Informing on the results of the SFMS work for the 1st half of 2023
The State Financial Monitoring Service of Ukraine (SFMS), as the financial intelligence unit of Ukraine, under wartime takes enhanced practical and organizational measures to counteract to legalization (laundering) of the proceeds from crime, financing of terrorism and financing of proliferation of the weapons of mass destruction (hereinafter – AML/CFT/CPF), which are based on the implementation of:
- the AML/CFT/CPF Law of Ukraine, acts of the Cabinet of Ministers of Ukraine and the Ministry of Finance of Ukraine;
- the Main Directions of the Development of the AML/CFT/CPF System in Ukraine for up to 2023 and Action Plan for Their Implementation (Order of the CMU of 12.05.2021 No. 435-r);
- the SFMS Strategic Development Programme for up to 2024;
- the SFMS Activity Priorities for the period of martial law, approved by the Ministry of Finance of Ukraine.
This work is carried out in coordination with national and international partners in terms of taking effective practical steps, including those of an international legal nature, in order to impose effective sanctions on the actions of a terrorist state.
On the official website of the SFMS, continuing the work started after imposition of wartime, key statistical data on the work of the financial intelligence unit in the international and domestic arena has been publishing on a weekly basis.
Collection and processing of information
During the 1st half of 2023, the SFMS received from the reporting entities 659 541 reports on financial transactions, subject to financial monitoring, including:
- 55 268 suspicious financial transactions (activities) reports;
- 590 916 threshold transactions reports;
- 77 threshold and suspicious transactions (activities) reports;
- 13 280 reports on the request for financial transactions monitoring.
Analytical research
In the 1st half of 2023, the SFMS sent 586 referrals (including 318 case referrals and 268 additional case referrals) to law enforcement agencies, in particular to:
- the Security Service of Ukraine – 175 referrals (including 97 case referrals and 78 additional case referrals);
- the National Police of Ukraine – 163 referrals (including 124 case referrals and 39 additional case referrals);
- the National Anti-Corruption Bureau of Ukraine – 88 referrals (including 26 case referral and 62 additional case referrals);
- the Economic Security Bureau of Ukraine – 62 referrals (including 35 case referrals and 27 additional case referrals);
- the prosecutors’ offices – 56 referrals (including 14 case referrals and 42 additional case referrals);
- the State Bureau of Investigation – 42 referrals (including 22 case referrals and 20 additional case referrals).
In these referrals, the sum of financial transactions that may be related to legalization of the proceeds and commission of a criminal offense amounted to
UAH 71.4 billion.
In the 1st half of 2023, the amount of financial transactions suspended and funds blocked by the SFMS amounted to the equivalent of UAH 3.3 billion.
Currently, the main activity of the SFMS is the detection of financial transactions and persons associated with the financing of terrorism/separatism and military aggression by the Russian Federation (RF) and the Republic of Belarus (RB) against Ukraine (including the activities of sabotage and intelligence groups; collaborative activities; public calls by persons to change or overthrow the constitutional order or change the boundaries of the territory or state border of Ukraine; persons subject to sanctions).
Within the framework of international cooperation on information exchange, as well as the identification and suspension/freezing of assets belonging to persons who commit predicate offences, organize, ensure and provoke the conduct of an aggressive war of the RF against Ukraine, and to other persons, the SFMS carries out constant analytical work, within the framework of which, in particular 55 requests were submitted to 29 financial intelligence units of foreign countries. Joint analytical researches are ongoing.
Thus, in the 1st half of 2023, the SFMS sent to law enforcement agencies 143 materials related to the financing of terrorism/separatism and military aggression by the RF and RB against Ukraine.
In addition, a representative of the SFMS participates in the operative group Task Force to identify and seize assets belonging to persons who organize, support and provoke the RF’s aggressive war against Ukraine, both in Ukraine and abroad, for the purpose of their further transfer to the state budget of Ukraine to rebuild its destroyed infrastructure.
Thus, in the 1st half of 2023, the SFMS found information on the possession of 15 real estate objects (2 apartments, 1 condominium, 3 villas, 1 mansion and 13 other real estate objects), 163 companies and 48 accounts by the subjects of the investigation and related persons. The value of the individual assets for which the relevant information is known is equivalent to about USD 25 million.
Analytical investigations into the laundering of the proceeds of corruption, embezzlement and misappropriation of public funds and property remain one of the focuses of the SFMS.
Thus, in the 1st half of 2023, the SFMS sent to law enforcement agencies
108 referrals (35 case referrals and 73 additional case referrals), that are related to the suspicion of corruption, in particular:
- the National Anti-Corruption Bureau of Ukraine – 88 referrals (26 case referral and 62 additional case referrals);
- the Security Service of Ukraine – 8 referrals (4 case referral and 4 additional case referrals);
- the State Bureau of Investigation Ukraine – 8 referrals (4 case referral and 4 additional case referrals);
- the Prosecutor General’s Office – 2 referrals (1 case referral and 1 additional case referrals);
- the National Police of Ukraine – 2 additional case referrals.
