Circumventing Sanctions to Become a Crime: Who Will Be at Risk

Circumventing Sanctions to Become a Crime: Who Will Be at Risk

Recently, there’s been a lot of discussion about a new draft law: the Verkhovna Rada is looking to introduce criminal liability—that is, real penalties—for violations of economic sanctions. It sounds serious: fines of up to two million UAH or even imprisonment for up to 10 years. But an important question arises: Are we truly ready for this? And is it really that straightforward?

What’s the core issue with sanctions?

Imagine a situation where you’re told that violating certain rules will result in severe punishment. But the rules themselves are unclear, and no one has properly explained what exactly qualifies as a violation from a criminal law perspective.

For a long time, the authorities explained that sanctions are not punishments in the criminal code sense. They were supposedly just restrictions: banning someone from doing business, accessing funds, or leaving the country. The goal was to halt activities that harm Ukraine.

But the new law fundamentally changes this approach. Now, anyone who attempts to circumvent these “restrictions”could face real punishment—fines, bans on holding certain positions, confiscation of assets, or even imprisonment. And this wouldn’t only apply to sanctioned individuals, but also to their partners and facilitators.

Key provisions of Draft Law No. 12406:

• Criminal liability for violating or intentionally circumventing sanctions — a fine from UAH 425,000 to UAH 2.04 million or imprisonment for 2 to 10 years;

• Mandatory disqualification from certain positions or activities for 10 to 15 years;

• Asset confiscation in specific categories of violations;

• Legal entities can also be held liable — through fines, asset confiscation, or liquidation;

• Criminal responsibility not only for sanctioned individuals, but also for public officials, service providers, and third parties aiding the violation of sanctions.

The core dilemma:

We’re now talking about criminal penalties for sanction violations, but Ukrainian law still lacks a clear definition of what sanctions are from a legal standpoint. Are they a form of criminal charge, as referred to in the law?

If we don’t answer this question, we risk:

• Violating human rights: every individual has the right to know what actions could lead to punishment, and what exactly constitutes a crime;

• Creating arbitrariness: vague rules may give authorities excessive discretion, leading to potential abuse or misapplication of the law.

What does the European experience say?

The European Court of Human Rights (ECHR) in Strasbourg provides guidance for determining whether a charge is “criminal” in nature, even if national legislation doesn’t define it that way. These guidelines are known as the “Engel Criteria”.

The court examines three things:

1. How the violation is defined in national law;

2. The nature and seriousness of the offence;

3. The severity of the potential penalty.

When applying these criteria to Ukrainian sanctions, an interesting picture emerges. The grounds for imposing sanctions—such as threats to national security or support for terrorism—closely resemble criminal offences under the Criminal Code. And the consequences, particularly with the proposed law, amount to severe punishments. Under European standards, Ukrainian sanctions could very well qualify as criminal charges.

What’s the way forward?

Before introducing criminal liability for violating sanctions, it’s essential to fix the underlying legal framework. That means:

• Define sanctions clearly: lawmakers must provide a precise legal definition. Are sanctions a form of punishment, or a specific category of restrictions?

• Align with the Criminal Code: if sanctions resemble criminal penalties, they should be integrated into criminal law—not treated as a parallel form of accountability.

• Ensure transparency and protection: procedures for imposing sanctions, especially on Ukrainian citizens, must be clear, and there must be effective legal safeguards.

Only then can we speak of fair and well-grounded criminal liability for sanction violations.

Bottom line

Sanctions are a vital tool—especially in times when Ukraine is fighting for its independence and security. But to make this tool effective and avoid harming our own citizens due to legal uncertainty, it must be rooted in clear, well-defined laws.