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 : : Legal Framework
2015-12-30 00:00:00  Print Version



 

Cabinet of Ministers of Ukraine

Order

dated 30.12.2015, № 1407-р

Kyiv

On approval of the Strategy of development of prevention and counteraction to legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction
for the period till 2020

1. Approve Development Strategy of the Prevention and counteraction to legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation for the period until 2020, which is attached.

2. Action Plan on the implementation of this resolution should be provided on yearly basis by State Financial Monitoring Service of Ukraine with other bodies of executive power by 1 December each year to develop and submit for approval by the Cabinet of Ministers of Ukraine.

3. This order comes into force on January 1, 2016.

 

Prime Minister of Ukraine

A. Yatsenyuk


 

Approved by the order of the Cabinet of Ministers of Ukraine
dated December 30, 2015,  №1407-
р


Strategy
of development of system of prevention and counteraction to legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction for the period until 2020

General part

One of the major problems in combating the laundering of proceeds from crime is the introduction of effective methods of preventing and combating corruption in Ukraine.

At the present stage of development of Ukraine corruption and money laundering are closely related.

State authorities together with competent authorities of foreign states actively work to investigate cases of money laundering as a result of the commission of acts of corruption, theft and misappropriation of public funds and property, in order to establish and further blocking of bank accounts and other assets abroad.

One of the main results of criminal proceedings is the confiscation of assets of crime and their transfer to the state budget.

In order to prevent and suppress the financing of terrorist activities, identifying people and their financial transactions related to such activities, it is necessary to establish a close cooperation of the competent authorities of the government with competent authorities of foreign countries in identifying international payments that can be used to finance terrorist activities.

A necessary condition for effective solution of these problems is to unite and constantly coordinate State authorities, financial institutions and other organizations involved in the national system of prevention and counteraction to legalization (laundering) of proceeds from crime, terrorist financing and financing proliferation of weapons of mass destruction, and cooperation with such international institutions as the Financial Action Task Force on Money Laundering (FATF), the Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering and the Financing of Terrorism (MONEYVAL), International Monetary Fund, World Bank and other.

Analysis of the situation

Currently, the State authorities are working to ensure the development of the national system of prevention and counteraction to legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction requirements are significantly enhanced in accordance with the updated FATF Guidelines, approved by the Group financial Action Task Force on Money Laundering (FATF).

In order to implement the updated FATF Recommendations, Verkhovna Rada of Ukraine at the October 14, 2014 adopted the Law of Ukraine "On prevention of legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation", which aims to protect the rights and legitimate interests of citizens, society and state, guarantee homeland security by determining the legal mechanism for combating legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction, and create a database to provide the competent national authorities and the competent authorities of foreign countries with possibility to detect and investigate crimes related to money laundering and other illegal financial transactions.

Cabinet of Ministers of Ukraine together with the National Bank of Ukraine every year approves action plan for prevention and counteraction to legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction, which defines the measures to ensure the effective functioning of the national system of combating laundering (legalization) of money from crime, terrorist financing and the financing of proliferation of weapons of mass destruction and implementation of FATF Recommendations into the national legislation.

The abovementioned plan also provides measures to prevent the conditions for legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction, minimizing the risks of the financial system for the legalization (laundering) of proceeds from crime, terrorist financing and financing of weapons of mass destruction, enhancing the effectiveness of law enforcement and other authorized bodies of state power and the development of international cooperation.

Purpose and basic arrangements for implementing the Strategy

The aim of this strategy is to provide legislative, organizational and institutional improvements and ensure stable operation of the national system of prevention and counteraction to legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction.

 In order to achieve this goal it is necessary to take such measures:

- ensuring the establishment of the status of Ukraine as a reliable partner of the international community in prevention and counteraction to legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction by:

- bringing national legislation into line with international standards;

- decriminalization and legalization of economic relations;

- principle, consistent and effective fight against terrorism and its financing;

- consistent and effective fight against corruption;

- improving the investment attractiveness of the national economy for foreign investors;

- creating a positive international image of Ukraine;

conditions to prevent the legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction by:

- ensuring the implementation of the Law of Ukraine "On prevention of legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction";

- yearly development of plan of measures on prevention and counteraction to legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction;

- improvement of methods of monitoring financial flows and combating illegal and nonproductive cash outflow from Ukraine, pseudo-investments in Ukraine, and pseudo-export pseudo-import;

