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DOI: https://doi.org/10.34069/AI/2024.76.04.23

How to Cite:

Naturkach, R., Lankevych, A., Bysaha, Y.Y., Bysaha, Y.M., & Prodan, V. (2024). Impact of illegal orders on the Ukrainian banking

system: a constitutional analysis. Amazonia Investiga, 13(76), 286-296. https://doi.org/10.34069/AI/2024.76.04.23

Impact of illegal orders on the Ukrainian banking system: a

constitutional analysis

Вплив незаконних розпоряджень на банківську систему України: конституційний аналіз

Received: March 6, 2024 Accepted: April 27, 2024

Written by:

Ruslan Naturkach1

https://orcid.org/0009-0006-9717-3961

Andriy Lankevych2

https://orcid.org/0009-0005-4443-5684

Yurii Y. Bysaha3

https://orcid.org/0009-0001-5340-8531

Yurii M. Bysaha4

https://orcid.org/0009-0006-5115-8379

Viktoriia Prodan5

https://orcid.org/0009-0008-3805-5150

Abstract

This article examines illegal orders and orders in

the field of the banking system from the point of

view of constitutional law. The study includes a

review of constitutional norms and principles

related to banking, analysis of specific cases of

issuance of illegal orders, as well as study of

mechanisms for protecting the rights of subjects

of banking relations. The purpose of the article is

to analyze illegal orders and orders in the

banking system in the context of constitutional

rights and freedoms. The methodology of the

article includes such methods as: analysis

method, historical-legal method, comparative

method, logical method. As a result of the study,

it was concluded that the Constitution of Ukraine

enshrines basic rights and freedoms that directly

affect the functioning of the banking system. In

particular, this is the right to property,

entrepreneurial activity, and the right to legal

Анотація

У цій статті розглядаються протиправні

розпорядження і накази у сфері банківської

системи з точки зору конституційного права.

Дослідження включає в себе огляд

конституційних норм та принципів, що

стосуються банківської діяльності, аналіз

конкретних випадків видачі протиправних

наказів, а також вивчення механізмів захисту

прав суб’єктів банківських відносин. Метою

статті є аналіз протиправних розпоряджень та

наказів у сфері банківської системи в контексті

конституційних прав та свобод. Методологію

статті включають такі методи, як: метод

аналізу, історико-правовий метод,

порівняльний метод, логічний метод. У

результаті дослідження підсумовано, що

Конституція України закріплює основні права і

свободи, які безпосередньо впливають на

функціонування банківської системи. Зокрема,

Ph.D., Associate Professor, Chief of staff of the Zakarpattia regional state administration - military administration, honored lawyer

of Ukraine.

Ph.D., doctoral student of the Department of Constitutional Law and Comparative Jurisprudence of the Law Faculty of Uzhhorod

National University, Head of the Lviv District Administrative Court, Ukraine.

Ph.D., Private Notary, Associate Professor of the Department of Administrative, Financial and Information Law of the Law Faculty

of Uzhhorod National University, Ukraine.

Doctor of Legal Sciences, Professor, Head of the Department of Constitutional Law and Comparative Jurisprudence of the Law

Faculty of Uzhhorod National University, Honored Lawyer of Ukraine, Ukraine.

Ph.D., Assistant of the Department of Constitutional Law and Comparative Jurisprudence of the Law Faculty of Uzhhorod National

University, Ukraine.

Naturkach, R., Lankevych, A., Bysaha, Y.Y., Bysaha, Y.M., Prodan, V. / Volume 13 - Issue 76: 286-296 / April, 2024

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protection. The study showed that these

constitutional guarantees are key to protecting

the rights of subjects of banking relations from

illegal orders and orders. The results of the study

emphasize the need to improve the legal

regulation of banking activity in Ukraine, in

particular by eliminating existing shortcomings

in the legislative framework and strengthening

the mechanisms for protecting the rights of

subjects of banking relations. The

implementation of the proposed

recommendations will contribute to ensuring

legality and law and order in the banking sector

and increasing trust in the banking system of

Ukraine.

Keywords: illegal orders, orders in the field of

the banking system, banking system, illegal

influence, legal demand.

