Dragging 60 Billion Out of the “Shadows”: How Economic Security Bureau Is Meant to Hit Targets Without Staff, Powers or Money

Against a backdrop of recertification, a shortage of staff and powers, and even scandals within the system, the Economic Security Bureau (ESB) is making its presence felt ever more often—through exposés in areas where the state had been losing billions for years.

The latest include schemes at customs and in the rebuilding of thermal power plants after strikes; operations to halt the illegal trade in vapes, networks of counterfeit passports and banknotes, and the shutting down of gambling businesses.

In the past month alone, electronics retail giants announced that they were abandoning “drop” schemes routed through sole traders (FOPs), repaying the state’s losses and moving to a transparent corporate governance model with their taxes brought out of the shadows. That is a swift economic result in the wake of an exposé.

High-profile cases at the ESB began to appear in such numbers after the transparent competition, and amid closer attention from international actors and civil society.

The paradox, however, is that the Bureau is achieving these results in conditions that can hardly be called normal for an institution carrying such expectations. Staff recertification is under way, headcount is limited, the territorial network is not operating at full capacity, powers are lacking, and funding covers only part of the real need. And it is on this very body that the state is effectively placing part of the task of finding tens of billions of hryvnias concealed in the shadow economy.

The authorities count on 60 billion from de-shadowing. Can the ESB deliver?

In 2026, Ukraine is spending almost twice what it earns: budget expenditure exceeds 4.7 trillion hryvnias, while revenue stands at around 2.9 trillion. Closing a gap of almost two trillion with new taxes on business is economically risky.

So the state is betting on bringing the economy out of the shadows—a move to make shadow businesses pay officially and in full.

It is precisely this de-shadowing that has been designated one of the systemic priorities of the National Revenue Strategy to 2030. For the first time, Ukraine’s 2026 budget allocates a separate line to it—60 billion hryvnias in expected revenue. The sources are more effective customs and a crackdown on shadow schemes in foreign economic activity.

Who is to find this money? First and foremost, the Economic Security Bureau, the body created in 2021 to combat economic crime.

The creation of the ESB was intended to mark a shift from heavy-handed pressure on business to an analytically driven model of work. The Bureau was meant to replace the tax police, which had been extorting business, as well as the economic units of the SSU and the National Police, ensuring the operation of a single specialized body in the field of economic security.

Yet less than a year after the Bureau officially began work, in December 2022 the Verkhovna Rada of Ukraine set up a temporary investigative commission to look into possible breaches of the law by ESB officials.

The situation proved so critical that resetting the Bureau became one of the conditions for further funding of Ukraine under the IMF programme. In 2024, a law was passed providing for an independent competitive selection of the ESB director with the involvement of international experts, and for the recertification of the Bureau’s staff.

Even so, carrying out this reform met with considerable resistance. Despite the competition being held, the new ESB director was appointed only in August 2025, after lengthy foot-dragging by the government and substantial public pressure.

ESB 2.0: high expectations without real tools

It is important to state honestly at the outset: appointing a new head does not make the ESB’s institutional problems vanish automatically. A corporate culture built up over years does not change along with the nameplate on the director’s door, and a large share of the systemic challenges remains.

What is more, the very appointment of a new director set in motion a separate process required by law—the recertification of the entire ESB workforce, that is, more than a 1,000 employees. This is a necessary and effectively unavoidable cleansing of the institution, but also an additional burden: the new leadership was tasked with organizing a large-scale, multi-stage procedure on the fly, while staff had to prepare for and undergo certification without pausing their current work.

Time for this is short. The certification panels began work only in February 2026, and the whole process is due to be completed as soon as February 2027.

And this is only one aspect of the problem. No less important is the question of the Bureau’s powers: does the body have enough tools to make a real impact on the shadow economy, even with a fully renewed and high-integrity workforce?

Three main problems still affect the ESB’s work: insufficient powers, the absence of a unified information system and… money.

1. Insufficient powers.

Even a fully renewed workforce will run into another problem: the ESB is still working with its hands tied.

Procedural powers are not a technicality; they are the foundation of any real investigation. It is hard to imagine an effective fight against smuggling without the right of unimpeded access to customs zones, or the investigation of financial schemes without access to information from insurance companies or capital-market participants.

It is precisely these tools that the ESB is denied—unlike the National Anti-Corruption Bureau, the State Bureau of Investigation and the Security Service of Ukraine, which enjoy such powers in full.

