Ukraine on the way to the sanctions policy reference: discussion of international experience at the ILI panel discussion at the VIII Kharkiv International Forum

On 24 September, the Institute of Legislative Ideas together with the Department of Criminal Law of the Yaroslav Mudryi National Law University organized a panel discussion on ‘Compensatory function of sanctions and criminalization of their violation: international and Ukrainian experience’.

Tetyana Khutor, Head of the ILI, opened the event and stressed the absence of a law that should control sanctions evasion, as well as the importance of the process in the world related to this:

"Ukraine has not yet introduced criminal liability for sanctions evasion. However, the last year and the end of last year have become a period for the world when states have begun to focus more on monitoring compliance with sanctions. They are not only introducing new sanctions but also getting significant financial results from their implementation." - Tetyana Khutor, Head of the Institute of Legislative Ideas.

Tetyana Khutor also noted that for a long time, many countries considered sanctions to be a deterrent tool and did not link them to the issue of compensation. However, in the context of Russia's war against Ukraine, it has become clear that the compensation aspect will become an integral part of the sanctions policy.

The speakers at the event were: Tetyana Khutor, Head of the Institute of Legislative Ideas; Oleksiy Zakharov, Deputy Head of the Legal Support Department of the Security Service of Ukraine; Inna Bohatykh, Deputy Minister of Justice of Ukraine; Mykola Rubashchenko, ILI expert and Associate Professor of the Department of Criminal Law at the National Law University; Maksym Pastushok, Director of the Sanctions Policy Department of the Ministry of Justice of Ukraine; Markiyan Galabala, HACC judge; Alesia Nahirna, Counsel to the Ministry of Justice of Canada and expert on international sanctions policy; Andriy.

The United States has the most successful experience in criminalizing sanctions evasion, and Tetyana Khutor spoke about the country's developed approach to this issue:

’...As of August 2024, the Office of Foreign Assets Control of the US Department of the Treasury has recovered more than $1 billion for sanctions violations in 11 civil cases. This amount shows how effective this tool can be..."

As for the European Union, unlike the United States, its system has long been underdeveloped in terms of prosecuting sanctions violations, but these processes have been significantly intensified during the period of full-scale invasion. In Germany, the Hamburg Prosecutor's Office this spring charged Siemens employees involved in the export of four gas turbines worth 111 million euros to the occupied Crimea, while in Lithuania, for example, customs fined a Lithuanian company more than 13.6 million euros for violating the ban on the sale of vehicles imposed by the sanctions.

‘...Lithuania has become the second country in the world, along with the United States, to adopt special legislation that allows the transfer of funds received in criminal proceedings and criminal proceedings to avoid sanctions to Ukraine...’ - Tetyana Khutor.

During the panel discussion, Oleksiy Zakharov covered the topic of violation of sanctions restrictions in Ukraine and the international legal framework for the application of these restrictions.

Inna Bohatykh shared more about the EU Directive on the criminalization of sanctions violations, its importance for Ukraine, and the legal basis for countering sanctions violations in partner countries. At the end of 2022, Ukraine started thinking about criminalizing sanctions violations, which resulted in the relevant Draft Law 8384, which was based on the EU Directive on the criminalization of sanctions violations:

‘On 24 April this year, an EU directive was adopted that recommends, or rather obliges EU member states to introduce criminal liability for circumventing sanctions... given that Ukraine has been a candidate for membership in the EU for 22 years, we were guided primarily by the provisions of this directive, that is, the concept of the directive was the basis, but there are also some, let's say, our developments, ideas that have already been reflected in the draft law.’ - Inna Bohatykh, Deputy Minister of Justice of Ukraine.

The new draft law on the criminalization of sanctions violations was one of the main topics of discussion, presented in more detail by Mykola Rubashchenko:

"Violation of sanctions should be criminalized not only in terms of the actions of officials and not even so much their actions as the sanctioned entities themselves and various frontmen. Regardless of whether the consequences occurred or did not occur, whether there was significant damage, grave consequences, and so on, whether there was a goal to harm Ukraine, or whether there was no such evil intent."

"Our partner countries have long criminalized sanctions violations, and it is in the form of separate articles dedicated to sanctions violations. There is no need to reinvent the wheel, so the project proposes to supplement the Criminal Code with new articles based on this experience."

The expert event also discussed the Estonian mechanism of asset recovery through sanctions and the prospects for obtaining them together with Andriy Klymasiuk, the Project Manager of the IIP. Maksym Pastushok presented successful cases of applying sanctions in the form of asset recovery under the Ministry's claims to the High Anti-Corruption Court.

In addition, they had the opportunity to hear more about the experience of recovering assets of aggression supporters from Markiyan Galabal, a HACC judge. Alesia Nagirna, Counsel to the Ministry of Justice of Canada and an expert on international sanctions policy, in turn, presented the legislative model for the confiscation of sanctioned assets in Canada and spoke about the obstacles to the recovery of sanctioned assets in partner countries.

The event was attended by more than 100 participants, including judges, prosecutors, investigators, heads of relevant departments of government agencies, academics, lawyers, and students. A recording of the panel discussion is available here.

Since the beginning of the full-scale invasion, sanctions pressure on the aggressor has become one of the main tasks of Ukraine and its partners. This has largely determined the active development of sanctions policy in various countries.