In these referrals, the amount of financial transactions that may be related to legalization of the proceeds and commission of a criminal offense
amounted to UAH 9.1 billion.
Cooperation with financial monitoring entities and public
In the framework of cooperation with the private sector, the SFMS continues testing the exchange of information with the reporting entities by means of the Information and Telecommunication System “Electronic Cabinet of the Financial Monitoring System”, implemented with the support of the EU Anti-Corruption Initiative in Ukraine (EUACI).
Thus, the SFMS resumed testing the exchange of information with banking institutions using the formats of reports, specified in the Resolution of the National Bank of Ukraine of August 26, 2022 No. 193.
At the same time, during the period of martial law, the SFMS focuses on cooperation with the public. Therefore, on 29 March 2023, the fourth meeting of the Public Council under the SFMS took place.
During the meeting, the representative of the SFMS informed attendees about the implementation by the SFMS in 2022 of the AML/CFT/CPF state policy, under martial law.
In addition, for the implementation of part two of Article 36 of the AML/CFT/CPF Law of Ukraine of December 06, 2019, No. 361-ІХ, the SFMS submitted report on the state of AML/CFT/CPF for 2022 (hereinafter – Report) to the Verkhovna Rada of Ukraine.
The Report contains information on the results of the activities of participants of the national AML/CFT/CPF system for 2022, taking into account conditions of the armed aggression of the RF against Ukraine.
Also, in accordance with Article 45 of the Law of Ukraine “On Civil Service” and the Standard Procedure for Public Report of the Head of an executive authority, approved by Order of the National Agency on Civil Service on 20.12.2016 No. 277 and registered with the Ministry of Justice of Ukraine on 11.01.2017 No. 28/29896, taking into account the introduction of martial law in Ukraine and the consequences of its introduction, in April 2023, the Head of the State Financial Monitoring Service of Ukraine presented a public report for 2022.
In the field of methodological work of the SFMS, an international conference was held on April 27-28, 2023, organized by the SFMS with the support of the project “Strengthening Financial Monitoring System Preparedness to Fight Money Laundering and Financing of Terrorism Threats”, within the framework of the Organization for Security Cooperation in Europe (OSCE) Support Program for Ukraine and in cooperation with the EU Anti-Corruption Initiative in Ukraine (EUACI) on the following topic: «Supranational and national AML/CFT/CPF systems: challenges and prospects».
The event was devoted to discussing the peculiarities of implementing AML/CFT/CPF legislation, taking into account the results of the third round of the AML/CFT/CPF National Risk Assessment, current challenges and identifying strategic priorities for the further evolution of the system of response to relevant threats, including in the context of RF’s military aggression against Ukraine.
On June 29, 2023, as part of the coordination work, the fifteenth meeting of the AML/CFT/CPF Council was held in the format of a video conference.
The Council discussed the results of the SFMS participation in the international events of the global AML/CFT system, as well as the results of the state financial monitoring entities’ AML/CFT/CPF supervision of the reporting entities, taking into account the risk-oriented approach and the problems accompanying it.
International events
The SFMS published a breakdown of risks posed by the RF to Global Financial Security and the World Order.
This breakdown demonstrates the nature of the destructive impact of the terrorist war waged by the RF against Ukraine, and shows the location, role and actions of key institutions that ensure Global Financial Security and World Order. Its analysis makes it possible to draw parallels between violations by the RF of the Geneva Conventions and other special conventions under the mandate of the Financial Action Task Force (FATF) and FATF Recommendations.
The war crime of the RF has a devastating effect (red lines) on the World Order and Global Financial Security, the purpose of which is to protect human rights (including ensuring the financial security of states, international associations, unions, and mere human).
Cooperation with the Financial Action Task Force (FATF)
During the 1st half of 2023, an exchange of information between the SFMS and the FATF regarding the situation in Ukraine related to the full-scale invasion of the RF was carried out.
In the reporting period, the Head of the SFMS repeatedly sent official letters to the President of the FATF, Mr. Raja Kumar, with a detailed description of the threats and risks posed by the RF to the integrity of the international financial system and a call for appropriate action.
In cooperation with partners from the public and private sectors, the SFMS prepared a new video appeals to the FATF describing the terrorist risks that the RF poses to the international financial system. This video appeals were published on the SFMS’s page on the YouTube social network.
In the period from 20 to 24 February 2023 and 19 to 23 June 2023, the SFMS, with the support of the EU Anti-Corruption Initiative in Ukraine (EUACI) project, took part in the regular FATF Plenary meetings and the meeting of the relevant FATF Working Groups held in Paris (French Republic).
At the Plenary meeting, held on February 20-24, the FATF adopted a Statement.
According to the Statement, FATF is deeply concerned by the reports of arms trade between the RF and United Nations sanctioned jurisdictions, and malicious cyber-activities emanating from the RF.
