Assessment of the criminalization of commodity smuggling in Ukraine in the context of European integration

CASE Ukraine’s legal expert Andriy Savarets participated in the discussion, which was moderated by CASE Ukraine’s Executive Director, Dmytro Boyarchuk.

We are publishing the key points of the speakers’ reports.

• Since 2012, criminal liability for smuggling has been abolished in Ukraine. Law No. 3513-IX, which came into force on January 1, 2024, restored criminal liability for excisable goods, and on July 1, it was extended to other non-excisable goods.
• Ukrainian anti-smuggling legislation is generally in line with European standards based on the provisions of the EU Directive. France, Germany, and Poland provide severe penalties: high fines (e.g., up to EUR 10 million in Poland, depending on the daily rate) and significant prison terms of up to 10 years in severe cases.
• During the year of the new legislation, there were no “explosive” criminal proceedings for large-scale smuggling. According to the PGO Office, 47 criminal proceedings were registered in the first 9 months of 2024, and indictments were submitted to the court in only 7 cases.
• Based on the results of monitoring criminal proceedings regarding the smuggling of goods and excisable goods (Articles 201, 201-1, 201-3, 201-4 of the Criminal Code of Ukraine), only three verdicts were delivered in 2024 (first instance).
• The trend shows that even in the presence of harsh sanctions, judges, using the legal grounds provided for in Articles 69 and 75 of the CCU, commute the sentence to a more lenient one: imprisonment is replaced by a fine, or a suspended sentence is imposed.
• Judges avoid harsh sentences and are reluctant to impose real terms of imprisonment, which may be due to
  – insufficient quality of the collected evidence;
  – judges consider offenses to be insufficiently serious to impose actual imprisonment;
  – general trends in court practice in cases of economic crimes.
  In weak institutions, where punishment is not inevitable, criminal liability loses its meaning. Accordingly, corruption risks, failure to prove guilt, non-prosecution, and a sense of impunity increase, leading to further decline in the justice system.

What to do.

• The institutional capacity of the judiciary and law enforcement agencies needs to be strengthened;
• The existing penalties remain very harsh, and their application in practice does not show effectiveness, so a new conceptual approach to the penal system is needed;
• The functioning of law enforcement agencies and the socio-economic circumstances in which smuggling occurs need to be reviewed.
• The repressive method of combating smuggling is essential, but not the only one; it is impossible to counter smuggling with criminal penalties alone.