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 : : Legal Framework
2009-01-01 00:00:00  Print Version



APPROVED

By the Order of State Committee  

for Financial Monitoring of Ukraine

dated August 31, 2007 under 148

 

 

 

MODAL RULES FOR EXECUTING INTERNAL FINANCIAL MONITORING

BY SECURITY TRADERS

  

 

These Rules shall establish the mechanisms on realization measure complex on executing internal financial monitoring for preventing using security traders (further - ST) for legalization of the proceeds from crime and terrorist financing.

The measures prescribed by this Rules could be supplemented by ST considering the requirements of SCFM of Ukraine and State Commission for Securities and Stock Market.

The Rules shall represent internal system of financial monitoring of ST, provided revealing of financial transactions subject to financial monitoring or could be related to terrorist financing, foreseen according to the legislation informing about such transactions the SCFM of Ukraine and established  the procedure of storing related documents.

 

 

1. GENERAL PROVISIONS

 

The Rules for executing internal financial monitoring by ST (further – the Rules) is developed according to the requirements of the Article 5 of the Law of Ukraine On prevention and counteraction to the legalization (laundering) of the proceeds from crime (further – the Law) and considering the requirements of other legislative acts on prevention and counteraction to the legalization (laundering) of the proceeds from crime and terrorist financing issues.

The Rules is the internal document of ST which establish the procedure and conditions of executing measures aimed at prevention and counteraction to using him for the legalization (laundering) of the proceeds from crime.

The Rules of ST is the document with restricted access. The procedure and regime of accessing the employees of ST to these Rules shall be established by the compliance officer of ST depending of their functioning obligations and shall be approved by the Head of ST.

The Rules shall include the followings:

The description of organization of system of internal financial monitoring of ST;

The general provisions of ST activity on executing financial monitoring issues;

The requirements to qualification of the compliance officer of ST;

The rights and obligations of the compliance officer of ST as well as other employees of ST involved to executing financial monitoring;

The procedure of identification of persons executing financial transactions subject to financial monitoring according to the Law;

The procedure of taking measures for determining the nature and purpose of financial transactions;

The procedure of revealing financial transactions subject to financial monitoring and could be related, connected or intended for terrorist financing;

The procedure of recording financial transactions subject to financial monitoring according to the Law;

The procedure of suspending executing financial transaction if its participant or beneficiary is person included to the List of persons related to terrorist activity;

The procedure of refusal in providing executing financial transaction if financial transaction according to the Law subject to financial monitoring;

The procedure of preparing and submitting to the compliance officer of ST the information necessary for him to take the decision on informing the SCFM of Ukraine and law enforcement authorities according to the legislation;

The procedure of collecting and storing documents on identification of the persons executing financial transactions and documents on executed financial transactions subject to financial monitoring and/or could be related, connected or intended for terrorist financing;

The requirements to providing privacy of information about financial transactions subject to financial monitoring and/or could be related, connected or intended for terrorist financing;

The procedure of acquaintance the employees with internal documents of ST on internal financial monitoring issues;

The procedure of organization and executing educational and practical measures for ST employees;

The procedure of informing the head of ST on revealed financial transactions subject to financial monitoring and measures could be used for realization the norms of the legislation in the sphere of prevention and counteraction to the legalization (laundering) of the proceeds from crime;

The description of measures aimed at prevention of possible using of the newest technologies in the schedules of legalization of the proceeds from crime and terrorist financing.

The main principles of developing this Rules is followings:

Direct participating of each employee of ST within their competence in revealing financial transactions that could be related to the legalization (laundering) of the proceeds from crime or terrorist financing;

Unprejudice in executing financial monitoring;

Privacy of information submitting to the SCFM of Ukraine (including about the fact of submitting the information on financial transaction), and other information on financial monitoring issues;

Prevention of involving employees of ST to the legalization (laundering) of the proceeds from crime.

The Rules are obligatory for executing by all employees of ST involved to executing financial transactions.

 

2. ORGANIZATIONAL PROVISION OF FIANCIAL MONITORING SYSTEM

 

Internal financial monitoring is the ST activity on revealing according to the Law financial transactions subject to financial monitoring and other financial transactions that could be related to the legalization (laundering) of the proceeds or terrorist financing.

The head of the ST shall be responsible for organization of complying requirements of legislation of Ukraine on the legalization (laundering) of the proceeds from crime issues and organization of internal system of prevention to the legalization (laundering) of the proceeds from crime.

The head of ST shall assign (retire) by his order the compliance officer as well as approve his job description.

ST shall inform the SCFM of Ukraine on assignment or retirement the compliance officer of ST (or person temporary executing his obligations) during 3 business days.

The form of informing on assignment/retirement the compliance officer (or person temporary executing his obligations) shall be “Card of registration of initial financial monitoring entity (separate subdivision) and compliance officers” (further Registration Card) – for submitting information on paper approved by the Order of SCFM of Ukraine from May 13, 2003 under 48 „On approving some record keeping forms and submitting information related to executing financial monitoring, and Instruction on its filling”, and for electronically submitting information considering the Order of SCFM of Ukraine from September 28, 2004 under 122 «Procedure of appropriation of identifier to the entities of initial financial monitoring for submitting of information to SCFM of Ukraine and submitting information in electronic form by non-banking entities of initial financial monitoring”.

The sample of Registration Card with information on assignment/retirement the compliance officer (or person temporary executing his obligations) shall be stored with the message on results of its processing (form #3-FM) during 5 years.