це право на власність, підприємницьку

діяльність, та право на судовий захист.

Дослідження показало, що ці конституційні

гарантії є ключовими для захисту прав

суб'єктів банківських відносин від

протиправних розпоряджень і наказів.

Результати дослідження підкреслюють

необхідність вдосконалення правового

регулювання банківської діяльності в Україні,

зокрема шляхом усунення існуючих недоліків

у законодавчій базі та посилення механізмів

захисту прав суб'єктів банківських відносин.

Впровадження запропонованих рекомендацій

сприятиме забезпеченню законності та

правопорядку у банківській сфері та

підвищенню довіри до банківської системи

України.

Ключові слова: протиправні розпорядження,

накази в сфері банківської системи, банківська

система, незаконний влив, законна вимога.

Introduction

In the context of economic instability and crisis

phenomena, it is especially essential to guarantee

the legality of the actions of state bodies and

officials regulating banking activity. Illegal

orders can lead to the destabilization of the

banking system and the loss of trust on the part

of customers and investors.

The relevance of the study is because the

constitutional right to property protection and the

legitimate economic interests of citizens and

enterprises are key elements of a democratic

society. Illegal orders in the banking sector may

violate these rights, which requires analysis and

development of protection mechanisms. Illegal

actions in the banking sector create legal

uncertainty and risks for economic entities,

which negatively affects the economic stability

of the country. Therefore, the analysis of cases of

illegal orders in the banking sector will help

identify gaps in the current legislation and

develop recommendations for its improvement,

which will contribute to strengthening the legal

protection of banks and their clients.

The object of the study is social relations in the

field of banking activity, which arise in

connection with the issuance and implementation

of orders and orders of state authorities,

regulatory bodies, as well as banking institutions

themselves.

The subject of the study is illegal orders and

orders in the field of the banking system, and

their constitutional and legal aspects, including:

Regulatory and legal framework that regulates

banking activities and protects the rights and

freedoms of subjects of banking relations.

Constitutional norms and principles guarantee

protection against unlawful orders and orders.

The practice of issuing and challenging illegal

orders and orders in the banking sector.

Mechanisms to protect the rights of subjects of

banking relations against illegal actions of state

bodies and officials.

Causes and consequences of illegal orders and

orders in the banking sector.

International experience and standards in the

field of banking regulation and protection of the

rights of subjects of banking relations.

Regarding the main tasks of the research, we note

the following.

The tasks are:

1. Analysis of constitutional guarantees in the

banking sector.

2. Analyze the laws of Ukraine that regulate

banking activity (in particular, "On banks

and banking activity" and "On the National

Bank of Ukraine") and identify gaps and

inconsistencies in legislative acts that may

contribute to the adoption of illegal orders

and orders.

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3. Assess the effectiveness of existing

mechanisms for protecting the rights of

subjects of banking relations, such as

judicial protection, control, and supervision

by the National Bank of Ukraine.

4. Identify the main causes of illegal orders and

orders in the banking sector, such as abuse

of power, insufficient control and

supervision, and political influence. And

5. Based on the analysis, develop

recommendations for improving the

legislative framework and increasing the

effectiveness of the mechanisms for

protecting the rights of subjects of banking

relations.

The fulfillment of the specified research tasks

will allow a comprehensive assessment of the

problem of illegal orders and orders in the

banking system of Ukraine, identify the main

factors contributing to their occurrence, and

develop effective measures for their prevention.

This will contribute to increasing the legal

protection of the subjects of banking relations

and strengthening the stability and trust in the

banking system of Ukraine.

The structure of the article can be outlined as

follows:

Introduction

• Overview of the topic: Examination of

illegal orders and orders within the banking

system from a constitutional law

perspective.

• Purpose: Analyze illegal orders in the

banking system in the context of

constitutional rights and freedoms.

Theoretical Framework and Literature

Review

• Review of constitutional norms and

principles relevant to banking.

• Analysis of specific cases involving illegal

orders in the banking sector.

• Study of existing literature on mechanisms

for protecting the rights of subjects in

banking relations.

