Informing on the results of the SFMS work for the 1st quarter of 2023

19.04.2023 9:30

The State Financial Monitoring Service of Ukraine (SFMS), as the financial intelligence unit of Ukraine, under 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);

- 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.

On the official website of the SFMS, continuing the work started after imposition of wartime, key statistical data on the work of the financial intelligence unit in the international and domestic arena has been publishing on a weekly basis.

Collection and processing of information

During the 1^st quarter of 2023, the SFMS received from the reporting entities 311 141 reports on financial transactions, subject to financial monitoring, including:

- 26 935 suspicious financial transactions (activities) reports;

- 283 468 threshold transactions reports;

- 33 threshold and suspicious transactions (activities) reports;

- 705 reports on the request for financial transactions monitoring.

Analytical research

In the 1^st quarter of 2023, the SFMS sent 307 referrals to law enforcement agencies (including 154 case referrals and 153 additional case referrals), in particular to:

- the National Police bodies – 99 referrals (including 74 case referrals and 25 additional case referrals);

- the Security Service of Ukraine – 87 referrals (including 46 case referrals and 41 additional case referrals);

- the National Anti-Corruption Bureau of Ukraine – 50 referrals (including 12 case referral and 38 additional case referrals);

- the prosecutors’ offices – 31 referrals (including 6 case referrals and 25 additional case referrals);

- the Economic Security Bureau of Ukraine – 28 referrals (including 12 case referrals and 16 additional case referrals);

- the State Bureau of Investigation – 12 referrals (including 4 case referrals and 8 additional case referrals).

In these referrals, the sum of financial transactions that may be related to legalization of the proceeds and commission of a criminal offense amounted to UAH 22.6 billion.

In the 1^st quarter of 2023, the amount of financial transactions suspended by the State Financial Monitoring and blocked funds was UAH 1.3 billion.

Currently, the main activity of the SFMS is the detection of financial transactions and persons associated with the financing of terrorism/separatism and military aggression by the Russian Federation (RF) and the Republic of Belarus (RB) against Ukraine (including the activities of sabotage and intelligence groups; collaborative activities; public calls by persons 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 the 1^st quarter of 2023, the SFMS sent 72 such materials to law enforcement agencies (including 41 case referrals and 31 additional case referrals) in particular:

- 39 referrals (including 11 case referrals and 28 additional case referrals) on the persons included in the annexes to the decisions of the National Security and Defense Council of Ukraine, enacted by Decrees of the President of Ukraine;

- 27 referrals (including 25 case referrals and 2 additional case referrals) on financial transactions of persons who may be associated with military aggression of the RF with the assistance of the RB against Ukraine and collaborative activities;

- 5 referrals (including 4 case referrals and 1 additional case referrals) on other financial transactions of persons related to terrorism/separatism/sanctions;

- 1 referral on persons or related persons that are subject to restrictive measures (sanctions) applied by other countries.

Within the framework of international cooperation on information exchange, as well as the identification and suspension/freezing of assets belonging to persons who organize, ensure and provoke the conduct of an aggressive war of the RF against Ukraine, and other persons, the SFMS carries out constant analytical work, within the framework of which, in particular, submitted 22 requests to 19 financial intelligence units of foreign countries. Joint analytical researches are ongoing.

In addition, a representative of the SFMS participates in the operative group 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.

Financial investigations regarding the facts of laundering of proceeds from corruption, embezzlement and misappropriation of public funds and property was not overlooked by the SFMS.

Thus, in the 1^st quarter of 2023, the SFMS sent to law enforcement agencies 56 referrals (14 case referrals and 42 additional case referrals), that are related to the suspicion of corruption, in particular:

- the National Anti-Corruption Bureau of Ukraine – 50 referrals (12 case referral and 38 additional case referrals);

- the Security Service of Ukraine – 5 referrals (2 case referral and 3 additional case referrals);

- 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 was UAH 4.7 billion.

Cooperation with financial monitoring entities and public

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 “Electronic Cabinet of the Financial Monitoring System”, 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, specified in Resolution of the National Bank of Ukraine of August 26, 2022 No. 193.

At the same time, during the period of martial law, the SFMS enhanced cooperation with the public. Therefore, on 29 March 2023, the fourth meeting of the Public Council under the SFMS took place.

During the meeting, the representative of the SFMS informed attendees about the implementation by the SFMS in 2022 of the state policy in the area of prevention and counteraction to legalization (laundering) of the proceeds from crime, financing of terrorism and financing of proliferation of weapons of mass destruction, under martial law.

