Informing on the results of the State Financial Monitoring Service of Ukraine for 2019
The SFMS as a financial intelligence unit of Ukraine takes enhanced practical measures aimed at counteraction to the legalization (laundering) of the proceeds from crime, terrorist financing and financing of proliferation of weapon of mass destruction. In particular, for 2019, the SFMS has prepared 893 referrals (of them 503 case referrals and 390 additional case referrals) which have been submitted to:
- the Prosecutor’s offices of Ukraine – 117 referrals (of them 40 case referrals and 77 additional case referrals);
- the State Fiscal Service of Ukraine – 218 referrals (of them 158 case referrals and 60 additional case referrals);
- the Internal affairs authorities of Ukraine – 173 referrals (of them – 149 case referrals and 24 additional case referrals);
- the Security Service of Ukraine – 215 referrals (of them – 104 case referrals and 111 additional case referrals);
- the National Anti-Corruption Bureau of Ukraine – 155 referrals (of them – 41 case referrals and 114 additional case referrals);
- the State Bureau of Investigations – 15 case referral (of them – 11 case referrals and 4 additional case referrals).
In these referrals, the amount of financial transactions that may be related to the legalization (laundering) of funds or the commission of another criminal offense, defined by the Criminal Code of Ukraine, is UAH 92,2 billion.
The SFMS pays particular attention to investigation of money laundering facts of corrupt acts, embezzlement and appropriation of state funds and property.
Thus, for 2019, the SFMS has submitted to law enforcement authorities 211 referrals (47 case referrals and 164 additional case referrals) which are related to suspicion in corrupt acts, in particular to:
- the National Anti-Corruption Bureau of Ukraine - 155 referrals (of them – 41 case referrals and 114 additional case referrals);
- the Prosecutor’s offices of Ukraine – 38 referrals (of them 1 case referral and 37 additional case referrals);
- the Security Service of Ukraine – 14 referrals (of them 4 case referral and 10 additional case referrals);
- the Fiscal Service authorities of Ukraine – 3 referrals (of them 1 case referrals and 2 additional case referrals);
- the Internal affairs authorities of Ukraine – 1 additional case referral.
In these referrals, the amount of financial transactions that may be related to the legalization (laundering) of funds and to the commission of another criminal offense, defined by the Criminal Code of Ukraine is UAH 41,8 billion.
Using own practice and taking into account the information of other participants of the national financial monitoring system, the SFMS prepared and published a typological study on «Money laundering from the appropriation of funds and property of state-owned enterprises and other entities financed by the state and local budgets».
According to the legislation of Ukraine, the SFMS together with law enforcement authorities, takes measures aimed at preventing and countering to the financing of terrorist activities, separatism.
Thus, for 2019, the SFMS has submitted to law enforcement authorities 106 referrals (of them 38 case referrals and 68 additional case referrals) regarding financial transactions of persons which, may be related to the financing of terrorism, separatism and/or conducted with the participation of persons, who publicly call for violent change or overthrow of the constitutional order or change of boundaries of the territory or state border of Ukraine, including:
- 34 referrals (of them 1 case referral and 33 additional case referrals) related to the implementation of financial transactions by individuals, whose identification data coincide with the identification data of the persons included in the List of Persons, related to the commission of terrorist activities or on which person’s international sanctions have been applied;
- 15 referrals (of them 6 case referrals and 9 additional case referrals), related to the implementation of financial transactions by persons included in the annexes to the decision of the National Security and Defense Council of Ukraine (enacted by Decree of the President of Ukraine as of 15.05.2017 №133/2017, as of 21.06.2018 №176/2018 and as of 19.03.2019 №82/2019);
- 9 case referrals related to suspicions in the conduct of financial transactions by persons involved in the activities of the international terrorist group «Islamic State of Iraq and Levant» or other extremist groups;
- 48 referrals (of them 22 case referrals and 26 additional case referrals), that may be associated with suspicion of financing illicit armed groups in the temporarily occupied territories in the Donetsk and Luhansk oblasts.
Of the 106 transmitted referrals, 32 referrals contained information on identified relationships with the Russian Federation.
Mentioned referrals were sent to the Security Service of Ukraine, to the Prosecutor General’s office of Ukraine, to the National Anti-Corruption Bureau of Ukraine and to the State Bureau of Investigations.
In 48 cases (referrals) blocked funds of financial transactions of individuals who, according to information from law enforcement authorities, may be involved in the financing of terrorism, separatism, for a total amount equal to UAH 27,7 billion.
In order to increase the effectiveness of interagency cooperation, during the reporting period, the SFMS took coordinating measures for the implementation by the relevant state authorities of the Action Plan to improve the national financial monitoring system based on the MONEYVAL 5th round of mutual evaluation of Ukraine (hereinafter - the Action Plan). Thus, the SFMS has ensured a generalization of information provided by state and law enforcement authorities on the progress of the implementation of the Action Plan, and sent generalized information to the Cabinet of Ministers of Ukraine.
In addition, the SFMS has taken measures for the preparation of the 1st follow-up report of Ukraine by all interested state authorities according to the results of the MONEYVAL 5th round of mutual evaluation of Ukraine.
During July 15-19, 2019, the delegation of Ukraine headed by the representative of the State Financial Monitoring Service of Ukraine has participated in the 58th MONEYVAL Plenary meeting in Strasbourg, France and presented the 1st Follow-up Report of Ukraine following the MONEYVAL 5th round of mutual evaluation, which was successfully approved by the Committee on 18 July. The approval of this report became a confirmation of the international community's adoption of steps taken by our country in improving the effectiveness of the national financial monitoring system.