- increasing efficiency of analysis methods and financial schemes of legalization (laundering) of proceeds from crime, financing of terrorism and proliferation of weapons of mass destruction and the implementation of typological research in this area;

- detect and prevent the illegal activities of conversion centers and enterprises of fictitious nature, including issuers of securities (bills, shares, bonds and investment certificates, etc.) involved in the legalization (laundering) of proceeds from crime or terrorist financing;

- detect and prevent illegal activity of financial pyramid schemes involved in the legalization (laundering) of proceeds from crime or terrorist financing;

- creating and ensuring the functioning of government public register of legal and natural persons involved in illegal activities and updated by the proposals of the competent authorities;

- detect and prevent the legalization (laundering) of proceeds from crime, terrorist financing and the financing of weapons of mass destruction in offshore areas and jurisdictions with favorable climate for legalization (laundering) of proceeds from crime, terrorist financing and the financing of weapons of mass destruction;

- creating conditions and opportunities for the establishment of final beneficial owners (controllers);

- detection and prevention of illegal activities of individuals and legal entities of state financial monitoring, which essentially provide financial services to attract and transfer of funds (including electronic money), credit, conduct foreign exchange and other financial transactions without the appropriate licenses and permits;

- improvement of formation of statistical reports conducted by the law enforcement agencies on counteraction to legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction;

- providing support to development of recommendations for the use of certain articles of the Criminal Code of Ukraine and the Criminal Procedural Code of Ukraine on prevention and counteraction to legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction;

- detection of financial transactions related with the financing of terrorism and acts committed for the purpose of violent change or overthrow the constitutional order or the seizure of state power, changing the boundaries of the state border or territory;

- detect facts of cybercrime and prevention of the legalization (laundering) of proceeds derived from the commission of cybercrime;

- reduce the risk of capital flow abroad with purpose of legalization (laundering) of proceeds from crime, terrorist financing and proliferation of weapons of mass destruction;

- improvement of methods of monitoring operations with cash, especially for its withdrawal from accounts in financial institutions, moving across the state border;

- improvement of monitoring the financial flows associated with the use and disposal of public funds and property;

- prevent, detect and deter illegal activity on the appropriation and embezzlement of state and local budgets, funds and assets of state and municipal enterprises, institutions, organizations and entities with the state share in the authorized capital, detection and suppression of offenses in the relevant field;

- detect and prevent the illegal receipt of benefits by persons authorized to perform state functions or local government, as well as detect and prevent cases of illegal enrichment;

- cooperation with foreign competent authorities to detection, installation, tracking, suspension, arrest and confiscation of illegally obtained state assets and income;

- transition to electronic form of interaction of state financial monitoring and reporting entities with SFMS;

- granting authority to the identification of participants in financial transactions to the third parties within financial groups;

- raise standards of combating abuses in the stock market using insider information;

- new approaches to combat manipulation in the stock market;

- obtaining intelligence information outside Ukraine on the operation in our state conversion centers, enterprises of fictitious nature (including issuers of securities), facts cybercrime and financial pyramids and operations involved in the schemes mentioned proceedings illegal activities;

improvement of legislation on prevention and counteraction to legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation by:

- development and adoption of laws on improvement of state regulation of public money lotteries and gambling;

- bringing legislation on auditing in terms of cooperation with the financial intelligence unit in accordance with Regulation (EU) N 537/2014 of the European Parliament and of the Council of 16 April 2014 on the specific requirements for statutory audit of public interest entities, repealing Decision Commission 2005/909 / EC;

- implementation into national law the EU Directive 2015/849 European Parliament and of the Council on the prevention of money laundering and fight against terrorism, amending Regulation (EU) 648/2012 of the European Parliament and of the Council abolished and Directive 2005/60 / EU of the European Parliament and the Council and Commission and Council Directive 2006/70 / EU;

- further implementation the recommendations of FATF, the United Nations Convention against Corruption, Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from proceedings criminal activity and financing of terrorism, and other international instruments;

- effective functioning of the relevant units in law enforcement agencies whose main activity is prevention and counteraction to legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction;

- ensuring an effective fight against cybercrime by strengthening international cooperation in harmonizing national legislation with international recommendations, as well as in rapid response to incidents of damage to computer systems;

Minimizing the risks of use of the financial system for the laundering of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction by:

- strengthen the transparency of the financial system;

