Informing on the results of the SFMS work for 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 prevent and counteract to the legalization (laundering) of the proceeds of crime, the financing of terrorism and the financing of proliferation of the weapons of mass destruction (hereinafter – AML/CFT/CPF), which are based on the implementation of:
- Law of Ukraine “On prevention and counteraction to the legalization (laundering) of the proceeds of crime, the financing of terrorism and the financing of proliferation of the weapons of mass destruction (hereinafter – Basic Law), acts of the Cabinet of Ministers of Ukraine and the Ministry of Finance of Ukraine;
- On Approval of Main Directions of the Development of the Prevention and Counteraction to Legalization (Laundering) of the Proceeds of Crime, Terrorist Financing and Financing of Proliferation of Weapons of Mass Destruction system in Ukraine for up to 2023 and Action Plan for Their Implementation (Regulation of the CMU of 12 May 2021 No. 435r);
- SFMS Strategic Development Programme for up to 2024;
- 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 the imposition of martial law, key statistical data on the work of the Financial Intelligence Unit in the international and domestic arena were published on a weekly basis.
Collection and processing of information
During 2023, the SFMS registered 1 429 594 reports on financial transactions, subject to financial monitoring received from the reporting entities, including:
- 155 369 suspicious financial transactions (activities) reports;
- 1 260 269 threshold transactions reports;
- 178 threshold and suspicious transactions (activities) reports;
- 13 778 reports on the request for financial transactions monitoring.
Analytical research
In 2023, the SFMS sent 1 122 referrals (608 case referrals and 514 additional case referrals) to law enforcement agencies, in particular to:
- the Security Service of Ukraine – 348 referrals (194 case referrals and 154 additional case referrals);
- the National Police of Ukraine – 278 referrals (212 case referrals and 66 additional case referrals);
- the National Anti-Corruption Bureau of Ukraine – 167 referrals (47 case referral and 120 additional case referrals);
- the Economic Security Bureau of Ukraine – 119 referrals (71 case referrals and 48 additional case referrals);
- the State Bureau of Investigation – 109 referrals (54 case referrals and 55 additional case referrals);
- the prosecutors’ offices – 101 referrals (30 case referrals and 71 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 totaled UAH 102,1 billion.
In 2023, the amount of financial transactions suspended and funds blocked by the SFMS totaled the equivalent of UAH 4,1 billion.
Currently, the main activity of the SFMS is the detection of financial transactions and persons related to the financing of terrorism/separatism and military aggression by the Russian Federation (RF) against Ukraine (including the activities of sabotage and intelligence groups; collaborative activities; public calls by individuals to change or overthrow the constitutional order or change the boundaries of the territory or state border of Ukraine; persons subject to sanctions).
Thus, in 2023, the SFMS sent to law enforcement agencies 267 referrals 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 (32 referrals contain several components):
- 33 referrals (23 case referrals and 10 additional case referrals) on financial transactions or their participants, in relation to which there are suspicions of terrorism/separatism and their financing (including the financing of illegal armed groups in the temporarily occupied territories of Ukraine);
- 103 referrals (95 case referrals and 8 additional case referrals) on financial transactions or their participants that may be related to military aggression by the RF against Ukraine; collaboration activities; publicly calling for violent change or overthrow of the constitutional order or seizure of state power, change of territory or state border, including those with the participation of 9 non-profit organizations;
- 163 referrals (59 case referrals and 104 additional case referrals) on legal entities and individuals or their associates, to whom restrictive measures (sanctions) were applied.
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, support 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 77 requests were submitted to 37 financial intelligence units of foreign countries. Joint analytical researches are ongoing.
In addition, a representative of the SFMS participates in the 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 2023, the SFMS detected information on the possession of 21 real estate objects (2 flats, 1 apartment, 1 condominium, 3 villas, 1 mansion and 13 other real estate objects), 2 yachts, 170 companies and 56 accounts by the subjects of the investigation and associates. The value of the individual assets, for which the relevant information is known, is equivalent to about USD 320,5 million.
The SFMS does not disregard financial investigations into the laundering of the proceeds of corruption, embezzlement and misappropriation of public funds and property.
Thus, in 2023, the SFMS sent to law enforcement agencies 250 referrals (86 case referrals and 164 additional case referrals) that are related to the suspicion of corruption, in particular:
- the National Anti-Corruption Bureau of Ukraine – 167 referrals (47 case referral and 120 additional case referrals);
- the State Bureau of Investigation – 42 referrals (18 case referral and 24 additional case referrals);
- the Security Service of Ukraine – 20 referrals (10 case referral and 10 additional case referrals);
- the National Police of Ukraine – 11 additional case referrals (4 case referral and 7 additional case referrals).
