21 October 2023

Resuming e-declaring during the war

Authors: Khalimon Zarina, Vladyslava Burbeza

Since the introduction of martial law in Ukraine in February 2022, the mandatory filing of electronic declarations by persons authorised to perform the state or local governance functions (the “declaration” and the “declarant”, respectively) was suspended. The primary reason for such a step was the untimeliness of declaring in view of active hostilities and the unfeasibility of collecting all documents necessary to complete the declarations. However, in 2023, in addition to being the topical issue for public discussions, resuming e-declaring for top officials became one of the IMF’s “structural benchmarks” (requirements) for providing Ukraine with financing.

After a lengthy procedure of approving and voting in the Verkhovna Rada, vetoing by the President of Ukraine and voting in a new version, the Law of Ukraine “On amendments to relevant laws of Ukraine on establishing the procedure for filing declaration by persons authorised to perform the state or local government functions under martial law” (“Law 3384-IX”) finally came into force on 12 October 2023. Law 3384-IX both resumed e-declaring and introduced additional amendments to the Law of Ukraine “On prevention of corruption” (the “Declaration Law”).

Timing for resuming e-declaring

With effect from 12 October 2023, the obligation to file declarations in accordance with the requirements of Article 45 of the Declaration Law (including filing the annual declaration for 2023 by 1 April 2024) is renewed.

Declarants who did not file declarations in accordance with the requirements of Article 45 of the Declaration Law in 2022-2023 (that is, any type of declaration envisaged by this article), which should have been filed by 12 October 2023, must file such declarations no later than 31 January 2024. For example, declarants who did not file their annual declarations for 2021 and 2022 by 1 April 2022 and 1 April 2023, respectively, must file such declarations by 31 January 2024. At the same time, Law 3384-IX establishes other deadlines for filing declarations by certain groups of military personnel and other persons – no later than 90 calendar days after the change of the conditions that give the right to deferral of e-declaring (the end of martial law, dismissal from service, departure from the occupied territories, combat zones or other grounds specified in parts 7-14 of Article 45 of the Declaration Law).

If declarants filed declarations at their initiative from 24 February 2022 to 11 October 2023 inclusive, such declarations qualify as accepted, and there is no need to re-file them again after 12 October 2023. At the same time, such declarants, if necessary, have the right to make corrections to already submitted declarations. For this purpose, declarants should apply to the National Agency for Corruption Prevention (the “NACP”) in any form no later than 25 October 2023 for filing amended declarations for the relevant reporting period, and the NACP must allow such persons to file amended declarations within 30 calendar days by notifying the declarants to that effect through their electronic cabinet.

Timing for filing notifications

Law 3384-IX stipulates that with effect from 12 October 2023, declarants again have an obligation to give notifications on opening of currency accounts and notifications on significant changes in in financial position in accordance with the requirements of Article 52 of the Declarations Law. However, unlike the declarations for 2022-2023, Law 3384-IX exempts declarants from the obligation to file notifications where the reasons for their filing arose during martial law before 12 October 2023.

The deadline for filing a notification on opening a currency account by a declarant or a member of the declarant’s family in a non-resident bank is extended from 10 to 20 days from the date of opening such an account.

The cap value of a transaction that requires filing a notification on significant changes in financial position is UAH 134,200,00 in 2023 and UAH 151,400.00 in 2024, respectively (according to the draft budget of Ukraine for 2024).

Resuming access to the register of declarations

Law 3384-IX provides for public access to the data of the Unified State Register of declarations of persons authorised to perform state or local government functions (the “Declarations Register”), save for declarations of certain categories of declarants, such as military personnel. According to public sources, the NACP plans to open public access to the Declarations Register on 10 December 2023.

Filing amended declarations

The changes also affected the mechanism and deadline for making corrections to submitted declarations if the declarant discovered mistakes by him-/herself. The provision limiting the possibility of filing a corrected declaration 3 times was removed from part 4 of Article 45 of the Declaration Law. Consequently, the said article can now be interpreted as allowing a declarant to file an amended declaration only once. The timing for filing an amended declaration was extended from 7 to 30 days. However, where an individual is prosecuted for failing to file the declaration or where false data are found, the amended declaration must be filed within 10 days.

In addition, part 4 of Article 45 of the Declaration Law was amended to include paragraph 3 prescribing that if the declarants themselves identify inaccurate data in the declaration after the expiry of the period for filing an amended declaration but before the NACP begins a full audit of this declaration, the declarant may apply to the NACP with a letter explaining the reasons causing the entry of the inaccurate data and a failure to file an amended declaration within the specified period, including the supporting documents. The NACP must study the information submitted by the declarant in such an event during the full verification of this declaration.