If ST details mentioned in Registration Card have changed, ST shall submit to the SCFM of Ukraine information on such changes during 3 business days.

The compliance officer of St shall coordinate activity of ST on executing financial monitoring measures.

If the compliance officer of ST is absent or is impossible to execute his obligations (vacation, illness, business trip etc.) the head of ST shall assign person temporary executing the obligations of the compliance officer. Person temporary executing obligations of the compliance officer of ST (further - TEO) shall have the rights and obligations of the compliance officer of ST.

In addition, TEO shall have the certificate of the State Commission for Securities and Stock Market  on providing professional activity on security market, complying to the license (one of licenses) for providing professional activity on stock market of professional participant to security market; pass internal training on financial monitoring issues through participating in educational and practical measures in ST; have no previous conviction and comply to requirement to qualification of the compliance officer established by the Order of the SCFM of Ukraine from May 12, 2003 under 46.

The compliance officer of ST shall execute his job responsibilities under the Job description approved by the head of ST.

If the compliance officer disagree with guidance of the head of ST on organization of system of prevention to the legalization (laundering) of the proceeds from crime and other issues of financial monitoring, the compliance officer could inform about it the SCFM of Ukraine and State Commission for Securities and Stock Market with his written objections.

 


3. REQUIREMENTS TO QUALIFICATION OF THE COMPLIANCE OFFICER

The compliance officer of ST shall know the following:

the legislation regulating relations in the sphere of prevention and counteraction to the legalization of the proceeds from crime and terrorist financing, normative legal acts of the SCFM of Ukraine, the State Commission for Securities and Stock Market and other normative legal acts in the sphere of prevention and counteraction to the legalization (laundering) of the proceeds from crime and terrorist financing, particularly:

The Law of Ukraine On prevention and counteraction to the legalization (laundering) of the proceeds from crime”;

The Law of UkraineOn securities and stock market”;

The Law of UkraineOn National depositary system and features of electronic circulation of securities in Ukraine”;

Resolution of Cabinet of Ministers of Ukraine from April 26, 2003 under 644 „Procedure of registration of financial transactions by the initial financial monitoring entities”;

Resolution of Cabinet of Ministers of Ukraine from April 26, 2003 under 645 „Procedure of determining NCCT”;

Resolution of Cabinet of Ministers of Ukraine from April 26, 2003 under 646 „Procedure of registration by the State Committee for Financial Monitoring financial transactions subject to obligatory financial monitoring”;

Directive of Cabinet of Ministers of Ukraine from February 24, 2003 under  77-rList of offshore zones”;

Resolution of Cabinet of Ministers of Ukraine from August 28, 2001 under  1124 „FATF 40 Recommendations”;

Order of SCFM of Ukraine Requirements for organization financial monitoring by the initial financial monitoring entities in the sphere of prevention and counteraction to the legalization of the proceeds from crime and terrorist financingfrom April 24, 2003 under 40;

Order of SCFM of Ukraine Requirements to qualification of the compliance officer of initial financial monitoring entityfrom May 12, 2003 under  46;

Order of SCFM of Ukraine On approving some record keeping forms and submitting information related to executing financial monitoring, and Instruction on its fillingfrom May 13, 2003 under 48;

Order of SCFM of Ukraine Procedure of appropriation of identifier to the entities of initial financial monitoring for submitting of information to SCFM of Ukraine and submitting information in electronic form by non-banking entities of initial financial monitoringfrom September 28, 2004 under 122;

Resolution of the State Commission for Securities and Stock Market Statute on executing financial monitoring by the securities market participantsfrom October 4,  2005 under 538;

Resolution of the State Commission for Securities and Stock Market Procedure of professional training for specialists of professional securities market participants on financial monitoring issuesfrom December 10, 2003 under 562;

Resolution of the State Commission for Securities and Stock Market Procedure of suspending financial transactions on securities market by the initial financial monitoring entities from May 12, 2006 under 288;

Resolution of the State Commission for Securities and Stock Market Statute on procedure of holding registers of registered securities ownersfrom October 17, 2006 under 1000;

Resolution of the State Commission for Securities and Stock Market Statute on settling – clearing activity under the securities contractsfrom October 17, 2006 under              1001.

the full list of types of financial transactions executing by ST, the procedure of their executing;

the job descriptions and functional responsibilities of ST employees participating to providing financial transactions;

the rules for executing internal financial monitoring and program of its executing;

the legislation norms foreseeing criminal, administrative and civil responsibility for violations of the Law.

The compliance officer of ST shall know and have skills on implementing the followings in practical activity:

procedure of identifying persons executing financial transactions;

procedure of storing documents concerning identification of persons executing financial transactions subject to financial monitoring according to the Law and all documents about executed financial transactions;

procedure of revealing financial transactions subject to financial monitoring and/or could be related to, connected or intended for terrorist financing;

criteria on assessing ML/FT risk of financial transaction executing by customer;

signs of financial transactions subject to financial monitoring;

procedure of keeping register of financial transactions subject to financial monitoring;

procedure of submitting to the SCFM of Ukraine information about financial transactions subject to financial monitoring;

procedure of informing the SCFM of Ukraine and law enforcement authorities about financial transactions, suspicious to be related to, connected or intended for financing terrorist activity, terrorist acts or terrorist organizations;

procedure of suspending financial transactions participant or beneficiary of which is person included in List of persons related to terrorist activity;

requirements on prevention of disclosing information submitting to the SCFM of Ukraine, and other information on financial monitoring issues including the fact of submitting.

