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MainActivityFunctionsNews Informing on the results of the State Financial Monitoring Service of Ukraine work in 2021

Informing on the results of the State Financial Monitoring Service of Ukraine work in 2021

The State Financial Monitoring Service of Ukraine, as a financial intelligence unit of Ukraine, takes measures to counteract to the legalization (laundering) of the proceeds from crime, financing of terrorism and financing of proliferation of weapons of mass destruction. In particular, in 2021, the SFMS has submitted 1170 referrals (of them 767 case referrals and 403 additional case referrals) to law enforcement agencies which were sent for consideration to:

- the National Police of Ukraine - 399 referrals (of them 345 case referrals and 54 additional case referrals);

- the State Fiscal Service of Ukraine - 265 referrals (of them 168 case referrals and 97 additional case referrals);

- the Security Service of Ukraine - 239 referrals (of them 116 case referrals and 123 additional case referrals);

- the prosecutor’s offices - 117 referrals (of them 82 case referrals and 35 additional case referrals);

- the National Anti-Corruption Bureau of Ukraine - 110 referrals (of them 36 case referrals and 74 additional case referrals);

- the State Bureau of Investigations of Ukraine - 40 referrals (of them 20 case referrals and 20 additional case referrals).

In these referrals, the amount of financial transactions that may be related to the legalization of funds and the commission of another criminal offence, is UAH 103.2 billion.

The SFMS pays particular attention to investigation of money laundering from corrupt acts, embezzlement and appropriation of state funds and property.

Thus, in 2021, the SFMS has submitted 160 referrals (44 case referrals and 116 additional case referrals) to law enforcement agencies, which are related to suspicion of corruption, in particular to:

- the National Anti-Corruption Bureau of Ukraine - 110 referrals (of them 36 case referrals and 74 additional case referrals);

- the Security Service of Ukraine - 27 additional case referrals;

- the State Bureau of Investigations of Ukraine - 15 referrals (of them 6 case referrals and 9 additional case referrals);

- the Prosecutor General’s Office - 5 referrals (of them 1 case referrals and 4 additional case referrals);

- the National Police of Ukraine - 2 additional case referrals;

- the State Fiscal Service of Ukraine - 1 case referral.

In these referrals, the amount of financial transactions that may be related to the legalization (laundering) of funds, and the commission of another criminal offense, is UAH 9.3 billion.

In addition, the SFMS on a regular basis pays special attention to the analysis of suspicious transactions that have signs of tax crimes, including using the mechanism of “counter-flows” and “twists”.

Thus, in 2021, the SFMS has submitted to law enforcement agencies 111 referrals (of them 56 case referrals and 55 additional case referrals) which are related to the mechanism of “counter-flows”, in particular to:

- the Fiscal Service of Ukraine offices - 48 referrals;

- the Security Service of Ukraine - 48 referrals;

- the Prosecutor General’s Office - 9 referral;

- the Kyiv Prosecutor’s Office - 2 referrals;

- the National Police of Ukraine - 2 referrals;

- the State Bureau of Investigations of Ukraine - 1 referral;

- the National Anti-Corruption Bureau of Ukraine - 1 referral.

The total amount of “converted” funds based on these referrals is UAH 22.9 billion.

In the course of these financial investigations, the SFMS suspended (blocked) funds in the amount of UAH 72.7 million.

Pursuant to the legislation of Ukraine, the SFMS in conjunction with law enforcement agencies, takes measures aimed at preventing and countering to financing of terrorist activities and separatism.

Thus, in 2021, the SFMS has submitted to law enforcement agencies 109 referrals (of them 83 case referrals and 26 additional case referrals) regarding financial transactions of persons which, including according to law enforcement agencies information, may be involved in financing of terrorism/separatism; 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, as well as to whom international sanctions have been applied, including:

- 49 referrals (42 case referrals and 7 additional case referrals), containing information on financial transactions of 118 individuals and 78 legal entities suspected of terrorism/separatism and financing thereof (including financing of illegal armed groups in the temporarily occupied territories of Donetsk and Luhansk regions);

- 29 referrals (12 case referrals and 17 additional case referrals), which are related to the implementation of financial transactions with the participation of 15 individuals and 66 legal entities included in the annexes to the decisions of the National Security and Defense Council of Ukraine, enacted by the Decrees of the President of Ukraine of 26.06.2018 No. 176/2018, of 14.12.2020 No. 564-27t (in the wording of the decision of the National Security and Defense Council of Ukraine of 28.01.2021, enacted by the Decree of the President of Ukraine of 28.01.2021 No. 29/2021), of 02.02.2021 No. 43/2021, of 19.02.2021 No. 64/2021, of 03.04.2021 No. 140/2021, of 21.04.2021 No. 169/2021, of 21.05.2021 No. 203/2021, of  24.06.2021 No. 266/2021 and of  20.08.2021 No. 375/2021;

