On April 26, 2019, the Head of the State Financial Monitoring Service of Ukraine (hereinafter – the SFMS) Igor Cherkaskyi presented Public Report on the results of 2018 activity.
At the beginning of his speech, the Head of the SFMS focused on the main aspects of the regulatory provision of the Service, its structure and informed about the main functions of the SFMS in detection and suspension of the assets derived from crime or related to the terrorist financing.
The Head of the Service stressed that the key result in 2018 was the victory in the contest “The Best Egmont Case Award” the results of which were announced during the 25th Plenary Meeting of the Egmont Group in Sydney, Australia.
The fact that the international community recognized as the winner concerned of the multistage and unprecedented by complexity investigation of corruption and money laundering by former high-ranking officials of Ukraine, culminating in confiscation of about USD 1.5 billion of the State revenue.
The second important event of 2018 was the approval of the draft Law “On Prevention and Counteraction to the Legalization (Laundering) of the Proceeds from Crime, Terrorist Financing and the Financing of the Proliferation of Weapons of Mass Destruction” in December of this year by the Cabinet of Ministers of Ukraine, which was developed jointly with the State Financial Monitoring Service of Ukraine (hereinafter - the SFMS) to implement the provisions of the 4th Directive (EU) 2015/849 “On the prevention of the use of the financial system for the purposes of money laundering or terrorist financing” and Regulation (EU) 2015/847 “On information accompanying transfers of funds”.
Also, Igor Cherkassy focused on cooperation between the SFMS and reporting entities, noting that the number of reports from all reporting entities over the past five years has increased from 1 million to over 10 million.
He marked the work of the Financial Intelligence Unit of Ukraine in the part of generalization of typological researches. In particular, in the reporting year, the Service issued a typological study: "The risks of using entities with an opaque ownership structure in money laundering schemes", which seeks to study the issue of concealment of beneficial ownership in money laundering schemes. This is an extremely relevant and sensitive topic, which the SFMS continues to develop this year.
At the same time, the Head of the SFMS has placed a special emphasis on improving the effectiveness of interaction with law enforcement and intelligence agencies, to which the SFMS submits relevant case referrals.
He stressed that in 2018, 934 cases were sent to law enforcement agencies. Thus, in comparison with the previous period in 2018, the amount of submitted by the SFMS case referrals to the law enforcement agencies increased to 31.2%.
In the mentioned referrals the amount of financial transactions that may be related to legalization of funds as well as to the commission of an another crime determined by the Criminal Code of Ukraine is UAH 347,4 billion.
Also, the Head of the Service mentioned that in general from March 2014 till December 2018 3599 case referrals have been submitted to the law enforcement authorities.
The next important aspect of the SFMS activity which was noted by Igor Cherkaskyi was the issue of ensuring coordination of the financial monitoring system participants.
Such coordination based on the implementation of the Strategy for development financial monitoring system till 2020 is carried out both on information level due to the Unified state information system, and through the activity of the Government AML/CFT Council as well as cooperation with professional associations of reporting entities and public.
The Head of the SFMS also emphasized that the SFMS IT system has been modernized in 2018.
He hasn’t overlooked such an important element of the SFMS activity as methodical assistance and cooperation with reporting entities.
The Head noted that on the basis of the State Institution of Postgraduate Education “The Academy of Financial Monitoring” under the SFMS, only in 2018 1749 specialists of the public and private sector have been trained.
Also, with the assistance of the OSCE Project Coordinator in Ukraine in 2018 the Glossary on prevention and counteraction to legalization (laundering) of criminal proceeds, terrorist financing, financing of proliferation of weapons of mass destruction and corruption and the Methodology of the National Risk Assessment on money laundering and terrorist financing in Ukraine developed taking into account international standards and MONEYVAL proposals were published.
Moreover, with the assistance of the EUACI a compilation of fundamental international documents being a basis for building up and evaluating AML/CFT system as well as methodical recommendations for real estate agents in the form of infographics were published.
At the same time, Igor Cherkaskyi paid the attention to that within the preparation to the second National Risk Assessment, the SFMS presented the Report following the sectoral risk assessment of the use of the real estate market for ML/FT purposes. The main objective of the sectoral risk assessment was the identification of the stage of compliance and effectiveness of legislative, methodological and practical measures taken in the country for protection and avoidance (reduction) threats and vulnerabilities to legalization (laundering) of proceeds on the real estate market.
According to Igor Cherkaskyi such a sectoral risk assessment emphasized should be conducted by every state financial monitoring entity and will be an integral part of the future National Risk Assessment to be conducted in this year.
However, the Head noted the significant volume of the SFMS work on the international level. The SFMS cooperates with major international organizations, in particular: FATF, MONEYVAL, Egmont Group of financial intelligence units and other. Currently, the SFMS has concluded 78 Memoranda of Understanding with foreign financial intelligence units (FIUs). In 2018, the SFMS actively exchanged financial information with foreign FIUs.
At the conclusion of the speech, the Head of the SFMS informed about future plans in the SFMS activity. Thus, an important area of activity will be the continuation of cooperation with MONEYVAL in the framework of coordination measures for implementation of the National AML Action Plan until 2019, as well as the Action Plan for the implementation of the MONEYVAL recommendations, following the results of the evaluation of Ukraine, the results of which will be presented by Ukrainian delegation in July at the Plenary meeting as the first follow-up report.
After the public report, the Head of the SFMS mentioned that the Service as a financial monitoring system coordinating authority, in order to achieve effective results in its activity, will remain open and provide constructive cooperation with state regulators, law enforcement authorities, reporting entities, and especially with institutes of civil society.
Separately, the Head of the SFMS thanked every employee of the Service for his/her contribution to the results achieved.