The following person can’t be assigned the compliance officer:

who has previous non-cancelled conviction for deliberate crime (the applying for the compliance officer person shall confirm the absence of previous conviction);

who works for ST as not principal place of business.

 

 

4. RIGHTS AND RESPONSIBILITIES OF THE COMPLIANCE OFFICER

The job responsibilities of the compliance officer of ST shall include particularly the followings:

Developing and permanent renewal of internal financial monitoring rules and program;

Providing complying of the internal financial monitoring rules and program by the employees of ST executing financial transactions;

Providing training and consulting personnel on revealing financial transactions subject to financial monitoring through educational and practical measures;

Taking decisions on registration and, directly, registration of financial transactions subject to financial monitoring;

Taking decisions on what financial transactions shall the SCFM of Ukraine be informed about and relevant informing;

Composing reference with grounding decision on inexpediency of informing the SCFM of Ukraine about financial transaction subject to financial monitoring;

Providing submitting information on financial monitoring issues under the requests of the SCFM of Ukraine;

Assistance to representatives of the SCFM of Ukraine and the State Commission for Securities and Stock Market on analyzing financial transactions subject to financial monitoring issues;

Developing criteria of risk assessing ML financial transaction by the customer;

Composing for the head of ST the presentation on taking decision on suspending of financial transaction (according to internal procedures of ST) participant or beneficiary of which is person included to List of persons related to terrorist activity;

Executing revisions of any subdivision of ST activity;

Informing in written form the head of ST about revealed suspicious financial transactions and taken measures concerning realization of legislative norms in the sphere of prevention and counteraction to the legalization (laundering) of the proceeds from crime once per month at least.

The compliance officer shall have the following rights, particularly:

Execute revisions ST activity and all employees on complying internal financial monitoring rules and program;

Attraction of any ST employees to revisions on internal financial monitoring issues, assignment them commission and instructions obligatory for execution within the competence as well as demand for assistance in executing individual actions;

Receive the explanations from ST employees independently of positions on executing internal financial monitoring issues;

Submit to the head of ST under the revision results information on revealed violations of requirements of the legislation in the sphere of counteraction to the legalization (laundering) of the proceeds from crime and terrorist financing by ST employees;

While executing revision, receive access to all premises and documents of ST and information related to executing financial monitoring.

The compliance officer shall execute other functions according to the legislation of Ukraine, internal financial monitoring rules, program for executing financial monitoring and other internal documents on counteraction to the legalization of the proceeds from crime and terrorist financing issues.

The compliance officer of ST shall organize and hold relevant education for providing relevant level of ST personnel training on executing financial monitoring issues.

Education of employees depending of their job responsibilities shall be performed through holding educational and practical training on the following directions:

acquaintance of ST employees with international AML/CFT standards, particularly, FATF 40 Recommendations and FATF 9 Special Recommendations;

acquaintance of ST employees with AML/CFT requirements of the legislation of Ukraine;

acquaintance of ST employees with requirements of ST internal documents on financial monitoring issues;

studying of progressive experience on revealing financial transactions that could be related to the legalization (laundering) of the proceeds from crime and terrorist financing.

The compliance officer of ST shall held practical trainings on progressive experience studying on the following directions:

Revealing financial transactions that could be related to the legalization (laundering) of the proceeds from crime and terrorist financing;

Acquaintance with means and methods of studying customers and examining identification information;

Identification of persons executing financial transactions subject to financial monitoring according to the Law;

Revealing financial transactions subject to financial monitoring and could be related to, connected or intended for terrorist financing;

Taking measures on determining nature and purpose of executing financial transaction subject to financial monitoring;

Preparing and submitting to the compliance officer of ST information about financial transaction (in form established by the compliance officer) necessary for him to take decision about registration;

Procedure of suspending financial transaction if participant or beneficiary of which is person included to List of persons related to terrorist activity;

Storing of documents concerning identification of persons executed financial transaction subject to financial monitoring according to the Law and all documents about executing financial transaction;

Providing measures on preventing disclosing information submitting to the SCFM of Ukraine and other information on financial monitoring issues (including persons whose financial transactions financial monitoring is executing about);

Explanation and analyses of the most broadened schedules of the legalization (laundering) of the proceeds from crime concerning ST activity.

Education and professional development of ST employees on counteraction to the legalization (laundering) of the proceeds from crime shall be held once per year at least.

 

5. PROCEDURE OF CUTOMER IDENTIFICATION AND STUDYING

Identification of persons executing financial transactions subject to financial monitoring according to the Law shall be executed by the compliance officer of ST or other authorized persons according to the Procedure of identification of person including:

Procedure of initial identification of person;

Measures on executing identification of person in case of changing information necessary for identification or if the validity of identifying documents is over;

Procedure of taking measures on examining identifying information;

Criteria for classification of persons, description of ML/FT high-risk types of persons;

Measures on additional identification of person.

 

For identification and studying of customers, the compliance officer on the ground of submitted originals or certified copies of originals of documents shall identify persons executing financial transactions subject to financial monitoring according to the Law. Such documents shall be valid at the moment of their submitting to ST.

Providing initial identification, first of all, shall be determined if customer includes to List of persons related to terrorist activity.

