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MainActivityFunctionsNews Informing on the results of the SFMS work for the 1st half of 2024

Informing on the results of the SFMS work for the 1st half of 2024

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 Min1sters of Ukraine and the Min1stry of Finance of Ukraine;

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 Min1stry 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 stat1stical 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 2024, the SFMS received from the reporting entities 813 983 reports on financial transactions, subject to financial monitoring, including:

  • 145 483 suspicious financial transactions (activities) reports;
  • 666 930 threshold transactions reports;
  • 189 threshold and suspicious transactions (activities) reports;
  • 1 381 reports on the request for financial transactions monitoring.

Analytical research  

In the 1st half of 2024, the SFMS prepared and sent 570 referrals (including 325 case referrals and 245 additional case referrals) to:

  • the National Police of Ukraine – 161 referrals (126 case referrals and 35 additional case referrals);
  • the Security Service of Ukraine – 156 referrals (101 case referrals and 55 additional case referrals);
  • the National Anti-Corruption Bureau of Ukraine – 96 referrals (21 case referrals and 75 additional case referrals);
  • the State Bureau of Investigation – 65 referrals (22 case referrals and 43 additional case referrals);
  • the Economic Security Bureau of Ukraine – 50 referrals (36 case referrals and 14 additional case referrals);
  • the prosecutors’ offices – 42 referrals (19 case referrals and 23 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 41,5 billion.

In addition, in the course of its financial investigations, the SFMS stopped transactions related to money laundering and criminal offenses, which amounted to the equivalent of UAH 5.4 billion.

The SFMS (as a financial intelligence unit), in cooperation with law enforcement agencies, takes measures aimed at preventing and counteracting the financing of terrorist and collaboration activities, detecting financial transactions related to military aggression by the RF against Ukraine, violent change or overthrow of the constitutional order or seizure of state power, change of territory or state border.

In the 1st half of 2024, the SFMS sent 86 referrals to law enforcement agencies related to the financing of terrorism/separatism and military aggression by the RF against Ukraine.

Such referrals are divided into the following components by the areas of investigation:

  • 48 referrals (45 case referrals and 3 additional case referrals) containing suspicions of financial transactions or their participants that may be related to the military aggression of the RF against Ukraine and the implementation of collaborative activities on suspicion of treason, forcible change or overthrow of the constitutional order or seizure of state power, change of territory or state border, including with the participation of 1 non-profit organization;
  • 34 referrals (17 case referrals and 17 additional case referrals), containing suspicions of financial transactions or their participants subject to restrictive measures (sanctions);
  • 7 case referrals containing suspicions of financial transactions or their participants that may be related to the financing of terrorism/separatism;
  • 1 case referral containing information on the freezing of the assets of a client included in the list of persons related to terrorist activities or subject to international sanctions.

Within the framework of international cooperation on information exchange, as well as the identification and suspension/freezing of assets belonging to persons who organize, ensure and provoke the conduct of an aggressive war of the RF against Ukraine, and other persons, the SFMS carries out constant analytical work, within the framework of which, in particular, 16 requests have been submitted to 13 foreign financial intelligence units. In addition, the SFMS received and processed 30 spontaneous disclosures from 7 foreign financial intelligence units containing information on persons who may be involved in organizing, supporting and provoking RF’s aggressive war against Ukraine. Joint analytical researches are ongoing.

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.

The SFMS pays special attention to the investigation of money laundering, embezzlement and misappropriation of public funds and property.
Thus, in the 1st half of 2024, the SFMS sent to law enforcement agencies 141 referrals (45 case referrals and 96 additional case referrals), that are related to the suspicion of corruption, in particular to:

  • the National Anti-Corruption Bureau of Ukraine – 96 referrals (21 case referrals and 75 additional case referrals);
  • the State Bureau of Investigation – 27 referrals (9 case referrals and 18 additional case referrals);
  • the National Police of Ukraine – 7 referrals (6 case referrals and 1 additional case referral);
  • the Security Service of Ukraine – 4 referrals (2 case referrals and 2 additional case referrals);
  • the Economic Security Bureau of Ukraine – 4 case referrals;
  • the Prosecutor General’s Office – 3 case referrals.

In these referrals, the amount of financial transactions that may be related to legalization of funds and commission of a criminal offense was UAH 11,7 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).

