Money from sanctions violators for Ukraine’s recovery: OSCE PA adopts The Hague Declaration

Individuals and entities that violate sanctions or help Russia circumvent restrictive measures should bear financial responsibility for the consequences of its aggression. The OSCE Parliamentary Assembly incorporated this principle into The Hague Declaration, adopted during its 33rd Annual Session on 8 July.

The provision states that fines and confiscated assets recovered from sanctions violators should be directed toward Ukraine’s needs, providing an additional source of funding for the country’s reconstruction and compensation for victims of the war.

The proposal was presented in The Hague by Ukrainian Member of Parliament Pavlo Frolov. Experts from the Institute of Legislative Ideas (ILI) Analytical Centre, who have been developing this mechanism since 2023, also contributed to drafting the provision.

The Declaration includes the following wording:

"Calls on OSCE participating States to strengthen efforts to secure full and effective reparation for the victims of the Russian Federation’s war of aggression against Ukraine, recognizing that accountability also has a financial dimension, including by developing lawful and coordinated mechanisms that allow fines and confiscated assets recovered from those responsible for the violation or circumvention of sanctions to contribute to such reparation, in full compliance with international law, the rule of law, and appropriate human rights safeguards."

This provision serves as a political commitment rather than a legally binding obligation. It does not create new international legal obligations or alter existing sanctions regimes. However, it formally endorses within the OSCE Parliamentary Assembly the principle that financial liability for sanctions violations and circumvention should contribute to Ukraine’s recovery.

Why this matters

Companies and individuals that help Russia circumvent sanctions – for example, by supplying military technologies or components used in weapons production – often face substantial fines and asset confiscation. At present, these funds generally remain in the budgets of the states that investigate and prosecute such violations.

Meanwhile, the costs of rebuilding destroyed infrastructure, supporting affected communities, and compensating victims of Russia’s aggression are borne by Ukraine and its international partners.

The new approach changes this logic: the financial burden should also be borne by those who enable Russia to sustain its war by helping it evade sanctions and gain access to prohibited goods, technologies, or financial services.

For Ukraine and its partners, this approach is important for several reasons:

• It creates an additional source of funding for reconstruction and compensation.
• It strengthens the deterrent effect of sanctions, as violators not only pay fines and lose their assets but also effectively contribute to rebuilding the country harmed by their actions.
• It reduces the financial burden on partner governments that are already allocating significant resources to support Ukraine.

The proposal, submitted on behalf of Ukraine, was first adopted in a resolution of the Committee on Democracy, Human Rights and Humanitarian Questions, which considered it from the perspective of ensuring full reparation for victims of the war. The resolution recognizes that accountability for international crimes and support for aggression has not only a political but also a financial dimension.

Who is already implementing this approach?

This mechanism is not merely theoretical – it is already being put into practice.

• The United States became the first country to transfer nearly USD 6 million confiscated from sanctions violators to Ukraine. The funds were used to restore critical infrastructure and support veterans.
• Lithuania has gone even further by adopting legislation that allows both confiscated assets and fines imposed for sanctions violations to be transferred to Ukraine. So far, EUR 167,000 has been allocated to the rehabilitation of Ukrainian service members.

Moreover, the European Union has already adopted the necessary legal framework – most notably Directives (EU) 2024/1226 and 2024/1260 – which enables the confiscation of assets related to sanctions circumvention in the public interest, including to support Ukraine as a state affected by Russia’s aggression.

The next step for Ukraine and its partners is to move from isolated examples to a systematic mechanism. This requires states to incorporate into their national legislation procedures allowing fines and confiscated assets from sanctions violators to be directed toward compensation for victims and the reconstruction of Ukraine.

The inclusion of this provision in The Hague Declaration of the OSCE Parliamentary Assembly strengthens international support for this approach and provides an additional political foundation for advancing it in other international organizations.