In addition, for the implementation of part two of Article 36 of the Law of Ukraine of December 06, 2019, No. 361-ІХ “On prevention and counteraction to legalization (laundering) of the proceeds from crime, financing of terrorism and financing of proliferation of weapons of mass destruction”, the SFMS submitted report on the state of prevention and counteraction to legalization (laundering) of the proceeds from crime, financing of terrorism and financing of proliferation of weapons of mass destruction for 2022 (hereinafter – Report) to the Verkhovna Rada of Ukraine.

The Report contains information on the results of the activities of participants of the national anti-legalization system for 2022, taking into account the armed aggression of the RF against Ukraine.

International events

The SFMS published a breakdown of risks posed by the RF to Global Financial Security and the World Order.

This scheme demonstrates the nature of the destructive impact of the terrorist war waged by the RF against Ukraine, and shows the location, 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 Financial Action Task Force (FATF) and FATF 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).

The breakdown also includes examples of some international organizations that excluded the RF from their membership. The competence of these organizations does not include the fight against the financing of terrorism or money laundering, but in relation to the issue of the RF, they acted decisively and preserved their reputation and trust among members.

Cooperation with the Financial Action Task Force (FATF)

During the 1^st quarter of 2023, 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.

Thus, on 17 January 2023, the SFMS prepared and sent, through the MONEYVAL Committee, another appeal to Co-chairs of the FATF/ICRG with materials to assess the RF’s criminal actions violating its commitments within the FATF and entry into the ICRG procedures.

On 1 February 2023, another appeal was submitted to the FATF President Mr. Raja Kumar with a call to FATF regarding the consolidation of efforts and the adoption of consensus decisions regarding the termination of the RF’s membership in the FATF and the inclusion of the RF in the list of jurisdictions subject to a call of actions.

In addition, in cooperation with partners from the public and private sectors, the SFMS prepared a new video appeal to the FATF describing the terrorist risks that the RF poses to the international financial system. This video appeal was published on the page of the SFMS on the YouTube social network.

Subsequently, in the period from 20 to 24 February 2023, the SFMS, with the support of the EU Anti-Corruption Initiative in Ukraine (EUACI) project, took part in the regular Plenary meeting and meetings of relevant FATF working groups held in Paris (French Republic).

As a result of consideration of the issue of imposing sanctions against the RF, the FATF adopted the relevant Statement, which was published on the FATF official website.

FATF reiterated its deepest sympathies for the needless loss of life, suffering, and destruction caused by the ongoing Russian invasion of Ukraine.

FATF strongly condemns the aggression war waged by the RF against Ukraine. Over the past year, the RF has intensified its inhumane and brutal attacks targeting public critical infrastructure.

FATF is also deeply concerned by the reports of arms trade between the RF and United Nations sanctioned jurisdictions, and malicious cyber-activities emanating from the RF.

The FATF stated that the actions of the RF unacceptably ran counter to the FATF core principles aiming to promote security, safety, and the integrity of the global financial system. They also represented a gross violation of the commitment to international cooperation and mutual respect upon which FATF Members have agreed to implement and support the FATF Standards. Considering the above, the FATF has decided to suspend the membership of the RF. The RF remains accountable for its obligation to implement the FATF Standards.

Following the Statements published in March, April, June and October 2022, the FATF 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.

The work of SFMS and partners in this direction is ongoing.

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 the Declaration of Ministers and High-level delegates of MONEYVAL and the MONEYVAL Development Strategy for the period 2023-2027, which are planned to be considered during High-Level Meeting in Warsaw (Republic of Poland) in April this year.

There was also communication with the MONEYVAL Secretariat regarding work issues.

Cooperation with Egmont Group of Financial Intelligence Units (EG)

The SFMS continues to take measures to exclude the RF from the EG on an ongoing basis. Thus, another appeal was sent to the EG regarding the violation of the principles of the EG by the FIU of the RF in January this year.

In the period from January 31 to February 1 2023, a representative of the SFMS took part in the meetings of the MSCWG of the Egmont Group (Dakar, Republic of Senegal).

Other international activities of the financial intelligence

On 16 January 2023, on the official website of the Conference of the Parties to Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism (Warsaw Convention), a decision following the Plenary Session (15-17 November 2022), where a representative of the SFMS took part virtually, was published.

In accordance with this decision, the RF, in particular, was deprived of the right to vote on any issues, which do not concern the statutory functions, to perform the functions of rapporteur, coordinator, head of a delegation representing the Conference.

Moreover, representatives of the SFMS took part:

- in the training on conducting investigations in the area of virtual assets as part of the project “Innovative policy solutions to mitigate money laundering risks of virtual assets”, which took place on 27-29 March 2023 in Vienna (Republic of Austria);

- in the FATF seminar on Non-conviction Based Confiscation, held virtually on 29 March 2023.

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