Key points on prevention of money laundering in Ukraine

Key points on prevention of money laundering in Ukraine

The prevention of money laundering in Ukraine is mainly regulated by financial monitoring.

Financial monitoring is a set of measures taken by financial monitoring bodies in the field of prevention and counteraction, including state financial monitoring and primary financial monitoring.

Financial monitoring in Ukraine is regulated by the Law of Ukraine "On Prevention and Counteraction to Legalization (Laundering) of the Proceeds of Crime, Terrorist Financing and Financing of the Proliferation of Weapons of Mass Destruction" dated December 6, 2019 (the "Law") and a number of regulations.

In accordance with the Law, threshold financial transactions (in particular, in the amount approx. EURO 10  000 and above) and suspicious financial transactions (if there are grounds to believe that they are the result of criminal activity or are related to or relate to terrorist financing or financing of the proliferation of weapons of mass destruction) are subject to financial monitoring. 

The national financial monitoring system consists of the following elements:

1. Subjects of primary financial monitoring (banks, financial institutions and others);
2. Subjects of state financial monitoring (NBU, NSSMC, Ministry of Digital Transformation, Ministry of Finance, Ministry of Justice, State Financial Monitoring);
3. Law enforcement, intelligence and judicial authorities (SBI, BES, SSU, PGO, NABU, National Police and others).

The State Financial Monitoring Service is the coordinator of the national financial monitoring system.

The Order of the Ministry of Finance of Ukraine No. 465 dated December 28, 2022, approved the updated Risk Criteria for Legalization (Laundering) of Proceeds of Crime, Terrorist Financing and Financing of the Proliferation of Weapons of Mass Destruction.

Currently, according to the Law, a high risk of business relations (financial transaction without establishing business relations) is established, in particular, in relation to the following clients:

• customers whose place of residence (location, registration) is a state (jurisdiction) that does not implement or improperly implements the recommendations of international and intergovernmental organizations involved in combating money laundering or terrorist financing or the financing of the proliferation of weapons of mass destruction;
• clients included in the list of persons, clients who are representatives of persons included in the list of persons, clients that are directly or indirectly owned or ultimate beneficially owned by persons included in the list of persons;
• foreign financial institutions (except for financial institutions registered in the member states of the European Union, member states of the Financial Action Task Force on Money Laundering (FATF), except for states that carry out armed aggression against Ukraine in the meaning given in Article 1 of the Law of Ukraine "On Defense of Ukraine") with which correspondent relations are established;
• foreign public figures, members of their families and persons related to such politically exposed persons, as well as clients whose ultimate beneficial owners are the said persons;
• customers whose place of residence (location, registration) is a state included in the list of offshore zones by the Cabinet of Ministers of Ukraine;
• clients in respect of whom information on the ultimate beneficial owner of the legal entity is excluded from the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Organizations or a note is made that the ownership structure of the legal entity is recognized by the National Bank of Ukraine as non-transparent;
• customers who are citizens of a state that carries out armed aggression against Ukraine (except for citizens of such a state who were granted the status of a combatant after April 14, 2014) and/or persons whose place of permanent residence (location, registration) is a state that carries out armed aggression against Ukraine;
• clients whose ultimate beneficial owners are citizens of a state that carries out armed aggression against Ukraine (except for citizens of such a state who were granted the status of a combatant after April 14, 2014), and/or persons whose place of permanent residence (location, registration) is a state that carries out armed aggression against Ukraine, etc.