At the same time, during the period of martial law, the SFMS is focused on cooperation with public. Therefore, on February 23, 2024, the sixth 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 2023 of the state AML/CFT/CPF policy under martial law.

In addition, for the implementation of part two of Article 36 of the Law of Ukraine “On prevention and counteraction to legalization (laundering) of the proceeds from crime, financing of terrorism and financing of proliferation of weapons of mass destruction”, the SFMS submitted report on the AML/CFT/CPF state for 2023 (hereinafter – the Report) to the Verkhovna Rada of Ukraine.

The Report contains information on the results of the activities of the AML/CFT/CPF system participants for 2023, taking into account the RF’s armed aggression against Ukraine.

In addition, pursuant to clause 14 of the Procedure for forming and publishing the complex administrative reporting in the area of preventing and counteracting to legalization (laundering) of the proceeds from crime, financing of terrorism and financing of proliferation of weapons of mass destruction, approved by the Resolution of the Cabinet of Min1sters of Ukraine No. 692 of August 05, 2020, the comprehensive administrative reporting for 2023 was published on the official website of the SFMS.

At the same time, on January 23, 2024, the SFMS held a meeting with representatives of the NPO sector as part of the implementation of the tasks of the Working Group on National Risk Assessment, where they discussed Ukraine’s compliance with the requirements of the FATF Recommendation 8 and raising awareness for NPO on the existing for them risks to be involved (used) for money laundering or terrorist financing.

In addition, within the framework of interagency cooperation, representatives of the SFMS took part in the workshop “Mission Possible. Determining the Ultimate Beneficial Owner (UBO) in Public and Charitable Organizations under the New Rules” (March 26, 2024).

Within the framework of interagency cooperation, the SFMS together with the Academy of Financial Monitoring organized and held a virtual national interagency forum “Strategy for the Development of the Financial Monitoring System in Ukraine 2024-2026”, which took place on April 18, 2024, with the support of the Special Representative of the OSCE Chairmanship - OSCE Project Co-ordinator in Ukraine.

During the event, a wide range of issues were discussed, including the specifics of the AML/CFT/CPF development and current trends in this area.

International events

Based on open sources of information, the SFMS has prepared a visualization «Global picture of protection of the international financial system from the ML/FT/PF risks generated by the RF as a result of the invasion of Ukraine».

This visualization demonstrates the state of the AML/CFT/CPF Global International Financial System before and after the RF invasion of Ukraine, as of February 2024, specifically:

  • a disruption of ties between key international organizations and jurisdictions with RF, which is aimed at ensuring the integrity and stability of the global international financial system;
  • the RF’s deliberate destructive steps to destroy the international financial system’s security infrastructure, in particular by creating gateways to it for countries under sanctions of the UN Security Council and «blacklisted» by the FATF;
  • the RF’s actions contradict the conclusions of the 2019 Mutual Evaluation Report and require a response from the FATF.

Cooperation with the Financial Action Task Force (FATF)

During the 1st half of 2024, there was a constant exchange of information between the SFMS and the FATF regarding the situation in Ukraine related to the RF’s full-scale invasion.

During February 19-23, 2024, the SFMS took part in the regular FATF Plenary meeting and the relevant Working groups’ meetings held in Paris (France).
Following the consideration of the issue of sanctions against the RF, the FATF issued a Statement, which is published on the official FATF website.

According to the Statement, FATF members note with concern the potential risks to the international financial system, including growing financial connectivity of Russia with countries subject to FATF countermeasures, risks of proliferation financing, and malicious cyber activities and ransomware attacks. Due to the gravity of these risks, many FATF members are taking proactive measures to protect themselves and the global financial system.

The FATF calls upon all jurisdictions to continue to remain vigilant due to the above-mentioned risks. As they have done since the Russian Federation commenced its war of aggression, FATF members will continue to monitor the situation and the risks posed to the global financial system. As a suspended member of the FATF, the Russian Federation still remains accountable for its obligation to implement the FATF Standards.

In addition, given the second anniversary of the beginning of the RF’s aggression against Ukraine, the FATF recalls its Statement of 24 February 2023.
During June 23-28, 2024, the SFMS, with the support of the EU Anti-Corruption Initiative in Ukraine (EUACI) project, took part in the regular FATF Plenary meeting and the relevant Working groups’ meetings held in Singapore (Republic of Singapore).

