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15.05.2017  Print Version

Igor Cherkaskyi: an unprecedented example of the effective work of the FIU of Ukraine – criminal assets detected and blocked by the SFMS were transferred to the State budget

In the context of the spread resonant information of April 28 concerning criminal proceeds confiscated to the State budget in the amount of more than USD 1.3 billion, the State Financial Monitoring Service of Ukraine emphasizes the following.

A positive decision on confiscation (as the final stage of the criminal proceedings) was preceded by a number of necessary steps that have been taken by the SFMS as the Financial Intelligence Unit of Ukraine concerning identification and freezing of criminal assets.

The SFMS, at its own initiative, conducted the most extensive financial investigation of laundering of proceeds of corruption, embezzlement and misappropriation of state funds and property by the former President of Ukraine Viktor Yanukovych, his close persons, former government officials and related to them persons as well as persons involved in the organization of premeditated mass murder in Ukraine.

The SFMS’s work was accompanied by using creative and innovative approaches to collecting information on financial transactions and other information that contained financial monitoring secret, as well as its analysis.
This included the processing of operational data from different information sources and databases, tailored study of cross-border and domestic movement of criminal assets, identification of IP-addresses of participants of disguised criminal schemes, active cooperation with foreign counterparts.

In particular, since March 2014 the State Financial Monitoring Service of Ukraine has conducted financial investigation on the transactions carried out with the participation of 42 non-resident companies (including offshore jurisdictions) related to the so-called “Yanukovych family”, that was linked by family and business interests, as well as official-constituent composition.

The complexity of investigation was, namely, due to the extensive use by these companies of nominee owners, which de jure being a beneficial owner, de facto had no real authority on business management, which in turn was the prerogative of former PEPs. It should also be taken into account the powerful legal lobby for money laundering schemes, whereby the relevant scams were slightly susceptible to detection.

The SFMS through a deep analysis found that these companies during 2010-2013, via accounts opened in the banks of Latvia, made "pseudo investments" in Ukraine in the total amount of more than USD 1.3 billion.

For further legalization the part of these funds in the amount of USD 1.15 billion were used in Ukraine for the acquisition of highly liquid domestic government  loan bonds (government loan bonds), issued in USD, the remaining funds – more than USD 200 million were placed on deposit accounts in domestic banks.

The explicit relationship between non-resident companies and former officials of Ukraine attested that these “investments” were nothing like a capital flight from Ukraine carried out by the same ex-officials, and were brought into Ukraine to obtain super-profitable income from the state, as well as keeping their own currency illicit assets in one of the safest and liquid types of state securities.

Moreover, funds and purchased government loan bonds were placed in the banking institutions of Ukraine, indirectly controlled by the respective former high level officials.

During the financial investigation the SFMS confirmed that over 1,000 business entities were engaged in the mentioned money laundering scheme.

Following the results of multi-stage and colossal in its complexity financial investigation, pursuant to the legislation on prevention and counteraction to legalization (laundering) of proceeds of crime and terrorist financing, in June-July 2014 the SFMS had blocked funds on the accounts of 19 non-resident companies which were placed in Ukrainian banks.

At the same time, since March 2014 the SFMS has prepared and submitted to the Prosecutor General’s Office of Ukraine 26 case referrals (additional case referrals) concerning the mentioned investigation (with criminal schemes visualization).

Within the criminal proceeding, under the claim of the Prosecutor General’s Office of Ukraine, in June and July 2014 funds, blocked by the SFMS, were seized by the court in the amount of USD 1.45 billion, part of which became subject to confiscation to the State budget on April 28, 2017.

Furthermore, in the framework of the mentioned financial investigation at the request of the SFMS, funds in the amount of USD 49.51 million were also blocked in the Latvian accounts.

In general, as of May 2017, on the basis of the results of the measures taken during the investigation funds in the total amount of USD 1.57 billion were blocked and seized in the accounts of individuals and entities that are related to Viktor Yanukovych and former high level officials.

The financial investigation conducted by the SFMS, followed by the further confiscation of illicit proceeds, has been made possible as a result of the joint coordinated actions with FIUs of USA, UK, Latvia, Estonia, Cyprus, Seychelles, Belize, British Virgin Islands, Panama and other countries.

From March 2014 and till today the State Financial Monitoring Service of Ukraine maintains regular contacts with the US Embassy in Ukraine, which has enabled effective communication in a coordinated manner with the competent authorities of the USA.

The close cooperation with the Financial Intelligence Unit of USA (FinCEN) and the Federal Bureau of Investigation (FBI), whereby there were established dollar-denominated transactions of non-residents, and with the Financial Intelligence Unit of Latvia, whereby accounts of non-resident companies, cash flow on them, accounts balance and related (trusted) person were established, played particularly important role in this investigation.

It should be noted that, in general, according to FIUs of other countries information, as of today assets abroad of former high level officials of state authorities, local self-government authorities of Ukraine and persons related to them were blocked in the total amount of USD 107,19 million, EUR 15,87 million and CHF 135,01 million, particularly in such countries as Austria, Great Britain, Latvia, Cyprus, Italy, Liechtenstein, Switzerland and the Netherlands.

It should also be emphasized that at all stages of financial investigation the SFMS was fully and effectively supported by top state officials – President of Ukraine Petro Poroshenko and the Government represented by Arseniy Yatsenyuk and Volodymyr Groysman.

It is worth noting the maximum level of the SFMS’s cooperation with the National Security and Defense Council of Ukraine and its Secretary Oleksandr Turchynov as well as with the leadership of security forces, whereby the confiscation of illicit proceeds to the State budget was made possible.

The State Financial Monitoring Service of Ukraine is fully responsibly, consistently and persistently determined to continue to take constructive measures to detect and disrupt schemes of laundering of proceeds of crime at the state level in close collaboration with the international community and national institutions.

Press Service of the SFMS

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