Important Draft Laws. Issue 27: Reforming the Accounting Chamber and Establishing Banks for Financial Inclusion

During this period, 43 bills were registered, with three initiated by the Cabinet of Ministers and the rest proposed by MPs. Among the important initiatives are the updated law on reforming the Accounting Chamber, the creation of financial inclusion banks that would provide services in hard-to-reach areas, and new rules for entering plea agreements in corruption cases. Lawmakers also addressed military-related issues, particularly initiatives that grant protection to military whistleblowers of corruption and simplify the decommissioning of drones and electronic warfare systems lost during combat.

Creating financial inclusion banks

Bill 12044 introduces a new type of financial institution — the financial inclusion bank. Postal operators would be able to become such banks, gaining the ability to provide banking services directly at post offices. This would simplify access to financial services in remote and frontline regions. Additionally, banking services could be provided at home, which is crucial for individuals with limited mobility.

Financial inclusion banks would offer services only to individuals and small businesses with a net income of up to €2 million per year, as well as state and local government bodies. They would operate under a special limited license issued by the National Bank of Ukraine (NBU). Institutions seeking the status of a financial inclusion bank must submit registration documents, information on the reputation of their ultimate beneficiaries, and a receipt of payment for the license fee to the NBU. In addition, they must submit a three-year strategy and business plan that outlines the development of financial inclusion, customer base structure, service areas, and plans for expanding services, particularly in remote areas.  

Existing banks can also obtain the status of a financial inclusion bank. To do so, they will need to comply with the conditions of the limited license, which means they must refrain from lending to large companies, conducting foreign exchange operations, investing in securities (except for domestic government bonds and NBU deposit certificates), and providing financial services in capital markets.

Enhancing the Operations of the Accounting Chamber

Bill 10044-d aims to improve the operations of the Accounting Chamber in line with international standards. Its provisions address key shortcomings of the previous version of the same bill. In particular, they regulate the selection procedures for members of the Accounting Chamber, strengthen its independence, and expand its powers.

If adopted, the Accounting Chamber will be able to oversee all public finances, including local budgets, state and municipal enterprises, social and pension funds, the National Bank’s revenues and expenditures, as well as the movement of foreign loans, grants, and aid. 

The revised draft law provides the Accounting Chamber with greater guarantees of financial independence. Currently, it can independently submit budget requests to the Ministry of Finance with proposals for necessary financial support. However, the draft law proposes that when the Cabinet of Ministers publishes the draft state budget, it should report on whether the Accounting Chamber’s financial proposals have been taken into account. Additionally, the bill requires relevant parliamentary committees to review the results of the Accounting Chamber’s audits and discuss cases of inadequate implementation or non-implementation of its recommendations. These measures aim to establish an effective mechanism for cooperation between the Accounting Chamber and Parliament.

The new bill also proposes reducing the number of Accounting Chamber members from 13 to 11 and introducing the positions of state auditors and a deputy secretary. These roles would not be classified as civil servants but would still be subject to anti-corruption obligations and the requirement to submit asset declarations.

The bill also proposes improving the competitive selection process for members of the Accounting Chamber and clarifying the requirements for candidates. Potential members would need to provide documents confirming their professional experience in auditing, as well as certificates of proficiency in the state language and one of the Council of Europe’s languages. The preliminary selection of candidates for the Accounting Chamber would be conducted by an advisory expert group based on the results of testing, interviews with candidates, and a special review. The advisory group would consist of six members approved by the Verkhovna Rada based on proposals from parliamentary factions. The candidates selected by the advisory group must then be approved by a parliamentary vote.

The draft proposal specifies that during an eight-year transitional period, three members of the expert advisory group would be appointed by the Cabinet of Ministers based on proposals from international organizations, and three would be appointed by Parliament based on proposals from parliamentary factions through a ranked voting process. A decision by the group would be considered valid if supported by at least four members, with at least two of them required to be candidates from international organizations. This ensures that international experts will have a decisive role in selecting members of the Accounting Chamber.  

Once every five years, one of the leading members of the International Organization of Supreme Audit Institutions (INTOSAI) must conduct an evaluation of the Accounting Chamber’s activities to ensure compliance with international audit standards.

New rules for plea agreements in corruption cases

The introduction of the possibility of entering into plea agreements in corruption cases is part of the reforms agreed upon with European partners and is outlined in the State Anti-Corruption Program and Ukraine Facility. Currently, criminal law allows plea agreements, but this option is unavailable for corruption offenses. Previous attempts have been made to regulate this issue. However, a government draft law received criticism for not clearly specifying in which cases a plea deal with probation might be appropriate. The absence of such rules could have allowed suspects to avoid punishment by simply paying a fine. In response, MPs have registered a new bill that specifies essential conditions for any plea agreement in corruption cases, including: 

• Disclosure by the suspect of information about other corrupt individuals, along with evidence of their involvement in corruption;
• Full compensation by the guilty party for all damages caused, applicable in cases of minor, non-severe, or severe corruption offenses committed individually.

In the case of a severe corruption offense, the prosecutor may enter into a plea agreement with the accused only after receiving approval from the Prosecutor General or their deputy. If the crime is being investigated by the National Anti-Corruption Bureau of Ukraine (NABU), the agreement must be approved by the head of the Special Anti-Corruption Prosecutor’s Office or their deputy.

If the suspect discloses accomplices or compensates for damages, the prosecutor may offer the following options: 

 Reduce the prison term, but it must be no less than one year;

1. Replace imprisonment with a probationary period, during which the suspect must not commit any repeat offenses. However, in such cases, the court has the right to impose additional penalties, such as confiscation of property or a fine, even if not specified in the article’s sanction:

• UAH 340,000 — 2,040,000 for committing a minor offense;  
• UAH 2,040,000 — 4,590,000 for committing a serious offense;  
• UAH 4,590,000 — 102,000,000 for committing a particularly serious offense.

