On March 28, the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine Regarding Improvement of Legislation in the Field of Subsoil Use” dated December 1, 2022 No. 2805-IX entered into force. This law creates new rules in the field of subsoil use and effectively restarts the industry in order to develop and attract investment.

Prior to this law, regulation in the field of subsoil use was complex, confusing and burdensome for businesses. This did not allow the industry to develop, and Ukraine – to provide the needs of the economy with its own mining of minerals. Thus, in 2019, only about 35% of over 9,000 industrially important mineral deposits were developed.

In order to obtain a special permit for the use of subsoil, the investor had to prepare dozens of documents, obtain impractical and burdensome approvals and permits.

Law No. 2805 corrects this situation and creates a transparent, convenient and understandable subsoil use system, in particular by cancelдing outdated and obsolete regulatory instruments, including:

A number of these regulatory instruments were considered at the meeting of the IWG on deregulation and recommended for cancellation – in particular, those that belong to the sphere of competence of the Ministry of Environment. When making the decision, the criteria for conformity of regulatory instruments with European and international obligations were taken into account. It was proposed to cancel 45% of regulatory instruments from the Ministry of Environment, and another 45% of instruments – licenses, permits, approvals – to be modernized or digitised.

The IWG on deregulation is headed by First Deputy Prime Minister – Minister of Economy of Ukraine Yulia Svyrydenko and Deputy Prime Minister – Minister of Digital Transformation Mykhailo Fedorov. The meetings are also attended by representatives of leading analytical centres, in particular the BRDO.

At the next meeting, the Interdepartmental Working Group on Deregulation (hereinafter referred to as the Working Group on Deregulation) reviewed and recommended the cancellation or modernization of a number of state regulatory instruments in the spheres of competence of the Ministries of Education, Culture and Information Policy, Youth and Sports, as well as State Cinema Agency (Derzhkino).

Among the listed institutions, Derzhkino is the leader in the number of outdated or irrelevant instruments of state regulation – the MWG on deregulation proposed to cancel 40% of such instruments. Next comes the Ministry of Education – 38% of instruments, but in the field of competence of the Ministry of Culture, it is recommended to cancel only 14% of instruments. The fact is that a large number of instruments of the Ministry of Culture and Information Policy relate to the protection of the cultural and historical heritage of the Ukrainian people, and therefore cannot be canceled.

Among the tools recommended for cancellation, in particular:

As for the current instruments of state regulation in the sphere of competence of the Ministry of Youth Sports, they will be modernized and optimized. All other instruments of Derzhkino, Ministry of Education, and Ministry of Culture that are not being canceled are also subject to optimization – they will be digitized or simplified.

The IWG on deregulation is headed by First Deputy Prime Minister – Minister of Economy of Ukraine Yulia Svyrydenko and Deputy Prime Minister – Minister of Digital Transformation Mykhailo Fedorov. The meetings are also attended by representatives of leading analytical centres, in particular BRDO.

Almost every Ukrainian has seen the “Work Abroad” ad with offers of mediation services for job search, in particular, in EU countries. Usually, the searcher had to pay the intermediary a certain amount of money in advance for such services – but there were no guarantees that the intermediary would really find him a job, and not steal the money and disappear.

According to statistics, in 2017, 12,400 Ukrainians went to work in Poland, although invitations for employment in this country were given to as many as 1.7 million of our citizens. Accordingly, the license issued by the Ministry of Economy to intermediary companies and international employment agencies, which was created to protect Ukrainians, does not actually work properly.

On March 20, 2023, the Parliament of Ukraine adopted the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine Regarding the Protection of the Rights of Labor Migrants and Combating Fraud in Employment Abroad”, which was sent to the President of Ukraine for signature.

The law removes the license for the business activity of mediation in employment abroad and replaces it with the “notifiable principle”. From now on, intermediary companies will only notify the Ministry of Economy that they plan to mediate employment abroad by submitting a declaration. At the same time, state bodies of control and supervision will retain the right to inspect such companies.

In addition, the provision of the mentioned Law creates additional mechanisms for the protection of Ukrainian job seekers:

Accordingly, the international employment market will be gradually legalized, which will help create a normal competitive environment and ensure transparent business operations. And this, in turn, will increase revenues to the state budget in the form of taxes and protect Ukrainians from paying money to fraudsters or unscrupulous businessmen.

