White-Collar Crime in Ukraine

A large number of entrepreneurs have suffered devastating losses since February 2022 and, consequently, have been forced to cease their operations. However, that part of the Ukrainian business sector that has managed to continue its work in challenging conditions is not only engaged in self-preservation, but also continues its development, adapting to daily realities.

Unfortunately, in addition to the decline in foreign investment, restrictions on foreign economic activity and military operations, the daily realities of Ukrainian entrepreneurs have been compounded by a significant increase in pressure exerted on their activities by law-enforcement and government officials through searches, seizure of primary documentation, computer equipment and accounts, as well as endless summonses of employees for interrogation, etc.

Despite numerous attempts to address the issue of criminal and legal risks for business at state level (through laws like “Stop Mask Show”, the Entrepreneurs Council at the Presidential Office, a moratorium on inspections as a temporary solution), the trend in rising volumes of criminal investigations of businesses carried out by the State Bureau of Investigation, the National Police, the Security Service, the Prosecutor-General’s Office, etc. remains unchanged. At the same time, it is not uncommon for different law-enforcement agencies to conduct parallel investigations of criminal proceedings against the same company.

According to statistics released by the Prosecutor-General’s Office, a total of 170,552 criminal proceedings against businesses were registered in 2024.

Adaptation of Legislation and Political Challenges

With the introduction of martial law, Ukrainian legislation underwent significant transformation, including the addition of new articles to the Criminal Code of Ukraine that provide for criminal liability for crimes against the foundations of Ukraine’s national security and offences committed under martial law.

In addition to identifying and bringing to justice those who act to the detriment of our country under martial law, the innovations introduced to the Criminal Code of Ukraine have been “skillfully” used by some law-enforcement officials to increase pressure on business, but under more severe articles.

For example, the registration of criminal proceedings under Article 111-2 (aiding the aggressor state) or other similar articles formally provides the pre-trial investigation body with more arguments before the investigating judge to obtain a search warrant, seizure, or other measures to secure criminal proceedings regarding the property and assets of a particular company.

A high-risk direction is the conclusion of contracts under government orders, which currently relate to the defence, infrastructure, and general economic sectors. It is not uncommon for government orders to be executed directly in dangerous locations (especially the construction of infrastructure facilities and fortifications). Such agreements may later be exploited by unscrupulous competitors, with the involvement of law-enforcement agencies for criminal prosecution, as each signed contract provoked several criminal proceedings at once, within which the entire range of investigative actions is carried out. A common element of such pressure is the constant media coverage of the actions and positions of law-enforcement agencies, which can cause reputational damage to the company.

Nevertheless, government agencies continue to make efforts to enhance the protection guarantees for business entities during criminal proceedings. In particular, representatives of the Verkhovna Rada of Ukraine and business have jointly developed a separate draft bill and identified the most common problem situations that they encounter in practice when interacting with law-enforcement agencies. In this regard, leading business associations unanimously called for support for its adoption by the Verkhovna Rada of Ukraine.

The initiators of this draft bill position it as one that provides for amendments to the Criminal Procedure Code of Ukraine to strengthen guarantees of business protection during pre-trial investigation of criminal proceedings, including

• resolving the issue of unlawful determination of jurisdiction;
• elimination of the practice of “eternal” arrests;
• the possibility of video recording during searches,

Strengthening the Sanctions Policy

Sanctions imposed in connection with russian military aggression have created new challenges for Ukrainian businesses. Restrictions on trade, financial transactions, technology supply and access to foreign markets put Ukrainian companies in a difficult position. On the one hand, this requires the rapid reconfiguration of trade routes, the search for new partners, and adaptation to new working conditions. On the other hand, it raises questions about how businesses can survive and develop under the sanctions policy, and what state support mechanisms are available to entrepreneurs today.

Ukrainian businesses must consider the impact of sanctions and comply with the Law of Ukraine On Sanctions. Depending on the circumstances, personal or sectoral measures may be applied to restrict the rights or activities of individuals, organizations, states, as well as to influence specific sectors of the economy to achieve political, economic or security goals.