New procedure for holding employers accountable for violating requirements on jobs for persons with disabilities

Bill 12046 establishes a procedure for penalizing employers who violate legislation regarding the employment of persons with disabilities. Currently, if a violation or reporting error is discovered during a scheduled inspection, the enterprise is immediately fined. The new proposal by lawmakers would give employers an opportunity to correct the violations. A fine would only be imposed if the employer fails to resolve the identified issues within 30 days.

Penalties for damage to military property 

MPs propose introducing criminal liability for arson, bombing, damaging, or destroying military property in other socially dangerous ways. Such actions would be considered an obstruction of the Armed Forces’ activities and would be punishable by 5 to 10 years of imprisonment, with the possibility of property confiscation. If these actions result in the loss of life, the penalty would increase to 10 to 15 years in prison.

Protection of military whistleblowers of corruption

The Disciplinary Statute of the Armed Forces of Ukraine does not formally outline military personnel’s right to report corruption violations. Currently, they can submit complaints about illegal decisions by commanders that violate the rights of service members or report cases of unjust punishment to officials in the Military Law Enforcement Service, military administration bodies, and investigative authorities. The government’s proposal adds the right to “file complaints and reports of corruption to anti-corruption agencies” to this list.

The Disciplinary Statute ensures that a service member who reports potential corruption cannot be dismissed, held accountable, or punished in any way for doing so. The government proposal clarifies that they may report corruption “learned of in connection with military service,” meaning the bill seeks to prohibit punishment of service members who report corruption within the military specifically. 

Simplification of the procedure for decommissioning military property

MPs propose simplifying the procedure for decommissioning military property. Currently, a significant number of drones and electronic warfare equipment lost during combat are still recorded on military inventories. To decommission lost property, a single report must be prepared, detailing the incident and listing the lost equipment. This report must be signed by a decommissioning committee from the military unit and at least two participants or witnesses (if available) and then approved within 30 days. This process places an excessive bureaucratic burden on service members.

Therefore, deputies seek to grant commanders of the Armed Forces of Ukraine, the head of the Main Intelligence Directorate (GUR), and the Head of the State Special Transport Service, with the agreement of the Commander-in-Chief, the authority to, under a special procedure, decommission all drones, aviation complexes, ground (robotic) systems, waterborne (floating) complexes, and unmanned systems, as well as all types of ground-based electronic warfare equipment that have been used since the beginning of martial law and have not been decommissioned at the time of this decision. 

Lifting of enforcement proceedings and asset seizures for military personnel

MPs propose ensuring the ability to suspend enforcement proceedings against a debtor who is a service member upon their request. The suspension would be valid during military service (under martial law), during treatment (with the suspension ending 30 days after the completion of therapy), and for up to 6 months after discharge from service.

The authors of Bill 12064 also clarify that once enforcement proceedings are suspended, any seizure imposed on the service member’s property would be automatically lifted, as current legislation does not explicitly provide for this. 

Simplified citizenship process for spouses of Ukrainian soldiers

Currently, spouses of foreign nationals or stateless persons fighting in Ukraine can obtain Ukrainian citizenship through a simplified process. However, this option is not yet available for foreigners married to Ukrainian citizens who are serving in the Armed Forces and other military formations, have died in the line of duty, or have been discharged from service. Bill 12032 expands the simplified citizenship procedure to include them as well. They would be able to submit a declaration renouncing their foreign citizenship to apply for Ukrainian citizenship.

The draft law also proposes granting foreign nationals and stateless persons who have come to Ukraine to reunite with their family (if their spouse is in the military) permission to apply for immigration and permanent residency. 

Ban on combining a deputy’s mandate mandates with employment at municipal enterprises

The bill prohibits deputies from combining their duties with employment in the local council staff to which they have been elected, as well as in institutions subordinate to that council and municipal enterprises. This aims to eliminate potential conflicts of interest for local council deputies, who may otherwise have to vote on decisions that affect their other places of employment.

Preventing domestic violence

Two new draft laws aim to make the fight against domestic violence more effective.

Bill 12051 will improve the collection of information on cases of violence. It specifies that statistical data must include the gender (separately for both the victim and the perpetrator), age, type of family relationship, the victim’s address, and the number of convictions or restraining orders issued against the perpetrator.

The second bill allows individuals who are planning to marry or are already married to request information from the police to check whether their partner has previously been held accountable for domestic violence.

Digitalizing sports

The Cabinet of Ministers proposes the creation of an electronic system called E-Sport. This system would function as a unified database containing information on individuals involved in physical culture and sports, including athletes, professionals in the field, sports institutions, relevant government bodies, sports-oriented public organizations, sporting events, competitions, facilities, sports medicine, and measures to prevent doping. The Ministry of Youth and Sports would serve as the custodian of this register.

Liability for promoting Russian imperial symbols

Bill 12061 proposes establishing administrative and criminal liability for promoting symbols of Russian imperial policies. This includes coats of arms, flags, anthems, images, and commemorative signs related to the aggressor state, its history, or those that glorify or justify the measures of Russian imperial policies and the individuals involved in their implementation. The production and use of such symbols would be punishable by fines of UAH 1,700–3,400 for citizens (100–200 tax-exempt minimum incomes) and UAH 3,400–5,100 (200–300 tax-exempt minimum incomes) for officials. Disseminating these symbols in government bodies, state, and municipal institutions (including schools and hospitals) would be punishable by imprisonment for up to 5 years, with possible confiscation of property. For repeat offenses, the imprisonment term would range from 5 to 10 years.