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Attempt Number Two

Date of publication: 16 May 2018

Dmytro Lazebnyi, Attorney at Law

Source: Dengi.ua

For the past year and a half Ukraine anticipates the emergence of a completely new authority, which will replace the tax police and will ensure the financial and economic security of the state.

In March 2017, the first attempt was made to ‘rebrand’ the tax police, which was embodied in the government draft law on the Financial Intelligence Service. However, the draft law did not find support neither with business circles and the law enforcement agencies, nor with the Parliament and the President.

In early March 2018, a new wave of legislative initiatives took place – three draft laws were registered at once: No. 8157, introduced by the Chairwoman of the parliamentary committee on tax and customs policy Nina Yuzhanina “On the National Bureau of Financial Security of Ukraine” (NBFS); No. 8157-1, introduced by the People’s Deputy of Ukraine Andrii Zhurzhii with the same name; № 8157-2, introduced by the People’s Deputy of Ukraine Tetiana Ostrikova “On the Legal Principles of Organization and Activities of the Financial Police”.

But since Yuzhanina’s draft law was chosen by the President Poroshenko as having top priority, it had clearly more chances to become a meaningful law as compared to the alternative versions.

In addition to the investigative function the draft law No. 8157 also envisages the analytical function of the NBFS, i.e. grants the right to conduct a pre-trial investigation based on the so-called ILP-model (Intelligence Led Policing). Moreover, this function will be the major one, as the NBFS will perform information retrieval and analytical work to identify and eliminate the causes and conditions of economic crimes.

Moreover, the NBFS employees will get broad mandate to access great variety of registers and databases. This will definitely facilitate operational analysis of information and decision-making. Yet it is very important that the relevant mechanism is adjusted in accordance with the provisions of the legislation currently in force.

The draft law also proposes to institute a body responsible for the pre-investigation review of the facts indicated in the crime complaint (for those crimes falling within the scope of the bureau’s competence). However, the investigator or prosecutor is still required to register the crime complaint, yet after receiving the analytical report of the appropriate NBFS body only. In my opinion, this proposal is quite controversial and is unlikely to be implemented in the form proposed. But the attempt to shift the emphasis from investigative actions to the analysis of pre-existing situation proves to be successful. And the introduction of such mechanism will significantly reduce the pressure on business.

Despite the fact that the selection of candidates for positions in the NBFS will be competitive, the issue of former employees remains unresolved. It is obvious that the new law enforcement body should be formed out of new specialists having no relation to the old tax police. And the personnel selection should be as transparent as possible.

The provision to NBFS of the exclusive powers to investigate economic crimes (crimes detrimental to public finances) sounds positive. The European experience of operation of such bodies demonstrates that the most effective way is to create one transparent investigative structure with clearly defined investigative powers. The functioning of two or more structures with identical functions may greatly complicate the fight against economic crimes.

However, the draft law needs to be substantially revised with respect to accountability of the new body. The lack of general public’s participation in the control over NBFS’s activities will probably contribute to its “manual control”.

In general, it’s difficult to predict what the new law enforcement agency called the National Bureau of Financial Security of Ukraine will be like. It is not unlikely that the final version of the draft law put on vote will be substantially revised and amended.

The greatest risk that might be faced during the formation of a new investigative body is that this body will be inefficient and not able to fully resolve the issues falling within its competence. Or that its employees will get excessive powers which will untie their hands for abuse and undue pressure on business.