Seizing assets is easy, proving legality is not. Why Ukraine’s sanctions are vulnerable

There are reforms that stay constantly in the spotlight — judicial, anti-corruption, customs. And there is a reform that is almost invisible in public discussions, even though it will directly affect Ukraine’s ability to implement the EU’s common sanctions decisions and regulations.

This is the reform of sanctions policy.

Even within the 6 “External Relations” Cluster, officially opened in July, there is no separate milestone specifically on sanctions. At the same time, the EU’s joint position explicitly states: Ukrainian legislation is so far only partially aligned with developments in the field of restrictive measures and, by the time of accession, must comply with all EU sanctions regimes and the EU sanctions enforcement system.

For most citizens, sanctions policy becomes noticeable mainly when sanctions are applied to well-known politicians or businessmen. Then the discussion boils down to specific surnames. But sanctions policy is not only about imposing restrictions. After each decision, numerous important questions arise, including how sanctions are implemented, how they can be appealed, and whether there is liability for breaching restrictions. It is precisely on this that the question of whether Ukraine’s sanctions system meets European rules and is ready to operate under them after accession depends.

Ukraine needs sanctions. The problem is the rules.

For Ukraine, sanctions are not a formality but one of the key security instruments. They make it possible to restrict access to economic resources and reduce the influence of people who support Russian aggression or pose a threat to national security.

Moreover, Ukraine has a unique instrument — a sanction in the form of seizure of assets in favor of the state. It allows the state to confiscate the assets of individuals connected to support for the aggression, cleansing the Ukrainian economy of Russian capital and influence. Thanks to this instrument, it has been possible to seize assets from the fugitive president Yanukovych, Russian oligarchs, collaborators, propagandists and other accomplices of Russia.

Proceeds from the sale of seized assets are transferred to the Fund for the Elimination of the Consequences of Armed Aggression, to which billions of hryvnias have already been sent. In 2025 the Fund received 4,51 billion UAH.

The problem is not that Ukraine actively uses sanctions, but that over more than ten years a full-fledged set of rules around this instrument has not been built.

As a result, Ukraine’s sanctions system today has two opposite shortcomings at once: it gives the state too broad a discretion where legal safeguards are needed, and it remains insufficiently effective where real enforcement of sanctions is required.

A powerful instrument without adequate safeguards

The more sanctions interfere with property rights and a person’s economic activity, the clearer the grounds for their application, the decision-making procedure, and the means of protection must be. Ukraine still has problems with this.

The most telling examples are decisions regarding Ukrainian politicians. The imposition of sanctions on former president and opposition leader Petro Poroshenko caused not only great public resonance but also concern among human rights defenders. Likewise, the imposition of sanctions on the former head of the presidential office Andriy Bohdan raised questions. In both cases, the public did not receive a clear explanation of which specific facts were the basis for imposing the sanctions.

The problem is broader than the justification of particular sanctions. It lies in the fact that a sanctioned person is not even informed of the general grounds for their application. Moreover, getting sanctions reviewed is difficult. The law does not provide a separate administrative procedure for reviewing sanctions upon request by the sanctioned person. Judicial review was for years complicated by the position of the Grand Chamber of the Supreme Court in case No. 800/162/16, according to which the court’s powers to assess the grounds for imposing sanctions are limited. Under such conditions there is a risk of using sanctions not only as a security tool but also as a means of political pressure.

This is no longer just a matter of public debate. In the case “MSL LLC v. Ukraine” the European Court of Human Rights found a lack of sufficient procedural safeguards, individualized justification for sanctions and adequate judicial oversight.

At the same time, even despite the Grand Chamber’s clarified position, which took into account the ECtHR’s decision in that case, a systemic overhaul of the procedure has still not occurred: new decrees on imposing sanctions still do not contain even a brief statement of the factual grounds on which the decision is based.

As a result, a simple question arises: how can a person effectively defend themselves in court if they do not know which circumstances the state relied on as the basis for the sanctions?