Revoking the license for intermediary companies on the international labor market was one of the recommendations of the Interagency Working Group on the Issues of Accelerated Review of the Instruments of State Regulation of Economic Activity (MRG on Deregulation). The group is headed by First Deputy Prime Minister – Minister of Economy of Ukraine Yulia Svyrydenko and Deputy Prime Minister – Minister of Digital Transformation Mykhailo Fedorov. The meetings are also attended by representatives of leading analytical centres, in particular BRDO.

Purification of the regulatory field continues – the Government approved the draft of the Decree of the President of Ukraine on the repeal of some Decrees that previously introduced state regulatory instruments.

Canceled:

Today, these documents are outdated and only create an unnecessary administrative burden on both business and state authorities. The draft Decree of the President will cancel such instruments as the Certificate for rationalization proposals and the Permit for re-export of goods originating from other countries.

Thus, the approval of the draft Decree “On the recognition of certain decrees of the President of Ukraine as having lost their validity” will improve the state regulatory environment. The adopted draft of the Decree was developed in accordance with the recommendations of the Interdepartmental working group on the issues of accelerated review of the instruments of state regulation of economic activity (IWG on deregulation). The group is headed by First Deputy Prime Minister – Minister of Economy of Ukraine Yulia Svyrydenko and Deputy Prime Minister – Minister of Digital Transformation Mykhailo Fedorov. The meetings are also attended by representatives of leading analytical centres, in particular the BRDO.

State administration in the field of fisheries will be relaunched.

The Parliament of Ukraine adopted in the second reading the revolutionary draft law No. 7616, which will positively affect the development of the “fish business” in Ukraine.

The document was developed by specialists of the BRDO together with the State Agency of Reclamation and Fisheries of Ukraine, the Ministry of Agrarian Policy and Food of Ukraine and business representatives.

What does draft law No. 7616 change?

One of the main novelties of the draft law is the introduction of transparent procedures for the distribution of aquatic biological resources, the development of conditions for preventing monopoly in the fishing industry and attracting new business entities to the market.

The document also provides the following:

The law will increase revenue to local budgets, reduce business time spent on obtaining permit documents in electronic form, and reduce the administrative burden on employees of the State Fisheries Agency. As a result, the number of new users of aquatic biological resources will increase and the quality and diversity of the industry’s products will increase.

What is e-commerce, and why is it important?

Draft law No. 7616 should also finally introduce transparent electronic auctions for the right to industrial extraction of aquatic biological resources.

These auctions are an important component of the fisheries reform in Ukraine. They were approved by Government Resolution No. 1479 as of December 30, 2022.

Currently, 255 auctions have been held in the state electronic trading system Prozorro.Sales, and more than 170 contracts have been concluded with the winners of electronic auctions.

As a result, the state has already received UAH 106 million in 2023. This figure is ten times higher than in previous years. In particular, for the whole of 2022, only UAH 10.2 million was paid for the special use of aquatic biological resources.

Law No. 7616 will make it possible to consolidate such a mechanism for the realization of rights not only as an experimental project but will make auctions a solid basis for the work of the industry.

We are grateful to the MPs for their support of the important document, and we continue to work on the reform of the fishery industry of Ukraine.

The government canceled several outdated regulatory instruments in the sphere of competence of the Ministry of Economy of Ukraine.

The resolution of the CMU was developed in accordance with the recommendations of the IWG on deregulation. The work of the IWG is aimed at clearing the regulatory field in Ukraine of such permits, licenses, etc., which are no longer of practical importance, are not used or are used very limited.

Thanks to the document adopted today, Ukrainian entrepreneurs will no longer have to:

These are holograms on CDs, without which the retail sale of discs was prohibited.

Also, by its decision, the Government transferred the authority to issue a certificate of a representative in intellectual property matters (patent attorney) to the National Intellectual Property Authority (previously, this authority belonged to the Ministry of Economy).

The IWG on deregulation is headed by First Deputy Prime Minister – Minister of Economy of Ukraine Yulia Svyrydenko and Deputy Prime Minister – Minister of Digital Transformation Mykhailo Fedorov. The meetings are also attended by representatives of leading analytical centres, in particular the BRDO.

Draft Law #7198 creates a compensation mechanism for Ukrainians whose real estate was damaged or destroyed as a result of the Russian Federation’s military aggression against Ukraine. It will allow those who are currently homeless to receive assistance at the expense of the state budget of Ukraine. BRDO team participated in the development of the document.