Some changes in the declaring

for disclosure of information in the declaration, the declarant’s family members other than his/her spouse or minor children are persons who lived together with the declarant as of the most recent day of the reporting period (provided that they lived together with the declarant for 30 calendar days preceding the most recent day of the reporting period) or for a total of at least 183 days during the year preceding the year of filing the declaration;
a real estate object owned by a Member of Parliament of Ukraine under the lease or other right of use is not subject to declaring if the costs of its lease (rent) are to be reimbursed to the Member of Parliament in accordance with the law and provided that the area of such real estate does not exceed 75 square meters;
personal protective equipment, drones and their equivalent with parts, individual surveillance and reconnaissance equipment, optoelectronic systems and firearms with parts, which are provided to military personnel during martial law, are not subject to declaring;
alimony, as well as social benefits and subsidies, if paid in cash, are added to the income subject to declaring;
income in the form of funds received as reimbursement or coverage of business trip expenses is not subject to a declaration if such reimbursement or coverage is made at the expense of the state or local budget, funds of international intergovernmental organisations, international technical assistance, as well as funds of the organiser (co-organiser) of the event to be attended by the person on a business trip;
repayable financial assistance provided to third parties and funds that have not been paid by third parties and are due in accordance with the terms of the transaction or court decision are subject to declaring (unless the aggregate value of all monetary assets of the declarant does not exceed 50 subsistence minimums);
the requirement to include information on the types and numbers of the declarant’s bank accounts in the declaration has been removed;
data on the object of declaration owned or used by the declarant or their family members shall be indicated in the declaration if such object was owned or used as of the last day of the reporting period (provided that the right of ownership or use arose with the declarant at least 30 calendar days before the last day of the reporting period) or for at least half of the days during the reporting period;
the declaration does not contain information on the objects of declaration that belong to the declarant or their family members on the right of private ownership, including joint ownership if such objects are recognised as destroyed as a result of hostilities, terrorist acts, sabotage caused by the armed aggression of the russian federation against Ukraine;
information about the objects of the declaration is considered to be indicated in the declaration if they are reflected in at least one section of the declaration. In this case, the failure to include information in other sections of the declaration is not considered to be the submission of knowingly false information or failure to submit such information. This will definitely make life easier for declarants who unintentionally did not include information in a certain section of the declaration if it should have been included in several sections. But it is worth noting that this change may also be the basis for manipulation by the declarant.

Full verification of declarations

Law 3384-IX stipulates that during the full verification of declarations, the NACP may not verify the grounds for acquiring real estate and transport vehicles acquired by the declarant or a member of his/her family before the declarant became obliged to file declarations.

In addition, the information in the declaration that has already been subject to the NACP’s verification and the results of which revealed no violations may no longer be subject to re-verification. Thus, if, after a “positive” verification of the declaration, the NACP receives additional information (e.g., in connection with obtaining access to the declarant’s bank secrecy under a court order or access to a foreign register) that may indicate that false information was entered in such declaration, the NAPC will not be entitled to initiate a re-verification of the respective information in the declaration that has already been verified and to which the NACP had no comments.

Changes to the list of declarants

The Declaration Law was amended to include a clear definition of officials of public-law legal entities (the “public entities”), namely the chairperson and a member of the supervisory board, board of directors, executive body, termination commission (reorganisation commission, liquidation commission), liquidator, manager, deputy manager, chief accountant, corporate secretary of such public entity, as well as a person exercising the powers of the sole executive body and their deputies, chairperson and members of other management bodies of the public entity (other than advisory), where creating such a body is required by the law or the public entity’s charter. By including this definition, the list of the public entity’s declarants was narrowed to its top officials only, excluding any other persons who may be defined as officials by law or by the public entity’s internal documents (including heads of structural units). According to the NAPC, the number of declarants has decreased by about 50 thousand.

Increase of the cap value of permitted gifts

The Declaration Law prohibits the declarants from, directly or through other persons, demanding, requesting, or receiving gifts for themselves or their close persons from other persons in connection with the performance of the duties related to the declarant’s functions or if the gift giver is subordinate to the declarant. At the same time, part 2 of Article 23 of the Declaration Law establishes an exception to this rule regarding gifts that meet the generally accepted concept of hospitality for a certain value. The changes introduced by Law 3384-IX increase the maximum value of such permitted gifts from 1 to 2 living wages for able-bodied persons (the “subsistence minimum”) (UAH 5,368.00 in 2023), and the aggregate value of such gifts received from one person (a group of persons) during a year should not exceed 4 subsistence minimums (UAH 10,736.00 in 2023) (while earlier cap was 2 subsistence minimums).