According to the official information of the FATF following the Plenary meeting, the suspension of the membership of the Russian Federation continues to stand. Following the statements issued since March 2022, the FATF reiterates that all jurisdictions should be vigilant to current and emerging risks from the circumvention of measures taken against the Russian Federation in order to protect the international financial system.

The outcomes of this FATF meeting are available on the official website of the SFMS in the section Main/Activity/International Cooperation/Statements of International organizations.

Moreover, the SFMS has summarized all FATF Statements on the RF’s risks since the beginning of its full-scale invasion of Ukraine.

Cooperation with the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL)

During the reporting period, the SFMS cooperated with MONEYVAL in the framework of preparation of the typological study “Proceeds and Conflicts”.
Ukraine is a team leader of the project aimed at identifying trends and typologies of money laundering/terrorist financing related to military conflicts, as well as sharing best practices and potential risk mitigation actions. The project will examine scenarios before, during and after military conflicts that fuel financial crimes, as well as illegitimate methods of conflicts financing.

During April 08-12, 2024, a representative of the SFMS took part in the 6th Round Training of MONEYVAL Evaluators, which aimed to increase the level of knowledge of the MONEYVAL assessment process, deepen the understanding of international AML/CFT/CPF standards for conducting assessments in MONEYVAL jurisdictions (Riga, Latvia).

Representatives of the SFMS took part in the meetings of the MONEYVAL Working Group on Evaluations and the 67th Plenary meeting (May 21-24, 2024, Strasbourg, France). The Plenary discussed the implementation of the MONEYVAL Strategy for 2023-2027, preparations for the 6th round of mutual evaluation, current developments in the field of combating money laundering and terrorist financing in MONEYVAL jurisdictions and at the EU level, etc. Ukraine has confirmed its compliance with all international obligations in the field of financial monitoring in the context of the unprovoked military aggression of the RF against Ukraine.

Cooperation with the Egmont Group of Financial Intelligence Units (EG)

During January 30 - February 1, 2024, the representatives of the SFMS took part in the Egmont Working and Regional Group meetings, held in Saint Julian’s, the Republic of Malta.

As a reminder, the membership of the RF’s Financial Intelligence Unit in the Egmont Group has been suspended since October 18, 2023.
During June 02 - 07, 2024, representatives of the SFMS took part in the meetings of the Working Groups and the Plenary meeting of the EG, held in Paris (French Republic).

In the 1st half of 2024, the SFMS, as part of its practical activities, cooperated with 64 foreign FIUs to ensure the organization of interaction and information exchange with the competent authorities of foreign countries and international organizations, namely:

The SFMS sent 349 requests to 50 foreign FIUs, 191 responses to 38 foreign FIUs and 7 spontaneous disclosures to 7 foreign FIUs;
The SFMS received 135 requests from 36 foreign FIUs, 425 responses from 49 foreign FIUs and 228 spontaneous disclosures from 26 foreign FIUs.

Other international activities of the financial intelligence

During the reporting period, the SFMS’s representatives took part in 73 events of other international organizations and institutions, including 58 physical and 15 online events related to:
- money laundering and corruption;
- methodology for preparing sectoral risk assessments of non-profit organizations (NGOs);
- implementation of the FATF Recommendation 25;
- open source OSINT intelligence;
- data collection in the field of fighting organized crime and corruption in the enlargement countries;
- parallel financial investigations;
- virtual assets;
- 6th round of MONEYVAL evaluation;
- strategic analysis;
- countering drug trafficking;
- investigation and prosecution of cross-border and international money laundering;
- detection and analysis of illegal financial activities, etc.

In order to improve the institutional capacity of the SFMS and enhance the capacity of the national AML/CFT/CPF system, the SFMS took measures to attract international technical assistance by establishing cooperation with potential development partners, as well as implementing activities envisaged within the framework of existing international technical assistance projects.

As of June 30, 2024, the SFMS concluded 84 Memoranda of Understanding with foreign financial intelligence units.
During the reporting period, the SFMS concluded a Memoranda of Understanding with the Norwegian FIU, the German FIU and the Gibraltar FIU.