Methodology

• Description of the methods used in the

study:

o Analysis method

o Historical-legal method

o Comparative method

o Logical method

Results and Discussion

• Findings on how the Constitution of Ukraine

enshrines basic rights and freedoms

affecting the banking system.

• Key constitutional guarantees, such as the

right to property, entrepreneurial activity,

and legal protection.

• Analysis of how these guarantees protect

banking subjects from illegal orders.

• Discussion on the need for improved legal

regulation in the Ukrainian banking sector.

• Identification of shortcomings in the current

legislative framework and recommendations

for strengthening mechanisms to protect

banking rights.

Conclusions

• Summary of the study's conclusions on the

constitutional protections for banking

subjects.

• Emphasis on the importance of enhancing

legal regulations and mechanisms to ensure

legality and trust in Ukraine's banking

system.

• Recommendations for legal and regulatory

improvements to support law and order in

the banking sector.

Thus, the study of illegal orders and orders in the

field of the banking system from the

constitutional aspect is extremely relevant and

will contribute to the improvement of the legal

regulation of banking activity in Ukraine, the

protection of the rights of subjects of banking

relations, and the improvement of the general

legal culture in the state.

Theoretical Framework or Literature Review

In the study of Baryshnikov (2009), the issue of

the collection of an administrative fine in the

context of banking was considered. It was

remarked that among the types of administrative

fines, fines play a based role in preventing

violations, training, and deterring further illegal

actions. However, not only the fact of its use but

also its specific size is crucial. The size of the fine

ultimately reflects the principle of the

effectiveness of the sanction as a means of

ensuring compliance with the law. The size of the

fine imposed on the offender (whether it is a

natural person or a legal entity) affects his

consciousness and motivation to refrain from

similar actions in the future.

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Bordyuk (2014) considered the banking

supervision systems of foreign countries. It was

found, that in different countries, there are

various systems of supervision of commercial

banks, which can be centralized or distributed

among different bodies. In many countries, such

as Great Britain, Italy, and the Netherlands, the

central bank is responsible for supervising

commercial banks. Canada and Switzerland have

separate supervisory bodies separate from the

central bank. In Germany, the USA, and Japan,

there is a mixed system, where the

responsibilities of supervision are divided

between the central bank and the state

authorities. There are different types of control

over the activities of commercial banks, such as

state, departmental, and independent. State

control is carried out through legislation that

regulates banking activities. Departmental

control consists of supervision by the central

bank of the country. Independent control is

carried out by independent audit firms. In the

banking systems of developed countries, there

are commercial and central banks. Commercial

banks can be universal or specialized. Universal

banks carry out a variety of banking operations,

while specialized banks specialize in specific

types of operations. In some countries, bank

specialization is mandatory due to legislation, but

many banks are still expanding their operations.

The tendency towards the predominance of one

type of bank in a country may change as a result

of the liberalization of legislation or through the

circumvention of existing laws. For example, in

countries where specialized banks prevail, a

trend towards universalization may appear. After

all, many countries have a combination of both

types of banks in their banking system.

Vlasova (2006) found out the reasons for the

NBU's use of influence measures. It has been

established that the list of grounds for the

application of influence measures by the

National Bank of Ukraine shows that not all of

them correspond to the general grounds defined

in Article 73 of the Law of Ukraine "On Banks

and Banking Activity". This may lead to the

appeal of decisions on the application of these

measures based on part 2 of Article 19 of the

Constitution of Ukraine, which requires that state

and local self-government bodies, as well as their

officials, act only on the basis, within the limits

of authority and in the manner provided for by

the Constitution and laws of Ukraine. In addition,

the method of determining the grounds for the

application of influence measures, outlined in the

Regulation on the application of influence

measures by the NBU for violations of banking

legislation, approved by Resolution of the NBU

Board dated August 28, 2001 No. 369, contains

many assessment norms and causes particular

difficulties in the process of proving the

existence of relevant grounds. In this regard, one

of the vital directions of further research should

be the improvement of the legal regulation of the

grounds for the application of NBU influence

measures, taking into account possible sources of

evidence of the existence of such grounds.