At the same time, the importance of the financial monitoring area in state security was confirmed by the appointment of the Head of The SFMS Igor Cherkaskyi as a member of the National Security and Defense Council of Ukraine.
Also, during 2019, the SFMS representatives participated in 53 coordination meetings with the interested state authorities in AML/CFT issues.
In addition, Memorandum on the general principles of cooperation in the area of counteraction to the legalization (laundering) of proceeds from crime, terrorist financing and financing of the proliferation of weapons of mass destruction between the SFMS and the National Institute for Strategic Researches.
On April 1, 2019, Agreement with the State Agency for Electronic Governance on the connection to the systems of electronic interaction of state electronic information resources and in order to join the integrated electronic identification system of the Unified Information System in the area of prevention and counteraction to the legalization (laundering) of proceeds from crime, terrorist financing and financing of the proliferation of weapons of mass destruction, on September 13, 2019, the agreement «On joining to integrated electronic identification system» was signed;
On June 25, 2019, Memorandum for interaction and cooperation with «YOU-CONTROL» organization on using YouControl Service by the SFMS.
On July 18, 2019, Memorandum for cooperation in the development of a mechanism for verifying information on ultimate beneficial owners was signed with interested state authorities and public organizations.
It should be noted, that in April 2019, a team formed under the leadership of the SFMS with the idea of a mechanism for verification of ultimate beneficial owners (UBO) under the name «100%RELIABLE" became the winner and was granted with the «Most Innovative Solution» award on the results of the Pilot Program “EU Association Lab».
Moreover, on October 18, 2019, to improve the analytical work of the Service and effective counteraction to corruption offenses, the SFMS signed a Memorandum for cooperation and transfer of information database copy «Open Register of National PEPs of Ukraine» with the Public Organization «Center for Combating Corruption», on November 15, 2019, Protocol of automated access of the State Financial Monitoring Service of Ukraine to the State Register of Real Property Rights and Protocol of automated access of the State Financial Monitoring Service of Ukraine to the Unified Information System of legal entities, individual entrepreneurs and public arrangements.
Also, in terms of cooperation coordination with the state authorities, public and private sector, the SFMS has organized the regular meeting of the Council on counteraction to the legalization (laundering) of the proceeds from crime, terrorist financing and financing of the proliferation of weapons of mass destruction, Working Group on prevention and counteraction of financing of the proliferation of weapons of mass destruction, meetings and a constituent meetings on formation of a new composition of the Public Council at the SFMS, and the meeting of the Working Group on Problem Issues of the reporting entities - banking institutions and a joint meeting of the banking and non-banking Working Groups on the reporting entities problematic issues, and also Sectoral Risk Assessment Working Group.
On April 26, 2019, Head of the State Financial Monitoring Service of Ukraine presents a public report on the results of the Service activity for the previous year.
At the same time, in order to improve information interaction with the public, a new SFMS web-portal has been launched: http://fiu.gov.ua. The new web portal is accessible for visually impaired users. Currently the new web-site operates in test mode.
Within the framework of legislative initiatives, the SFMS during the reporting period the work on support of the developed with the assistance of the SFMS, of the draft Law of Ukraine «On prevention and counteraction of legalization (laundering) of the proceeds from crime, terrorist financing and financing the proliferation of weapons of mass destruction», that was adopted by the Verkhovna Rada of Ukraine on the second reading on December 6, 2019, and in general it was officially announced on December 28.
The mentioned Law is aimed at implementing the requirements of the EU Directive 2015/849 as of May 20, 2015, «On the prevention of the use of the financial system for the purpose of money laundering and terrorist financing» and the provisions of EU Regulation 2015/847 «On information accompanying transfers of funds» and the implementation of the recommendations mentioned in the MONEYVAL Council of Europe Committee of Experts report, provided on the results of the 5th round of mutual evaluation of Ukraine in the area of counteracting money laundering and terrorist financing, approved at the 55th MONEYVAL Plenary meeting.
Also, the SFMS coordinated conduction of the second round of the National Risk Assessment of Money Laundering and Terrorism Financing based on the Methodology updated in 2018.
The presentation of the Report on the National Risk Assessment in the area of prevention and counteraction to the legalization (laundering) of proceeds from crime and terrorist financing took place on December 20, 2019, at the SFMS.
Within the framework of methodological work, during 2019, the representatives of the SFMS participated in 95 educational events, which involved about 3370 persons.
In the direction of international cooperation participation has been taken, in particular:
- in the joint expert meeting of FATF and MONEYVAL (Tel Aviv, Israel);
- in the meetings of the Working Groups and the 26th Plenary Meeting of the Egmont Group of Financial Intelligence Units in the Hague, Netherlands;
- in the 58th Plenary meeting of the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL);
- as a member of the MONEYVAL mutual evaluation off-site mission of the Slovak Republic in the AML/CFT area, within the framework of the MONEYVAL 5th round of evaluation;
- presentation of a new joint project of technical assistance of the EU and the Council of Europe "Strengthening anti-money laundering and terrorist financing measures in Ukraine", in which SFMS will become a key beneficiary and recipient of the project;
- in the 59th Plenary meeting of the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL).
On December 20, 2019, meeting between the Head of the SFMS Mr. Igor Cherkaskyi and the MONEYVAL Chairperson Mrs. Elzbieta Franków-Jaskiewicz took place.
Also, the SFMS in the reporting period signed Memoranda of Understanding in the AML/CFT area with the FIUs of Kuwait and the Republic of Austria and the Statement of Cooperation with the FIU of Japan.