- 20 referrals (19 case referrals and 1 additional case referral), which contained information about 76 individuals suspected of involvement in criminal offenses - mercenaries, encroachment on the territorial integrity and inviolability of Ukraine and creation of unlawful paramilitary or armed formations;

- 11 referrals (10 case referrals and 1 additional case referral), which are related to suspicions of financial transactions involving 22 individuals, possibly involved in the financing of international terrorist organizations and/or extremist groups.

Of 109 referrals submitted, 28 referrals contained information on links with the Russian Federation.

These referrals were sent to the Security Service of Ukraine and the Prosecutor General’s Office.

In addition, 1 case referral, which is related to the financial transactions of a person included in the OFAC sanctions list, was transferred to the State Fiscal Service of Ukraine.

In order to increase the effectiveness of interagency cooperation, during the reporting period, the SFMS was 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’s 5th Round of Mutual Evaluation of Ukraine (hereinafter – the Action Plan). Thus, the SFMS has ensured a compilation of information provided by state and law enforcement agencies on the progress of the implementation of the Action Plan in 2020, and sent compiled information to the Cabinet of Ministers of Ukraine.

Later, in February 2021, the completed questionnaire on the 3rd Enhanced Follow-up Report based on the results of MONEYVAL 5th Round of Mutual Evaluation of Ukraine was sent to MONEYVAL. The Report has been considered via “written procedure”.

At the same time, in June 2021, the eleventh meeting of the Government AML/CFT Council took place in a videoconference format. The Council discussed the implementation of the Action Plan to improve the national system of financial monitoring based on the results of MONEYVAL 5th Round of Mutual Evaluation of Ukraine, in particular, concerning the need to amend the Criminal and Criminal Procedural Codes of Ukraine.

On November 30, 2021, the 12th meeting of the Government AML/CFT Council took place. The Council discussed information on the approval of the 3rd Follow-Up Report of Ukraine by the MONEYVAL Committee and information on the state of implementation of the Action Plan to improve the national financial monitoring system. Law enforcement and judicial authorities informed the audience about the results of the work to address the shortcomings identified by the international experts during the 5th round of evaluation of Ukraine.

Also, within the framework of interagency cooperation, the SFMS in January 2021 signed Agreement on interagency cooperation between the SFMS and the Commission for Regulation of Gambling and Lotteries.

In addition, during 2021, 15 interagency documents on information exchange were concluded, in particular with the Ministry of Justice of Ukraine, the State Tax Service of Ukraine, the State Customs Service of Ukraine, the Administration of the State Border Guard Service and the Pension Fund of Ukraine.

At the same time, in March 2021, in order to increase awareness of the public about the national financial monitoring system, the Annual SFMS’s report for 2020 was posted on the SFMS’s official website, and in April 2021 Head of the SFMS Igor Cherkaskyi presented a public report on the results of the SFMS’s work in 2020.

On April 28, 2021, in order to summarize the results after the entry into force of the updated Basic Law (April 28, 2020), Head of the SFMS Igor Cherkaskyi has given an extended interview to the information portal “Minfin”. During the interview, Igor Cherkaskyi replied to current anti-legalization topics of interest to the public and the professional community.

Within the framework of legislative initiatives of the SFMS, the Government of Ukraine approved the Main directions of the development of the national financial monitoring system up to 2023 and the Action plan for their implementation (Order of the Cabinet of Ministers of Ukraine of 12.05.2021 No. 435-r). This Plan is aimed to implement the provisions of the updated Basic Law and the international AML/CFT standards.

In November 2021, the indicators of comprehensive administrative reporting in the AML/CFT area were approved. These indicators are designed to comply with international requirements pertaining to comprehensive statistics on the effectiveness of the AML/CFT system.

Moreover, the SFMS during the reporting period actively promoted the activities of the Public Council under the SFMS. Thus, during this period, two meetings of the Public Council were held online, where Council’s members were informed about the implementation by the SFMS of the AML/CFT policy. On September 30, 2021, a constituent assembly was held, during which a new composition of the Public Council under the SFMS was formed and its first meetings were held. In particular, the second meeting of the Public Council (November 26, 2021) was held as part of events dedicated to the Day of the financial monitoring system employee.