Gotvyanskyi (2016) investigated the current state

of fraud in the field of economic activity.

Dmytrenko (2021) analyzed the peculiarities of

legal regulation of banking relations in the

context of Ukraine's European integration. Thus,

it was noted that Ukraine, having signed the

Association Agreement, undertook to implement

the standards, principles, and legal norms

regulating banking activities in the EU into the

banking legislation. Significant for the regulation

of the banking services market within the EU,

and which have already been implemented or are

subject to implementation into Ukrainian

legislation, according to the authors, are EU

documents containing financial monitoring

mechanisms and the basic principles of financial

institutions. Since these provisions are only

partially integrated into Ukrainian legislation,

work on their consolidation should continue.

Particular attention should be paid to the

harmonization of legislation with the rules,

requirements, and recommendations of the Basel

Committee on Banking Supervision, in

particular, regarding the introduction of

minimum capital adequacy and liquidity ratios to

reduce the outflow of capital from Ukraine.

Given several problems in the banking system of

Ukraine in the period 2015-2020, including

during the financial crisis and pandemic, current

priorities include: strengthening control and

responsibility of financial market participants;

introducing special requirements for indicators of

systemically important banks and other financial

institutions; improvement of the system of

regulation and supervision of financial

institutions; ensuring transparency of activity and

reporting of financial market participants;

transition of banks and non-banking financial

institutions to international financial reporting

standards; reduction of the state's share in the

banking system, etc. The implementation of

these and other measures will contribute to the

adaptation of the Ukrainian banking system to

EU standards, which, in turn, will ensure the

provision of modern and high-quality banking

services by Ukraine's European integration

course.

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Zhuk (2020) carried out a comprehensive

analysis of the legal regulation of banking

activity in the criminal legislation of foreign

countries. From the point of view of improving

the domestic criminal law regulation of banking

activity, in the author's opinion, the following

foreign law-making experience is useful: the

presence of administrative prejudice as a

condition for criminal liability; increased

attention to protecting the rights and legitimate

interests of creditors, in particular establishing

liability for several violations related to

bankruptcy proceedings and debt collection;

encouraging positive post-criminal behavior by

establishing special types of exemption from

criminal liability.

Emelyanov (2011) investigated the problematic

aspects of organizational and legal protection of

bank secrecy in Ukraine. It was finalized that in

the conditions of the development of the

information society, market economic relations,

and the expansion of international cooperation,

the issue of BT protection becomes especially

relevant. Ukraine has created its own BT

protection system, which demonstrates positive

development trends and meets world standards.

BT is a separate type of IPR and has a specific

protection regime that is not identical to any

other legal privacy regime. Legislative regulation

of BT circulation in modern conditions requires

constant research and improvement. Therefore, it

is significant to develop and adopt a special law

of Ukraine on BT, which would eliminate the

analyzed problematic aspects and shortcomings

of the current legislation.

Luk'yanets (2006) analyzed administrative-delict

relations in Ukraine. The main focus of the

monograph is on the content of administrative-

delict relations, modern concepts of

administrative responsibility, principles of

construction and implementation of a normative

model of administrative responsibility in modern

conditions, as well as problems of

systematization of administrative-delict

legislation.

Yepifanov, Plastun, & Dombrovskyi (2009)

carried out a comprehensive analysis of the

financial security of enterprises and banking

institutions. The monograph examines the

essence of the concept of financial security at

both the micro and macro levels and examines

the causes of crises and methods of their

prevention. Special attention is paid to the

problems of ensuring financial security in

Ukraine, analysis of the current state of the

banking system of Ukraine from the point of

view of its financial security, as well as

theoretical approaches to the formation and

implementation of the financial security system

in the activities of enterprises and banks. In

addition, the work proposes several innovations

and improvements to the existing theoretical base

in the field of financial security for enterprises

and banks.

Nadobko (2016) analyzed the issue of

administrative responsibility for violations of

legislation on banks and banking activities,

namely, he carried out a general description of

administrative responsibility for violations of

banking legislation, investigated the legal

grounds of administrative responsibility for

violations of legislation on banks and banking

activities, features of the application of

administrative responsibility in the banking

sector, types of administrative penalties for

violations of banking legislation, as well as

problems and prospects for improving

administrative responsibility for violations of

legislation on banks and banking activities.

