Analysis of the draft law:
Analysis of draft law No. 12406 regarding liability for violation of sanctions
Essence of the draft law
Draft law No. 12406 introduces amendments to the Criminal Code, the Criminal Procedure Code of Ukraine, and the Law of Ukraine “On Sanctions.” The aim is to establish criminal liability for violations of special economic and other restrictive measures (sanctions). It defines the elements of the crime, penalties for violating sanctions, and procedural aspects of investigating such crimes.
Structure and main provisions of the draft law
The draft consists of two sections that amend:
- The Criminal Code of Ukraine:
- Amendments are introduced to Article 49 (Exemption from criminal liability due to the expiration of the statute of limitations), Article 55 (Deprivation of the right to hold certain positions or engage in certain activities), Article 96-1 (Special confiscation), Article 96-3 (Grounds for applying special confiscation), Article 96-5 (Grounds for liquidation of a legal entity of public law), and a new Article 114-3 (Violation of special economic and other restrictive measures (sanctions)) is added.
- The new Article 114-3 defines the elements of crimes related to the violation of sanctions and the corresponding penalties.
- The Law of Ukraine “On Sanctions”:
- The types of assets that may be subject to recovery in the form of sanctions are clarified.
- Technical and editorial amendments are made to align with other legislative acts.
Important provisions for different groups
- For legislators:
- Establishing a clear legal framework for criminal liability for violating sanctions.
- Harmonizing Ukrainian legislation with international standards in the field of sanctions policy, in particular with the provisions of EU Directive 2024/1226.
- For experts:
- Defining criteria for distinguishing criminal actions from legitimate activities under sanctions.
- Analyzing the implementation of the new Article 114-3 of the Criminal Code of Ukraine and its impact on the practice of applying sanctions.
- For business:
- Understanding the risks and responsibilities for violating sanctions.
- The need to check counterparties and comply with the requirements of legislation on sanctions.
- For citizens:
- Increasing the transparency and effectiveness of the state’s sanctions policy.
- Protecting the national interests and security of Ukraine by strengthening liability for violating sanctions.
Analysis of other documents:
Analysis of documents regarding the draft Law of Ukraine “On Amendments to the Criminal Code of Ukraine and the Criminal Procedure Code of Ukraine and the Law of Ukraine “On Sanctions” regarding the establishment of liability for violation of special economic and other restrictive measures (sanctions)”
1. Letter from the President of Ukraine V. Zelenskyy to the Verkhovna Rada of Ukraine
The President of Ukraine supports the draft law and initiates it as urgent for extraordinary consideration by the Verkhovna Rada of Ukraine. He emphasizes the importance of the draft law, defining it as a priority.
Main provisions:
- Defining the draft law as urgent for extraordinary consideration.
- Instructing the Vice Prime Minister for European and Euro-Atlantic Integration of Ukraine – Minister of Justice of Ukraine O. Stefanishyna to report on the draft law during its consideration at the plenary session of the Verkhovna Rada of Ukraine.
2. Resolution of the Verkhovna Rada of Ukraine “On Adoption as a Basis of the draft Law of Ukraine “On Amendments to the Criminal Code of Ukraine and the Criminal Procedure Code of Ukraine and the Law of Ukraine “On Sanctions” regarding the establishment of liability for violation of special economic and other restrictive measures (sanctions)””
This document records a formal stage of the legislative process, namely the adoption of the draft law as a basis. This means that the Verkhovna Rada generally supports the idea of the draft law and is ready to finalize it.
Main provisions:
- Adoption as a basis of the draft law submitted by the President of Ukraine.
- Instructing the relevant committee to finalize the draft law, taking into account comments and proposals, and submit it for consideration in the second reading.
3. Conclusion of the Main Scientific and Expert Department of the Verkhovna Rada of Ukraine
The Main Scientific and Expert Department generally supports the purpose of the draft law, but expresses a number of comments and proposals aimed at improving it. The analysis indicates the need for a clearer definition of some provisions and their harmonization with international standards.
Main provisions:
- It is proposed to provide for criminal liability for violation of sanctions and their intentional circumvention.
- In the sanctions of Parts 1-3 of the new Article 1143 of the Criminal Code, it is proposed to provide for such an additional mandatory penalty as deprivation of the right to hold certain positions or engage in certain activities for a term of ten to fifteen years.
