Sanctions are an effective tool used by the international community to deprive of the economic basis for waging an aggressive war against Ukraine and to compensate for the consequences of such actions.
At the same time, the absence of criminal liability for violating/bypassing sanctions significantly reduces their effectiveness.
This has already been recognised at the EU level. Thus, in April 2024, the EU Council adopted a Directive that:
- obliges all EU members to introduce criminal liability for violations of sanctions,
- establishes minimum rules for determining the offence of violating sanctions and determining the punishment for them.
This Directive is mandatory for EU Member States to implement by May 2025.
Ukraine also actively uses the sanctions tool. According to the State Register of Sanctions, 17,211 people are currently under sanctions, including 10,085 individuals and 7,126 legal entities.
Despite the fact that Ukraine’s sanctions policy is quite strict, Ukrainian legislation still does not provide for liability for violation of sanctions or their circumvention.
It cannot be said that Ukraine has been completely inactive in this matter, as certain steps have been taken to criminalise sanctions violation / circumvention.
Next, we will analyze the lawmaker’s proposals in more details.
The first step towards criminalising sanctions violations/circumvention was taken in 2020 with the registration of Draft Law No. 4002.
It was proposed to amend the following:
- of the Criminal Code of Ukraine by introducing a new type of crime – intentional violation of sanctions legislation.
Penalties: from a fine of UAH 17,000 to 8 years in prison.
- The Law of Ukraine “On Sanctions”.
The proposed amendments included: the establishment of an authorised body to supervise and monitor compliance with the sanctions legislation; and the designation of the Office of the Prosecutor General as the initiator of sanctions.
The draft law was included in the agenda of the Verkhovna Rada, but the relevant amendments were not adopted.
The second step was taken in March 2021, when draft law No. 5193 was registered.
It was planned to add 2 types of crimes to the Criminal Code:
- Violation of restrictions and prohibitions imposed on sanctioned entities if such actions threaten Ukraine or are aimed at changing the constitutional order by force or unlawful seizure of state power.
Sentence: imprisonment for 3 to 10 years.
- Intentional violation of the sanctions legislation.
Penalty: a fine of UAH 85 thousand to UAH 1.7 million.
In June 2021, experts from the Verkhovna Rada’s Main Scientific and Expert Department criticised Draft Law No. 5193.
The main reason for the criticism is the vagueness of the proposed wording. Draft law No. 5193 was not even submitted for the first reading.
The third step towards criminalising sanctions violations/circumvention was taken in January 2023, when members of the “Sluha Narodu” parliamentary faction registered draft law No. 8384. It provided for amendments to:
- the Criminal Code of Ukraine by adding a new type of crime – violation of the requirements of the sanctions legislation.
Penalty: from a fine of UAH 255 thousand to imprisonment for up to 12 years.
- the Law of Ukraine “On Sanctions” by establishing a ban on transactions, actions, and decisions that violate sanctions and/or facilitate their avoidance.
Draft Law No. 8384 was also heavily criticised by experts from the Verkhovna Rada’s Main Scientific and Expert Department. The main concerns of the experts were:
- Broad and vaguely defined wording of the essence of the offence;
- The low level of fines as a form of punishment. (For example, the fine for failure to comply with court decisions is 10 times higher than the fine proposed for violation of sanctions).
- Excessive punishment in the form of imprisonment.
Draft law No. 8384 was not even submitted for the first reading.
The next step was taken this year, when the Institute of Legislative Ideas, together with the Ministry of Justice of Ukraine, developed draft amendments to the laws of Ukraine.
- The Institute of Legislative Ideas and the Ministry of Justice of Ukraine propose amendments to the law:
- of the Criminal Code of Ukraine by adding 2 types of crime to it:
- Intentional violation of special economic and other restrictive measures (sanctions).
Penalty: from a fine of UAH 34 thousand to 10 years in prison.
- Reckless violation of special economic and other restrictive measures (sanctions).
Penalty: from a fine of UAH 34 thousand to 8 years in prison.
- of the Law of Ukraine “On Sanctions” by establishing:
- Possibilities to obtain permission to take actions prohibited or restricted by sanctions.
- Additional obligations and prohibitions in connection with the application of the asset freeze sanction (obligation to provide information on assets subject to freeze; prohibition to take actions aimed at concealing or disguising the origin or ownership of assets subject to freeze, etc.)
- Prohibiting the violation of sanctions (including their circumvention).
The draft law has already been discussed and clarified by government officials, leading lawyers and representatives of the scientific community. We expect that the drafters will take the comments into account in the near future and the draft law will be registered.
Given that the sanctions are aimed at protecting Ukraine, it is Ukraine that should set an example for other states in terms of criminalising the violation/ circumvention of restrictive measures.
We hope that by May 2025, the relevant law will come into force in Ukraine. This will be a significant step towards improving the effectiveness of sanctions and harmonising Ukrainian legislation with the EU Directive.