It is important to note that this draft law is an intermediate link between providing the affected Ukrainians with housing and full compensation, which the Russian Federation must pay for all the damage caused to Ukraine and its citizens. After all, currently the Russian Federation does not pay reparations to Ukraine, and the budget of Ukraine cannot cover all the needs for the restoration of damaged or destroyed property. Those Ukrainians who decide to wait and not take advantage of the compensation that will be introduced by draft law #7198 will be able to receive funds after Ukraine’s victory from the reparations that will be paid by the Russian Federation.

Who will be able to receive compensation for destroyed and damaged housing?

The draft law is aimed at creating a legal basis for citizens to receive compensation for some types of real estate as quickly as possible, without waiting for the decisions of international courts regarding reparations from the Russian Federation, since such processes can drag on for years. At the same time, further distribution of compensation to other categories of persons or other types of immovable property is not excluded in case of financial possibility. Receiving compensation in accordance with the adopted law is a right, not a duty of a citizen.

It is important in the draft law that the funds allocated for compensation for damaged or destroyed housing will work for the economy of Ukraine. This will be possible due to the fact that Ukrainians who have lost and need housing will be able to use the certificate to obtain housing on the secondary market or to finance the construction of a new housing or separate building materials, or services by analogy with eSupport.

Currently, the Government is developing a special methodology, according to which the amount of compensation for destroyed housing will be calculated, as well as an algorithm for compensation for persons whose housing was damaged.

Read more about how you can get compensation for destroyed or damaged housing and what needs to be taken into account during the implementation of draft law 7198 in our previous news.

The interdepartmental working group on issues of accelerated review of instruments of state regulation of economic activity (IWG on deregulation) recommended canceling 49% of instruments of state regulation in the spheres of competence of the Ministry of Health and subordinate central executive bodies. Another 25% of tools (licenses, permits, approvals, etc.) are proposed to be modernised.

The corresponding decisions were made at the meeting of the IWG on deregulation, which is chaired by the First Deputy Prime Minister – Minister of Economy of Ukraine Yulia Svyrydenko and the Deputy Prime Minister – Minister of Digital Transformation Mykhailo Fedorov. The meetings are also attended by representatives of leading analytical centres, in particular BRDO.

What regulatory instruments are recommended for abolition?

A license to carry out economic activities for medical practice, a conclusion on the quality of the medicinal product, an annual periodical medical examination of drivers who carry out passenger and cargo transportation work, etc. are planned to be optimised.

This is the fourth meeting of the Interdepartmental Working Group. To remind, based on the results of the previous meetings, it is recommended:

Based on the results of the IWG decisions, legislative projects will be developed, which will undergo a general approval procedure by the Central Committees, including public discussions on the proposed changes.

The Committee on Economic Development of the Parliament of Ukraine recommended for consideration draft law No. 5837, which reboots the system of state control and introduces new principles of state inspections of businesses. BRDO participated in the development of the document.

State inspections have always been associated with corruption among Ukrainian entrepreneurs. After all, the existing state control system is mainly focused on detecting violations in business and applying sanctions in the form of fines. Year after year, every second inspection records a violation, but the number of violations, despite the applied fines, does not decrease. In addition, entrepreneurs appeal the imposition of fines in court in their favour. All this does not contribute to a real reduction of risks at enterprises, trust in regulatory bodies, and also creates an unnecessary burden on the judicial system of Ukraine.

The most important thing is that draft law No. 5837 proposes to rebuild the state control system into a service with an emphasis on a risk-oriented approach to business inspections. That is, the lower the degree of risk of the entity’s activity, the less often it will be inspected and the shorter the inspection period will be.

In particular, the bill proposes the following:

The inspection portal was developed by BRDO’s team in collaboration with the Government in 2017 and was fully operational in November 2022.

The adoption of draft law No. 5837 will be a powerful signal for Ukrainian entrepreneurs and international investors about the introduction of transparency and accountability in the processes of state inspection, will create prerequisites for the development of SMEs and the attraction of investments in Ukraine.

Therefore, we call on people’s deputies to support this extremely important document for Ukrainian entrepreneurs.

The Cabinet of Ministers of Ukraine canceled the need to obtain the approval of the State Reserve when the Ministry of Economy issues licenses for the import of raw cane sugar into Ukraine (within the tariff quota). The relevant decision within the framework of deregulation of the economy was adopted by the Government today.

