Informing on the results of the State Financial Monitoring Service of Ukraine work for the 1st half 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 a terrorist state.
Collection and processing of information
During 01.01.2022 - 30.06.2022, the SFMS has received 546,332 reports from the reporting entities on financial transactions subject to financial monitoring, of which:
- 20, 301 reports on suspicious financial transactions (activity);
- 524, 022 reports on threshold transactions:
- 83 reports on threshold and suspicious transactions (activity);
- 866 reports on a request for tracking financial transactions.
Of the indicated total number of reports, during the wartime period (during 24.02.2022 - 30.06.2022), the SFMS has received 294,351 reports from reporting entities on financial transactions subject to financial monitoring, of which:
- 12,131 reports on suspicious financial transactions (activity);
- 281,401 reports on threshold transactions;
- 36 reports on threshold and suspicious transactions;
- 783 reports on a request for tracking financial transactions.
Analytical research
In the first half of 2022, the SFMS has sent 373 referrals to law enforcement agencies (249 case referrals and 124 additional case referrals), in particular to:
- the Security Service of Ukraine – 162 referrals (121 case referrals and 41 additional case referrals);
- the National police bodies – 67 referrals (48 case referrals and 19 additional case referrals);
- the Economic Security Bureau of Ukraine – 54 referrals (41 case referrals and 13 additional case referrals);
- the Prosecutor's office – 44 referrals (17 case referrals and 27 additional case referrals);
- the State Bureau of Investigation – 32 referrals (19 case referrals and 13 additional case referrals).
- the National Anti-Corruption Bureau of Ukraine – 14 referrals (3 case referrals and 11 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 28,823.50 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 first half of 2022, the SFMS sent 102 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.
In the course of these financial investigations, the SFMS stopped (blocked) funds in the amount of UAH 2, 383 billion.
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, and other persons, the SFMS carries out continuous analytical work, in the framework of which, in particular, 837 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 the conduct of 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 attention of the SFMS.
Thus, in the first half of 2022, the SFMS has sent 21 referrals (4 case referrals and 17 additional case referrals) to law enforcement agencies, related to suspicion of corruption, in particular to:
- the National Anti-Corruption Bureau of Ukraine – 14 referrals (3 case referrals and 11 additional case referrals);
- the Security Services of Ukraine – 6 additional case referrals;
- the Economic Security Bureau of Ukraine – 1 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 426, 55 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” (e-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.
At this time, testing by external users of the ITS software “e-cabinet SFM” continues to ensure the processing the 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-based 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 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 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.
International events
Cooperation with the Financial Action Task Force (FATF)
During the first half of 2022, there was a constant exchange of information between the SFMS and FATF and regarding the situation in Ukraine related to the full-scale invasion of the RF. In particular, the SFMS sent a number of appeals to the FATF regarding the exclusion of the Russian Federation from the FATF and the inclusion of the RF and the RB in the FATF blacklist.
In addition, the representative of the SFMS 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 (6-7 and 12 - June 17, in a hybrid format). During the events, the representative of the SFMS presented the position of Ukraine and took part in the discussion of the inclusion of the RF in the FATF “black list” (jurisdictions with a high level of risk, in respect of which the FATF calls on all members and urges all jurisdictions to take actions (counteractions).
According to the results of the Plenary meeting, the FATF issued a separate Public Statement and significantly limited the rights and powers of the RF as a member of the FATF.
The issue of including the RF in the FATF “black list” remains on the agenda of this international organization and will be discussed at the next FATF Plenary meeting in October 2022.
Cooperation with 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 MONEYVAL regarding the situation in Ukraine related to the full-scale invasion of the RF.
On March 16, 2022, MONEYVAL adopted a decision to exclude the RF from the Council of Europe and, accordingly, from 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 framework of the Council of Europe.
Representatives of the SFMS took part in the meeting of the MONEYVAL Working Group on Evaluations and the 63rd Plenary Meeting held in Strasbourg, France (May 16-20, in a hybrid format).
At the said Plenary meeting, it was planned to consider the issue of measures taken by our state to comply with the Procedures related to the implementation of the voluntary tax compliance programmes, but the issue was postponed in connection with the introduction of martial law in Ukraine.
The specified Plenary meeting was the first meeting after the exclusion of the RF from the Council of Europe and 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 5th round mutual evaluation until the situation in Ukraine returns to normal.
Cooperation with the Egmont Group of Financial Intelligence Units
In the first half of 2022, the SFMS 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 actions of the RF.
At the initiative of the SFMS, 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.
As part of the activities of the 28th Plenary meeting of the Egmont Group, 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 coordination and cooperation for 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 representatives of the SFMS took part in the meetings within the Egmont Group meetings, in particular in the meetings of the Working groups, the EUROPE II Regional Group and the Plenary meeting.
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.
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.
Also, in close cooperation with 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 specific proposals for action 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.
Also, during the first half of 2022, the SFMS initiated and ensured cooperation with the regulatory authorities of the financial sector of 54 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 Service for Financial Monitoring of the RF and the Department of Financial Monitoring of the State Control Committee of the RB.
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