The compliance officer shall be obliged to identify the following person:

who concludes the agreement about securities;

who executes financial transactions subject to financial monitoring according to the Law.

 

If person acts as representative of other person or the compliance officer has suspicions that such person acts in the name of other person, or beneficiary is other person, the compliance officer shall be obliged to identify person in the name of which financial transaction is executing or beneficiary, representative.

 

The followings shall be determined for identifying residents:

) for residents natural persons:

surname, name, patronymic; birth date; series and number of passport (or other identifying documentbirth certificate, sailor passport, military card, driving license etc.), issuing date and authority; location; identification number under State Register of natural persons – tax payers;

) for residents legal persons:

name (full and abbreviate); location; documents certifying state registration (including statutory documents, information on officials and their responsibilities etc.); identification number under Unified State Register of entities and organizations of Ukraine; requisites of bank in which account is opened and number of bank account (e.g., on the grounds of originals or certified copies of bank reference, document from tax authorities in which account number is mentioned; or other document composed according to the legislation and certify necessary information).

) for nonresidents natural persons:

surname, name, patronymic (if available); birth date; series and number of passport (or other identifying document), issuing date and authority; citizenship; location or place of temporary staying (with mentioned address in Ukraine)

) for nonresidents legal persons:

full name; location and requisites of bank in which account is opened; number of bank account; copy of legalized extract from trading, bank or judicial register or notary certified registration certificate of foreign country authorized agency on registration of relevant legal person.

Certified copies of identifying documents of legal or natural persons as well as identifying customer card shall be stored in case for 5 years.

For identification customer – legal person ST shall be obliged to identify natural persons – owners of such legal person who has influence on such legal person and receives the profits from its activity. If legal person is the economic entity, ST shall be obliged to identify natural persons who are essential participant in this legal person (more than 10%).

If customer refuses to submit such information, ST shall refuse to provide services.

For identification and taking measures prescribed by the legislation for confirming the customer person legal person and for providing ST possibility to comply these Rules, ST shall have the right to request foreseen by the legislation information related to identification of this person, its leadership, from supervising state authorities, banks, other legal persons as well as take measures prescribed by the legislation on collecting such information from other sources. Mentioned state authorities, banks, other legal persons shall be obliged in 10 business days from receiving the request submit free of charge such information to financial institution.

Identification of person shall be not obligatory if person, executes financial transaction, was previously identified by ST according to the actual legislation of Ukraine or in case of concluding the agreement between banks registered in Ukraine.

 

If possibility of executing by the person transactions related to the legalization (laundering) of the proceeds from crime or terrorist financing is assessing by ST as high, more attention shall be focused on such transactions and the compliance officer shall specify information received from identification and studying customer at least once per year. For other customers the term of specifying information shall not exceed 3 years.

The followings shall be the high-risk customers:

Foreign persons from countries (territories) about which from reliable sources is known that they:

Doesn’t comply international standards on combating with the legalization (laundering) of the proceeds from crime;

Doesn’t foresee disclosure or submitting information on financial transactions;

Doesn’t execute FATF Recommendations;

Are countries (territories) in which war actions are held;

Are offshore zones;

Are countries (territories) that doesn’t participate in international cooperation in the sphere of prevention and counteraction to the legalization (laundering) of the proceeds from crime and terrorist financing;

If in financial transaction participates the person who:

 Is (was) widely authorized official;

Executes foreign economic transactions;

Receives financial help from nonresidents or gives financial help to nonresidents;

Is NPO;

Initiates executing financial transaction without previous contacting with ST.

Obligatory specification of identifying and studying information of the customer shall be performed if there were following changes:

In statutory documents;

Owners of legal person;

Location of legal or natural person;

If term of validity of previously submitted documents is over.

The compliance officer, executing identification, can make copies of identifying documents in presence of customer – natural person.

The compliance officer for additional studying the customer shall have the right to request from customer other documents and information necessary for determining the nature of his activity and financial condition.

Providing identification and studying persons ST can compose the customer cards that are internal document of ST and could include additional information on persons executing financial transactions.

Customer card shall be filled and signed exceptionally by the compliance officer of ST.

Recommended forms of customer cards are given in Annexes 1 - 4. Customer cards could be amended with other data that ST consider necessary to determine.

Identifying persons who became customers of ST before the Law enforced, shall be performed while executing next financial transaction.

Information concerning identification of persons who executed financial transaction subject to financial monitoring according to the Law and all documents shall be stored for 5 years after exeuting such financial transaction.

 

 

6. PROCEDURE OF REVEALING AND RECRDING FINANCILA TRANSACTIONS SUBJECT TO FINANCIAL MONITORING

Employee of ST directly participating in providing financial transaction shall perform the following:

Revealing financial transactions subject to financial monitoring and that could be related, connected or intended for terrorist financing;

Preparing and submitting to the compliance officer of ST additional information necessary for taking decision on recording financial transaction;

Determining the nature and purpose of financial transaction subject to financial monitoring;

Collecting and storing identification documents on persons executing financial transactions and on financial transactions subject to financial monitoring and could be related, connected or intended for terrorist financing;

Providing measures on prevention to disclosure (including person whose financial transactions subject to examining) information submitting to the SCFM of Ukraine and other information on financial monitoring issues (including the fact of submitting such information).

Employees of ST, before executing, when concluding the agreement as well as while servicing customer, shall analyze financial transactions for revealing transactions subject to financial monitoring according to the legislation in the sphere of prevention to the legalization of the proceeds from crime.