- the Prosecutor General’s Office – 8 referrals (5 case referral and 3 additional case referrals);
- the Economic Security Bureau of Ukraine – 2 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 totaled UAH 15,5 billion.
In addition, the SFMS, using its own work experience, the practice of other participants of the national financial monitoring system, and the experience of international partners, prepared a typological study on the topic: “Risks and Threats of the Legalization (Laundering) of the Proceeds of Crime, Terrorist Financing in the Context of Military Aggression of the RF”.
The typological study (distributed among the system participants) highlights the types of schemes for the legalization (laundering) of criminal proceeds and terrorist (separatism) financing, which are carried out under the conditions of the military aggression of the RF, reveals the indicators of suspicion, methods and tools of AML/CFT/CPF schemes, and also indicates the importance of applying a risk-based approach in order to identify the above-mentioned offences and develop strategies for their prevention and counteraction.
Cooperation with financial monitoring entities and public
As part of the legislative work, the SFMS, together with the Ministry of Finance of Ukraine and other stakeholders, developed an Action Plan to prevent the occurrence and/or reduce the negative consequences of risks identified as a result of the third national risk assessment in the field of AML/CFT/CPF, for the period up to 2026, which was approved by the Cabinet of Ministers of Ukraine on 27 December 2023.
This plan contains a set of institutional, legislative, organizational and practical measures to improve the national system of prevention and counteraction in accordance with international standards and the system of strategic planning in this area.
In addition, a representative of the SFMS has repeatedly participated in meetings of the committees of the Verkhovna Rada of Ukraine regarding draft laws on amendments to the Basic Law.
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 “the Financial Monitoring System Electronic Cabinet”, 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 26 August 2022 No. 193.
Moreover, in September and December 2023, the SFMS updated its recommendations for banks and non-bankong institutions to submit information on financial transactions to the SFMS. These recommendations were updated following the amendments to the Basic Law.
At the same time, during the period of martial law, the SFMS focuses on cooperation with the public. Therefore, on 29 March and 1 September 2023, the fourth and the fifth meeting of the Public Council under the SFMS took place.
During the meetings, the representative of the SFMS informed attendees about the implementation by the SFMS in 2022 and 2023 of the AML/CFT/CPF state policy under martial law.
Moreover, the Public Council’s members approved the Council’s work plan for 2024.
In addition, for the implementation of part 2 of Article 36 of the AML/CFT/CPF Law of Ukraine of 6 December 2019 No. 361-ІХ, the SFMS submitted the report on the AML/CFT/CPF state for 2022 (hereinafter – the Report) to the Verkhovna Rada of Ukraine.
The Report contains information on the activities results of the participants of the national AML/CFT/CPF system for 2022, taking into account conditions of the armed aggression of the RF against Ukraine.
Furthermore, in accordance with Article 45 of the Law of Ukraine “On Civil Service” and the Standard Procedure for conducting a Public Report of the Head of an executive authority, approved by Order of the National Agency on Civil Service on 20 December 2016 No. 277 and registered with the Ministry of Justice of Ukraine on 11 January 2017 No. 28/29896, taking into account the imposition 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 27-28 April 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 and Co-operation 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 dedicated to discussion of the implementation peculiarities of anti-legalization legislation, taking into account the results of the third round of the AML/CFT/CPF National Risk Assessment, current challenges and identification of strategic priorities for the further evolution of the system of response to relevant threats, including in the context of the RF’s military aggression against Ukraine.
On 7-8 December 2023, a Forum “Financial Monitoring 2023” was held in the city of Ternopil, organized by the SFMS and the Academy of Financial Monitoring with the support of the OSCE Support Program for Ukraine, the Council of Europe and the EU Anti-Corruption Initiative in Ukraine (EUACI).
During the forum, the issues of current relevance to Ukraine were discussed, including the implementation specifics of anti-legalization legislation, taking into account modern trends in the development of Ukraine.
In addition, to inform the reporting entities, law enforcement agencies, judicial authorities and the public, the SFMS translated and published the following editions in September 2023:
- EU AML/CFT Global Facility Report on Typologies of Illicit Financial Abuse of the NPO Sector;
- RUSI Guide to Conducting a National Proliferation Financing Risk Assessment;
- FATF Guidance on Beneficial Ownership of Legal Persons;
On 29 June and 21 December 2023, as part of the coordination work, the fifteenth and sixteenth meeting of the AML/CFT/CPF Council was held in the format of a video conference.
