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 (hereinafter – AML/CFT/CPF), which are based on the implementation of:

- the AML/CFT/CPF Law of Ukraine, acts of the Cabinet of Ministers of Ukraine and the Ministry of Finance of Ukraine;

- Main Directions of the Development of the AML/CFT/CPF 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 9 months of 2023, the SFMS registered 1 025 757 reports on financial transactions, subject to financial monitoring received from the reporting entities, including:

- 92 897 suspicious financial transactions (activities) reports;

- 919 176 threshold transactions reports;

- 130 threshold and suspicious transactions (activities) reports;

- 13 554 reports on the request for financial transactions monitoring.

Analytical research

For 9 months of 2023, the SFMS sent 870 referrals (including 477 case referrals and 393 additional case referrals) to law enforcement agencies, in particular to:

- the Security Service of Ukraine – 264 referrals (including 146 case referrals and 118 additional case referrals);

- the National Police of Ukraine – 228 referrals (including 174 case referrals and 54 additional case referrals);

- the National Anti-Corruption Bureau of Ukraine – 131 referrals (including 37 case referral and 94 additional case referrals);

- the Economic Security Bureau of Ukraine – 99 referrals (including 61 case referrals and 38 additional case referrals);

- the prosecutors’ offices – 68 referrals (including 18 case referrals and 50 additional case referrals);

- the State Bureau of Investigation – 80 referrals (including 41 case referrals and 39 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 85,3 billion.

For 9 months of 2023, the amount of financial transactions suspended and funds blocked by the SFMS amounted to the equivalent of UAH 3.6 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, for 9 months of 2023, the SFMS sent to law enforcement agencies 207 materials related to the financing of terrorism/separatism and military aggression by the RF and RB against Ukraine.

Such materials are divided into the following components by the areas of investigation (30 referrals contain several components):

- 33 referrals (23 case referrals and 10 additional case referrals) on financial transactions or their participants, in relation to which there are suspicions of terrorism/separatism and its financing (including financing of illegal armed groups in the temporarily occupied territories of Ukraine);

- 79 referrals (71 case referrals and 8 additional case referrals) on financial transactions or their participants that may be related to military aggression by RF and RB against Ukraine; collaboration activities; publicly calling for violent change or overthrow of the constitutional order or seizure of state power, change of territory or state border, including with the participation of 9 non-profit organizations;

- 125 referrals (46 case referrals and 79 additional case referrals) on legal entities and individuals or persons related to them, to which restrictive measures (sanctions) were applied.

Within the framework of international cooperation on information exchange, as well as the identification and suspension/freezing of assets belonging to persons who commit predicate offences, organize, ensure and provoke the conduct of an aggressive war of the RF against Ukraine, and to other persons, the SFMS carries out constant analytical work, within the framework of which, in particular 66 requests were submitted to 32 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.

Thus, for 9 months of 2023, the SFMS detected information on the possession of 20 real estate objects (2 apartments, 1 condominium, 3 villas, 1 mansion and 13 other real estate objects), 2 yachts, 163 companies and 52 accounts by the subjects of the investigation and related persons. The value of the individual assets for which the relevant information is known is equivalent to about USD 148,78 million

The SFMS does not disregard financial investigations into the laundering of the proceeds of corruption, embezzlement and misappropriation of public funds and property.

Thus, for 9 months of 2023, the SFMS sent to law enforcement agencies 185 referrals (61 case referrals and 124 additional case referrals), that are related to the suspicion of corruption, in particular:

- the National Anti-Corruption Bureau of Ukraine – 131 referrals (37 case referral and 94 additional case referrals);

- the Security Service of Ukraine – 14 referrals (6 case referral and 8 additional case referrals);

- the State Bureau of Investigation Ukraine – 25 referrals (11 case referral and 14 additional case referrals);

- the Prosecutor General’s Office – 6 referrals (4 case referral and 2 additional case referrals);

- the National Police of Ukraine – 8 additional case referrals (2 case referral and 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 amounted to UAH 11.9 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 of reports, specified in the Resolution of the National Bank of Ukraine of August 26, 2022 No. 193.

Also in September this year, the Service updated its recommendations for banks and non-bank institutions to submit information on financial transactions to the SFMS. These recommendations were updated following the amendments to the Basic Law.

At the same time, during the period of martial law, the SFMS focuses on cooperation with the public. Therefore, on 29 March and 1 September 2023, the fourth and the fifth meeting of the Public Council under the SFMS took place.

During the meetings, the representative of the SFMS informed attendees about the implementation by the SFMS in 2022 and 2023 of the AML/CFT/CPF state policy under martial law.

Moreover, the Public Council’s members approved the Council’s work plan for 2024.

In addition, for the implementation of part two of Article 36 of the AML/CFT/CPF Law of Ukraine of December 06, 2019, No. 361-ІХ, the SFMS submitted the report on the AML/CFT/CPF state for 2022 (hereinafter – the Report) to the Verkhovna Rada of Ukraine.

The Report contains information on the results of the activities of participants of the national AML/CFT/CPF system for 2022, taking into account conditions of the armed aggression of the RF against Ukraine.

