Informing on the results of the State Financial Monitoring Service of Ukraine work for 9 months of 2022
The State Financial Monitoring Service of Ukraine, as the financial intelligence unit of Ukraine, in 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, which are based on the implementation of:
the Law of Ukraine “On Preventing and Counteracting 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;
the 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 12.05.2021 No. 435-r);
the Action Plan on Improvement of the National Financial Monitoring System following the Results of the MONEYVAL’s 5th Round Mutual Evaluation of Ukraine;
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 actions of terrorist country.
Collecting and processing information
During 01.01.2022 - 30.09.2022, the SFMS has registered 853 465 reports on financial transactions subject to financial monitoring received from the reporting entities, of which:
- 35 534 reports on suspicious financial transactions (activity);
- 809 244 reports on threshold transactions;
- 149 reports on threshold and suspicious transactions (activity);
- 8 538 reports on a request for tracking financial transactions.
Of the indicated total number of reports, during the wartime period (during 24.02.2022 - 30.09.2022), the SFMS has registered 602 544 reports on financial transactions subject to financial monitoring received from reporting entities, of which:
27 364 reports on suspicious financial transactions (activity);
566 623 reports on threshold transactions;
102 reports on threshold and suspicious transactions;
8 455 reports on a request for tracking financial transactions.
Analytical research
During 9 months of 2022, the SFMS has sent 653 referrals to law enforcement agencies (400 case referrals and 253 additional case referrals), in particular to:
- the Security Service of Ukraine – 260 referrals (174 case referrals and 86 additional case referrals);
- the National police bodies – 127 referrals (94 case referrals and 33 additional case referrals);
- the Economic Security Bureau of Ukraine – 90 referrals (64 case referrals and 26 additional case referrals);
- the Prosecutor's office – 83 referrals (29 case referrals and 54 additional case referrals);
- the State Bureau of Investigation – 50 referrals (26 case referrals and 24 additional case referrals);
- the National Anti-Corruption Bureau of Ukraine – 43 referrals (13 case referrals and 30 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 is UAH 41,1 billion.
Currently, the main activity of the SFMS is to identify the funding channels for persons who may be associated with the military aggression by the Russian Federation (RF) and the Republic of Belarus (RB) against Ukraine, including sabotage and reconnaissance groups.
Thus, for 9 months of 2022, the SFMS sent 170 referrals to law enforcement agencies regarding the financial transactions of persons, who are reasonably suspected as collaborators/traitors and may be related to the military aggression of the RF and the RB against Ukraine.
For 9 months of 2022, the total amount of financial transactions stopped by the SFMS and funds blocked is UAH 3,55 billion.
Within the international cooperation on information exchange, as well as identifying and suspending/freezing assets belonging to persons who organize, ensure and provoke an aggressive war of the RF against Ukraine, and other persons, the SFMS carries out continuous analytical work, in the framework of which, in particular, 1041 requests were sent to the financial intelligence units of foreign countries. Joint analytical studies are ongoing.
In addition, a representative of the SFMS participates in the operational group “Task Force” in the direction of identifying and seizing assets belonging to persons who organize, ensure and provoke an aggressive war of the RF against Ukraine, both on the territory of Ukraine and abroad, for the purpose of their subsequent transfer to the state budget of Ukraine for the reconstruction of its destroyed infrastructure.
Financial investigations in the facts of laundering of proceeds from corruption, embezzlement and misappropriation of public funds and property are not left out of the SFMS attention.
Thus, for 9 months of 2022, the SFMS has sent 57 referrals (14 case referrals and 43 additional case referrals) to law enforcement agencies, related to suspicion of corruption, in particular to:
- the National Anti-Corruption Bureau of Ukraine – 43 referrals (13 case referrals and 30 additional case referrals);
- the Security Services of Ukraine – 12 additional case referrals;
- the Economic Security Bureau of Ukraine – 1 case referral;
- the State Bureau of Investigation – 1 additional case referral.
In these referrals, the amount of financial transactions that may be related to legalization of the proceeds and commission of a criminal offense is UAH 1,2 billion.
Cooperation with financial monitoring entities and public
In the framework of cooperation with the private sector, the SFMS, from February 15, 2022, has been testing the exchange of information with the reporting entities by means of the Information and Telecommunication System “The Financial Monitoring System Electronic Cabinet” (e-cabinet), implemented with the support of the EU Anti-Corruption Initiative in Ukraine (EUACI) project.
In this regard, with the assistance of the EUACI project, step-by-step video instructions for work in the e-cabinet have been developed and posted on the official website of the SFMS, with the links to the SFMS’s page on the social network YouTube.
At this time, testing by external users of the ITS software “e-cabinet SFM” continues to ensure the processing reporting entities’ information and improve the logical control of incoming reports from the reporting entities when processed by the ISFM software in accordance with the requirements of the Order of the Ministry of Finance of Ukraine of 04.06.2021 No. 322.