The Council discussed the following:
- the results of the SFMS participation in international events of the global AML/CFT system;
- the results of the supervision of the reporting entities in the field of AML/CFT by the state financial monitoring entities, taking into account the riskbased approach and the problems accompanying it;
- improvement of the mechanism for operational exchange of information between state authorities involved regarding the actual transfers of goods of military purpose and dual use (refusal of permit documents, absence from control lists, etc.) and the results of work on identifying signs (facts) of the risk of international transfer of goods of military purpose and dual use (other goods) in the context of AML/CFT/CPF;
- optimization of working groups created under the Council.
Representatives of the SFMS also took part in:
the conference “Sanctions – an instrument of the state security policy”, held on the platform of the National Academy of the Security Service of Ukraine on 12 September2023;
the National expert roundtable discussion “Monitoring and Investigating Trafficking in Cultural Property: Achievements and Challenges”, organized by the United Nations Office on Drugs and Crime (UNODC), together with the Ivan Franko National University of Lviv on 21 and 22 September 2023.
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 place, 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 FATF and its 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 FATF
In 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 actions.
In cooperation with partners from the public and private sectors, the SFMS prepared video appeals to the FATF describing the terrorist risks that the RF poses to the international financial system. These video appeals were published on the SFMS’s page on the YouTube social network.
In addition, on 26 October 2023, the website of the Royal United Services Institute (RUSI) published an article by Igor Cherkaskyi, Head of the State Financial Monitoring Service of Ukraine, entitled “We Must Go Further To Challenge Russia’s Disregard For International Norms”, which draws attention to the current issue of maintaining the security of the Global Network due to non-cooperative actions of the RF.
In the period from 20 to 24 February 2023 and from 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 meetings of the relevant FATF Working Groups held in Paris (France).
At the Plenary meeting held on 20-24 February 2023 the FATF adopted a Statement.
According to the Statement, the FATF is deeply concerned by the reports of arms trade between the RF and the United Nations sanctioned jurisdictions, and malicious cyber-activities emanating from the RF.
The FATF stated that the RF’s actions unacceptably run counter to the FATF core principles aiming to promote security, safety, and the integrity of the global financial system. They represent a gross violation of the commitment to international cooperation and mutual respect upon which the FATF Members have agreed to implement and support the FATF Standards. Therefore, the FATF decided to strengthen sanctions against the RF by suspending its membership in this organization. At the same time, the RF remains accountable for its obligation to implement the FATF Standards.
The next FATF Plenary meeting, held on 19-23 June 2023, extended the suspension of RF’s membership in the FATF.
According to the FATF official information, following the results of this FATF Plenary meeting, the RF’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 commitment to international cooperation and mutual respect upon which the FATF Members have agreed to implement and support the FATF Standards.
The FATF meeting, held on 23-27 October 2023, confirmed that the suspension of the RF’s membership in the organization remains in effect.
The full text of the results and statements of this Plenary meeting in Ukrainian can be found here.
Following the statements published 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.
As part of the preparations for the next FATF meeting to be held on 19-23 February 2024, the work of the SFMS and its partners continues.
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 Declaration of Ministers and high-level delegates of MONEYVAL and the MONEYVAL Strategy for 2023-2027, which were approved during the High-Level Meeting in Warsaw (Republic of Poland) on 25 April 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 the member States and territories of MONEYVAL 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 the 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 RF against Ukraine and confirmed their full support for Ukraine and its people.
These documents are available on the MONEYVAL official website, and their Ukrainian version on the SFMS official website.
During 22-26 May and 11-15 December 2023, the representatives of Ukraine, coordinated by the SFMS, participated in the meetings of the Working Group on Evaluations and the 65th and 66th MONEYVAL Plenary meetings, which took place in Strasbourg (France).
During the Plenary meetings, negotiations were held with MONEYVAL member states 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.
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.
From 31 January to 1 February 2023, a representative of the SFMS took part in the MSCWG meetings (Dakar, the Republic of Senegal).
From 3 July to 6 July 2023 in Abu Dhabi (United Arab Emirates), with the assistance of the Special Representative of the OSCE Chairmanship - Project Co-ordinator in Ukraine, the representatives of the SFMS took part in the annual EG Plenary meetings.
Within the framework of the current meetings, a consensus was reached on steps aimed at further strengthening the capacity of the EG community to withstand current challenges and discussing issues aimed at improving the effectiveness of bilateral and multilateral international cooperation between the FIUs of the EG, including within the framework of project initiatives of various working groups.