Also, in accordance with Article 45 of the Law of Ukraine “On Civil Service” and the Standard Procedure for Public Report of the Head of an executive authority, approved by the Order of the National Agency on Civil Service on 20.12.2016 No. 277 and registered with the Ministry of Justice of Ukraine on 11.01.2017 No. 28/29896, taking into account the introduction of martial law in Ukraine and the consequences of its introduction, in April 2023, the Head of the State Financial Monitoring Service of Ukraine presented a public report for 2022.

In the field of methodological work of the SFMS, an international conference was held on April 27-28, 2023, organized by the SFMS with the support of the project “Strengthening Financial Monitoring System Preparedness to Fight Money Laundering and Financing of Terrorism Threats”, within the framework of the Organization for Security and Co-operation in Europe (OSCE) Support Program for Ukraine and in cooperation with the EU Anti-Corruption Initiative in Ukraine (EUACI) on the following topic: «Supranational and national AML/CFT/CPF systems: challenges and prospects».

The event was devoted to discussing the peculiarities of implementing AML/CFT/CPF legislation, taking into account the results of the third round of the AML/CFT/CPF National Risk Assessment, current challenges and identifying strategic priorities for the further evolution of the system of response to relevant threats, including in the context of RF’s military aggression against Ukraine.

Also, to inform financial monitoring entities, law enforcement agencies, judicial authorities and the public, the SFMS translated and published the following editions in September this year:

- EU AML/CFT Global Facility Report «Typologies of Illicit Financial Abuse of the NPO Sector»;

- RUSI «Guide to Conducting a National Proliferation Financing Risk Assessment»;

- FATF publication «Virtual Assets: Targeted Update on Implementation of the FATF Standards on Virtual Assets and Virtual Asset Service Providers»;

- FATF publication «Guidance on Beneficial Ownership of Legal Persons»

- MONEYVAL Typologies report «Money laundering and terrorist financing risks in the world of virtual assets».

On June 29, 2023, as part of the coordination work, the fifteenth meeting of the AML/CFT/CPF Council was held in the format of a video conference.

The Council discussed the results of the SFMS participation in the international events of the global AML/CFT/CPF system, as well as the results of the state financial monitoring entities’ AML/CFT/CPF supervision of the reporting entities, taking into account the risk-oriented approach and the problems accompanying it.

Representatives of the SFMS also took part in:

- the conference “Sanctions - an instrument of the state security policy”, held on the platform of the National Academy of the Security Service of Ukraine on September 12, 2023;

- the National expert roundtable discussion “Monitoring and Investigating Trafficking in Cultural Property: Achievements and Challenges”, organized by the United Nations Office on Drugs and Crime (UNODC), together with the Ivan Franko National University of Lviv on September 21 and 22, 2023.

In addition, a representative of the SFMS has repeatedly participated in meetings of the Verkhovna Rada Committees on draft laws amending the Basic Law.

International events

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

This breakdown demonstrates the nature of the destructive impact of the terrorist war waged by the RF against Ukraine, and shows the place, 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).

Cooperation with the Financial Action Task Force (FATF)

During 9 months of 2023, an exchange of information between the SFMS and the FATF regarding the situation in Ukraine related to the full-scale invasion of the RF was carried out.

In the reporting period, the Head of the SFMS repeatedly sent official letters to the President of the FATF, Mr. Raja Kumar, with a detailed description of the threats and risks posed by the RF to the integrity of the international financial system and a call for appropriate actions.

In cooperation with partners from the public and private sectors, the SFMS prepared video appeals to the FATF describing the terrorist risks that the RF poses to the international financial system. These video appeals were published on the SFMS’s page on the YouTube social network.

In the period from 20 to 24 February 2023 and 19 to 23 June 2023, the SFMS, with the support of the EU Anti-Corruption Initiative in Ukraine (EUACI) project, took part in the regular FATF Plenary meetings and the meeting of the relevant FATF Working Groups held in Paris (French Republic).

At the Plenary meeting held on February 20-24, the FATF adopted a Statement.

According to the Statement, FATF is 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 Russian Federation’s actions unacceptably run counter to the FATF core principles aiming to promote security, safety, and the integrity of the global financial system. They also represent 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 Russian Federation. The Russian Federation remains accountable for its obligation to implement the FATF Standards.

The next FATF Plenary meeting, held from June 19 to 23, 2023, extended the suspension of RF’s membership in the FATF.

According to the FATF official information, following the results of the FATF Plenary meeting, the Russian Federation’s war of aggression against Ukraine continues to run counter to FATF’s principles of promoting security, safety and the integrity of the global financial system and the commitment to international cooperation and mutual respect upon which FATF Members have agreed to implement and support the FATF Standards.

Following the statements issued in March, April, June and October 2022, FATF once again 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.

As part of the preparations for the next FATF meeting to be held on October 23-27 this year, the work of the SFMS and its partners continues.

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 High-Level Declaration of MONEYVAL and the MONEYVAL Strategy for 2023-2027, which were approved during the High-Level Meeting in Warsaw (Republic of Poland) on April 25, 2023.