In terms of cooperation with the state financial monitoring entities, an appeal has been sent to each state regulator to strengthen the supervision over reporting entities regarding their application of a risk-oriented approach and risk indicators to RF-related customers.
In May of this year, the updated Recommendations on the implementation of the requirements of the legislation in the field of financial monitoring for the period of martial law were prepared and brought to the attention of the reporting entities, in particular in terms of identifying suspicious financial transactions related to the aggressor country, as well as risk indicators of transactions and RF and RB-related customers were sent for use in the work.
On April 7, 2022, on the SFMS initiative, the Order No. 113 of the Ministry of Finance of Ukraine “On Amending Clause 4 of the Order No. 322 of the Ministry of Finance of Ukraine of June 4, 2021” was approved, which was registered with the Ministry of Justice of Ukraine on April 22, 2022 No. 443/37779, according to which the effective date of the Order of the Ministry of Finance of Ukraine of 04.06.2021 No. 322 (hereinafter referred to as – the Order of the Ministry of Finance No. 322) has been postponed from May 1, 2022 to the first Monday of the fourth month after the termination or cancellation of martial law.
In order to inform the participants of the financial monitoring system and the public, the materials of the public report of the Head of the State Financial Monitoring Service of Ukraine for 2021 and the typological study of the SFMS for 2021 have been published on the official website of the SFMS.
On June 30, 2022, the SFMS organized the thirteenth AML/CFT Council meeting.
Measures to prevent and counter legalization (laundering) of proceeds of crime, financing of terrorism, and financing of the proliferation of weapons of mass destruction under the martial law were discussed at the meeting.
During the period of martial law, the SFMS provides focused cooperation with the public. Thus, on September 27, 2022, with the assistance of the Service, the third meeting of the Public Council under the SFMS was held.
During the meeting, the SFMS representatives informed those present about the SFMS’s implementation in 2022 of the state policy in the field of prevention and counteraction to the legalization (laundering) of the proceeds from crime, financing of terrorism and financing of the proliferation of weapons of mass destruction during martial law, other relevant issues were discussed as well.
At the same time, within the framework of the methodical work, the SFMS, with the assistance of the OSCE Project Coordinator in Ukraine, has prepared the publication “Review of the Legislation Regulating Virtual Assets”.
The publication reviews the legislation comprehensively regulating the sphere of virtual assets turnover, including the prevention and counteraction to money legalization (laundering), financing of terrorism and financing of proliferation of weapons of mass destruction in twenty-four countries of the world.
In addition, the official website of the SFMS announced the publication of the FATF Risk-based Approach Guidance for the Real Estate Sector and the Report on Partnering in the Fight Against Financial Crime: Data Protection, Technology and Private Sector Information Sharing.
International events
Cooperation with the Financial Action Task Force (FATF)
During 9 months of 2022, 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. In particular, the SFMS has sent a number of appeals to the FATF regarding the exclusion of the RF from the FATF and the inclusion of the RF and the RB in the FATF blacklist.
The SFMS representatives took part (virtually) in the meeting of the International Co-operation Review Group (ICRG) and the FATF Plenary meeting, which were held in Berlin, Germany (On 6-7 and 12 – 17 June, in a hybrid format). During the events, the SFMS representatives presented the position of Ukraine and took part in the discussion of the inclusion of the RF in the FATF blacklist (high-risk jurisdictions, in respect of which the FATF calls on all members and jurisdictions to take actions (counter-measures).
According to the results of the Plenary meeting, the FATF published a separate Public Statement and significantly limited the rights and powers of the RF as a FATF member.
The SFMS representative also took part in the autumn meetings of the International Cooperation Review Group (ICRG) and the Plenary meeting of the Financial Action Task Force (FATF), which were held in Paris, the French Republic (October 18-21). At the mentioned meetings, the argumentation of Ukraine’s position regarding the further imposing of sanctions on the RF was being consistently continued.
As a result of consideration of the RF membership issue, the FATF adopted a relevant Statement, which is posted on the FATF official website.
According to the Statement, Russia’s actions continue to violate FATF’s core principles, which aim to promote security, safety and the integrity of the financial system. As a result of Russia’s continuing actions, the FATF has decided to impose additional restrictions on the country’s remaining role, including by barring them from participating in current and future FATF projects. Russia is also barred from participating in meetings of the FATF-Style Regional Bodies as an FATF Member. These measures expand on the actions that the FATF took in June, which stripped Russia of all its leadership roles among other restrictions.
The work of the SFMS and partners in this direction continues.
Cooperation with the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL)
During the reporting period, there was a constant exchange of information between the SFMS and the MONEYVAL regarding the situation in Ukraine related to the full-scale invasion of the RF.