The FATF stated that the actions of the RF unacceptably ran counter to the FATF core principles aiming to promote security, safety, and the integrity of the global financial system. They also represent a gross violation of the commitment to international cooperation and mutual respect upon which FATF Members have agreed to implement and support the FATF Standards. Considering the above, the FATF has decided to suspend the membership of the RF. The RF remains accountable for its obligation to implement the FATF Standards.
The next FATF Plenary meeting, held from June 19 to 23, 2023, extended the suspension of RF’s membership in the FATF.
According to the FATF official information, following the results of the FATF Plenary meeting, the Russian Federation’s war of aggression against Ukraine continues to run counter to FATF’s principles of promoting security, safety and the integrity of the global financial system and the commitment to international cooperation and mutual respect upon which FATF Members have agreed to implement and support the FATF Standards.
Following the statements issued in March, April, June and October 2022, FATF once again reiterates that all jurisdictions should be alert to possible emerging risks from the circumvention of measures taken in order to protect the international financial system and take the necessary measures to mitigate these risks.
The work of the SFMS and partners in this direction is ongoing.
Cooperation with the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL)
The SFMS processed the drafts of High-Level Declaration of MONEYVAL and the MONEYVAL Strategy for 2023-2027, which were approved during the High-Level Meeting in Warsaw (Republic of Poland) on April 25, 2023.
These documents outline the political and practical visions and role of the MONEYVAL in AML/CFT/CPF activities for the next 5 years, within the framework of which the ministers of MONEYVAL member states and territories responsible for anti-money laundering policies have committed to improving the effectiveness of their regimes to prevent and combat money laundering, the financing of terrorism and proliferation of weapons of mass destruction.
In particular, in the Declaration (clause 3), ministers and high-level delegates of MONEYVAL member states and territories joined in strongly condemning the continued aggression of the Russian Federation against Ukraine and confirmed their full support for Ukraine and its people.
These documents are available on the MONEYVAL official website.
During 22-26 May 2023, the representatives of Ukraine, headed by the SFMS, participated in the meetings of the Working group on Evaluations and the 65th MONEYVAL Plenary meeting, which took place in Strasbourg (French Republic).
During the Plenary meeting, negotiations were held with MONEYVAL member countries and observers. International partners were provided with information on the operation of the national AML/CFT/CPF system in the context of the aggressive war of the RF against Ukraine.
Ukraine has confirmed compliance with all international obligations in the field of financial monitoring taking into account the objective circumstances of the AML/CFT/CPF system operation.
There was also communication with the MONEYVAL Secretariat regarding work issues.
Cooperation with the Egmont Group of Financial Intelligence Units (EG)
The SFMS continues to cooperate with the EG on an ongoing basis to ensure its adequate response to violations of the EG Charter and the Principles for Information Exchange between Financial Intelligence Units caused by the RF terrorist war against Ukraine.
Confidential communication is ensured with the leadership of the EG, its Secretariat and the EG member FIUs.
In the period from January 31 to February 1, 2023, a representative of the SFMS took part in the EG MSCWG meetings (Dakar, the Republic of Senegal).
Also, on May 16, 2023, the SFMS took part in a virtual meeting of the MSCWG.
Other international activities of the financial intelligence
On January 16, 2023, on the official website of the Conference of the Parties to Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism (Warsaw Convention), a decision following the Plenary Session (15-17 November 2022), where a representative of the SFMS took part virtually, was published.
In accordance with this decision, the RF, in particular, was deprived the right to vote on any issues, which do not concern the statutory functions of the Conference, to be entrusted with any task of rapporteur, coordinator, head of a delegation representing the Conference of the Parties.
Moreover, the SFMS representatives took part in:
- the training on conducting investigations in the area of virtual assets as part of the project “Innovative policy solutions to mitigate money laundering risks of virtual assets”, which took place on 27-29 March 2023 in Vienna (Republic of Austria);
- the FATF seminar on Non-conviction Based Confiscation, held virtually on 29 March 2023.
- the meetings with the European Commission’s peer review mission on the fight against organised crime in Ukraine, held on April 18, 2023;
- the meeting with representatives of the European Commission to analyze the effectiveness of financial investigations by the competent authorities of Ukraine (April 21, 2023), in the context of assessing Ukraine as a candidate country for European Union membership;
- the study visit to Berlin (Germany) in order to study the German experience in conducting sectoral risk assessments and use these achievements in the course of the National Risk Assessment in Ukraine, which took place on April 18-22, 2023 and was organized by the Center for Democracy and Rule of Law (CEDEM) within the framework of the Ukrainian Civil Society Sectoral Support Initiative Project;
- the conference “Securing the Integrity and Resilience of Ukraine’s Financial System”, held on June 19, 2023 in London, UK, where progress, impact, and effectiveness of the ongoing efforts in Ukraine by the government and civil society to build a solid and well-defended financial system in the face of financial abuses have been considered.
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