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

Informing on the results of the SFMS work for the 1st quarter 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 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”, acts of the Cabinet of Ministers of Ukraine and the Ministry of Finance of Ukraine;

- Action Plan aimed at preventing and/or mitigating the negative consequences of the risks identified by the results of the third national AML/CFT/CPF risk assessment for the period up to 2026 (Order of the CMU dated 27.12.2023 № 1207-p);

- 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 terrorist state’s actions.

Continuing the work started after imposition of wartime, the SFMS official website has published key statistical data on the work of the financial intelligence unit in the international and domestic arena on a weekly basis.

Collection and processing of information

During the 1st quarter of 2024, the SFMS registered 377 503 reports on financial transactions subject to financial monitoring, received from the reporting entities, including:

- 61 263 suspicious transactions (activities) reports;

- 315 751 threshold transactions reports;

- 105 threshold and suspicious transactions (activities) reports;

- 384 reports on the request for financial transactions monitoring.

Analytical research  

In the 1st quarter of 2024, the SFMS sent 273 referrals to law enforcement agencies (148 case referrals and 125 additional case referrals), in particular to:

- the Security Service of Ukraine – 71 referrals (41 case referrals and 30 additional case referrals);

- the National Police bodies – 65 referrals (52 case referrals and 13 additional case referrals);

- the National Anti-Corruption Bureau of Ukraine – 49 referrals (10 case referrals and 39 additional case referrals);

- the State Bureau of Investigation – 40 referrals (14 case referrals and 26 additional case referrals);

- the Economic Security Bureau of Ukraine – 28 referrals (21 case referrals and 7 additional case referrals);

- the prosecutors’ offices – 20 referrals (10 case referrals and 10 additional case referrals).

In these referrals, the amount of financial transactions that may be related to legalization of funds and commission of a criminal offense amounted to UAH 21,8 billion.

In the 1st quarter of 2024, the amount of financial transactions suspended and blocked funds by the SFMS is equivalent to more than UAH 2,1 billion.

Currently, the main activity of the SFMS is the detection of financial transactions and persons related to the financing of terrorism/separatism, military aggression by the RF against Ukraine, forcible change or overthrow of the constitutional order or seizure of state power, change of the boundaries of the territory or state border.

Thus, in the 1st quarter of 2024, the SFMS sent 38 such referrals to law enforcement agencies, which were divided into the following components
(5 referrals containing several components):

- 4 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;

- 16 referrals (15 case referrals and 1 additional case referral) 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;

- 22 referrals (14 case referrals and 8 additional case referrals) containing suspicions of financial transactions or their participants subject to restrictive measures (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, 15 requests have been submitted to 13 foreign financial intelligence units. 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 also conducts financial investigations into the laundering of funds of corruption, embezzlement and misappropriation of public funds and property.

Thus, in the 1st quarter of 2024, the SFMS sent to law enforcement agencies 64 referrals (14 case referrals and 50 additional case referrals), that are related to the suspicion of corruption, in particular to:

- the National Anti-Corruption Bureau of Ukraine – 49 referrals (10 case referrals and 39 additional case referrals);

- the State Bureau of Investigation – 13 referrals (2 case referrals and 11 additional case referrals);

- the Prosecutor General’s Office – 1 case referral;

- the Economic Security Bureau of Ukraine – 1 case referral.

In these referrals, the amount of financial transactions that may be related to legalization of funds and commission of a criminal offense was UAH 6,9 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 armed aggression of the RF 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 Ministers 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 FATF Recommendation 8 and raising awareness by NPO of the existing risks for NPO sector 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).

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 quarter of 2024, there was a constant exchange of information between the SFMS and the FATF regarding the situation in Ukraine related to the full-scale invasion of the RF.

From February 19 to 23, 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 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.

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)

In the reporting quarter, the SFMS cooperated with MONEYVAL in the 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.

Among the issues to be investigated under the typology are the analysis of the use of crowdfunding, virtual assets, online payment systems, and the procurement of dual-use goods to obtain funds or assets to support conflicts. Sanctions evasion schemes, such as concealment or disguise of ownership of legal entities, corruption, fraud and misappropriation, will also be considered.

The project team, in addition to Ukraine, includes representatives from Jersey, Lithuania and the Republic of Moldova.

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

From January 30 to February 1, 2024, with the assistance of the Special Representative of the OSCE Chairman-in-Office - Project Coordinator in Ukraine, the representatives of the SFMS took part in the Egmont Working and Regional Group meetings, held in Saint Julian’s, the Republic of Malta.

Within the framework of these meetings, the representatives of the SFMS held working meetings with the Interim Chair of the Egmont Group and the Regional Representative of the Europe II Regional Group.

At the same time, a representative of the SFMS took part in a Joint Council of Europe and Egmont Group Training of Trainers Strategic Analysis Course based on the course of the Egmont Centre of FIU Excellence and Leadership (ECOFEL) (March 11-13, 2024, Strasbourg, France).

As a reminder, the participation of the RF’s Financial Intelligence Unit in the Egmont Group has been suspended since October 18, 2023.

Other international activities of the financial intelligence

Representatives of the SFMS took part in:

- the online presentation of the methodology for preparation of the NPO Sectoral Risk Assessments (Greenacre), developed by the EU AML/CFT Global Facility (January 17, 2024);

- online meeting with representatives of the «Finance Against Slavery and Trafficking» initiative (FAST) (January 24, 2024);

- online expert meeting with an international expert from the Council of Europe to discuss the technical document “Assessment of the Response of the Government of Ukraine to the Requirements of FATF Recommendation 8 and Immediate Outcome 10” (March 05, 2024);

- workshop on legislative support related to virtual assets, organized by the Office of the Co-ordinator of OSCE Economic and Environmental Activities (OCEEA) (February 05 - 09, 2024, Warsaw, Poland);

- Virtual Assets Task Force workshop, and meetings on IT issues (March 11-15, 2024, Warsaw, Poland);

- Conference of the Council of Europe “Enhancing the Strategic Analysis function of the FIUs – experiences, needs and challenges” (Warsaw, Poland, March 20-21, 2024).