At the same time, in September this year, the meetings of the Working Groups on consideration of problematic issues of reporting entities-banking and non-banking institutions were held where the issues that arise in reporting entities in compliance with the AML/CFT legislation requirements were discussed.

Additionally, within the framework of methodological work, the SFMS:

- the review on the topic “Use of non-profit organizations for illegal purposes” has been prepared;

- taking into account the requirements of EU Directives 2015/843 and 2018/843 based on the results of compilation of national legislation, best international practices, case studies and unresolved issues, prepared and published Guidelines “Management of business relations with PEPs”;

- in order to increase the capacity of Ukrainian prosecutors to lead the pre-trial investigation and to support public prosecution in criminal proceedings for money laundering, published the Handbook on detection, investigation and prosecution of money laundering, prepared by international experts of the Council of Europe, prepared by international experts of the Council of Europe, in the framework of the Project “Strengthening measures to counter money laundering and financing of terrorism in Ukraine” (PGG);

- with the assistance of the OSCE Project Co-ordinator in Ukraine, prepared a publication “World experience in conducting national ML/FT risks assessments”. The publication contains best practices, shortcomings and suggestions for conducting a national risk assessment;

- within the framework of international projects prepared together with other stakeholders and published the Manual on certain aspects of financial investigations (analysis of financial relations), which aims to develop an understanding of the concept of financial investigation and approaches to its implementation;

- under the auspices of the OSCE Project Coordinator in Ukraine prepared the publication “Horizontal Review on Mutual Evaluation Reports of Countries in the AML/CFT Area”, which collected conclusions and recommendations on 43 FATF/MONEYVAL member countries in the AML/CFT area;

- in order to be well prepared for the next round of NRA conducting (2022) Methodology of the NRA conducting in Ukraine has been amended;

- the typological study on the topic “Actual methods, ways, tools for legalization (laundering) of proceeds from crime and terrorism (separatism) financing” has been prepared;

At the same time, in partnership with other state bodies participating in the AML/CFT system and the private sector with the support of international partners (OSCE Project Coordinator in Ukraine, EU Anti-Corruption Initiative in Ukraine (EUACI), “Strengthening measures to counter money laundering and financing of terrorism in Ukraine” project in the framework of the EU/CoE “Partnership for Good Governance” (PGG) programme) there were organized:

- interdepartmental discourse “Transparency of beneficial ownership: lessons and perspectives” (Odessa);

- international workshop on “Financial investigations involving offshore component, trusts, virtual assets and PEPs” (Kyiv);

- integrated panel discussion “Financial Monitoring 2021” (Lviv).

Also, as part of educational work, during 2021, representatives of the SFMS took part in 83 educational events, which were attended by 4378 persons, including “Academy of Financial Monitoring”.

With regard to international cooperation. The key events were:

- during April 26-30, 2021, the representatives of Ukraine, headed by the SFMS, participated in the Working Group on Evaluations meeting and the MONEYVAL 61st Plenary meetings (“hybrid”);

- during June 22-25, 2021, with the assistance and consent of MONEYVAL, the SFMS’s representatives took part in the FATF Plenary meeting, (online mode);

- during June 28 - July 9, 2021, the SFMS representatives participated in the Working Groups meetings and the 27-th Plenary meeting of the Egmont Group of Financial Intelligence Units (online);

- within the framework of the joint project of international technical assistance of the SFMS and the OSCE Project Coordinator in Ukraine, the SFMS received a modern software and hardware complex for organizing and conducting videoconferences, meetings, round tables, etc;

- during July 26-28, 2021, the SFMS’s representative took part as an expert in a national seminar on “Combating Money Laundering and the Financing of Terrorism: Strengthening the Capacity of Competent Authorities of Turkmenistan”. The event was organized by the Regional Office for Central Asia of the United Nations Office on Drugs and Crime;

- during December 13-17, 2021, representatives of Ukraine chaired by the SFMS participated in the Working Group on Evaluations and the MONEYVAL 62nd Plenary Meetings (“hybrid”);

- on December 23, 2021, representatives of the SFMS took part in the presentation of the Report of the Organization for Economic Cooperation and Development (OECD) on Typology of Corruption Crimes in the Energy Sector in Ukraine;

- the SFMS signed Memoranda of Understanding with financial intelligence units of the Republic of Malta, Kingdom of Saudi Arabia and the Holy See.

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