Draft law No. 9587-д

On 5 September 2023, the Verkhovna Rada also adopted another draft law in the field of e-declarations – Law No. 9587-д “On amendments to the Code of Ukraine on Administrative Offenses and other laws of Ukraine on improving the procedure for bringing to responsibility of persons authorised to perform state or local governance functions” (“Draft Law No. 9587-д”), which amends the procedure for recording offences related to late submission of declarations or entering inaccurate information therein, the procedure for considering cases of such offences, as well as to the provisions governing liability for the same. On 12 September 2023, Draft Law No. 9587-д was submitted to the President of Ukraine for signature. However, as of the date of this publication, Draft Law No. 9587-д has not yet been signed and has not entered into force.

The key changes proposed by the Draft Law No. 9587-д are described below.

Automatic recording of violations

It is envisaged that the Declarations Register will automatically record the late submission of declarations. At the same time, no protocol on the commission of an administrative offence will be drawn up.

The procedure for adopting a resolution on an administrative offence has been updated

Liability for late submission of declarations is provided for in Article 172-6 of the Code of Administrative Offenses (the “Administrative Code”). Draft Law No. 9587-д proposes to provide for consideration of such cases by the NACP. As a reminder, local courts currently consider such cases with the mandatory participation of the prosecuted person and the prosecutor.

It is envisaged that at least 72 hours before the start of the hearing, the offender will be notified via the electronic account of the date and time of the hearing. From this point on, the declarant must report the existence of valid reasons for the late submission of the declaration and provide documents that, in his or her opinion, should be considered during the review.

At the same time, a resolution on the commission of an offence may be adopted without the participation of the declarant if he or she has been notified of such consideration. Administrative penalties on behalf of the NACP may be imposed by its Head, Deputy Head and other officials authorised by the Head.

Within three business days, the resolution shall be sent to the declarant and deemed delivered on the day it is received in the electronic account of the declarant. At the request of the declarant, the resolution may be sent by mail.

The resolution may be appealed to a local court within 10 days from the date of its receipt in the electronic account.

List of valid reasons for failure to submit the declaration on time

Article 172-6 of the Administrative Code provides for liability only if the declarant missed the deadline for filing the declaration without valid reasons. Draft Law No. 9587-д proposes to develop an exhaustive list of such cases, namely:

detention, custody or serving a sentence;
restriction of freedom of movement as a result of a law or court decision;
force majeure circumstances (epidemics, military events, acts of God or other similar circumstances);
serious illness or stay in a health care facility due to treatment or pregnancy, provided that it is impossible to temporarily leave such facility;
technical malfunction of the official website of the National Agency on Corruption Prevention;
requesting information required for inclusion in the declaration.

Terms of storage of information in the Unified Register of Corrupt Officials

Draft Law No. 9587-д also amends the Declaration Law to provide for the following period of storage of information in the Unified State Register of persons having committed corruption or corruption-related offences (the “Unified Register of Corrupt Officials”):

1 year – information on bringing an individual to civil liability;
1 year – information on the imposition of an administrative penalty on an individual;
5 years – information on legal entities that have been subjected to criminal sanctions in connection with a corruption offence;
until the conviction is lifted or expunged – information on bringing an individual to criminal liability.

After the above terms expire, the data will be deleted. It is worth noting that according to Draft Law No. 9587-д, the Unified Register of Corrupt Officials will not contain information on late submission of declarations or knowingly false information. The register will likewise not contain information on disciplinary offences.

“Indulgence” for false information in the declaration subject to a fine payment

When considering Draft Law No. 9587-д in the session hall, the members of the Verkhovna Rada adopted amendment No. 25, which is intended to release declarants from liability for “discrepancies” in the declaration amounting to 100 to 500 subsistence minimums (currently, these range from UAH 268,400 to UAH 1,342,000), subject to payment of a fine ranging from UAH 17,000 to UAH 42,500).

Therefore, if a declarant fails to declare property or assets worth up to UAH 1,342,000 and pays a fine for such an offence, he or she is considered not to have been subjected to an administrative penalty.

The above amendment has provoked opposition from the public and the NACP, which calls on the President of Ukraine to veto Draft Law No. 9587-д. In addition, the NACP opposes the failure to include information on disciplinary sanctions related to corruption and the removal of information on persons brought to criminal liability from the register (as such data will be removed after the conviction is lifted or expunged).