The new AML/CFT Law has come into force
On April 28, 2020, the Law of Ukraine “On Prevention and Counteraction to Legalization (Laundering) of Proceeds from Crime, Terrorist Financing and Financing of Proliferation of Weapons of Mass Destruction” as of 06.12.2019 No. 361-IX enters into force.
The new Law is aimed at:
the implementation of Financial Action Task Force (FATF) Recommendations;
the implementation of Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing and Regulation (EU) 2015/847 of the European Parliament and of the Council of 20 May 2015 on information accompanying transfers of funds and repealing Regulation (EC) requirements in the legislation of Ukraine, which obligatory should be implemented by EU Member States and associated countries;
the fulfilment of the commitments taken by Ukraine when signing the Association Agreement between Ukraine and the European Union, ratified by the Law of Ukraine of September 16, 2016;
the implementation of the recommendations mentioned in the MER of Ukraine by MONEYVAL experts provided following the results of the 5th round mutual evaluation of Ukraine in AML/CTF area, which was approved at the 55th MONEYVAL Plenary meeting;
the fulfilment of the commitments defined by the Memorandum of understanding between Ukraine and the European Union ratified by the Law of Ukraine “On ratification of the Memorandum of Understanding between Ukraine as Borrower and the European Union as Lender, and the Loan Agreement between Ukraine as Borrower, the National Bank of Ukraine as Agent of Borrower, and the European Union as Lender”
The Law provides for comprehensive amendments to the legislation, which are as follows:
laying the groundwork for the possibility of remote verification by reporting entities (REs) which is particularly relevant in the context of the spread of COVID-19 in Ukraine;
the number of financial transactions features regarding which REs are obliged to inform the SFMS is decreased from 17 to 4. Thus, the REs are obliged to inform about financial transactions involved cash, money transfer abroad, politically exposed persons and clients from the states, which do not fulfil the recommendations of international, intergovernmental organizations that exercise AML activities;
the threshold for financial transactions about which the REs should inform the SFMS is increased (from UAH 150,000 to UAH 400,000);
the transition to a risk-based approach during the submitting information about suspicious financial transactions by REs and introducing adequate measures of influence for violation of AML legislation: from written warnings and penalties in large amounts to license revocation;
the REs range is expanded which encompasses entities providing tax consulting, persons providing services for the establishment, provision of activity or management of legal entities and virtual asset services providers;
the procedure for identification of ultimate beneficial owners is improved;
the mechanisms of regulation virtual assets are provided for, in particular, a regulator for entities of this sphere is determined;
the mechanism of applying targeted financial sanctions, in accordance with the requirements of FATF Recommendations 6 and 7 and UN Security Council Resolutions 1267 and 1373 is refined, in particular, the introduction of the asset freezing procedure and the provisions on international cooperation in this direction are improved;
the mechanism for relying on third parties for proper due diligence is introduced;
the new requirements on supporting transfers with information about the originator and the recipient of funds are set up;
the amendments to the Criminal and Criminal Procedure Codes are introduced, in particular, the new wording of Article 209 of the Criminal Code of Ukraine (Legalization (laundering) of property from crime) is introduced.
According to the paragraph 7 Section 7 of the Law state authorities are obligated to bring its regulations in compliance with this Law and repeal their regulations that contradict this Law within three months after the entry into force of this Law.
Prior to the implementation of these regulations, the SFMS in conjunction with the other supervisory authorities, prepared recommendations for the REs - banking and non-banking institutions regarding the new types of REs registration and the submission (from 28.04.2020) of information on financial transactions subject to financial monitoring, other information that may be related to the ML/TF. Mentioned information published on the official web site of the SFMS at the link.