Under financial transaction shall be meant transactions with securities complying criteria of the Articles 1, 11 and 12 of the Law.

A financial transaction shall be subject to obligatory financial monitoring if its amount equals or exceeds UAH 80,000, or equals or exceeds the sum in foreign currency equivalent to UAH 80,000 if such financial transaction also has one or more indications specified in Article 11 of the Law:

Performing financial transactions with securities when at least one of the parties is a physical or legal entity that is registered, located or resident in a country (territory) that does not take part in international cooperation in the area of prevention and counteraction of the legalization (laundering) of the proceeds from crime and terrorist financing, or if one of the parties has an account with a bank registered in such country (territory). The list of such countries (territories) shall be fixed in accordance with the procedure established by the Cabinet of Ministers according to lists, approved by the international organizations engaged in counteraction to the legalization (laundering) of the proceeds from crime and terrorist financing.

Carrying out financial transactions with bearer securities not placed in depositaries;

Purchase of securities for cash.

 

A financial transaction shall be subject to internal financial monitoring provided it has one or more following indications:

Nonstandard or excessively complicated financial transaction that has no evident economic sense or obvious legal aim;

Person insists on conducting a transaction according to rules that differ from those established by the laws and internal documents of ST relating to the essence of such transaction or the terms of carrying out such transaction;

Person introduces considerable changes into the previously agreed pattern of financial transaction right before its conduction, especially changes pertaining to the movement of funds or other kinds of property, including repeated changes of bank references of beneficiary after the first order for transfer of funds was issued or payment documents endorsed, as well as issuing order for transfer of funds to beneficiary using two or more bank accounts of other persons;

Person submits unverifiable information;

Person's (customer's) refusal to provide the information specified by the laws and internal documents of ST;

Regular conclusion of short-term agreements by a person or the use of other derivative financial instruments, particularly those that do not envisage the provision of basic assets, pertaining to the financial transactions with one or several counteragents resulting in permanent profit or permanent losses of the customer;

Receipt by ST of funds from a person that proposes or agrees to payment of commission (payment for conducting financial transactions with this person’s funds) in the amount that is higher than that the one fixed in terms of similar financial transactions;

Impossibility to identify person’s counteragents, acceptance of funds (payment documents for payment of such funds) from a person that transfers the funds to another party of a civil law agreement, which results in return of funds without conducting of a financial transaction due to the failure to locate such other party or due to the refusal of such party to accept the funds;

Acceptance of funds by ST from a person who repeatedly exchanges securities for other securities within the same year without receiving or providing cash indemnity related to such exchange;

Noncompliance of a financial transaction with the activity of legal entity defined by statutory documents of such entity;

Absence of clear connection between the nature and kinds of a person’s activities with the services for which the customer applies to ST;

Single-time sale (purchase) by a person of a large block of shares that do not freely circulate at organized market provided the person is not a professional operator at securities market and the securities are not given to the person as compensation for the arrears of a counteragent;

Repeated financial transactions, the nature of which gives grounds to believe that their aim is to evade the procedures of obligatory financial monitoring established by the Law;

Person orders to conduct a financial transaction through a representative (intermediary), if such representative (intermediary) fulfills the person’s order without direct (personal) contact with ST;

Obtaining ownership for block of securities summary value of which exceeds UAH 80000 under donation or exchange agreements;

Executing transactions with bills, including bearer or blank endorsement;

Internal financial monitoring can also be applied to other financial transactions, when the compliance officer of ST has grounds to believe that a financial transaction is aimed at legalization (laundering) of proceeds.

Before executing the financial transaction but the next business day at least the employee of ST, who provides financial transaction or the compliance officer, shall clarify the opportunity to consider this financial transaction subject to financial monitoring according to the Law.

If such transaction was revealed, employee of ST shall inform in written form the compliance officer of ST the same day.

The compliance officer of ST after examining and confirming received information shall record such transaction the same day.

Recording of financial transactions subject to financial monitoring shall provide in the Register which is formed and kept be the compliance officer of ST and is electronic or written document of established structure.

The Register is the totality of data on financial transactions subject to financial monitoring and their participants.

The compliance officer of ST shall provide recording of financial transactions subject to financial monitoring in the Register of financial transactions subject to financial monitoring of established form (form #2-FM).

The format, structure of the Register, reference book of codes and the procedure of submitting the information on paper are established by the Order of SCFM of Ukraine from May 13, 2003 under 48 “On execution of certain forms relevant to financial monitoring and Instructions for their filling in. The procedure of submitting information in electronic form approved by the Order of SCFM of Ukraine from September 28, 2004 under 122 “Procedure of appropriation of identifier to the entities of initial financial monitoring for submitting of information to SCFM of Ukraine”.

For every record in the Register the serial number and time and date of recording shall be assigned as well as the position, surname, name and patronymic of the compliance officer of ST who made the record shall be written. The Register shall have the continuous numbering from the beginning registration of the first financial transaction.

In case taking the decision by the compliance officer if ST on inexpediency of informing the SCFM of Ukraine about the financial transaction subject to initial financial monitoring, the compliance officer shall compose the written reference note where he grounds his decision. Reference note particularly shall include the composing date, serial number of the financial transaction in the Register, the results of taken measures on clarifying nature and purpose of executing this financial transaction by the client and signature of the compliance officer .