Melnyk (2017) paid attention to the classification

of financial fraud in a commercial bank and

noted that further research in this direction

involves the study of the place and role of

financial fraud in the system of ensuring the

financial security of a commercial bank, as well

as the mechanisms of its detection,

countermeasures, and prevention.

Kryushenko (2015) considered the methods of

fraud in the banking sector and noted that the

peculiarities are the specifics of this sector and

access to data. Shapoval (2016) considered the

general issues of the constitutional law of

Ukraine and singled out and systematized the key

provisions in the textbook.

Finageev (2016) analyzed the ways of

committing crimes related to the use of means of

access to bank accounts. The scientist

distinguishes 3 groups of ways of concealing

crimes related to illegal access to bank accounts:

Concealment of a crime by masking information

and its carriers:

− change of legal address and actual location

of the enterprise;

− transfer of the employee to another job (to

another unit or institution);

− use of forged payment documents and

technological errors to hide illegal

transactions;

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− multiple transfers of funds between

accounts, mixing of legal and criminally

obtained funds on different accounts;

− conversion and transfer into cash of illegally

obtained funds;

− various operations for the legalization

(laundering) of proceeds obtained through

crime.

Concealment of a crime due to the destruction of

information and its carriers:

1. liquidation of enterprises and financial

institutions;

2. destruction of objects and documents, with

the help of which the crime was committed

(for example, payment documents,

accounting reports, records in electronic

payment systems), through their

concealment, loss, or illegal acquisition.

Concealment of a crime due to falsification of

information and/or its carriers:

− providing knowingly false testimony;

− distortion of financial, statistical,

technological, tax, and other documentation;

− threats, persuasion, or bribery of employees

of bank security, law enforcement, and

control bodies;

− the use of corruption cover-up and other

methods of countering the investigation.

Podolyan (2020) investigated transactions in the

field of banking activity in the context of

historical and legal analysis, that the legal

regulation of banking operations granted powers

to each type of banking institution through

separate transactions and a set of transactions,

which were determined primarily by the

functions of these institutions. At the same time,

the list of these operations, established in the

legislation, was gradually expanded thanks to the

improvement of regulatory acts. The major

banking operations for each type of credit

institution remained practically unchanged, and

the number of such operations increased due to

new additional operations, which became

separate types of transactions. Attention was also

drawn to the fact that the lack of mandatory

licensing of banking operations led to

insufficient regulation of the activities of

commercial banks, which allowed them to act

independently within the limits of their charter.

In general, according to the researcher, the

regulation of banking activity in the researched

period had a multi-level character, which was

reflected in the adoption of laws and by-laws.

Most of the by-laws were passed for state-owned

and small credit institutions, while for joint-stock

commercial banks, the instructions and orders

were not sufficiently specified, resulting in a

number of restrictions and regulations. Another

shortcoming of the banking legislation of that

period was the significant dynamics of legal

regulation, which was expressed in the constant

reformation of legal norms, which did not

contribute to the stable operation of banking

institutions. In addition, the state influence on the

banking system was significant, which was

manifested in the ability of state authorities to

make changes to the charters of banking

institutions.

The following is observed from the above

analysis. The main research trend is focused on

the study of constitutional guarantees that protect

the rights and freedoms of subjects of banking

activity. Another trend concerns the analysis of

the legislative framework that regulates banking

activities in Ukraine. Researchers are actively

studying the mechanisms of protection of the

rights of subjects of banking relations against

illegal orders and orders. This includes: an

analysis of the role of the judicial system in

protecting the rights of subjects of banking

relations; a review of the decisions of the

Constitutional Court of Ukraine, which concern

banking activity; development of proposals for

the creation of specialized bodies or procedures

for quick response to illegal actions in the

banking sector. There is also considerable

interest in the influence of international law and

practices on the regulation of banking activity in

Ukraine and the study of practical aspects of the

implementation of constitutional norms in

banking activity.