Optimizing the issuance of this approval was considered by the Interdepartmental working group on deregulation headed by the First Deputy Prime Minister — Minister of Economy of Ukraine Yulia Svyrydenko and Deputy Prime Minister — Minister of Digital Transformation of Ukraine Mykhailo Fedorov.

“Reducing the regulatory burden on business is recognized as one of the key tasks of Ukraine’s economic security strategy. In order to create the most favorable conditions for the development of business and, accordingly, the economy, we must review the current instruments of state regulation and outdated instruments. And this work is carried out systematically and purposefully. Today, a decision was made to cancel one of these instruments, which does not correspond to the interests of the state, business, or society,” said Yuliya Svyrydenko.

To remind, the IWG was created by the Government’s decision on January 13, 2023 with the aim of simplifying the regulatory environment for business. The meetings are also attended by representatives of leading analytical centers, in particular BRDO. Based on the results of the IWG decisions, legislative projects will be developed, which will undergo a general approval procedure by the Central Committees, including public discussions on the proposed changes.

The government approved the State Anti-Corruption Program for 2023-2025, which was developed by the BRDO team.

The State Anti-Corruption Program (SAP) is a strategically important document for Ukraine, developed by the National Agency for the Prevention of Corruption (NACP) together with partners and public organizations for the implementation of the Anti-Corruption Strategy for 2021-2025.

The DAP is a step-by-step plan that includes more than 1,700 measures to reduce corruption and ensure integrity in 15 areas. Among these areas, in particular, are state regulation of the economy, judiciary, defense, law enforcement, customs and taxation, urban planning and land management, corporate management of state enterprises.

“Overcoming corruption is vital for Ukraine, given the colossal challenges in defence and post-war reconstruction. Today, society is determined more than ever to bring the fight against corruption to an end, so the successful implementation of the anti-corruption program should be an important step on this path,” said Oleksii Dorogan, CEO of BRDO.

Each of the planned SAP activities has its own performance indicator and executors, which will allow monitoring the implementation of the Program in real time. In the future, it is planned to develop a public online system that will help everyone monitor the progress of the implementation of the document by area.

The approved text of the SAP project will soon be available here: https://www.kmu.gov.ua/npasearch

To remind, last summer the Parliament adopted a draft law on the principles of state anti-corruption policy for 2020-2024, in the development of which BRDO also participated.

After the beginning of the full-scale Russian invasion of Ukraine, a number of state institutions hid some public information, in particular in the form of open data about their work, closed state registers and suspended information about their work.

The main justification for this was security considerations, although the analysis shows that this explanation is not suitable for all data and they were closed for other reasons. Such a policy significantly worsened the transparency of the work of state bodies and local self-government bodies, and citizens lost operational access to open data, which is of significant public interest.

Closedness of state registers and lack of access to socially important data leads to corruption, lack of accountability and responsibility and, most importantly, to loss of trust in key state institutions.

In the conditions of war, this has devastating consequences, because the war did not become an obstacle for corruption, and the closure of public information created the basis for its spread. Therefore, we have recently seen a number of anti-corruption investigations that expose the abuse of politicians and officials at the highest level.

Because of that, the investigation of corruption acts takes place contrary to the closure of data, through its sources of information, journalists. And total secrecy can create the impression in the society that these investigations are conducted in closed conditions, that corruption can be covered by both the Parliament and the leadership of the Government, since it is these authorities that influence the policies regarding access to data.

Public organizations and mass media have repeatedly written about the fact that there is a line between security issues and the accountability of state and local self-government bodies. After all, the war, like covid, became an opportunity for some politicians, officials, and judges to close data and block public control over their work. Only in certain and clearly defined cases can the restriction of access to information be justified during war.

Please note that open data is an effective component of countering the aggressor, an important factor that does not weaken, but, on the contrary, strengthens and strengthens the work of our bodies as organizational and management structures. It is thanks to open data that citizens can qualitatively analyze the situation in the country and communities, make operational changes in decision-making and increase the transparency, accountability and efficiency of state and local self-government bodies, even in conditions of martial law.

Access to open registries and databases for the private sector is critical from the point of view of checking the integrity of contractors, clients, partners and potential employees, and therefore – a guarantee of security and economic stability of both a specific company and the state as a whole. In addition, entrepreneurs have the opportunity to more actively participate in anti-corruption monitoring and control of government actions, as well as help with the implementation of the sanctions policy in the fight against the terrorist state.