If the compliance officer of ST has grounded suspicious that revealed financial transaction is executing for the legalization (laundering) of the proceeds from crime, he shall submit information on such financial transaction to the SCFM of Ukraine.

In the case of necessity to correct noisy data in the Register on individual financial transaction, informational field of the Register consisting data on this financial transaction shall be amended with the note of its canceling and new note shall be added to the Register about this financial transaction with new number and date of registration and submitted to the SCFM of Ukraine in new information reference during 3 business days from the refusal in recording previous reference date.

Every day if new records is made to the Register, all new records or changed during business day records shall be printed. Printed pages of the Register shall be certified with signature of the head or the compliance officer of ST.

Up to fifth day of each month, printed pages of the Register for previous month shall be formed by the dates, stringed and certified by the signature of the head or the compliance officer ad by the signet of ST and shall be stored for 5 years.

On the first page of the case shall be written the number of pages in case, first and last financial transaction registration dates.

 

7. PROCEDURE OF SUBMITTING TO THE SCFM OF UKRAINE THE INFORMATION ON FINANCIAL TRANSACTIONS SUBJECT OT FINANCIAL MONITORING

The procedure of submitting by ST to the SCFM of Ukraine information on financial transaction subject to financial monitoring approved by the Resolution of Cabinet of Ministers of Ukraine from April 26, 2003 under 644 „On approving the Procedure of recording financial transactions by the entities of initial financial monitoring”.

The procedure of submitting information in electronic form approved by the Order of SCFM of Ukraine from September 28, 2004 under 122 “Procedure of appropriation of identifier to the entities of initial financial monitoring for submitting of information to SCFM of Ukraine and submitting information in electronically form by the non-banking entities of the initial financial monitoring.

Information on each financial transaction submitting to the SCFM of Ukraine in electronic form as file – reference shall be signed with electronic digital signature of the compliance officer of ST or the person temporary executing his responsibilities under the order of the head of ST.

In case of receiving from the SCFM of Ukraine file – receipt with codes of mistakes on separate financial transaction submitted in file – reference or on file – reference as a whole, the compliance officer of ST shall analyze the reasons of mistakes, provide correcting mistakes and submit information on these financial transactions as new file – reference again to the SCFM of Ukraine. The procedure of correcting (canceling) mistakes established in the Section 6 of the Rules.

File – receipt with zero codes of mistakes shall be the approval that this transaction is recorded by the SCFM of Ukraine. Copies of references submitted to the SCFM of Ukraine shall be stored by ST in electronic form for 5 years.

If for any reasons ST didn’t receive from the SCFM of Ukraine file – receipt for relevant file – reference in 2 business days, the compliance officer of ST shall apply to the SCFM of Ukraine and clarify the reasons of non-submitting of file - receipt.

In case if impossibility to submit by ST information to the SCFM of Ukraine in electronic form (technical reasons approved by relevant authority reference) such information shall be submitted on paper with cover letter in which the reasons of submitting information on paper shall be written.

The format, structure of the Register, reference book of codes and the procedure of submitting the information on paper are established by the Order of SCFM of Ukraine from May 13, 2003 under 48 “On execution of certain forms relevant to financial monitoring and Instructions for their filling in.

Information on financial transactions subject to financial monitoring submitting to the SCFM of Ukraine on paper shall be signed by the compliance officer of ST.

In case of receiving from the SCFM of Ukraine the form 5 FM Notification on recording financial transaction or refusal of recording by SCFM with sign on refusal of recording information in connection with its improperly execution, the compliance officer of ST shall be obliged in 3 business days submit properly executed information to SCFM of Ukraine again.

In case of necessity of submitting fifth and next notification on paper by the post with delivery report ST shall submit such notifications to SCFM of Ukraine and during 1 month shall provide submitting of information in electronic form.

Information on magnetic medium or on paper shall be submitted to SCFM of Ukraine by the post with delivery report or by special delivery providing measures that exclude uncontrolled access to such information during delivery.

Information that is submitting shall be information with restricted access. Safety of information while submitting it to SCFM of Ukraine shall be provided according to the legislation.

The requirements for submitting information, reference book of codes, communication channels for submitting information shall be determined by SCFM of Ukraine.

  

9. PROCEDURE OF REVEALING AND SUSPENDING THE TRANSACTION PARTICIPANT OR BENEFICIARY OF WHICH IS PERSON INCLUDED TO LIST OF PERSONS RELATED TO TERRORIST ACTIVITY

 For providing complying the requirements of the Article 121 of the Law on suspending financial transactions related to terrorist activity, employee of ST before executing each financial transaction shall examine presence among participants or beneficiaries of such transaction persons included to List of persons related to terrorist activity.

If there are persons included to List of persons related to terrorist activity among participants, information on such transaction shall be immediately submitted to the compliance officer of ST.

In case of revealing by ST financial transaction participant or beneficiary of which is person included to List of persons related to terrorist activity, ST shall suspend financial transaction up to 2 business days. Decision on suspending financial transaction shall be legalized as the order of the head of ST.

In case of taking decision on suspending financial transaction ST shall inform SCFM of Ukraine the same day. Information shall be submitted to SCFM of Ukraine in electronic form by the communication channels, on magnetic medium or, by the agreement of SCFM of Ukraine, on paper. ST shall provide all necessary measures for opportune informing SCFM of Ukraine on suspended financial transaction (by special delivery etc).