- deepen partnerships with the private sector in prevention and counteraction to legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction;

- increasing the share of non-cash payments and narrowing the scope of the use of cash;

- improvement and expansion of a common information space electronic interaction of state authorities - participants of the national system of prevention and counteraction to legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction;

- public administration reform;

- improving forms and methods of risk-oriented approach to financial monitoring;

- conduction of National Risk Assessment;

- establishing effective cooperation between SFMS and the National Anti-Corruption Bureau;

- establishing appropriate penalties for the legalization of proceeds manipulation in the securities market, trafficking inside information and violation of legislation on prevention and counteraction to legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction;

improvement of the State authorities in the sphere of combating legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction by:

- improve the mechanism of interaction between law enforcement agencies and SFMS, particularly during the processing of referrals on financial transactions that could be linked to the laundering of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction, as well as during the criminal proceedings;

- development and implementation of effective mechanisms for tracing funds and property acquired illegally, to further seize and confiscate the established procedure;

- introduce special procedures for confiscation of assets related to the legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction and other predicate crimes;

- improvement of the institutional framework of combating legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction, enhancing inter-agency cooperation and coordination;

- improvement of detection and subsequent freezing of assets of those involved in terrorist financing and proliferation of weapons of mass destruction;

- representation of information detected by the public authorities to the SFMS during the execution of their functions of information on financial transactions for which there is suspicion that they are related to the legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction or persons in relation to which international sanctions are applied;

- implementation of agreements on mutual legal assistance that promote the international exchange of information for the investigation of criminal proceedings and bringing the perpetrators to justice;

improve the mechanism of regulation and supervision of reporting entities by:

- improving the efficiency of regulation and supervision of reporting entities based policies, procedures and systems of control, risk assessment in prevention and counteraction to legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction;

- improvement of formation and filing of administrative reporting of state financial monitoring on the results of supervision over entities of initial financial monitoring in prevention and counteraction to legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction;

- prevent a statutory fund of relevant entities at the expense of the sources of which have no official confirmation;

- use clear mechanism for inspection reputation of persons that manage and control entities;

by training specialists:

- organization of training representatives of entities, including specially defined;

- carrying out coordination work on retraining and advanced training for government officials and entities in the sphere of combating legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction, particularly at the educational institution, belongs to the management of SFMS;

- improving the efficiency of the preparation and training of special units of law enforcement agencies involved in the identification, detection and investigation of facts of legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction;

- organization of training on prevention and counteraction to legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction of employees of SFMS, law enforcement, intelligence and judicial authorities;

organization of effective international cooperation through:

- continuation of Ukraine's participation in international events in the field of prevention and counteraction to legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction, carried out within the framework of the Financial Action Task Force on Money Laundering (FATF), the Committee of Experts Council of Europe on the Evaluation of Anti-Money Laundering and the Financing of Terrorism (MONEYVAL), European Union, Council of Europe, the World Bank, the International Monetary Fund, the Egmont Group of Financial Intelligence Units and other international organizations and institutions;

- continuation of the preparation and conclusion of international agreements (memorandum) on cooperation on countering the legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction;

- ensuring effective interaction and information exchange with competent authorities of foreign states and international organizations which are aimed at prevention of legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction;

providing public information on the measures taken for prevention and counteraction to legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction by:

- develop an effective mechanism of access of individuals and legal entities, and the media to public information on the performance of state bodies in the sphere of combating legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction;

- ensure transparency of state bodies in the sphere of combating legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction.

Expected results

Implementation of this strategy will provide:

systematic implementation of state policy in the sphere of combating legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction in accordance with the international standards;

harmonization of the national system of prevention and counteraction to legalization (laundering) of proceeds from crime, terrorist financing and the financing of proliferation of weapons of mass destruction with international standards;

reducing corruption;

functional cooperation and continuous exchange of information with the executive authorities, other public bodies - entities of state financial monitoring, and competent authorities of foreign states and international organizations in this field;

training for government officials and entities on financial monitoring;

transparent and efficient use of the state budget;

stimulate foreign investment into the national economy;

filling the revenue of the state budget;

promote the liberalization of the EU visa regime for Ukraine.

The Strategy will promote the development of Ukraine as a democratic, rule of law state and ensure the protection of its national interests, improvement of socio-economic relations and formation of principles of civil society.

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