In turn, business representatives must constantly monitor the implementation of restrictive sanctions measures at both national and international levels to minimize risks to their operations and ensure compliance with all requirements that may affect their stability and development.

Accordingly, a business is committed to managing sanctions restrictions imposed by the UN Security Council, the U.S. Treasury’s Office of Foreign Assets Control, the U.S. Department of Commerce’s Bureau of Industry and Security, the U.S. Department of State, the European Union, Ukraine, the United Kingdom or any other country or organization whose decisions and acts are legally binding.

Companies acting in contravention of international principles and norms, such as facilitating the financing of terrorism, may not only be subject to sanctions, but also suffer from their negative consequences on the global international market.

Sanctions imposed in connection with military aggression have created new challenges for Ukrainian businesses. Restrictions on trade, financial transactions, technology supply and access to foreign markets put Ukrainian companies in a difficult position. On the one hand, this requires the rapid reconfiguration of trade routes, the search for new partners, and adaptation to new working conditions. On the other hand, it raises questions about how businesses can survive and develop under the sanctions policy, and what state support mechanisms are available to entrepreneurs today.

Ukrainian businesses must consider the impact of sanctions and comply with the Law of Ukraine On Sanctions. Depending on the circumstances, personal or sectoral measures may be applied to restrict the rights or activities of individuals, organizations, states, as well as to influence specific sectors of the economy to attain political, economic or security goals.

In turn, business representatives must constantly monitor the implementation of restrictive sanctions measures at both national and international levels to minimize risks to their operations and ensure compliance with all requirements that may affect their stability and development.

Accordingly, a business is committed to managing sanctions restrictions imposed by the Office of Foreign Assets Control (UNSC), the U.S. Office of Foreign Assets Control (OFAC), the U.S. Department of Commerce’s Bureau of Industry and Security (BIS), the U.S. Department of State, the European Union, Ukraine, the Kingdom of Great Britain or any other country or organization whose decisions and acts are legally binding.

Companies that act in contravention of international principles and norms, such as facilitating the financing of terrorism, may not only be subject to sanctions but also face negative consequences in the global market.

According to established practice, applying sanctions poses risks of imposing restrictions on the implementation of specific activities by companies, which can hinder the development of new areas and projects. The application of this type of restriction significantly affects the company’s competitiveness and reduces its stability in the market, for example, by cancelling the company’s existing licenses.

As a result of violations of sanctions legislation, top managers risk being held administratively and/or criminally liable. Such risks may include significant monetary fines, imprisonment, extradition, denial of listing, revocation of licenses, suspension of executives, as well as damage to reputation and business relationships.

The process of introducing criminal liability for violations of sanctions legislation is well under way. A list of actions that fall under the criminalization of types of sanctions evasion and make it possible to disguise a person who owns the company against whom sanctions have been applied or bring a company or its ultimate beneficial owner (against whom sanctions have been used in the form of asset blocking) to bankruptcy, is under consideration. At the same time, the concept of assets is expanded to include not only tangible resources but also other forms, such as intangible assets, cryptocurrencies, and precious metals, etc.

In general, the proposed rules complete the formation of the institution of sanctions enforcement in Ukraine and eliminate the situation where Ukraine demanded strict compliance with the sanctions regime from its partners without having any institutions for bringing them to justice in its own legislation. However, the proposed legislative changes raise concerns about possible abuses and unjustified restrictions on business rights.

Useful Recommendations

Increased risks require a systematic approach, based on their consideration in the context of protecting business interests. The formation of this concept is the most important and primary measure to guarantee effective and comprehensive further protection.

The main recommendations that will help to reduce the risks of blocking the company’s activities and withstand the procedural “wave of pressure” are as follows:

• regularly conduct legal and security due diligence of one’s own company and counterparties to determine whether they are subject to criminal proceedings, as well as whether they have founders, beneficiaries, or assets related to the aggressor state;
• conduct a financial audit and inventory;
• organize the storage of statutory and primary documents, the existence of their backup copies, and placement on remote servers;
• conclude a legal aid agreement with both the legal entity and key officials of the company.