Informing on the results of the SFMS work for the 1st quarter 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 Prevention and Counteraction 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;
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 (Order of the CMU of 12.05.2021 No. 435-r);
Action Plan on Improvement of the National Financial Monitoring System following the Results of the 5th Round of Evaluation of Ukraine by the Council of Europe Committee MONEYVAL;
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 a terrorist state.
Collection and processing of information
During the period from 01.01.2022 to 31.03.2022, the SFMS has received 318 524 reports from the reporting entities on financial transactions subject to financial monitoring, including:
- 9 985 suspicious financial transactions (activities) reports;
- 308 302 threshold transactions reports;
- 53 threshold and suspicious transactions (activities) reports;
- 184 reports on the request for financial transactions monitoring.
From the specified total number of the reports, during the wartime, for the period from 24.02.2022 to 31.03.2022, the SFMS has received 67 603 reports from the reporting entities on financial transactions subject to financial monitoring, including:
- 1 815 suspicious financial transactions (activities) reports;
- 65 681 threshold transactions reports;
- 6 threshold and suspicious transactions (activities) reports);
- 101 reports on the request for financial transactions monitoring.
Analytical research
In the 1st quarter of 2022, the SFMS has sent 141 referrals to law enforcement agencies (including 90 case referrals and 51 additional case referrals), in particular to:
- the National Police bodies – 43 referrals (including 28 case referrals and 15 additional case referrals);
- the Security Service of Ukraine – 42 referrals (including 27 case referrals and 15 additional case referrals);
- the Bureau of Economic Security of Ukraine – 34 referrals (including 30 case referrals and 4 additional case referrals);
- the Prosecutors’ offices – 10 referrals (including 2 case referrals and 8 additional case referrals);
- the National Anti-Corruption Bureau of Ukraine – 8 referrals (including 1 case referral and 7 additional case referrals);
- the State Bureau of Investigation – 4 referrals (including 2 case referrals and 2 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 11 563,69 million.
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, in the 1st quarter of 2022, the SFMS has sent 14 referrals to law enforcement agencies on financial transactions of 83 persons, who are reasonably suspected as collaborators/traitors and may be related to the military aggression of the RF and the RB against Ukraine.
In the course of these financial investigations, the SFMS has suspended (blocked) funds in the amount of UAH 687.4 million.
In order to identify and suspend/freeze the assets belonging to persons who organize, ensure and provoke an aggressive war of the RF against Ukraine, the SFMS carries out continuous analytical work, in the framework of which, in particular, 379 requests have been sent to the financial intelligence units of foreign states.
Currently, the analytical work is ongoing.
Financial investigations regarding the facts of laundering of proceeds from corruption, embezzlement and misappropriation of public funds and property have not been overlooked by the SFMS.
Thus, in the 1st quarter of 2022, the SFMS has sent to law enforcement agencies 7 referrals (1 case referral and 6 additional case referrals), which are related to the suspicion of corruption, in particular:
- the National Anti-Corruption Bureau of Ukraine – 6 referrals (1 case referral and 5 additional case referrals);
- the Security Service of Ukraine – 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 14,58 million.
Cooperation with financial monitoring entities
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”, implemented with the support of the EU Anti-Corruption Initiative in Ukraine (EUACI).
In this regard, with the assistance of the EUACI project, step-by-step video instructions for work in the E-Cabinet have been prepared and posted on the official website of the SFMS, with the links to the SFMS’s page on the social network YouTube.
In terms of cooperation with the 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-based approach and risk indicators to customers related to the RF.
Recommendations on Compliance with the Requirements of the Legislation in the Field of Financial Monitoring during Wartime have been prepared and communicated to the reporting entities, in particular, regarding the detection of suspicious financial transactions related to the aggressor state, as well as risk indicators for transactions and customers from the RF and the RB.
In addition, the representative of the SFMS participates in the Task Force set up by the Prosecutor General’s Office of Ukraine to identify and seize assets belonging to those who organize, ensure and provoke an aggressive war of the RF against Ukraine, both in Ukraine and abroad, in order to transfer them further to the state budget of Ukraine for the reconstruction of its destroyed infrastructure.
Moreover, the SFMS has sent appeals to the Ministry of Foreign Affairs of Ukraine to coordinate the collection of information on the applied financial sanctions against the RF and its assets.
International events
Regarding the exclusion of the RF from MONEYVAL
On March 16, 2022, the Committee of Ministers of the Council of Europe decided to exclude the RF from the Council of Europe and, accordingly, from the Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) as a working body of the Council of Europe. Under such conditions, the RF is deprived of the right and opportunity to influence AML measures within the Council of Europe.
Regarding the exclusion of the RF from the FATF and the inclusion of the RF in the FATF “Black list”
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 in the FATF “Black list”. On March 04, 2022, the FATF has published a Public Statement in connection with the tragic developments in Ukraine (http://www.fatf-gafi.org/publications/fatfgeneral/documents/ukraine-2022.html) stating that the actions of the RF run counter to the FATF core principles and represent a gross violation of the obligations to implement and support the FATF Standards. At this stage, the FATF is reviewing the RF’s role at the FATF and will consider what future steps are necessary to uphold these core values.
The SFMS continues to consult with the FATF in order to take more effective steps to exclude the RF from the membership in this organization and to include the RF in the FATF “Black list”. For this purpose, a number of additional requests have been sent and appropriate communication with the FATF is provided.
In addition, the SFMS has established constant communication with the Ministry of Foreign Affairs of Ukraine and sent appeals to strengthen communication with the Ukrainian embassies abroad, including by informing the countries of the world of the need to disseminate information to participants of the financial and non-financial sectors of the respective countries about the exponentially growing risks of transactions carried out with the participation, on behalf and in the interests of the entities with financial and economic relations of the RF.
Furthermore, a number of official letters have been sent to the Members of the European Parliament with the request to facilitate the positive consideration by the FATF of an exclusion of the RF from the FATF and the RF’s inclusion in the FATF “Black list”.
The SFMS has informed the Ambassadors Extraordinary and Plenipotentiary of Ukraine to the United States of America, France, the United Kingdom as well as the United Nations about the actions taken by Ukraine to impose sanctions on the RF, and requested assistance.
The SFMS has developed and supported a petition for the inclusion of the RF in the FATF “Black list”, which is available at https://bit.ly/3wrMU5y (Petition: Expel Russia from the FATF and add it to the “Black List”).
Similarly, the SFMS has sent an appeal to the FATF to impose sanctions on the RB in connection with its assistance to the RF’s aggression against Ukraine.
Practical international steps of financial intelligence unit
The SFMS maintains daily working contacts with the financial intelligence units of the world 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.
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 sanctioned banks (Sberbank and others), in order to completely block their hosting. Based on the results of the work carried out, the SFMS has sent and followed up on the appeal to the key American host company Cloudflare.
Moreover, in close cooperation with crypto providers of Ukraine and the world, a mechanism for 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 specific proposals for action to deter the RF’s aggression in the virtual assets market, as a result 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.
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