Why sanctioned individuals benefit from asset disclosure and Kyiv lags behind

A study by the analytical center "Institute of Legislative Ideas" showed that one of the key elements of an effective sanctions system is reporting. Precisely because of this, the safest option for a sanctioned person is the opposite of concealment to disclose to the regulator information about all their assets.

Read more about why sanctioned individuals, who are used to hiding property, benefit from disclosure in the article by Andrii Klymosiuk and Oksana Huzii of the "Institute of Legislative Ideas": Transparency as a tool against sanctions evasion: the path taken by EU, US and UK.

The first reason why disclosure is beneficial is purely pragmatic. After sanctions in the form of asset freezing are imposed, a sanctioned person cannot freely use their own funds. This makes it impossible to support their family or pay for necessary medical or legal services, since any operations with assets are prohibited.

Pragmatic incentives alone would not be enough. That is why the United Kingdom and the EU introduced a self-reporting obligation, violation of which entails criminal liability.

In the United Kingdom, the self-reporting requirement was introduced in 2023 within the sanctions regime against Russia, and in 2024 against Belarus.

A sanctioned person must, within 10 weeks from the date of inclusion on the sanctions list, submit a report on any funds or economic resources they own, hold or control.

This concerns any assets if their value exceeds £10,000.

The sanctioned person must also immediately inform the competent authority of any changes in financial circumstances by submitting an updated report.

If the person is a UK resident, they must report all their assets worldwide. If not – only those located in the United Kingdom. Refusal to report without a valid reason or submission of false information entails criminal liability.

In the EU, Article 9 of Regulation 269/2014 already obliged sanctioned persons to report assets within the Union within six weeks. Directive 2024/1226 requires all member states to recognise intentional failure to report as a separate criminal offense.

If the value of undeclared assets exceeds €100,000, the maximum penalty must be at least one year of imprisonment.

Since EU directives establish only a minimum standard that member states may strengthen in their own legislation, some countries have introduced significantly harsher penalties.

Even if a sanctioned person decides not to list all their property in the report, hidden assets are highly likely to be identified anyway.

Ukraine’s Law "On Sanctions" currently does not provide for a self-reporting mechanism.

However, as a candidate country for EU membership, Ukraine is obliged to harmonise its legislation with EU law, including by introducing a full-fledged reporting system.

Ukraine’s sanctions system does not yet have such a tool, so its introduction should become a priority for the authorities.