On March 16, 2022, the Council of Europe Committee adopted a decision to exclude the RF from the Council of Europe and, accordingly, from the MONEYVAL, as a working body of the Council of Europe. Under such conditions, the RF is deprived of the right and opportunity to influence anti-legalization measures within the Council of Europe.
The SFMS representatives took part in the meeting of the MONEYVAL Working Group on Evaluations and the 63rd Plenary Meeting held in Strasbourg, French Republic (May 16-20, in a hybrid format).
The issue on measures taken by our state to comply with the Procedures related to the implementation of the voluntary tax compliance programmes was planned to be considered during this Plenary meeting, but this issue was postponed in connection with the introduction of martial law in Ukraine.
The mentioned Plenary meeting was the first meeting after the exclusion of the RF from the Council of Europe and the MONEYVAL and, accordingly, was held without the participation of the RF.
Also, in the reporting period, an official letter was received from the MONEYVAL Secretariat on the suspension of the process of reporting on Ukraine’s AML/CFT progress following the results of the MONEYVAL’s 5th round mutual evaluation until the situation in Ukraine returns to normal.
Cooperation with the Egmont Group of Financial Intelligence Units
For 9 months of 2022, the SFMS has repeatedly communicated with the management and the Secretariat of the Egmont Group of Financial Intelligence Units regarding the situation in Ukraine related to the full-scale invasion of the RF.
The Head of the Egmont Group issued an official Public Statement in connection with the military aggression against Ukraine condemning the RF actions.
On the SFMS initiative, in cooperation with a significant number of foreign financial intelligence units, the work has been intensified in the direction of analysis and investigation of crimes involving the use of virtual assets with the participation of individuals and legal entities from the RF, as well as their collaborators and related persons.
Within the activities of the 28th Plenary meeting of the Egmont Group (10-15 July, Riga, Republic of Latvia), during an operational training session, the SFMS, together with a representative of the FATF and the FIU of Belgium, presented key results and practical solutions regarding global and national asset recovery measures. It is worth noting that the FIU of Ukraine acted as one of the leaders of the Egmont Group project “Asset recovery – the Role of FIUs”, together with the FIU of Belgium. The presentation emphasized the importance of the coordination and cooperation for the effective asset recovery to prevent and counter criminal activity. Currently, this issue is particularly important in the context of the fight against the Russian terrorist war against Ukraine.
In addition, the SFMS representatives took part in the Egmont Group meetings, in particular in the meetings of the Working groups, the EUROPE II Regional Group and the Plenary meeting.
Also, within the framework of the 28th Plenary meeting of the Egmont Group, the Head of the SFMS Igor Cherkaskyi and the Director of the FIU of Luxembourg Max Braun concluded a Memorandum of Understanding on cooperation in the exchange of financial intelligence related to money laundering, associated predicate offences and terrorism financing.
The key objective of the Memorandum is to strengthen and simplify the exchange of financial intelligence between Ukraine and Luxembourg.
Practical international steps of financial intelligence
The SFMS maintains daily working contacts with the foreign financial intelligence units and the relevant financial regulators on the exchange of intelligence information, as well as on strengthening of the financial supervision of businesses with ties to the RF.
This activity is aimed at the prevention of the spread of international terrorism, including blocking of financial transactions, freezing of assets and their subsequent confiscation.
In April this year, the SFMS sent an appeal to the Asia-Pacific Anti-Money Laundering Group (APG) to deprive the RF of observer status in this international organization, which was satisfied at the Plenary meeting, which was held on July 26-28, 2022 in Kuala Lumpur, Malaysia.
Together with the team of the Ministry of Digital Transformation, as well as with the key crypto experts of Ukraine, the work has been carried out to identify the list of Russian crypto exchangers associated with the banks under sanctions (Sberbank and others), in order to completely block their hosting.
Also, in close cooperation with the crypto-providers of Ukraine and the world, a mechanism of spontaneous blocking of crypto-wallets of the RF has been launched.
In this regard, the SFMS has sent an appeal to the Binance cryptocurrency exchange with the specific proposals for actions to deter the RF’s aggression in the virtual assets market, as a result of consideration of which Binance has changed its policy and on March 20, 2022, ruled out P2P transactions for a number of Russian banks and payment systems, which were included in the sanctions list. Moreover, other practical measures regarding blocking Russian crypto assets and transactions of Russian residents were implemented.
In addition, during 9 months of 2022, the SFMS initiated and ensured cooperation with the regulatory authorities of the financial sector of more than 100 countries to strengthen the implementation of financial supervision measures in relation to individuals of the RF.
In connection with the aggressive war against Ukraine, the SFMS has severed bilateral ties with the Federal Financial Monitoring Service of the RF and the Department of Financial Monitoring of the State Control Committee of the RB.
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