Open data helps save taxpayers’ money, develop the business environment and prevent corruption. Therefore, a clear balance must be found between the issues of national security and defense and the issue of openness and accountability, which was also discussed at the international conference in Lugano.

Based on the above, the state should immediately restore:

declaration to control the income of politicians and officials and compare their standard of living with the funds received;

reporting for parties for received government funding;

completeness of information about the work of people’s deputies on the website of the VRU and about the activities of parliamentary committees;

restore access to the Unified register of legal entities and individual entrepreneurs and other registers of the Ministry of Justice of Ukraine, taking into account legal restrictions and justifying the impossibility of disclosure;

strengthen control over compliance with the Law “On Access to Public Information”, as a number of authorities and local self-government bodies abuse martial law and do not provide information to citizens;

restore access to that part of the information in the court register that was hidden in violation of the Law “On Access to Court Decisions”;

the register of seized assets administered by ARMA;

auctions on Prozorro and the publication of purchase agreements.

to start work on the release of public information by managers in the form of open data in accordance with Decree #835, and in the case of impossibility of releasing data, to release the results of the three-fold test with the justification of the impossibility of releasing data.

To remind, the RISE Ukraine coalition recently published an appeal regarding the need to fully open the Unified State Register of Legal Entities and Individuals. The closure of the EDR and exclusive access to it make it impossible to carry out anti-corruption activities, in particular, public control/monitoring of the reconstruction process in order to minimise abuses.

Signees of the statement:

CHESNO movement

Anti-Corruption Center

“Nashi Groshi”

Institute of Legislative Ideas

Anti-corruption headquarters

StateWatch

ZN.UA

Interdisciplinary Scientific and Educational Center for Combating Corruption (ACREC)

DEJURE Foundation

All-Ukrainian association “Automaidan”

“Glavkom”

Bihus.Info

LIGA.net

Sonia Koshkina, editor-in-chief of “Left Bank”

Ukrainska Pravda

Detector Media

Smart Media

Public control. Openness. Transparency. Accountability

Zaporizhzhia Center of Investigation

Nadiia Babynska-Virna, open data expert

Electronic democracy

Center for Political Studies

Integrity UA

Joint action center

All-Ukrainian public association “Institute of the Republic”

Active Community

YouControl

Public organization “Open Data Association”

Committee of Voters of Ukraine

Center for Economic Strategy

UNIC

Bureau of Social and Political Development

NGO “Center for Journalistic Investigations “Force of Truth”

Center for access to information

Institute of mass information

Coalition “Zaporizhia Council of Reforms”

Clarity Project and Clarity App

NGO “Public Holding “INFLUENCE GROUP”

GO “Automaidan Vinnytsia”

Anastasia Rudenko, editor-in-chief of the online publication “Rubryky”

NGO “Institute of a Successful City”

NGO “Eastern Variant”

BRDO

Investigative Journalism Agency “Fourth Power”

NGO “EkoZaporizhia”

GO “STAN”

Innovation Development Center

“Access to the Truth”

Human Rights Platform

Institute of Economic Research and Political Consultations

NGO “Zaporizhia Bicycle”

RISE Ukraine

Center for Political and Legal Reforms

Center for Local Government Studies

UPLAN public network of public law and administration

“Law and Democracy” Foundation

Odesa Institute of Social Technologies

NGO “Local Democracy Foundation”

NGO “Dnipro Center for Social Research”

NGO “Volyn Institute of Law”

Almost a third of the current instruments of state regulation in the fields of aviation, highways, transport safety, railways, communication, shipping, and tourism are proposed to be canceled or modernised.

The corresponding decision was made at the meeting of the IWG on deregulation, which is chaired by the First Deputy Prime Minister – Minister of Economy of Ukraine Yuliya Svyrydenko and Deputy Prime Minister – Minister of Digital Transformation of Ukraine Mykhailo Fedorov.

The meetings are also attended by representatives of leading analytical centers, in particular BRDO. Based on the results of the IWG decisions, legislative acts will be developed, which will undergo a general approval procedure by the central executive bodies, including public discussions on the proposed changes.

At the last meeting of the IWG, 153 instruments of state regulation under the competence of the Ministry of Infrastructure and central executive bodies subordinated to the ministry were analysed.