These documents outline the political and practical visions and role of the MONEYVAL in AML/CFT/CPF activities for the next 5 years, within the framework of which the ministers of MONEYVAL member states and territories responsible for anti-money laundering policies have committed to improving the effectiveness of their regimes to prevent and combat money laundering, the financing of terrorism and proliferation of weapons of mass destruction.

In particular, in the Declaration (clause 3), ministers and high-level delegates of MONEYVAL member states and territories joined in strongly condemning the continued aggression of the Russian Federation against Ukraine and confirmed their full support for Ukraine and its people.

These documents are available on the MONEYVAL official website, and their Ukrainian version on the SFMS official website.

During 22-26 May 2023, the representatives of Ukraine, headed by the SFMS, participated in the meetings of the Working group on Evaluations and the 65th MONEYVAL Plenary meeting, which took place in Strasbourg (French Republic).

During the Plenary meeting, negotiations were held with MONEYVAL member countries and observers. International partners were provided with information on the operation of the national AML/CFT/CPF system in the context of the aggressive war of the RF against Ukraine.

Ukraine has confirmed compliance with all international obligations in the field of financial monitoring taking into account the objective circumstances of the AML/CFT/CPF system operation.

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

Cooperation with the Egmont Group of Financial Intelligence Units (EG)

The SFMS continues to cooperate with the EG on an ongoing basis to ensure its adequate response to violations of the EG Charter and the Principles for Information Exchange between Financial Intelligence Units caused by the RF terrorist war against Ukraine.

Confidential communication is ensured with the leadership of the EG, its Secretariat and the EG member FIUs.

From January 31 to February 1, 2023, a representative of the SFMS took part in the EG MSCWG meetings (Dakar, the Republic of Senegal).

From July 03 to July 06, 2023, in Abu Dhabi (United Arab Emirates), with the assistance of the Special Representative of the Chairmanship - OSCE Project Co-ordinator in Ukraine, the representatives of the SFMS took part in the annual Plenary meetings of the Egmont Group of FIUs.

Within the framework of the current meetings, a consensus was reached on steps aimed at further strengthening the capacity of the Egmont Group community to withstand current challenges and discussing issues aimed at improving the effectiveness of bilateral and multilateral international cooperation between the FIUs of the Egmont Group, including within the framework of project initiatives of various working groups.

Also, within the framework of these meetings, a new Memorandum of Understanding on cooperation in the exchange of information on money laundering or other assets related to predicate offenses and terrorist financing was signed between the SFMS and the Special Supervisory Service of Banking Supervision (IVE) of the Republic of Guatemala.

On July 13, 2023, the representatives of the SFMS took part in an online seminar on the 16th FATF Recommendation (wire transfers) organized by the Egmont Group Secretariat.

Other international activities of the financial intelligence

On January 16, 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 the right to vote on any issues, which do not concern the statutory functions of the Conference, to be entrusted with any task of rapporteur, coordinator, head of a delegation representing the Conference of the Parties.

Moreover, the SFMS representatives took part in:

- the basic training 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);

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

- the meetings with the European Commission’s peer review mission on the fight against organized crime in Ukraine, held on April 18, 2023;

- the meeting with representatives of the European Commission to analyze the effectiveness of financial investigations by the competent authorities of Ukraine (April 21, 2023), in the context of assessing Ukraine as a candidate country for European Union membership;

- the study visit to Berlin (Germany) in order to study the German experience in conducting sectoral risk assessments and use these achievements in the course of the National Risk Assessment in Ukraine, which took place on April 18-22, 2023 and was organized by the Center for Democracy and Rule of Law (CEDEM) within the framework of Ukraine Civil Society Sectoral Support Activity;

- the conference “Securing the Integrity and Resilience of Ukraine’s Financial System”, held on June 19, 2023 in London, UK, where progress, impact, and effectiveness of the ongoing efforts in Ukraine by the government and civil society to build a solid and well-defended financial system in the face of financial abuses have been considered.

- the seminar on “European experience in the introduction and circulation of virtual assets”, which took place on July 12-13, 2023, within the framework of attracting external assistance from the European Commission under the TAEIX instrument and at the initiative of the NSSMC;

- a meeting with representatives of the European Commission on the preparation of the Recovery Plan for Ukraine, in terms of combating money laundering, organized by the Ministry of Finance of Ukraine on August 03, 2023;

- the meeting on ensuring the implementation of the recommendations of the European Commission, as stated in the European Commission’s Opinion on Ukraine’s application for membership in the European Union, in terms of ensuring the compliance of national anti-money laundering legislation with the sixth and seventh FATF Recommendations, organized by the Ministry of Finance of Ukraine on August 04, 2023;

- a meeting with representatives of development partners under international technical assistance projects to discuss the implementation of current and future project activities, which took place on September 13, 2023;

- the Global NGO Sector Consultation: “Risk and Consequence: The Future of FATF Rec 8 For Financial Integrity and For Civil Society”, which took place on September 26-27, 2023 in Germany.