Ukraine’s Approach to Sanctions Violations

Despite ongoing discussions, Ukraine has yet to introduce criminal liability for sanctions violations or circumvention. In an article for Ekonomichna Pravda, Denys Shkarovskyi explores whether legislative changes are expected soon and what they may entail.

EU Directive and Ukraine’s Efforts to Criminalize Sanctions Violations

The EU Council recently adopted a Directive criminalizing sanctions violations, requiring member states to enforce it by May 2025. Meanwhile, Ukraine has been attempting to introduce similar measures for years. Since 2020, three bills have been registered to amend the Criminal Code, but no significant progress has been made. The issue remains unresolved.

In 2024, the Ministry of Justice and the Institute for Legislative Ideas developed a new draft law, proposing comprehensive amendments to the Criminal Code, the Criminal Procedure Code, and the Law of Ukraine “On Sanctions.”

Key Legislative Proposals

• Explicit prohibition on violating or circumventing sanctions (currently, no such ban exists).
• Recognition of sanctions violations as criminal offenses.
• Mandatory declaration of blocked assets.
• Official authorization for sanctioned individuals to conduct specific activities.

Defining Sanctions Circumvention

Legal liability requires an explicit ban. The proposed law would introduce clear definitions of sanctions violations, considering the following actions as circumvention:

• Engaging in restricted activities without special authorization.
• Providing false information or failing to report assets subject to blocking.
• Failing to update beneficiary details of blocked assets.
• Concealing, disguising, or transforming blocked assets.

Criminal Liability for Sanctions Violations

The draft law introduces two new articles into Ukraine’s Criminal Code:

1. Intentional Violation or Circumvention of Sanctions

Criminal liability applies to:

• Transactions involving assets over UAH 151,400 (as of 2024).
• Deals related to military or dual-use goods, regardless of value.
• Any deliberate circumvention of sanctions.

Penalties:

• Fines starting at UAH 34,000 or imprisonment for up to 6 years.
• If aggravating factors are present (e.g., destruction of evidence, intimidation of witnesses, crimes committed by officials or groups, or transactions exceeding UAH 1,514,000), penalties increase to UAH 170,000 or 8 years’ imprisonment.
• Severe violations involving an organized group, high-ranking officials, or assets over UAH 15,140,000 can lead to up to 10 years in prison and potential property confiscation.

2. Negligent Violation of Sanctions

• Circumvention cannot occur through negligence, as it requires deliberate actions.
• Criminal liability starts when the value of affected assets exceeds UAH 757,000.

Penalties:

• Fines from UAH 34,000.
• If committed by an official or involving assets over UAH 1,514,000, penalties increase to UAH 85,000 or 6 years’ imprisonment.
• If assets exceed UAH 15,140,000, imprisonment for up to 8 years is possible.

Both sanctioned individuals and entities engaging with them—banks, financial institutions, and counterparties—could face liability.

Enforcement and Asset Declaration Requirements

The Security Service of Ukraine (SBU) will investigate sanctions violations, with pre-trial investigations allowed in absentia for suspects evading prosecution.

Declaration of Blocked Assets

• The obligation to declare frozen assets has existed in the EU since 2014.
• In Ukraine, sanctioned individuals must report their assets.
• Even non-sanctioned persons will need to disclose assets owned or controlled by sanctioned entities.
• Declaration applies to real estate, movable property, securities, corporate rights, cryptocurrencies, and financial assistance exceeding UAH 151,400.
• Those already under sanctions must comply upon the issuance of a Cabinet of Ministers resolution.

Conclusion

With global pressure mounting and the EU setting new standards, Ukraine is moving toward criminalizing sanctions violations. If the draft law is adopted, businesses, banks, and individuals will face strict liability for engaging in transactions with sanctioned entities. This marks a significant shift in Ukraine’s sanctions enforcement and compliance framework, aligning it with international best practices.

Detailed information on the legal foundations and enforcement mechanisms of sanctions in Ukraine can be found on the “Ukrainian Sanctions” portal — a comprehensive resource dedicated to sanctions policy and its legal implications.

About Post Author