint joint ownership, regardless of divorce. The wife and husband have the right to divide the property by mutual consent.

Paragraph 2 of Part 2 of Art. 69 of the Family Code of Ukraine provides that the agreement on the division of a house, apartment, other real estate, as well as the allocation of real estate to his wife, husband from all the property of the spouses must be notarized.

The specified norm does not contain requirements of the notarial certificate of the contract which subject is division of money resources.
According to paragraph 1 of Article 209 of the Civil Code of Ukraine, a transaction made in writing is subject to notarization only in cases established by law or by agreement of the parties.

Thus, the court came to the conclusion that since the subject of the agreement on the division of common property was money, it was not subject to mandatory notarization.

Therefore, the court concluded that the requirements for the recognition of ownership of funds are legal, reasonable and subject to satisfaction.

As a result, our client recognized the ownership of cash in the amount of 4,000,000.00 (four million) US dollars, which in hryvnia equivalent at the rate of the NBU at the date of the contract was 29,892,400.00 UAH, according to the agreement of division of joint property of spouses from December 15, 2008.

The court decision can be used as a tool to legalize funds, the origin of which is difficult or impossible to confirm.

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