Thus, 49% of the analysed current instruments relate to the aviation industry, 26% to shipping, and 16% to transport safety.

Based on the results of the review, it is recommended to cancel the authorization documents, such as:

The following instruments of state regulation are planned to be optimized:

We will remind you that earlier the IWG considered and formulated proposals for the cancellation or optimisation of more than 70% of state regulatory instruments from the sphere of competence of the Ministry of Economy and more than 80% of the Ministry of Environmental Protection and Natural Resources.

The destruction wrought by the Kremlin’s illegal and barbaric war in Ukraine is senseless and will require hundreds of billions of dollars of reconstruction.

Conferences, such as the one held in Lugano in July 2022, commit to supporting Ukraine’s reconstruction process and ambitions; the G7 has repeatedly affirmed its support for Ukraine’s “repair, recovery and reconstruction,” seeking to coordinate international partners and international organizations and financial institutions; international private sector investors have started to sift for opportunities; and Ukrainian civil society organizations, notably the RISE Ukraine coalition, are undertaking tireless work to make “the reconstruction a model of integrity, sustainability and efficiency.” 

Ukraine’s focus on corruption – combining an energetic and expansive civil society and the development of key government capabilities, including the National Anti-Corruption Bureau of Ukraine (NABU), the Specialized Anti-Corruption Prosecutor’s Office (SAPO), and the High Anti-Corruption Court – has gathered momentum since the 2013-2014 EuroMaidan Revolution.

And with good cause.

Ukraine’s corruption challenges have been well documented, and the country has faced a years-long challenge to reverse the tide of corruption across society. The recent ousting of top government officials for alleged corruption suggests there is no room for complacency.

The lessons of the last eight years are proving critical in formulating a reconstruction process that has integrity, sustainability, and efficiency.  

For example, a recent proposal from RISE Ukraine on the “Institutional Architecture of Ukraine’s Recovery” includes 10 principles for reconstruction, including a zero tolerance for corruption.

Throughout the current discussions on reconstruction integrity, an important focus has rightly been placed on such a “zero tolerance” for corruption, an ambition that is advanced via a range of initiatives aimed at securing the “first line of defense.”

Core to these initiatives is the use of technology. Ukraine has a strong tradition of leveraging technology to bring simplicity and transparency to government services, such as the DIIA portal that brings together Ukrainian citizens’ digital documents via one app as part of a drive to digitize the country.

Other such initiatives relevant to the reconstruction process include ProZorro, a “fully online public procurement platform and a collaboration environment that ensures open access to public procurement (tenders) in Ukraine,” and the Electronic Reconstruction Management System (ERMS).

While these systems should indeed support the transparency of the reconstruction process, they will also importantly gather valuable information for those seeking to monitor the integrity of the implementation of related projects and their associated payments.  

As RISE Ukraine notes, the use of electronic systems should ensure that “All stages of the (reconstruction) cycle should be open for public participation, public control and international supervision.”

 

Preparing the second line of defense

An important group of beneficiaries of this transparency includes those operating in the financial system – both banks and other private sector actors, along with those from government, such as the Ukrainian Financial Intelligence Unit (FIU, known as the State Financial Monitoring Service), and supervisors of regulated sectors charged with policing the financial system against money laundering.

Money laundering is the process by which the proceeds of crime, be they from drug trafficking, fraud, or corruption, are washed through the financial system in order to disguise their origin, rendering the money indistinguishable from genuinely earned wealth.  

Once cleaned, the money can be reinvested in criminal activities or enjoyed on luxuries like mansions, yachts, or extravagant holidays, often far beyond the reach of law enforcement in the affected origin country.

There is a global system for combating money laundering designed and monitored by the Financial Action Task Force (FATF), a multilateral watchdog that conducts reviews of countries approximately every 10 years. 

Ukraine was last reviewed in 2017, and the resulting report included some positive messages. Ukraine was judged to have a reasonably good understanding of its money laundering risks, and its FIU was well regarded. 

But corruption was assessed by the FATF to pose an “overarching money laundering (ML) risk in Ukraine,” generating “substantial amounts of criminal proceeds and seriously undermin(ing) the effective functioning of certain state institutions and the criminal justice system.” Critically, the FATF noted that the “law enforcement focus to target corruption-related (money laundering) is only at its inception.”

