STATE COMMITEE FOR FINANCIAL MONITORING OF UKRAINE
Igor Cherkaskyi: International audit of the national AML/CFT system is completed.
The activity of the State Financial Monitoring Service of Ukraine is recognized effective and successful.
On January 30, 2018, the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) published the 5th round Mutual Evaluation Report of Ukraine (https://rm.coe.int/fifth-round-mutual-evaluation-report-on-ukraine/1680782396).
On the whole, the Report confirms that Ukraine is a reliable jurisdiction in AML/CFT issues, which does not require special control measures (beacons) from MONEYVAL and FATF.
The indicated result testifies to unconditional progress in the development of the national financial monitoring system and confirms the growing effectiveness of actions of all its participants.
In the light of this event, it should be emphasized that, based on the results of the audit, MONEYVAL confirmed the significant level of operational and institutional capacity of the national financial intelligence unit - the State Financial Monitoring Service of Ukraine for all rating parameters.
In addition, the Report focuses on the significant level of inter-agency coordination, the quality of the first National Risk Assessment, the organization of international cooperation, as well as high level of regulatory and supervisory activities, in particular over the banking sector and the securities market.
The Report also pays tribute to the concentrated work that is currently underway to arrest and confiscate funds in cases of corruption and theft of state assets at higher levels in accordance with national ML risks.
It should be emphasized that under the monitoring regime Ukraine is at the level of such FATF member countries as Australia, USA, Canada, Singapore, Denmark, Sweden and Switzerland.
Based on the results of the evaluation of Ukraine, the positive MONEYVAL’s decision was preceded by a number of unprecedented complex organizational and practical measures that were carried out and accompanied by the SFMS throughout the whole 5th round evaluation process, which lasted more than a year and was launched in August 2016.
In this context, it should be noted that the significant efforts of the SFMS were focused on the completeness of the information and analytical support of international experts, as well as on the coordination of joint actions with the state authorities of Ukraine in this area, in particular with the Prosecutor General’s Office of Ukraine, the National Anti-Corruption Bureau of Ukraine, the Security Service of Ukraine, the State Fiscal Service of Ukraine, the National Police of Ukraine, the National Bank of Ukraine and other authorities.
Also, the evaluation process took place with the considerable support of the Cabinet of Ministers of Ukraine and the Ministry of Finance of Ukraine.
The SFMS was the main moderator of the abovementioned work at all stages of preparation and conducting of the international evaluation of Ukraine, in particular:
- Stage I (September-December 2016) – the detailed Questionnaires on Technical Compliance of Ukrainian legislative framework with FATF standards as well as on Effectiveness of functioning of financial system (including examples, statistics and other professional information) were filled in, translated and sent to MONEYVAL;
- Stage II (January-March 2017) – the SFMS conducted practical, methodological and explanatory meetings, meetings and trainings for participants of the financial monitoring system. About 40 of such interagency thematic events were organized and conducted;
- Stage III (March 23 - April 8, 2017) - The SFMS has organized a stay of MONEYVAL evaluation team in Kyiv, which has held more than 70 expert meetings with relevant representatives of Ukrainian authorities;
- Stage IV (April-September 2017) - The SFMS has ensured cooperation with MONEYVAL Secretariat, which included the conference calls, consultations on elaboration of the draft Report;
- Stage V (October-December 2017) - SFMS has ensured the participation of Ukrainian delegation in the face-to-face meetings with the evaluation team in Strasbourg, French Republic (2-4 October 2017) and further elaboration of the draft Report;
- Stage VI (December 4-7, 2017) – the SFMS has ensured the organization of the participation of the Ukrainian delegation in the meeting of the Working group of experts and the 55th Plenary meeting of MONEYVAL (Strasbourg, French Republic), which approved the 5th round Mutual Evaluation Report of Ukraine;
- Stage VII (December 8, 2017 – January 30, 2018) - the SFMS took part in carrying out detailed analysis of the approved Report concerning quality and consistency in accordance with the approved MONEYVAL’s procedures with regard to Ukraine.
As a result of the coordinated and constructive work of the SFMS with MONEYVAL, the final Report broadly and objectively highlights the state of technical compliance and effectiveness of AML/CFT measures in Ukraine.
This international document provides an analysis of the level of compliance of Ukrainian legislation with the relevant FATF Recommendations, an assessment of practical operability and effectiveness of the financial monitoring system in Ukraine, and provides recommendations for its improvement.
In particular, the Report includes a comprehensive rating assessment of the situation in Ukraine on prevention and counteraction to money laundering, terrorism financing and financing of proliferation of weapons of mass destruction and covers the following issues:
- National Risk Assessment and International Cooperation;
- regulation, supervision, evaluation of the private sector and risks of legal entities;
- collection, analysis and sharing financial information;
- investigation and prosecution of money laundering and terrorism financing;
- the use of confiscation and targeted financial sanctions for financing of terrorism and proliferation of weapons of mass destruction.
As a result, Ukraine has received positive ratings based on the results of a technical compliance assessment of Ukrainian legislation. In particular, it has been established that national legislation is fully compliant with 12 FATF Recommendations, largely compliant with 20 FATF Recommendations, partially compliant with 7 FATF Recommendations and one Recommendation is not applicable in Ukraine.
Under the level of efficiency, according to the established ratings, Ukraine was rated by the two immediate outcomes as "substantial", by eight immediate outcomes as "moderate" and by one immediate outcom as “low”.
The MONEYVAL’s Report has also identified a number of constructive comments to the work of the National financial monitoring system. These comments primarily concern the necessity of increasing efficiency of:
- the law-enforcement and judicial system, in particular, in terms of improving practical measures for investigating criminal proceedings, seizure and confiscation of criminal proceeds;
- measures for regulating and supervising of non-financial institutions and businesses;
- introduction of a procedure for verifying the reliability of the data of the ultimate beneficial owners;
- measures for preventing and counteracting to terrorism financing and awareness in private and non-profit sectors with appropriate threats, vulnerabilities and risks associated with their professional activities;
- measures to introduce comprehensive, reliable and continuous administrative reporting in the field of financial monitoring;
- harmonization of the national legislation with regard to crimes related to terrorism financing and targeted financial sanctions in line with international standards, etc.
It should be noted, that indicated MONEYVAL’s proposals for Ukraine fully comply with outcomes of the National Risks Assessment held by the SFMS in 2016, in particular with regard to risks of corruption, organized crime, high cash flow, terrorism manifestation, lack of sector assessment of financial sector risks, ineffective sanction policy, work of law-enforcement and judicial system.
Today, the SFMS has started the process of preparation of the relevant Action Plan for further improvement of the financial monitoring system in Ukraine by the results of the 5th round of MONEYVAL’s evaluation. The specified work is defined by the SFMS as priority and urgent.
The SFMS, taking into account the results of the 5th round of evaluation, will actively continue to take effective measures in the context of further development of internal cooperation and cooperation with MONEYVAL as well as international community in order to minimize the negative manifestations of global and national risks and taking into account the need for continuous and uninterrupted functioning of the mechanism for prevention and counteraction to the threats of money laundering, terrorism financing and financing of proliferation of weapons of mass destruction.
Reference: It is worth topay attention to the positive MONEYVAL’s conclusions in the context of evaluation of the SFMS’s work effectiveness as a national financial intelligence unit.
Press-service of the SFMS