Meanwhile, in the EU the grounds for imposing sanctions on a person are stated directly in the sanctions decisions, which makes it possible to understand the reasons for the restrictions and to challenge them.

The European approach does not mean weaker sanctions. On the contrary, a strong security instrument requires strong legal safeguards — clear grounds, proper justification, the possibility of review, and effective judicial control. This is what the Ukrainian system lacks today.

It is easier to impose sanctions than to enforce them.

Another problem of Ukraine’s sanctions system is weak infrastructure for their implementation. The state can quickly impose restrictions, but then questions arise: who controls their enforcement, what happens to frozen assets and what to do when sanctions violate the rights of third parties or halt business operations.

One example is the absence in Ukraine of a mechanism for licenses related to sanctions. In the EU, the competent authority may, in clearly defined cases — notably for humanitarian and medical needs or to pay for legal assistance — authorize transactions involving frozen assets if this does not contradict the purpose of the sanctions. Ukraine lacks such a systemic mechanism, so sanctions sometimes create problems not only for the sanctioned person but also for their business partners, employees or family members.

And in some cases the state itself suffers losses. For example, in 2023, after the suspension of special permits of companies in the Smart Energy group in connection with sanctions against Vadym Novynskyi, the operations of two gas production enterprises were halted. According to the group’s own estimate, by the end of June of that year the state had lost about 320 million UAH in taxes and nearly 40 million cubic meters of gas.

Another problem is the lack of full-fledged sanctions reporting. To control frozen assets and detect attempts to circumvent sanctions, the state must first know which assets are frozen, where they are and who owns them. In the EU sanctioned persons (and others) are required to notify competent authorities about frozen assets. Ukraine still does not have such a mechanism.

Moreover, despite more than ten years of the sanctions mechanism functioning, parliament still has not adopted legislation that criminalizes the violation of sanctions themselves. In 2024 the EU adopted Directive 2024/1226, which set common minimum rules for criminalizing breaches of and circumvention of sanctions. Member States were to transpose it by 20 May 2025. Ukraine is not an EU member yet, but the European Commission in its report for 2025 stated explicitly: circumvention of sanctions is still not a separate criminal offense, and Ukraine’s sanctions enforcement system needs to be further aligned with EU achievements. Bill No. 12406, adopted in principle as early as June 2025, has been awaiting its second reading for more than a year.

There is also an institutional problem: Ukraine has no single authority responsible for the practical implementation of sanctions policy. Instead, powers are scattered among various institutions, complicating coordination and control over sanctions enforcement.

Therefore, the problem of Ukraine’s sanctions policy is not only who and for what is sanctioned, but whether the state can make those sanctions actually effective, controllable and predictable.

Prepare the system before accession, not after it.

The absence of a separate sanctions benchmark does not mean the absence of requirements in this area. They follow from the very logic of membership: Ukraine must be ready not only to join the EU’s sanctions decisions but also to ensure their enforcement in accordance with European rules.

For this, Ukraine already needs to:

make the sanctions application procedure more transparent — provide clear grounds for their application and proper justification for sanctions decisions;

ensure effective mechanisms for appealing sanctions — a sanctioned person must have a real opportunity to challenge a decision before the competent authority and in an independent court;

introduce a licensing mechanism for sanctions so that in clearly defined cases unnecessary harm to third parties and businesses can be minimized without weakening the sanctions themselves;

create a full-fledged sanctions reporting system that will allow the state to see and control frozen assets;

establish effective liability for breaching and circumventing sanctions in line with European standards;

designate a single competent authority responsible for implementing sanctions — it should coordinate enforcement, issue sanctions licenses, receive reporting on frozen assets and monitor compliance with imposed restrictions.

The task is not to make sanctions weaker, but to make the system stronger: the state must react quickly to threats, while at the same time explaining its decisions, controlling their execution and ensuring compliance with the established rules. The absence of a separate sanctions benchmark does not exempt Ukraine from this task: by the day of accession the sanctions system must be ready to work under the same rules as in the EU.