And herein lies Ukraine’s challenge in the years ahead. As the community gathered by the G7 begins to provide the flow of funds needed to rebuild Ukraine, not only must the procurement process itself be secure, but the country’s financial system – from both the public and private sectors – must also remain alert to detect, report, and disrupt financial activity related to reconstruction corruption. 

It is this mission to bolster the second line of defense that the Centre for Financial Crime & Security Studies (CFCS) at RUSI and the Better Regulation Delivery Office (BRDO) will seek to advance in 2023 via our project on Supervising and Monitoring Ukraine’s Reconstruction Funds, which specifically aims to empower Ukraine’s civil society as part of this “second line of defense” by providing the necessary expertise and tools to enhance the financial monitoring capabilities of Ukraine’s reconstruction funds.

But how might this be done?

The key will lie in the focus placed on technology and transparency in the reconstruction management process. 

Money laundering thrives on the opaque nature of the financial system. Company ownership is too often hidden; sources of wealth can be too easily obfuscated; and financial flows can all too readily (and swiftly) be routed between banks and across borders beyond the reach of the authorities – if they ever realize that illicit financial activity is under way. 

All these vulnerabilities can be tackled via the introduction of transparency and the promotion of information sharing, reversing the advantages on which criminals and the corrupt thrive. 

Ensuring that the transparency and information gathering of Ukrainian reconstruction’s first line of defense is not only harnessed for the reconstruction process itself, but is also leveraged by those charged with ensuring the integrity of the financial system, will be key to limiting the criminal ambitions of those seeking to abuse the enormous planned financial activity to advance their own corrupt agendas by stealing from the Ukrainian people.

Authors: Tom Keatinge and Oleksii Dorogan

Published in The Kyiv Independent

On Tuesday, February 21, a general meeting of members of the RISE Ukraine Coalition was held. Representatives of organizations that are part of the Coalition discussed the results of work as of February and plans for three key areas of activity, and also elected the Coalition Board.

The meeting focused on the following topics: the institutional architecture of reconstruction, the Electronic Reconstruction Management System (ERMS), as well as monitoring and open data.

Regarding the results of the first strand, last year the RISE Coalition offered its Discussion paper on the institutional architecture of recovery. RISE representatives also covered this issue at the International Anti-Corruption Conference in Washington and in meetings with international partners (WB, IMF, US Department, USAID, NED, OSF, GMF, think tanks).

Currently, one of the directions of the Coalition’s work is coordination with the newly created Recovery Agency. Recently, the Coalition held a meeting with representatives of the Agency, during which they discussed the directions and principles of the institution’s activities, as well as the Agency’s cooperation with civil society. The participants of the meeting emphasised that the task of standardisation and use of transparent procedures and best practices in reconstruction is largely solved by the Electronic Recovery Management System (ERMS).

Yurii Romashko, Institute of Analysis and Advocacy

Achievements and plans in the direction of the ERMS also became one of the key topics at the meetings of the Coalition members. In particular, the following updates were discussed:

Oleksii Dorogan, BRDO

Monitoring and open data is another important area of the Coalition’s work. The participants of the event emphasized that the monitoring of reconstruction should cover not only the monitoring of purchases. In addition, this process should be standardized and not take place in a “paper request – paper response” format. Therefore, the standard of monitoring activities and frameworks, as well as public engagement tools, should be adopted. The experience of DOZORRO can help with these tasks, and individual teams of the Coalition are already working on similar tools, including the Big Recovery Portal and others.

Ivan Lakhtionov, DOZORRO

In addition, during the meeting, the policies and procedures of the Coalition were approved, and the Board was elected.

Andrii Klymenko, CHESNO
Martyna Bohuslavets, Institute of Legislative Ideas

Viktor Nestulia, co-founder of the Coalition, head of the direction of supporting Ukraine in the Open Contracting Partnership, was elected as the Chairman of the Board. Viktor emphasized: “We are moving in the right direction, in half a year the Coalition managed to achieve significant progress in specific tasks. However, this is only the beginning and there are still many challenges ahead. Therefore, it is very important that the members of the Coalition are actively involved in the work and everyone makes their contribution to the successful reconstruction. A clear definition of procedures and policies will allow the Coalition to work more effectively and fulfill its tasks.”

Viktor Nestulia, Chairman of the Board of RISE Ukraine, Open Contracting Partnership

Composition of the Board of the RISE Ukraine Coalition: