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Humanization of financial crimes in Ukraine or unlimited fines

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Since the 18th of January 2012 majority of financial crimes will result in fines rather than imprisonment and other criminal penalties. Such liberalization of liability is provided by the Law “On amendments to some legal acts of Ukraine related to humanization of liability in the field of commercial activities”. We prepared a legal advice on the issue.

On the one hand the Law is really humane. A number of financial crimes have been decriminalized or in other words “transferred” from “rank” of crime to administrative offenses. Other crimes have been significantly “humanized” meaning that penalty for committing them has been reduced to the level of fines. But on the other hand the size of the penalty for financial crimes and offences will not be limited by the exact number which allows to speak about increase rather than decrease of liability.

First of all it applies to revocation of criminal liability for goods smuggling in large amounts (amount greater than 536500 UAH). Previously this crime could result in imprisonment for 3 to 7 years with confiscation of smuggled goods. From now on it is “only” a fine. But what a fine it is! Its amount equals to 100% of smuggled goods or vehicles cost. At the same time the smuggled goods and vehicles used for their transportation are confiscated.

Thus, from now on there is neither maximal nor minimal amount of fine. When importing/exporting smuggled goods in the amount of 1 million UAH be so kind to pay 1 million UAH of fine, 20 million – 20 million of fine! This applies not only to smuggling in large amounts but also to any transfer of goods over the border outside of customs control or by avoiding such. So if previously smuggling of goods in the amount of 200000 UAH could result in 8500 – 17000 UAH of fine “plus” confiscation, from now on it is 200000 UAH of fine “plus” confiscation.

As for other “humanized” crimes the upper limit for fines was actually set. It equals to 50000 of untaxed minimum incomes (850000 UAH). But if required this limit can be increased!

Since according to new version of Article 53 of the Criminal Code of Ukraine when committing a crime which results in fine in the amount of more than 3000 untaxed minimum incomes the amount of fine ruled by a court cannot be less than the amount of financial damage caused by the crime itself or illegally obtained income. At the same time it does not depend on upper fine limit stipulated by an article (section of an article) of Special Part of the Criminal Code of Ukraine.

Requirement for defining of fine in the amount of financial damages raises questions about unit of these damages (incomes) calculation. Since when qualifying crimes (defining damages) an untaxed minimum income is used which equals to 50% of social tax exemption (as of now – 536,5 UAH) and when applying penalties an untaxed minimum income is used as it is (17 UAH). It is not yet clear how these two untaxed minimum incomes will correlate and whether there will be equality not only of names but of actual amounts.

If decided that legal equality is enough meaning that amount of damages measured in so called minimum incomes is equal to social tax exemption and amount of fines measured in untaxed minimum incomes (ones that equal 17 UAH), than it may turn out that one can pay off by a part of unlawfully gained income and stay free. And if sums are equal, the amount of liability will be equal to scope of the offence, just like in case with goods smuggling. And therefore it is not clear which money should be used by an offender in order to repay damages to a civil claimant and in case of his property confiscation – how the amount of fine should be repaid.

In missing payment of fines within one year (the maximal term of delay) will result in substitution of this type of penalty into more serious ones – community service or correctional works or even imprisonment. At the same time 1 day of imprisonment equals to 8 untaxed minimum incomes (136 UAH) but according to Section 5 of Article 53 of the Criminal Code in certain amounts. For example untimely payment of fine for a moderate crime results in imprisonment for 1 to 5 years, serious crime – 5-10 years and particularly serious crime – 10-12 years.

This material was prepared by experts of our law firm.


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