Under consideration of the National Reform Council there is a draft law ‘On Financial Investigation Service’ approved by the Cabinet of Ministers on March 22, 2017. On April 24, 2017, Executive Committee of the National Reform Council addressed its feedback regarding this draft law to the Ministry of Finance.
During the above mentioned meeting the Cabinet of Ministers approved the decision to send the draft law to the National Reform Council rather than its executive body. However, the Council did not hold any meetings on this issue. Therefore, experts of the Tax and Budgeting Reform group and Law Enforcement Agencies Reform group of the Reanimation Package of Reforms consider it unacceptable to further delay the consideration of the draft law on the basis of position of the Executive Committee of the National Reform Council.
Experts also draw attention to the fact that for over half a year, tax militia has been operating outside the legal field, committing unlawful actions and receiving funding.
In this regard, the experts urge the National Reform Council to immediately hold a meeting to review the draft law “On the Financial Investigation Service” and send it to the Parliament as soon as possible, based on the draft law, approved by the Government, taking into account the number of priorities, jointly developed by MPs, business associations and the public, in particular:
- to provide functional mechanism of checks and balances in the field of financial policy implementation, consolidating at the legislative level the coordination of the work of the Financial Investigation Service (FIS) with the Ministry of Finance of Ukraine as the basic body in the profile sphere, which has the trust of the society and has the institutional capacity for qualitative coordination of analytical developments (the Ministry of Finance directs and coordinates the activities of the Civil Service of Financial Monitoring) ;
- to ensure transparent selection of FIS employees, in which an absolute majority of the representatives of the competition committee will be independent from the government and recognized by civil society and expert environment;
- to establish at the legislative level the maximum number of FIS staff – no more than 3000 people;
- to provide restrictions, according to which the staff of the FIS will consist of no more than 20% of the former and current employees of the State Fiscal Service (SFS), the National Police of Ukraine (NPU), the Security Service of Ukraine (SSU), prosecutors and courts regardless of the period and duration of their work in the above-mentioned bodies, as well as to prohibit such persons from taking senior management positions in the newly formed FIS;
- to secure high salaries of FIS employees at the level of the law, and thus ensure the involvement of new, highly professional and diligent personnel;
- to provide the change of work tools, in particular the transition from punitive functions to the functions of investigation and analytics, clearly defining the main tasks and scope of the competence of the FIS (in particular, taking into account the consistency of the National Anti-Corruption Bureau of Ukraine);
- to establish a full list of grounds when the FIS will be able to initiate inspections of business entities by the competent authorities;
- to eliminate the duplication of functions of state bodies, depriving the State Fiscal Service (SFS) of Ukraine, National Police of Ukraine (NPU) and the Security Service of Ukraine (SSU) of authorities in the field of investigation of economic crimes (in particular, para 4 and 5 of Article 191 of the Criminal Code of Ukraine, which are widely used by NPU, SFS, SSU and prosecutors for illegal business pressure, should be attributed to exclusive FIS testimonial);
- not to overburden the FIS with the investigation of small economic crimes by dozens of “minor” articles of the Criminal Code in order to maximize concentration of FIS on high-level financial crimes;
- to require from the competition committee on selection of the Head of the FIS an impeccable reputation, competence, high moral qualities, public authority, the prohibition of inclusion in the composition of such committee of persons, authorized to perform functions of the state or local self-government;
- to consolidate at the legislative level the obligation to record the results of voting during meetings of the competition committee with the subsequent publication of such protocols in the Internet;
- to establish at the legislative level a direct prohibition to reject all candidates for the position of the Head of FIS, determined by the competition committee, and limit the maximum number of such candidates to two persons;
- to provide the annual reporting of the Head of FIS to the Parliament of Ukraine and the public.
Experts of the Tax and Budgeting Reform group and Law Enforcement Agencies Reform group of Reanimation Package of Reforms emphasize: the establishment of an independent, high-integrity and effective Financial Investigation Service was publicly supported by the President of Ukraine and the Government. It is an inherent part of the reform of the State Fiscal Service and one of the key requirements of the IMF.
It is significant to note that, according to the recent polls, foreign investors name repressive actions of law enforcement agencies among the key obstacles to the inflow of investments. That is why experts insist on unacceptability of further activity of the tax militia outside the legal field and urge the authorities against further delays in the establishment of the Financial Investigation Service. Experts also call on the National Reform Council to immediately approve and submit to the parliament respective draft law approved by the Cabinet of Ministers, civil society and the business community.