2. No unified information system.

By integrating, in real time, data from the State Tax and State Customs services, the Ministry of Digital Transformation, the Ministry of Internal Affairs, Asset Recovery and Management Agency (ARMA) and other bodies, the system was meant to enable a shift from reacting to crimes already committed to proactive risk analysis.

Instead, the Bureau today is forced to work to a different logic: to check a company, detectives must each time send separate requests to the various registry holders and wait for replies. For a body intended not only to investigate crimes but also to shape the environment in which they arise, this is a fundamental operational constraint.

Meanwhile, in 2024 ESB units were obliged to buy licences for the commercial analytics system YouControl for 2.7 million hryvnias from a private company that is itself an aggregator of information from the very state registers to which the ESB ought to have unimpeded direct access.

3. No money and no people.

No less telling is the ESB’s resourcing: its needs are funded at just 18 percent, and instead of 4,000 staff it has only 1,123.

According to figures from the Accounting Chamber, the Bureau’s funding needs are met, on average, by only 18 percent. It is precisely this chronic underfunding that has been one of the reasons why only 9 of the 24 ESB territorial directorates are operating today, while in a large share of regions the full-fledged activity of the single specialized body for combating economic crime remains limited.

The problem is compounded by an artificial cap on the Bureau’s staffing capacity. Although the Law of Ukraine “On the Economic Security Bureau of Ukraine” sets the body’s maximum headcount at 4,000, the state budget laws for 2024–2026 set a different ceiling: 1,400 in 2024 and 2,000 in 2025 and 2026. In effect, the provision of the special law was curtailed by the annual budget laws. As a result, the ESB’s actual headcount today does not exceed 1,200, and 245 employees have already been dismissed under the current recertification.

What is already working: the first results

Despite the procedural and institutional constraints within which the Economic Security Bureau of Ukraine operates, and the recertification of its entire staff, the ESB is already showing concrete results in bringing the economy out of the shadows.

The fuel market. One of the most telling areas has been the fight against the illegal fuel market. In 2025, 538 filling stations showing signs of illegal activity were identified. In a number of regions the number of shadow petrol stations fell several-fold, and in Kyiv they were effectively eliminated. The effect of these measures was not only to shut down illegal sites but also to raise budget revenue: by the ESB estimates, the additional fiscal effect came to around 23 billion hryvnias.

Cigarettes and alcohol. No less telling are the results in the circulation of tobacco products and alcohol, traditionally among the riskiest segments of the shadow economy. In 2025, the illegal cigarette market’s share fell to 15.9 percent, against 21.8 percent in 2023. At the same time, the tobacco industry’s legal turnover rose to 152.5 billion hryvnias. On the alcohol and spirits market, the volume of illegal goods seized increased almost sevenfold, while de-shadowing delivered a 15.9 percent rise in legal turnover and an additional fiscal effect for the budget.

Voluntary repayment of unpaid taxes. In 2025, on the basis of ESB casework, 187 proceedings were sent to court against businesses that voluntarily repaid unpaid taxes and penalties. As a result, more than 3.2 billion hryvnias flowed into the state budget.

What needs to be done

First, completing the ESB reform requires the adoption of the legislative changes envisaged by draft law No. 14207-1. The changes it proposes are aimed at removing the Bureau’s key institutional and procedural constraints, expanding access to information, strengthening analytical capacity and ensuring more effective performance of the functions assigned to the body.

Second, the Bureau lacks a number of procedural, investigative (operational-search) and information-analytical powers that other law enforcement agencies enjoy. Further factors are the absence of the legally mandated unified information system, chronic underfunding and an artificial cap on headcount contrary to the requirements of the special law.

And yet the ESB is showing its first results even amid limited resources and unfinished reform. The shrinking of the illegal fuel, alcohol and tobacco markets, together with the practice of voluntary repayment of unpaid taxes, confirms that there is significant potential to bring the economy out of the shadows and increase budget revenue.

Third, the further institutional strengthening of the ESB requires political will and the support of international partners. The experience of earlier stages of the reform shows that the most important changes in economic security became possible with the active involvement of the European Union and the IMF, through the setting of specific requirements as a precondition for funding. Only a combination of adequate resourcing, legislative reinforcement of the ESB’s powers and international support will make it possible to bring the economy out of the shadows and secure the additional budget revenue the state is counting on.