The IBA’s response to the war in Ukraine
Game changer in the Ukrainian law enforcement system
For a long time, there were several inspection authorities in Ukraine for financial crimes investigations; namely, the Security Service of Ukraine, the tax police, and the national police. Lately, this finally has been changed by the adoption of the Law of Ukraine ‘On the Bureau of Economic Security of Ukraine’ (hereinafter ‘the Law’) in March 2021. This process was accelerated due to Ukraine’s international obligations. Pursuant to the provisions of the Memorandum of Economic and Financial Policies with the International Monetary Fund (IMF) and the Memorandum of Understanding with the European Union, Ukraine was supposed to launch the newly created institution authorised to fight economic crimes.
Finally, the Law was signed and soon Ukraine will face important changes. First, the Bureau of Economic Security of Ukraine (hereinafter ‘the Bureau’) must not only meet European standards but also should be adapted to Ukrainian realities. The main tasks of the Bureau will be to investigate, terminate, disseminate, detect and prevent criminal offences of an economic nature. Provisions of the Law stipulate the elimination of the tax police, the deprivation of the Security Service of Ukraine of its powers to investigate corruption crimes and organised criminal activity in the economic sphere. This will positively affect the business by protecting it from various enforcement agencies with duplicated activities. The main feature of the new body is a strong analytical component which should lean to the great increase in crime prevention. In the course of its activities, the Bureau will use the system of risks and threats. The risk criteria used in the risk-oriented approach shall be divided into criteria related to the offender, the nature and type of wrongdoing, sectoral characteristics of systemic criminal phenomena, financial losses of the state from the optimisation of tax payments, and so on.
It is planned that the Bureau will become fully operational in September 2021. The business community in Ukraine now is a witness to the process of selection of the director, detectives and officers of the Bureau. After an open competition, the Cabinet of Ministers will appoint the Director of the Bureau for the term of five years. It is expected that the maximum number of employees of the central office and territorial offices of the Bureau shall be not more than 4,000 people.
It is important to emphasise that the establishment of the Bureau is a revolutionary game changer in the Ukrainian law enforcement system and it will have a great impact on the investigation of economic crimes and decrease the criminogenic situation. Hopefully, such a long-awaited introduction of the new body will reduce the tax burden on taxpayers and help Ukrainian businesses to avoid excessive pressure from numerous unbiased inspections of tax authorities.
It is expected that, from the beginning, the work of the Bureau, in the field of formation and use of financial resources of the state and its economic security, will be more effective. As a result, there will be a decrease in shadow business in Ukraine, an increase in revenues, and an optimisation reduction approach of the total number of employees who oppose financial crime.