Economic Security Bureau Reboot: Can It Shed the Legacy of Tax Police—and When?

In 2025, one of Ukraine’s law enforcement agencies—the Economic Security Bureau, or ESB—came under intense scrutiny because of the scandal surrounding the competition for a new director. In August, the government ultimately appointed former National Anti-Corruption Bureau detective Oleksandr Tsyvinskyi, the winner of an open competition involving international experts. In an interview with ZN.UA, he outlined the institution’s main challenges and said that if problems arose in communication with the authorities—ESB is procedurally subordinate to the prosecutor general—he would say so publicly.

No such high-profile statements have followed over the past six months. Instead, tension has surfaced in the media, along with a pressing question: what has actually changed after the “reboot”? A stir was caused both in society and in the press by the declared pension of the 44-year-old Tsyvinskyi—around UAH 300,000. The ESB chief himself explained that this amount includes payments for his long service, based on 26 years of experience, as well as benefits linked to his combat veteran status, accrued over several months after the paperwork for his appointment was completed.

At the same time, the appointment of a new director signaled an intention to relaunch the ESB for both business and the state. Yet over these six months, hopes for quick results have collided with reality: the institution is in the midst of a deep internal restructuring.

Tsyvinskyi is effectively operating as a crisis manager. His appointment coincided with another key element of the “reboot”—the full recertification of the Bureau’s staff, as provided for by the law passed at the IMF’s insistence in June 2024. On top of that, the ESB currently has only about a third of its authorized staff in place. Some employees are undergoing vetting, while new ones still have to be recruited through open competition. All of this sharply limits the agency’s ability to produce quick results—at least in the short term.

So what, in reality, determines the ESB’s effectiveness today? Does it have sufficient resources and powers to carry out its tasks? And is it even appropriate, at this stage, to judge its performance solely by quantitative indicators?

From concept to launch: how did the ESB come into being?

The ESB’s main task is to counter offenses that undermine the functioning of the state’s economy. This means crimes in the economic sphere and bringing the “shadow” segment of business into the “white” economy. In other words, the goal is for business to operate, develop and pay taxes, filling both the state and local coffers.

The emphasis on “prospering” is not accidental. This is not only about taxes, but also about the rules of the game: the absence of pressure from law enforcement agencies—masked raids, demands for “protection rent”—as well as predictability and investment attractiveness for both Ukrainian and foreign business. There is, however, a crucial caveat: the ESB has not, in fact, functioned properly at any point since its creation in 2021. And that largely explains what we are seeing today.

The question at hand is the unfinished reform of the tax police. Formally, it was abolished back in 2016, but in practice it survived until 2021. During that time, the state made several attempts to create a new body—a financial police force, a Financial Investigations Service, a National Bureau of Financial Security. Only in 2020 was that effort finally realized, and in 2021 the law on the ESB came into force. It was designed along the lines of specialized agencies such as the National Anti-Corruption Bureau (NABU) or the State Bureau of Investigation (SBI), with separate jurisdiction, competitive selection and guarantees of independence. But, as practice has shown, merely copying a sector-specific law is not enough.

Problems with leadership and competition procedures emerged almost immediately. Then martial law intervened, and in the end Ukraine committed itself to “reboot” the ESB. That step was preceded by a critical conclusion from the Verkhovna Rada’s Temporary Investigative Commission in 2023, as well as open dissatisfaction from business associations, which described the same practices seen in the days of the tax police: pressure, extortion and groundless searches.

As of early 2024, the ESB’s reputation was summed up in one blunt phrase: “They simply moved the tax police officers from one agency to another.”

Recruitment is under way, but staff are still in short supply

In June 2024, the Law “On Amendments to Certain Legislative Acts of Ukraine on Improving the Work of the Economic Security Bureau of Ukraine” launched a new competition for the post of director and provided for the evaluation of all ESB employees. Oleksandr Tsyvinskyi was appointed under conditions in which this very “reboot” had become the institution’s key requirement. At the same time, the new leadership was expected to begin recruiting for vacant positions.

Over an 18-month period, the ESB is required to carry out full staff evaluation and complete its staffing. The process began on 6 August 2025. At the same time, over all the years of the Bureau’s existence, it has managed to recruit only about a third of the required number of employees—roughly 1,200 out of a maximum possible 4,000.