Therefore, the study of illegal orders and orders

in the field of the banking system from the

constitutional aspect is multifaceted and covers a

wide range of issues. The main research trends

are focused on ensuring constitutional

guarantees, improving the legislative framework,

developing mechanisms for protecting the rights

of subjects of banking relations, the influence of

international law and practices, as well as on

practical aspects of the implementation of

constitutional norms in banking. These studies

are extremely important for ensuring the law and

order and stability of the banking system of

Ukraine.

Methodology

Let’s see how each method will be applied in the

study, along with concrete examples:

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Analysis Method:

• Constitution of Ukraine:

o Study of constitutional provisions

guaranteeing the rights and freedoms of

banking subjects.

o Example: Analyzing articles related to

property rights, entrepreneurial activity, and

legal protection.

• Laws of Ukraine:

o Examination of legal norms governing

banking activities.

o Example: Analyzing provisions from laws

such as "On banks and banking activities"

and "On the National Bank of Ukraine"

regarding the legality of orders and

instructions.

• By-laws:

o Review of resolutions, orders, and directives

that regulate the banking sphere.

o Example: Analyzing specific directives

issued by regulatory bodies regarding

banking operations and their conformity

with constitutional principles.

Historical-Legal Method:

• Historical Development of Legislation:

o Tracing the evolution of banking laws and

regulations over time.

o Example: Analyzing how changes in

banking legislation have influenced the

prevalence of illegal orders and

instructions.

• Trends and Regularities:

o Identifying patterns in the issuance of illegal

orders and instructions.

o Example: Studying historical cases of illegal

orders in the banking sector and identifying

recurring themes or causes.

Comparative Method:

• Comparison with International Norms:

o Contrasting Ukrainian legislation with

international legal standards.

o Example: Comparing Ukrainian banking

laws with those of other countries to identify

areas of convergence or divergence in

addressing illegal orders.

• Study of International Practices:

o Analyzing international standards,

recommendations, and practices in the

banking sphere.

o Example: Examining how other countries

handle illegal orders and instructions in their

banking systems and assessing their

effectiveness.

Logical Method:

• Data Structuring:

o Organizing collected information in a

logical manner.

o Example: Categorizing findings from the

analysis of constitutional provisions, laws,

and historical data into coherent themes.

• Conclusion Formulation:

o Drawing logical conclusions based on the

analysis.

o Example: Formulating recommendations for

improving the legal framework to address

identified issues related to illegal orders in

the banking sector.

By employing a combination of these methods,

the study aims to provide a comprehensive

understanding of illegal orders and instructions

in the banking system from a constitutional

perspective. This multifaceted approach enables

the identification of problems, assessment of

their causes and consequences, and development

of recommendations for legal improvements to

ensure legality and order in Ukraine's banking

sector.

Results and Discussion

In the current conditions of the development of

the banking system of Ukraine, special attention

should be paid to the constitutional aspects of the

legality of orders and orders issued in this area.

The Constitution of Ukraine defines the basic

principles by which state authorities and their

officials must act, which is necessary for

ensuring the stability and legality of the

functioning of the banking system.

According to Part 2 of Art. 19 of the Constitution

of Ukraine, state authorities and local self-

government bodies, their officials are obliged to

act only on the basis, within the limits of

authority and in the manner provided by the

Constitution and laws of Ukraine. This principle

is key in the context of considering the legality of

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orders and orders issued in the field of banking

activity (Law No. 254к/96-VR, 1996).

Orders and orders in the banking sector must

comply with the legislation of Ukraine, including

the norms regulating banking activities. In

particular, the Law of Ukraine "On Banks and

Banking Activity" establishes general grounds

for the issuance of normative legal acts that

regulate the activities of banks and their

interaction with the National Bank of Ukraine

(NBU) (Law No. 2121-III, 2000). The National

Bank of Ukraine, in turn, issues orders that must

meet the requirements of the Constitution and

other laws of Ukraine (Law No. 679-XIV, 1999).

In the banking system of Ukraine, situations may

arise when illegal orders and orders are issued

that contradict the Constitution and current

legislation. Such actions can have serious

consequences for both banking institutions and

the country's economy as a whole.

