Bill No. 15372-1: Why Tobacco Control and Financial Monitoring of PEPs Were Combined into a Single Bill

On July 20, 2026, alternative bill No. 15372-1 was submitted to the Verkhovna Rada of Ukraine. Unlike the main bill No. 15372, which focused exclusively on digital monitoring of the circulation of raw tobacco, the alternative bill additionally proposes to amend the rules for applying a risk-based approach during the financial monitoring of politically exposed persons (PEPs). The combination of issues that are so different in terms of their regulatory scope makes this bill unusual and warrants a separate analysis.

Digitization of State Control Over the Circulation of Raw Tobacco

Bill No. 15372-1 proposes a new model for state control over the circulation of raw tobacco by introducing:

• electronic traceability and labeling. Each individual package of raw tobacco will be marked with a graphic element of the electronic excise tax stamp during packaging. The system will track the movement of raw tobacco from the importer or raw tobacco producer to the manufacturer of finished products;
• a unified registry of tobacco raw material producers. The registry will contain the geographic coordinates of land plots, data on planted areas, seed varieties, and actual yields. The registry will be integrated with other government databases and data from satellite systems;
• comprehensive physical control. Raw material producers will be required to have access control systems with automatic vehicle number plate recognition and weighing, as well as 24/7 video surveillance. Video recordings must be stored for at least 30 days, and the system’s storage capacity must be at least 40 terabytes;

GPS monitoring of vehicles. Remote monitoring of raw material movements will be implemented. Vehicles must be equipped with devices that transmit real-time data on their route and location.

The new labeling rules are to be implemented as of July 1, 2029, and one year later, all unlabeled raw materials will be completely withdrawn from circulation.

 The approach proposed by the draft law generally aligns with Directive 2014/40/EU, which established the Track and Trace traceability system throughout the European Union. Currently, this system applies in the EU to finished (manufactured) tobacco products—cigarettes, roll-your-own tobacco, cigars, and tobacco-containing snus. The basic principle of the system is the marking of consumer packaging with a unique identifier and the tracking of movements from the manufacturer/importer to the first retail outlet. Unmanufactured tobacco (leaves, raw material) is not considered a “finished tobacco product” within the meaning of the Directive. It was not until July 2025 that the European Commission initiated amendments to the Directive to include unprocessed tobacco within its scope. The Ukrainian legislature, however, proposes introducing an electronic traceability mechanism for both finished tobacco products and tobacco raw materials.

On November 25, 2025, Ukrainian Members of Parliament O. V. Kovalchuk, D. O. Getmantsev, and others had already submitted Bill No. 14245 to amend legislation aimed at improving the effectiveness of controls over the production and circulation of raw tobacco. This bill was rejected on June 10, 2026. Among the comments on the bill was the observation that it lacked an adequate financial and economic justification regarding the scale of the required expenditures. An analysis of the explanatory memorandum and the text of Bill No. 15372-1 shows that some of the comments raised during the consideration of Bill No. 14245 were not addressed.

The introduction of the Track and Trace traceability system for tobacco products is one of the elements of Ukraine’s fulfillment of its obligations to align its legislation with EU law. However, the introduction of simultaneous controls over both finished tobacco products and raw tobacco significantly expands the scope of government regulation. In the absence of proper financial and economic justification and expert discussion, questions arise regarding the realism and proportionality of such an approach.

Improving the Risk-Based Approach to Financial Monitoring

In June 2026, Law of Ukraine No. 4903-IX (Bill No. 15111-d) was submitted to the President of Ukraine for signature; this law introduces significant amendments to Article 11 of the Law of Ukraine “On Preventing and Combating the Legalization (Laundering) of Proceeds from Crime, the Financing of Terrorism, and the Financing of the Proliferation of Weapons of Mass Destruction” (hereinafter—Law No. 361-IX), particularly regarding the abolition of the lifetime status of enhanced PEP controls.

Draft Law No. 15372-1 builds upon the approaches set forth in Law No. 4903-IX and proposes a series of changes aimed at improving the application of a risk-based approach in the field of financial monitoring:

• automated monitoring is introduced for transactions that match the client’s risk profile and do not exhibit signs of suspicious activity. If the system detects an anomaly or a suspicious transaction, an individual review is then conducted. Controlled interbank data exchange is also permitted to verify the sources of a client’s funds;
• A simplified procedure for assessing and reassessing client risk is implemented if the account is not actually used or is used primarily for salaries, pensions, and social benefits, and the risk remains low. In addition, it is prohibited to repeatedly request documents that are already available or can be obtained from government registries through electronic interaction;
• The procedure for refusing to open an account or conduct a financial transaction is specified in detail. The draft law stipulates that PEP status alone is not grounds for refusal, which is permitted only in the cases specified in Article 15 of Law No. 361-IX. At the same time, an explanation of the reasons and circumstances underlying the refusal must be provided in writing within five business days, with the possibility of extending the deadline to ten days;
• It is emphasized that after twelve months have elapsed from the day following the date on which the person ceased to perform prominent public functions, enhanced monitoring ends, and measures may be applied only if there is a documented risk. In addition, the decision to continue applying the measures must be reviewed by the primary financial monitoring entity at least once a year.

The proposed approach is consistent with European practices for countering unjustified de-risking. In particular, the European Banking Authority emphasizes that rejecting entire categories of customers without considering their individual profiles may indicate ineffective risk management, while EU Regulation 2024/1624 requires that measures be applied for at least 12 months and thereafter until the risk associated with the former function ceases.

Formally, there is no direct substantive link between the amendments to the legislation on state regulation of the circulation of raw tobacco and the amendments to the legislation in the field of financial monitoring. They regulate different spheres of social relations, have different objectives, and cover different groups of entities. The explanatory note does not provide a separate justification for combining two distinct sets of legislative changes into a single bill. The Verkhovna Rada has already resorted to a similar combination when adopting Law of Ukraine No. 4903-IX, which concerned the taxation of income received through digital platforms, as well as financial monitoring of cross-border electronic payments. As of the time of this article’s preparation, the law remains unsigned by the President of Ukraine. It is not known for certain whether this is specifically due to the inclusion of unrelated amendments, but such a legislative structure may complicate the bill’s passage. This practice of combining unrelated issues within a single bill is inconsistent with the principles of sound legislative drafting, complicates its expert review, and creates additional risks during the legislative process.