Why should draft law No. 12406 be supported?
On 14 May 2025, the Verkhovna Rada Committee on Law Enforcement will discuss draft law No. 12406 ‘On Amendments to the Criminal Code of Ukraine, the Criminal Procedure Code of Ukraine and the Law of Ukraine “On Sanctions” regarding the establishment of liability for violations of special economic and other restrictive measures (sanctions)’.
History of development and significance of the draft law
The draft law was submitted by the President of Ukraine on 14 January 2025 as a result of a year-long work of a working group established on the initiative of the Ministry of Justice. It included experts from the Ministry of Justice, the Ministry of Economy, the Ministry of Internal Affairs, the Office of the President, the Office of the Prosecutor General, the Security Service, the National Bank, the National Agency for Corruption Prevention, the National Securities and Stock Market Commission, and the Analytical Centre ‘Institute of Legislative Ideas’.
Draft law No. 12406 is important for Ukraine's European integration process, as it complies with Ukraine's international legal obligations set out in Article 7 of the Association Agreement between Ukraine and the EU and takes into account the requirements of the recently adopted EU Directive 2024/1226. In addition, the draft law ensures the implementation of the European Commission's recommendations provided in its reports on Ukraine's progress under the EU Enlargement Package. In particular, in its 2024 Report, the European Commission stressed the need to amend the Criminal Code by adding a new article that would provide for criminal liability for circumventing restrictive measures.
Main provisions of draft law No. 12406
1. Not all types of sanctions are criminalised, but mainly those of a material nature (the most dangerous financial sanctions).
2. Liability for intentional and negligent violations of sanctions, as well as intentional circumvention of sanctions, will be punishable by a fine of between 425,000 and 2.04 million hryvnia or imprisonment for a term of between two and ten years.
3. A value threshold of 151,400 hryvnias, which allows for the distinction between minor violations (the EU recommends a threshold of 10,000 euros, but as a victim country, we have reduced this to 3,500 euros).
4. Mandatory additional punishment in the form of deprivation of the right to hold certain positions or engage in certain activities for a term of 10 to 15 years, and in certain cases – confiscation of property.
5. Application of criminal law measures against legal entities in the form of fines or confiscation of property and liquidation.
6. The subjects of criminal offences are not only sanctioned persons, but also officials, persons providing public services, and any third parties.
Experts from the Analytical Centre ‘Institute of Legislative Ideas’ have developed a detailed analysis and itemised explanation of the proposed legislative changes and analysed their compliance with best international practices.
Conclusions and proposals
Draft law No. 12406 fills a significant gap in Ukrainian legislation by introducing criminal liability for violations of sanctions, which will effectively counter attempts to undermine the state's sanctions policy.
In view of the above, the Analytical Centre ‘Institute of Legislative Ideas’ calls on the Verkhovna Rada Committee on Law Enforcement to recommend that the Verkhovna Rada of Ukraine adopt draft law No. 12406 as a basis following the discussion.