Personnel and evaluation commissions have been established for the process, with the participation of international experts and civil society representatives. As in the police and the prosecutor’s office, it consists of three stages: tests on knowledge of the law, an assessment of general aptitude and an integrity interview.

At the same time, the experience of previous law-enforcement reforms shows that this model is complex and not always effective. The risk of court-ordered reinstatements remains high. Stronger internal oversight and disciplinary accountability might be an alternative, but the new ESB leadership is constrained by the requirements of the 2024 law and is forced to act within its framework.

Then there is another problem: the evaluation itself is effectively pushing the agency’s core work into the background. Employees are preparing for tests, gathering documents and taking leave. As a result, part of the Bureau’s functions has been put “on pause”: instead of investigations and analysis, resources are being spent on the internal process of rebooting the institution.

Recruiting new employees through open competition is another serious challenge. More than 2,700 positions are vacant, and dismissals following evaluation will add to that number. Already now, around 100 employees have refused to undergo the process.

But the problem is not only one of numbers. It is also one of conditions. Work at the ESB is less attractive than at NABU or the SBI. And the issue is not the nature of the work itself—for investigators or detectives, the difference between economic, corruption or official misconduct cases is not fundamental. The key factor is pay. Formally, salaries at the ESB, NABU and the SBI are the same—22 subsistence minimums. But while NABU and the SBI use the full amount, UAH 3,028, the ESB uses a reduced figure, UAH 2,102. As a result, ESB employees receive roughly a third less. Until that disparity is addressed at the budget level, genuinely competitive recruitment will be hard to achieve.

In the end, the ESB remains critically understaffed. And while evaluation and recruitment competitions are still under way, its ability to deliver qualitatively new results is objectively limited. It is with those factors in mind that its work should be assessed today.

The ESB in action: the agency’s powers and institutional profile

The bulk of the ESB’s proceedings concern areas where the economy is losing money through unpaid taxes and duties. This includes both classic economic crimes—such as large-scale embezzlement or tax evasion—and violations of excise rules and the smuggling of goods. The latter covers a broad spectrum, from importing products without customs clearance to the illegal circulation of excisable goods, including alcohol and tobacco. It also includes so-called black-market gas stations operating without the proper permits and effectively outside the tax system.

In that sense, the state is the key beneficiary of the ESB’s work, since what is at issue is budget revenue. At the same time, business also has a stake in the Bureau’s results. When the market is flooded with contraband and counterfeit goods, the winner is not the one who works more efficiently, but the one who is better at “optimizing” the business model, often by evading taxes. That distorts competition and undermines trust in the rules of the game. That is precisely why the demand for an institution that not only punishes, but also establishes clear rules, is shared by both the state and legal business.

Alongside its procedural work, the ESB is trying to build a different format of interaction—through dialogue with business associations. In its first six months, it has managed to establish basic communication and outline an approach based not on pressure and rent extraction, but on creating conditions in which operating in the “white” economy becomes more profitable than remaining in the shadows. This is directly tied both to the budget and to the country’s investment appeal. In the long term, the ESB’s work should result in the displacement of shadow practices and the emergence of a more predictable market.

According to information from the Agency for Legislative Initiatives, in March-April 2026 the ESB is expected to publish an updated institutional development strategy. The current document, adopted in early 2024, does not reflect the vision of the new leadership and requires revision.

It is also worth mentioning attempts to strengthen the Bureau’s institutional capacity. During a recent visit to the United States, the ESB leadership discussed guarantees of the agency’s independence. Given the background of the current team—including figures who came from NABU—it cannot be ruled out that the Bureau will in time try to borrow elements of that model, above all in terms of institutional guarantees.

Growth points vs results: what the ESB should focus on

Nearly eight months have passed since Tsyvinskyi’s appointment. That is enough to assess not so much the final results as the pace of change and the direction in which the Bureau is moving.

Among the more visible steps has been increased activity in segments linked to violations of excise rules and shadow markets. These include fuel, counterfeit tobacco and coffee, as well as electronics being imported on a mass scale without proper customs clearance. But for any long-term effect, the ESB has to act proactively: business adapts quickly, changes its schemes, and finds new ways to evade taxes.

