Informing on the results of the State Financial Monitoring Service of Ukraine work for 9 months of 2021
The SFMS, 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, for 9 months of 2021, the SFMS has submitted 933 referrals (of them 612 case referrals and 321 additional case referrals) to law enforcement agencies which were sent for consideration to:
- the prosecutor’s offices - 53 referrals (of them 41 case referrals and 12 additional case referrals);
- the State Fiscal Service of Ukraine - 259 referrals (of them 164 case referrals and 95 additional case referrals);
- the National Police of Ukraine - 311 referrals (of them 275 case referrals and 36 additional case referrals);
- the Security Service of Ukraine - 191 referrals (of them 88 case referrals and 103 additional case referrals);
- the National Anti-Corruption Bureau of Ukraine - 88 referrals (of them 28 case referrals and 60 additional case referrals);
- the State Bureau of Investigations of Ukraine - 31 referrals (of them 16 case referrals and 15 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 81,9 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 9 months of 2021, the SFMS has submitted 129 referrals (34 case referrals and 95 additional case referrals) to law enforcement agencies, which are related to suspicion of corruption, in particular to:
- the National Anti-Corruption Bureau of Ukraine - 88 referrals (of them 28 case referrals and 60 additional case referrals);
- the State Bureau of Investigations of Ukraine - 12 referrals (of them 4 case referrals and 8 additional case referrals);
- the Prosecutor General’s Office - 3 referrals (of them 1 case referrals and 2 additional case referrals);
- the National Police of Ukraine - 2 additional case referrals;
- the Security Service of Ukraine - 23 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 7,9 billion.
Also, 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» (fraud with VAT using mutual settlement for substitution of incoming and outgoing payments through shell companies for fictitious interchange of tax credits of one group of goods with tax obligations of different group of goods which don’t correspond to each other).
Thus, for 9 months of 2021, the SFMS has submitted to law enforcement agencies 88 referrals (of them 41 case referrals and 47 additional case referrals) which are related to the mechanism of «counter-flows», in particular to:
- the State Fiscal Service of Ukraine - 46 referrals;
- the Security Service of Ukraine - 39 referrals;
- the State Bureau of Investigations of Ukraine - 1 referral;
- the National Anti-Corruption Bureau of Ukraine - 1 referral;
- the Prosecutor General’s Office - 1 referral.
The total amount of «converted» funds based on these referrals is UAH 16.5 billion.
In the course of these financial investigations, the SFMS suspended (blocked) funds in the amount of UAH 72.22 million.
Pursuant to the legislation of Ukraine, the SFMS (as a financial intelligence unit of Ukraine) in conjunction with law enforcement agencies, takes measures aimed at preventing and countering to financing of terrorist activities and separatism.
Thus, for 9 months of 2021, the SFMS has submitted to law enforcement agencies 83 referrals (of them 66 case referrals and 17 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:
- 16 referrals (7 case referrals and 9 additional case referrals), which are related to the implementation of financial transactions with the participation of 7 individuals and 62 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 as of 21.06.2018 No. 176/2018, as of 14.12.2020 No. 564-27t (in the wording of the decision of the National Security and Defense Council of Ukraine as of 28.01.2021, enacted by the Decree of the President of Ukraine as of 28.01.2021 No. 29/2021), as of 02.02.2021 No. 43/2021, as of 19.02.2021 No. 64/2021, as of 03.04.2021 No. 140/2021, as of 21.04.2021 No. 169/2021, as of 21.05.2021 No. 203/2021 and as of 24.06.2021 No. 266/2021;
- 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 unforeseen by law paramilitary or armed groups;
- 10 referrals (9 case referrals and 1 additional case referral), which are related to suspicions of financial transactions involving 15 individuals, possibly involved in the financing of international terrorist organizations and/or extremist groups;
- 36 referrals (30 case referrals and 6 additional case referrals), containing information on financial transactions of 98 individuals and 36 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);
- 1 case referral, transferred to the State Fiscal Service of Ukraine, which is related to the financial transactions of a person included in the OFAC sanctions list.
From 83 referrals submitted, 17 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 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’s 5th Round of Mutual Evaluation of Ukraine was sent to MONEYVAL. The Report is planned to be considered via «written procedure» in this year.
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’s 5th Round of Mutual Evaluation of Ukraine, in particular, concerning the need to amend the Criminal and Criminal Procedure Codes of Ukraine.
Also, within the framework of interagency cooperation, the SFMS in January this year signed Agreement on interagency cooperation between the SFMS and the Commission for Regulation of Gambling and Lotteries. The purpose of this Agreement is to establish cooperation and information exchange to prevent and counter the organization and conduct of gambling and lotteries.
In addition, during 9 months of the current year, 9 interagency documents on information exchange were concluded, in particular with the State Tax Service of Ukraine, the State Customs Service of Ukraine and the Pension Fund of Ukraine.
At the same time, in March 2021, in order to better inform the public about the national system of financial monitoring, the Annual SFMS’s report for 2020 was posted on the SFMS’s official website, and in April this year the 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), the Head of the SFMS Igor Cherkaskyi provided 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 No. 435-r as of 12.05.2021). This plan is designed to implement the provisions of the updated Basic Law and the international AML/CFT standards.
Also, 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 by videoconference, where Council’s members were informed about the implementation by the SFMS of 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 meeting was held.
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. The meetings discussed topical issues that arise in reporting entities in compliance with the AML/CFT requirements.
At the same time, within the framework of methodological work, the SFMS’s specialists:
- jointly with state regulators, prepared recommendations for reporting entities-non-banking institutions to submit from January 1, 2021 information on the termination of separate units and clarification on e-cabinets of the financial monitoring system;
- provided clarifications for banking institutions on electronic interaction on financial monitoring issues, in particular L-type files (file-list);
- based on the results of the study of the risks of using non-profit organizations, prepared a review on the topic «Use of non-profit organizations for illegal purposes»;
- 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 politically exposed persons»;
- 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;
- in the framework of international projects prepared together with other interested bodies in this field and published a 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.
At the same time, an interagency discourse: «Transparency of beneficial ownership: lessons and prospects», organized by the SFMS under the auspices of the OSCE Project Coordinator in Ukraine and the project «Strengthening measures to counter money laundering and financing of terrorism in Ukraine» under the Program EU/Council of Europe «Partnership for Good Governance» (PGG) took place during July 1- 2, 2021 in Odesa.
Also, as part of educational work, during 9 months of 2021, representatives of the SFMS took part in 60 educational events, which were attended by 2915 persons.
With regard to international cooperation:
- during April 26-30, 2021, the representatives of Ukraine, headed by the SFMS, participated in the Working Group on Evaluations meeting and the MONEYVAL 61-st Plenary meeting, which, due to restrictions caused by the pandemic COVID-19 were held in a «hybrid » mode;
- during June 22-25, 2021, with the assistance and consent of MONEYVAL, the SFMS’s representatives took part in the FATF Plenary meeting, which took place online. The Plenary considered a number of issues related to the global measures taken by FATF and its members in the AML/CFT area;
- during June 28 - July 9, 2021, the SFMS’s representatives participated in the Working Groups meetings and the 27-th Plenary meeting of the Egmont Group of Financial Intelligence Units, which, due to restrictions caused by the pandemic COVID-19, were held 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;
- the SFMS signed Memoranda of Understanding with financial intelligence units of the Kingdom of Saudi Arabia, the Republic of Malta and the Holy See (Vatican).
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