Information shall be submitted to SCFM of Ukraine providing measures that exclude uncontrolled access to such information during delivery.

The compliance officer, the head of ST shall be obliged to insure that submitted information is received by SCFM of Ukraine (by telephone).

In case of receiving by ST the decision of SCFM of Ukraine on further suspending of financial transaction, he shall provide further suspending for term determined by SCFM of Ukraine. Further suspending of financial transaction shall be legalized as the order of the head of ST.

In case of non-receiving the decision on further suspending of financial transaction from SCFM of Ukraine by ST in 2 business days, ST shall renew execution of financial transaction. Decision on renewal of executing financial transaction shall be legalized as the order of the head of ST.

St shall be acquainted with List of persons related to terrorist activity (further - List) by SCFM of Ukraine. In addition, List shall be available on the web-site of SCFM of Ukraine (www.sdfm.gov.ua) in section “List of persons related to terrorist activity”.

After receiving List or amendments for it ST shall be obliged to inform SCFM of Ukraine about receiving of mentioned information in 3 business days by the letter of free form or by fax.

 

10. PROCEDURE OF REFUSAL OF PROVIDING FINANCIAL TRANSACTION AND SUBMITTING INFORMATION ON SUCH TRANSACTION TO SCFM OF UKRAINE

Before executing the financial transaction but the next business day at least the employee of ST, who provides financial transaction, shall clarify the opportunity to consider this financial transaction subject to financial monitoring according to the Law. In case of revealing such financial transaction employee of ST shall immediately inform the compliance officer of ST about it.

According to the Part 2 of the Article 7 of the Law the compliance officer of ST shall have the right to refuse of executing or providing financial transaction if established that such financial transaction subject to financial monitoring according to the Law and shall be obliged to identify persons who want to execute mentioned financial transaction and inform SCFM of Ukraine about these persons and nature of this transaction.

The compliance officer of ST shall obligatory inform the head of ST about taken decision on refusal of executing or providing financial transaction subject to financial monitoring according to the Law, and only after that the compliance officer of ST shall submit written commission to the employee of ST who executes such financial transaction.

If the employee of ST receives relevant written commission, he shall return to customer documents without execution with written grounding of refusal of executing financial transaction (with obligatory reference on the Part 2 of the Article 7 of the Law) and shall write the date of returning of documents (shall be certified by the signature of employee and signet of ST). Refusal of providing financial transaction shall be legalized by separate written letter.

 

 

11. PROCEDURE OF INFORMING THE HEAD OF ST BY THE COMPLIANCE OFFICER ABOUT REALIZATION OF RULES FOR INTERNAL FINANCIAL MONTORING

 

Every month, the fifth day of next month at least (another date could be established in Rules for internal financial monitoring), the compliance officer of ST shall inform the head of ST on complying the legislation norms and internal documents of ST in the sphere of prevention and counteraction to the legalization (laundering) of the proceeds from crime.

Informing shall be provided by submitting to the head of ST the written reference of free form.

The reference shall contain information about:

The issuing date;

The quantity of customers;

The quantity of revealed financial transactions subject to financial monitoring;

The quantity of recorded financial transactions with signs of obligatory and internal financial monitoring;

The quantity of submitted to SCFM of Ukraine financial transactions subject to obligatory and internal financial monitoring;

The quantity of repeatedly submitting to SCFM of Ukraine financial transactions after correcting made mistakes;

The taken measures concerning developing and renewing the Rules and Program for internal financial monitoring considering the requirements of the legislation, including normative legal acts of SCFM of Ukraine;

The taken measures concerning personnel training on revealing financial transactions subject to financial monitoring according to the Law by holding educational and practical measures;

The signature of the compliance officer of ST.

The reference with signature of the head of ST shall be stored by the compliance officer of ST in separate case under nomenclature number of this case for 5 years.

 

 

12. RESPONSIBILITY FOR VOILATIONS OF THE LEGISLATION REQUIREMENTS IN THE SPHERE OF COUNTERACTION TO THE LEGALIZATION (LAUNDERING) OF THE PROCEEDS FROM CRIME

The compliance officer of ST as well as other officials of ST shall be responsible according to the actual legislation for violations of the legislation on prevention and counteraction to the legalization of the proceeds from crime.

. In case of non-executing (non-appropriate execution) the requirements of the Law by ST, the fine in amount up to 1000 untaxed minimum income of citizens could be applied to ST according to the procedure prescribed by the legislation. In case of disagreement with the decision about applying the fine or refusal of paying the fine shall be received by court under presentation of authority that regulates the initial financial monitoring entity activity and issues licenses or other special permission.

. The administrative responsibility of officials of ST shall be prescribed by the Article 1669 of the Code of Administrative Offences of Ukraine.

Article 1669. Breaking the legislation on preventing legalization (money laundering) of illegal income.

Cases, when demands concerning identification of a person, executing a financial transaction, the order of registration financial transactions, which are the subject to primary financial monitoring, are broken, special authorities of executive power, dealing with financial monitoring, do not provide, provide untimely or provide inauthentic information about such financial transactions, demands concerning storing the documents, dealing with identification of persons, who perform financial transactions and documents concerning the performed financial transactions, are not fulfilled, lead to fines imposing on officials of the subjects of primary financial monitoring at the rate from fifty to hundred tax-free income minimums.

Cases, when information, given to special authorities of executive power, dealing with financial information, or the fact of providing such information, is disclosed - lead to fines imposing at the rate from one hundred to three hundred tax-free income minimums.