Illegal orders and orders in the field of the

banking system can be defined as those that:

1. They contradict the norms of the

Constitution of Ukraine.

2. They violate the current banking legislation.

3. They are beyond the authority of the person

issuing them.

4. Aim for illegal enrichment or other selfish

purposes.

Examples of such illegal actions can be orders to

carry out operations that violate the principles of

financial monitoring, or orders that facilitate

money laundering.

Therefore, decrees and orders that contradict the

Constitution of Ukraine, and laws issued more

than authority are considered illegal. Such acts

may be challenged in court, and their execution

may be suspended. An important aspect is also

the assessment of the legality of the actions of

officials who issue or execute such orders and

orders (Luk'yanets, 2006).

Illegal orders and orders in the banking sector:

− Illegal acts of regulatory bodies.

− The compulsion to perform actions contrary

to the law.

− Interference in the internal affairs of banking

institutions (Finageev, 2016).

Officials who issue illegal orders or orders are

liable following the current legislation of

Ukraine. It can be disciplinary, administrative, or

criminal responsibility depending on the nature

of the offense. In this context, it is also important

to ensure effective mechanisms of control and

supervision of the activities of such officials by

the relevant authorities. In addition, the

Constitutional Courts play an important role in

the protection of rights and freedoms in the

banking sphere, ensuring compliance of national

legal acts with constitutional norms and

international standards.

Regarding international standards in the field of

banking activity, the main international standards

that regulate banking activity are:

− Basel Principles: The Basel Committee on

Banking Supervision sets standards for

effective supervision of banks (Bis, 2012;

and

− FATF Recommendations: Aimed at

Combating Money Laundering and the

Financing of Terrorism (FATF, 2018).

International organizations such as the

International Monetary Fund and the World

Bank, and at the national level the National Bank

of Ukraine also provide recommendations on

protecting banking systems from illegal

interference. They contribute to the

implementation of effective regulation and

supervision that meets international standards

(Resolution No. 23, 2022).

The strategy for the development of the financial

sector of Ukraine until 2025 (Ministry of Finance

of Ukraine, s.f) provides for:

− Effective regulation of the financial sector

and improvement of supervisory approaches

Transparent financial sector

− Resilience of the financial sector to

challenges (shocks)

− Improving the quality of corporate

governance and risk management in the

financial sector

− Increasing the availability and level of use of

financial services

− Strengthening the protection of the rights of

consumers of financial services

− Increasing the level of financial literacy of

the population.

Let's consider the problematic issues of detection

and prevention of illegal orders and orders in the

banking sector.

1. The imperfection of the legislative

framework

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− Gaps and inconsistencies in legal acts

regulating banking activities.

− The lack of clear demarcation of powers

between different state bodies creates

opportunities for abuse of power.

2. Insufficient judicial protection

− The length of court proceedings and

insufficient independence of the judicial

system make it difficult to challenge illegal

orders and orders.

− Low effectiveness of the existing

mechanisms for protecting the rights of

subjects of banking relations.

3. Lack of effective control and supervision

− Insufficient control by the National Bank of

Ukraine and other regulatory bodies.

− Absence of effective mechanisms for rapid

response to illegal actions.

4. Political influence and corruption

− The influence of political forces on the

adoption of orders and orders in the banking

sector.

− Spread of corruption, which undermines

confidence in the banking system and

creates conditions for abuse of power.

5. Low legal awareness of subjects of banking

relations

− Insufficient awareness of citizens and legal

entities regarding their rights and

mechanisms for their protection.

Ways to solve these problems can be:

Improvement of the legislative framework.

Carrying out a comprehensive revision of

legislation regulating banking activities to

eliminate gaps and inconsistencies.

Amendments to the laws of Ukraine "On Banks

and Banking" (Law No. 2121-III, 2000) and "On

the National Bank of Ukraine" (Law No.

679-XIV, 1999) clearly demarcate the powers of

state bodies and increase their responsibilities.

− Increasing the effectiveness of legal

protection

Reform of the judicial system to ensure its

independence and efficiency in the consideration

of cases related to banking activities.

Introduction of specialized courts for

consideration of banking disputes.