That means the Bureau must not only react, but also anticipate such shifts. And that requires resources—in personnel, finance and analytics. Without completing its staffing and strengthening its capacity, it will be difficult to scale up this work.

If one turns to the formal indicators, the ESB’s 2025 report does record certain shifts: roughly UAH 100 million in additional tax receipts as a result of shutting down business-splitting schemes for tax avoidance, seizures of excisable goods and property worth an estimated UAH 3 billion and growth in declared revenues—from UAH 380.4 billion in 2024 to UAH 403.4 billion in 2025. Within the Bureau itself, this is linked to the market’s gradual de-shadowing.

Still, those figures alone are not enough to assess the ESB’s effectiveness. Economic crimes are harder to evaluate in terms of positive impact than corruption cases or ordinary criminal offenses. The most common penalty in such cases is a fine, and the goal is not to destroy a business but to compel it to operate by the rules. An overly punitive approach can have the opposite effect—a decline in economic activity and, as a result, lower tax revenues. That is why, in cases involving breaches of tax discipline, the logic of enforcement is gradually shifting from purely punitive to incentive-based.

It is in that context that the ESB has begun discussing alternative approaches to resolving criminal cases. In particular, a mechanism has been proposed that would allow proceedings to be closed as early as the notice-of-suspicion stage—without a court ruling. The idea is a kind of “tax compromise,” under which the damage to the state is not only repaid, but an additional fine of 150–200 percent is also paid.

Such tools are intended not only to punish, but also to create incentives for businesses to leave the shadows. At the same time, their implementation requires caution, because it involves altering the balance between the interests of the state and the principle that liability should be unavoidable.

Long-haul work instead of hopes pinned on each half-year?

It is still too early to speak of a paradigm shift in the fight against economic crime. At the same time, the ESB’s first steps can be seen as a marker and a potential foundation for long-term change. This includes the gradual normalization of relations with business, the search for more balanced approaches to regulating the shadow segment and the creation of conditions in which operating by the rules becomes more profitable than circumventing them.

The real effect of these changes can be assessed only once the Bureau is operating at full capacity—above all after evaluation and recruitment competitions have been completed and the staff has been brought up to strength. Until then, any assessment will inevitably remain provisional.

Maintaining the course that has been set, while at the same time dealing with personnel, budgetary and organizational problems, is an uphill task. But whether the “reboot” turns into real institutional change rather than another imitation of reform will depend precisely on the ESB’s ability to stay on that course.

At the same time, the key challenge is not only the Bureau’s internal transformation, but also the environment in which it operates. At the outset, the new leadership declared its readiness to speak openly about possible influence from informal centers of decision-making. But over the past six months no public conversation on that subject has taken place. Have there been attempts to pressure the ESB from the presidential office or from other “informal” sources of influence? The question remains open. (Meanwhile, our sources confirm that the back office of Vitalii Hahach, former ESB deputy director, still exists, and that the authorities are continuing to try to use it to influence the ESB. In his interview with us, Oleksandr Tsyvinskyi promised to turn to NABU and SAPO for help if absolutely necessary. It appears that such a need has already arisen.—ZN.UA)

No less important is the question of institutional guarantees of the ESB’s own independence. The experience of Ukraine’s anti-corruption infrastructure shows that without a clearly constructed system of safeguards—from the procedures for appointing the leadership to procedural autonomy—any attempt at change remains vulnerable to political influence. And it is precisely in this respect that the ESB is still only at the beginning of the road. The Bureau has neither a separate specialized prosecutor’s office nor a specialized court, so much depends on how its relationship is built with the prosecution service that provides procedural oversight. Draft law No. 12439, which is likely to be passed in the coming days, may worsen the situation for the ESB. How many such ideas the Bureau’s opponents may have in reserve is anybody’s guess.

That is why it is still premature to speak of the ESB as a fully formed new body. For now, it is better understood as an institution in the making—with the right direction of travel, but no guaranteed outcome yet.

Changes within the system need to be visible and openly articulated. Without an honest and open conversation between the ESB’s leadership and society—which is above all interested in the emergence of an effective law-enforcement institution—it will be difficult, in the event of pressure, to rally outside support and build a body that can truly safeguard economic security.