. Criminal responsibility of employees of ST shall be prescribed by the Article 2091 of the Criminal Code of Ukraine.

1. Intentional failure to submit the information on transactions, or repeated intentional submission of deliberately false information regarding transactions subject to internal or obligatory financial monitoring to SCFM of Ukraine, shall be punishable by a fine of 1000 to 2000 untaxed minimum incomes of citizen, or limitation of liberty for a term up to two years, or imprisonment for the same term with the deprivation of the right to occupy certain positions or engage in certain activities for a term up to three years.

2 Intentional illegal disclosure of information in any form, which was submitted to SCFM of Ukraine, by a person who learned such information in the course of performance of his/her professional or service duties, shall be punishable by a fine of 2000 to 3000 untaxed minimum incomes of citizen, or limitation of liberty for a term up to three years, or imprisonment for the same term with the deprivation of the right to occupy certain positions or engage in certain activities for a term up to three years.


 

Annex 1

CUSTOMER CARD

(for natural person - resident)

I. Identification data of natural person – resident according to the Article 6 of the Law

Information

1.1.

Surname

Name

Patronymic

1.2.

Birth date

1.3.

1.3.1.Data on identification document

Passport or other document _______Series _______ ___________ issuing date ________________

Issuing authority ____________________________________________

1.4.

Location

1.5.

Identification code under State Register of Natural Persons – Tax Payers

1.6.

E-mail

 

II. Additional information for customer studying

2.1. Identification data of natural persons authorized to act in the name of customer (passport data or other identification document, identification code, series and number of power of attorney term of validity etc.).

__________________________________________________________________

/ Surname, name, patronymic/ (the signature of the compliance officer of ST who provided customer identification)

 

„____”   _____________  200__ .

(filling date)


Annex 2

CUSTOMER CARD

(for natural person - nonresident)

I. Identification data of natural person – nonresident according to the Article 6 of the Law

Information

1.1.

Surname

Name

Patronymic (if available)

1.2.

Birth date

1.3.

1.3.1. Data on identification document

Passport or other document _______Series _______ ___________ issuing date ________________

Issuing authority ____________________________________________

1.4.

Citizenship

1.5.

Location or temporary staying

1.6.

E-mail

 

II. Additional information for customer studying

2.1. Identification data of natural persons authorized to act in the name of customer (passport data or other identification document, identification code, series and number of power of attorney term of validity etc.).

Other additional information about natural person – nonresident necessary for ST according to the internal procedures.

__________________________________________________________________

/ Surname, name, patronymic/ (the signature of the compliance officer of ST who provided customer identification)

 

„____”   _____________  200__ .

(filling date)

 

 

 


Annex 3

CUSTOMER CARD

(for legal person – resident)

I. Identification data of legal person

Information

1.1.

Name  

Full______________________________

Abbreviate __________________________

1.2.

Location

1.3.

Documents on confirmation of state registration:

1.3.1.Certificate of state registration

Series ________________ issuing date________________

Issuing authority _________________

1.3.2. Statute (with last registered amendments)

of registration ______________ registration date __________

Registration authority _______________________

1.4.

Information on officials and their responsibilities

1.4.1 The head _____________(Surname, name, patronymic),

passport data,

identification code,

number and date of the order for assignment on position.

1.4.2. The deputy head ____________ (Surname, name, patronymic), passport data,

identification code,

number and date of the order for assignment on position

1.5.

Identification code under Unified State Register of Entities, Organizations and Institutions

1.6.

Bank account number, MFO, name and address of bank

1.7.

E-mail

 

_________________________________________________________________

/ Surname, name, patronymic/ (the signature of the compliance officer of ST who provided customer identification)

„____”   _____________  200__ .

(filling date)

Annex 4

CUSTOMER CARD

(for legal person – nonresident)

I. Identification data of legal person – nonresident according to the Article 6 of the Law

Information

1.1.

Full name ______________________________

1.2.

Location and requisites of bank in which the account is opened and bank account number

1.3.

Documents on confirmation of state registration:

1.3.1. Copy of legalized extract from trading, banking or court register

Series ________________ issuing date________________

Issuing authority _________________

1.3.2. Or notary certified registration certificate of the foreign country authorized agency on registration of this legal person

1.3.3. The country of registration

1.4.

Information on officials and their responsibilities

1.4.1 The head _____________(Surname, name, patronymic),

passport data,

identification code,

number and date of the order for assignment on position.

1.4.2. The deputy head ____________ (Surname, name, patronymic), passport data,

identification code,

number and date of the order for assignment on position

1.5.

The registration country of legal person – nonresident

1.6.

E-mail

II. Additional information for customer studying

2.1. Identification data of natural persons authorized to act in the name of customer (passport data or other identification document, identification code, series and number of power of attorney term of validity)

2.2. Founders and related persons

2.3. Owners of essential participation with mentioning of their part in the legal person capital

2.4. Financial condition

2.5. Main counteragents

2.6. Availability of subsidiaries and other separate subdivisions in Ukraine.

2.7. Degree of risk of executing financial transaction related to the legalization of the proceeds from crime

Other additional information about legal person – nonresident necessary for ST according to internal procedures.

 

__________________________________________________________________

/ Surname, name, patronymic/ (the signature of the compliance officer of ST who provided customer identification)

 

„____”   _____________  200__ .

(filling date)



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