Liability for violation of sanctions

With the beginning of the full-scale Russian-Ukrainian war, one of the effective methods of countering both individuals and businesses has become the use of sanctions. The state uses sanctions for legal entities and individuals who have ties to the aggressor (in particular, they contribute to the replenishment of the budget of the Russian Federation). At the same time, as of today, the current Ukrainian legislation does not specifically define liability for violating or circumventing sanctions. Of course, this seriously harms the national interests of our state. In January 2025, the President of Ukraine submitted to the Parliament a draft Law (No. 12406), which provides for the establishment of criminal liability for violating sanctions. The basis of the specified project is the Law of Ukraine "On Sanctions". In this article, we will consider in detail the liability for violating sanctions.

Analysis of criminalization of liability for violation of sanctions

The main purpose of the above-mentioned draft law is to legally ensure liability for intentional circumvention of restrictive measures applied by the state. Regarding the proposed restrictive measures provided for in Article 114-3 of the Criminal Code of Ukraine:

• Part One

For obstruction of the implementation or failure to implement sanctions or their intentional circumvention, the following penalties are provided: fines - up to 50 thousand NMDH; imprisonment - from 2 to 6 years; ban on professional activity - up to 15 years.

• Part Two

Part Two specifies aggravating circumstances: commission of unlawful acts by an official, repeatedly, by a group of persons in prior collusion, in particularly large amounts. For the above actions, the accused faces: a fine of up to 120,000 NMD; imprisonment of 3 to 7 years; ban on professional activity of up to 15 years.

• Part Three

Liability is provided for an act committed by an official who occupies a particularly responsible position. If proven guilty, the person faces up to 10 years of imprisonment with confiscation of property.

Important: a ban on engaging in professional activity is considered as an additional punishment. The draft law discloses the concept and possible forms of circumvention of sanctions.

If draft law No. 12406 is adopted, lawyers of “Prikhodko & Partners” recommend that business representatives conduct a thorough check of counterparties for their presence on sanction lists. This will protect both legal entities and individuals from being included in the circle of defendants in criminal proceedings under the article on violation of sanctions.

According to the draft law, exemption from criminal liability is provided if the subject has fulfilled certain conditions. In this case, special confiscation is not excluded.

Sanctions Violation: Forms of Circumvention of State Restrictions Enacted by the Bill

The Bill No. 12406 clearly specifies two forms of evasion of sanctions, for which administrative and criminal liability is provided:

1. Acquisition of blocked assets. Committing actions related to the transformation, transfer, masking or concealment of assets.
2. Bringing a business entity to bankruptcy. Liability is also provided for fictitious bankruptcy for the purpose of evading sanctions.

Thus, the criminalization of evasion of sanctions is an important step that should significantly increase the effectiveness of state sanction measures. However, the proposed bill contains certain nuances. In particular, a person under sanctions cannot obtain permission to perform certain actions that are provided for by sanction restrictions (for example, payment for legal services, humanitarian aid). It also does not establish an obligation for persons under sanctions to declare blocked assets.

Other types of circumvention of sanctions restrictions are also criminalized. This applies, for example, to masking the control of a sanctioned owner or attempts to bring an enterprise to bankruptcy. Recently, these methods have become quite widespread.

Criminal offenses related to circumvention of sanctions are under the jurisdiction of the Security Service of Ukraine. The procedure for declaring, obtaining permits, etc. will be regulated at the level of a special by-law.

If a state sanction policy has been applied against you, or you want to check the counterparties with whom you plan to cooperate in the future, contact the lawyers of "Prikhodko and Partners". We have the necessary practical experience to effectively protect the interests of each client. You can count on 100% confidentiality and obtaining the desired result. Our lawyers and advocates provide the full range of services to ensure compliance with the rights and interests of each citizen.

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