− Strengthening control and supervision

Improvement of control mechanisms by the

National Bank of Ukraine, in particular by

introducing a system of early warning and

response to illegal actions.

Increasing the transparency of regulatory bodies

and creating independent commissions to

oversee their activities.

− Prevention of political influence and fight

against corruption

Introduction of stricter anti-corruption measures

in the banking sector, including control over the

income and expenses of officials.

Development of mechanisms to prevent political

influence on decision-making in the banking

sector.

− Increasing legal awareness

Conducting information campaigns and

educational programs to increase the legal

awareness of citizens and legal entities regarding

their rights in the banking sector.

Solving problematic issues related to illegal

orders and orders in the banking system requires

a comprehensive approach, which includes

improving the legal framework, reforming the

judicial system, strengthening control and

supervision, preventing political influence and

fighting corruption, as well as increasing legal

awareness of sub-objects of banking relations.

The implementation of these measures will

contribute to the strengthening of law and order

in the banking sphere and increase trust in the

banking system of Ukraine.

Ensuring the legality of orders and orders in the

field of banking activity is an important task that

requires compliance with constitutional

principles, improvement of legislation, and

effective control. Only under such conditions is

it possible to achieve stable and legal functioning

of the banking system of Ukraine, which will

meet international standards and contribute to the

protection of the rights and interests of all

financial market participants.

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Conclusions

1. According to the first task and the second

task, with the help of the historical-legal

method, the method of analysis, and logical

methods, it was established that the

Constitution of Ukraine enshrines the basic

rights and freedoms that directly affect the

functioning of the banking system. This

includes the right to property, business, and

legal protection. The provision of these

rights is fundamental for the protection of

the subjects of banking relations from illegal

orders and orders. At the same time, the

study revealed gaps and inconsistencies in

the legislation regulating banking activities.

Despite the presence of numerous normative

legal acts, their imperfection creates

conditions for the adoption of illegal orders

and orders. Changes in the legislation are

necessary to more clearly define the powers

and responsibilities of state bodies and

banking institutions.

2. A detailed study of the impact of regulatory

mechanisms on violations in the banking

sector allowed us to conclude that the

existing mechanisms for protecting the

rights of subjects of banking relations, such

as judicial protection and control by the

National Bank of Ukraine, are not always

effective. This is due to lengthy procedures,

insufficient independence of the judicial

system, and limited opportunities for prompt

response to illegal actions. The main reasons

for illegal orders and orders in the banking

sector are abuse of power, insufficient

control and supervision, as well as political

influence. These factors undermine

confidence in the banking system and

negatively affect its stability.

3. The method of analysis and forecasting

helped to establish that international

standards and practice play an important role

in improving the legal regulation of banking

activities. The implementation of these

standards can help increase the level of law

enforcement and protection of the rights of

subjects of banking relations in Ukraine.

Based on the conducted research,

recommendations were developed for improving

the legal regulation of banking activities:

− Elimination of gaps and inconsistencies in

the legal framework.

− Strengthening control and supervision of the

activities of banks and state bodies.

− Improvement of mechanisms for protecting

the rights of subjects of banking relations,

including the development of special

procedures for quick response to illegal

actions.

− Borrowing and implementing the best

international practices and standards.

Therefore, the results of the study emphasize the

need for systematic changes in the legal

regulation of banking activities to ensure legality

and law and order. Implementation of the

proposed recommendations will contribute to

increasing the legal protection of subjects of

banking relations, strengthening the stability of

the banking system, and increasing trust in it. The

study of illegal orders and orders in the field of

the banking system from the constitutional aspect

showed the need to improve the legislative

framework, strengthen control and supervision,

as well as introduce effective mechanisms for the

protection of the rights of subjects of banking

relations. Implementation of international

standards and best practices can significantly

improve the situation in the banking sector of

Ukraine. This will help increase the legal

protection of citizens and legal entities and

strengthen the economic stability of the state.

As for further scientific research, we consider it

necessary to focus on the study of the practice of

the Constitutional Court of Ukraine regarding

appeals against illegal orders and orders in the

banking sector.

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