- It is necessary to provide a mechanism for obtaining permits to perform actions prohibited by sanctions, in cases where it is due to public interests.
- The list of actions that should be considered as circumvention of sanctions should be supplemented with the provisions of the EU Directive.
4. Conclusion of the Committee of the Verkhovna Rada of Ukraine on issues of integration of Ukraine to the European Union
The Committee on issues of integration of Ukraine to the European Union generally supports the draft law, believing that it does not contradict Ukraine’s international legal obligations in the field of European integration and EU law, but needs to be finalized. Particular attention is paid to the need to fully take into account the provisions of Directive 2024/1226/EU.
Main provisions:
- The establishment of criminal liability for violation of sanctions does not contradict Directive 2024/1226/EU.
- In the event of a violation of sanctions, it is important to ensure that such violation can be committed both intentionally and through negligence, as provided for in the Directive.
- It is necessary to add that, according to point 1 (i) of Article 3 of Directive 2024/1226/EU, among the types of violations of restrictive measures is the violation or non-compliance with the terms of permits granted by competent authorities to carry out activities.
- The draft Law does not take into account all cases of circumvention of sanctions provided for in point I (B) of Article 3 of Directive 2024/1226/EU.
5. Conclusion of the Committee of the Verkhovna Rada of Ukraine on Budget Issues
The Committee on Budget Issues notes that the implementation of the provisions of the draft law may increase the revenue side of the state budget as a result of the application of fines and confiscation of property for the relevant crime and lead to an increase in expenditures of the state budget for the maintenance of convicts in penal institutions in connection with the establishment of terms of imprisonment for the relevant crime.
Main provisions:
- Possible increase in state budget revenues from fines and proceeds from confiscation of property.
- Possible need for additional state budget expenditures for the maintenance of convicts.
6. Conclusion of the Committee of the Verkhovna Rada of Ukraine on Law Enforcement
The Committee on Law Enforcement recommends that the Verkhovna Rada of Ukraine adopt the draft Law in the second reading and as a whole as a law in the wording proposed by the Committee with the necessary technical and legal amendments. A large number of amendments and proposals were processed, and international practice on effective mechanisms for preventing circumvention and violation of the sanctions regime was analyzed, and the relevant wording of the draft law was agreed with the competent state authorities, in particular, in the field of law enforcement.
Main provisions:
- Establishing criminal liability for violation of a special economic or other restrictive measure (sanction) or intentional circumvention of a sanction.
- Liability for intentional failure to comply with or obstruction of the implementation of a sanction, as well as intentional circumvention of a sanction, will be punishable by a fine of 25,000 tax-free minimum incomes for citizens to 75,000 tax-free minimum incomes for citizens or imprisonment for a term of 2 to 10 years.
- Expansion of the list of acts that qualify as “circumvention of sanctions.”
7. Conclusion of the Main Department of Documentary Support of the Verkhovna Rada of Ukraine
The Main Department of Documentary Support conducted a linguistic examination of the draft Law and made a number of editorial amendments to improve the quality of the text.
Main provisions:
- The draft law is written in modern Ukrainian literary language.
- Editorial amendments were made to improve the quality of the text.
8. Comments of the Main Legal Department of the Verkhovna Rada of Ukraine
The Main Legal Department generally shares the considerations and proposals expressed by the Main Scientific and Expert Department, and considers it necessary to draw attention to a number of legal inaccuracies and inconsistencies in the draft law. Critical comments relate to the definition of the elements of a criminal offense, competition of norms with other articles of the Criminal Code of Ukraine, as well as terminological inaccuracies and conflicts with the Civil Code of Ukraine.
Main provisions:
- The use in the draft law of an approach to determining the elements of a criminal offense by stating the content of the unlawful act, especially with reference to another law in the note to the article of the Criminal Code of Ukraine, is unacceptable.
- The wording of the act in the form of “providing false or misleading information to hide the fact…” has signs of legal uncertainty.
- The proposed exemption from liability exclusively for actions seems unfair (discriminatory) in relation to persons who commit inaction.
- Authorizing the Government to determine the procedure for payment for services in the field of professional legal (legal) assistance and the methodology for calculating the amount of remuneration of lawyers who provide legal assistance to an individual and/or legal entity, including a person to whom sanctions have been applied, is an interference in the implementation by the Bar of guarantees of its independence.