Moreover, within the framework of these meetings, a new Memorandum of Understanding on cooperation in the exchange of information related to money or other assets laundering, associated predicate offenses and financing of terrorism was signed between the SFMS and the Superintendency of Banks through the Special Verification Intendancy (IVE) of the Republic of Guatemala.
On 13 July 2023, the representatives of the SFMS took part in an online seminar on the FATF Recommendation 16 (wire transfers) organized by the EG Secretariat.
On 18 October 2023, a virtual EG HoFIU meeting was held, where, in order to support the EG reputation in the global space of combating money laundering and terrorist financing, ensuring the cohesion of the AML/CFT ecosystem and protecting other interests and goals of the EG, the following was agreed upon:
- to suspend the membership of Rosfinmonitoring (the FIU of the RF) in the EG for the time necessary to protect the interests of the EG and ensure the achievement of its goals;
- to support the additional measures introduced by the HoFIU on 13 December 2022, as far as it is practically possible, taking into account the suspension.
On 19 October 2023, the EG Chair issued a Statement, according to which the EG remains deeply concerned by the devastating effects of the current Russian military aggression against Ukraine and the negative impact on the SFMS (the FIU of Ukraine).
This decision was preceded by the systematic and comprehensive work of the SFMS in the context of constant international contacts and negotiations, preparation and forwarding of relevant information to the management of the EG.
Other international activities of the financial intelligence
On 16 January 2023, a decision following the Plenary Session (15-17 November 2022) of the Conference of the Parties to the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism (Warsaw Convention), where a representative of the SFMS took part online, was published on the official website of COP.
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, to be entrusted with any task of rapporteur, coordinator, head of a delegation representing the Conference.
In addition, the SFMS representatives took part in:
the basic training as part of the project “Innovative Policy Solutions to Mitigate Money Laundering Risks of Virtual Assets”, which took place on 2729 March 2023 in Vienna (Republic of Austria);
- the FATF seminar on Nonconviction Based Confiscation, held virtually on 29 March 2023;
- the meetings with the peer review mission of the European Commission on the general assessment of the legal and institutional framework and expert assessment on the fight against organized crime in Ukraine, which took place on 18 April 2023;
- the meeting with the representatives of the European Commission to analyze the effectiveness of financial investigations by the competent authorities of Ukraine (21 April 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 1822 April 2023 and was organized by the Center for Democracy and Rule of Law (CEDEM) within the framework of Ukraine Civil Society Sectoral Support Activity;
- the conference “Securing the Integrity and Resilience of Ukraine’s Financial System”, held on 19 June 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 welldefended financial system in the face of financial abuses have been considered;
- the seminar on “European experience in the introduction and circulation of virtual assets”, which took place on 1213 July 2023, within the framework of attracting external assistance from the European Commission under the TAEIX instrument and at the initiative of the NSSMC;
- a meeting with representatives of the European Commission on the preparation of the Recovery Plan for Ukraine, in terms of combating money laundering, organized by the Ministry of Finance of Ukraine on 3 August 2023;
- the meeting on ensuring the implementation of the recommendations of the European Commission, as stated in the European Commission’s Opinion on Ukraine’s application for membership of the European Union, in terms of ensuring the compliance of national antimoney laundering legislation with the FATF Recommendations 6 and 7, organized by the Ministry of Finance of Ukraine on 4 August 2023;
- a meeting with representatives of development partners under international technical assistance projects to discuss the implementation of current and future project activities, which took place on 13 September 2023;
- the Global NGO Sector Consultation: “Risk and Consequence: The Future of FATF Rec 8 for Financial Integrity and for Civil Society”, which took place on 2627 September 2023 in Germany;
- the advanced training on virtual assets investigations, which took place in Vienna (Republic of Austria) on 1417 November 2023;
- the Global Dialogue with the private sector, which was organized by the World Resources Institute in cooperation with UNODC and Interpol on 15 November 2023;
- the working visits to the FIU of the Kingdom of Sweden and the FIU of the Kingdom of Denmark (OSCE) on 27 November – 1 December 2023, within the framework of which a Memorandum of Understanding with the Financial Intelligence Unit of the Kingdom of Sweden was signed on 27 November 2023.
Also, Decision of the Council of the European Union (CFSP) 2023/2871 was published in the Official Journal of the EU on 18 December 2023 amending Decision 2014/145/CFSP concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine, with a list of natural and legal persons subject to sanctions within the framework of the adopted 12th package. According to the decision, the Financial Intelligence Unit of the RF and its head were included in the list of sanctioned persons of the terrorist state.