Criminal liability for violation of Ukrainian sanctions

21.01.2025

Since the start of the full-scale war, the application of Ukrainian sanctions has become one of the effective ways to counteract individuals and businesses associated with Russia and help Russia in various ways to finance the hostilities in Ukraine.

At the same time, Ukrainian legislation does not currently establish liability for violating and circumventing sanctions, which not only significantly undermines the effectiveness of the sanctions imposed, but also harms Ukraine's national interests, security, sovereignty and territorial integrity. 

On 14 January 2025, the President of Ukraine submitted to the Parliament the draft law No. 12406 of 14 January 2025 on criminalisation of violation and circumvention of sanctions imposed under the Law of Ukraine “On Sanctions”. 

In particular, it is proposed to supplement the section of the Criminal Code of Ukraine (hereinafter - the CC of Ukraine) on crimes against the foundations of national security of Ukraine with a new Article 114-3, which establishes liability for violation of a restrictive measure (sanction), as well as for intentional circumvention of sanctions. 

Grounds for criminal liability

The draft law stipulates that criminal liability under this article shall be incurred regardless of the consequences of violation (circumvention) of sanctions, i.e. the mere fact of violation (circumvention) of sanctions will be a sufficient reason for criminal liability. 

Investigative jurisdiction

The pre-trial investigation of criminal offenses under Article 114-3 of the CC of Ukraine will be carried out by the security investigative bodies, and the court proceedings in such cases can take place in the absence of the defendant (in absentia). 

Penalties for violation and circumvention of sanctions

Article 114-3 of the CC of Ukraine establishes various types of punishment for violation and/or circumvention of sanctions, including 

  • a fine in the amount of UAH 425 thousand up to UAH 2 million; 
  • imprisonment for a term of 2 up to 10 years; 
  • seizure of property; 
  • deprivation of the right to occupy senior positions or engage in certain activities for a period of 10 up to 15 years; 
  • application of criminal law measures to legal entities (fine, forfeiture and compulsory liquidation). 

Who can bear criminal liability for violation and circumvention of sanctions

Since the crime proposed in Article 114-3 of the CC of Ukraine is a grave crime, this means that any person (Ukrainian citizen, foreigner and/or stateless person) is criminally liable for the crime, regardless of whether they committed the crime on the territory of Ukraine or outside of the territory of Ukraine.  

Although legal entities cannot be held criminally liable, the CC of Ukraine establishes certain cases where they may be subject to criminal law measures. Such case is, in particular, the commission of a crime prosecuted under Article 114-3 of the CC of Ukraine by an individual on behalf of a legal entity. In this case, the individual (director, accountant or other authorised person) will bear criminal liability, and the legal entity will be subject to criminal law measures (fine, forfeiture and compulsory liquidation).  

Amendments to the Law of Ukraine “On Sanctions”

The draft law also provides for amendments to the Law of Ukraine “On Sanctions” (the “Law”), in particular, its supplementation with Articles 5-5 and 5-6. 

Thus, Article 5-5 of the Law clarifies what actions should be considered as circumvention of sanctions. These include the following: 

  1. acquisition (transfer, change, transformation) of assets in respect of which the actual circumstances indicate that they belong to a sanctioned person; 
  2. committing actions aimed at concealing, disguising (a) the origin of such assets or (b) ownership of them, (c) control over them, (d) rights to such assets, (e) sources of their origin, (f) location; 
  3. bringing a business entity, which or whose ultimate beneficiary is subject to a sanction, to bankruptcy, or submitting a knowingly false statement about the inability of such entity to fulfil its obligations to a creditor, if such actions are aimed at changing the ownership of the business entity's assets. 

Article 5-6 of the Law aims to improve the conditions for international cooperation in the field of state sanctions policy. The proposed amendments include the possibility of returning to Ukraine or foreign state assets that have been forfeited on the basis of a court decision (verdict) in a case on violation or circumvention of sanctions.