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Financial monitoring system updating

On January 19, the Ministry of Finance has published on its website a large-scale draft law related to updating a system of financial monitoring: Law of Ukraine “On entering changes into some legislative acts of Ukraine in the sphere of prevention and counteraction of legitimization (laundering) of proceeds of crime, financing terrorism and financing proliferation of weapons of mass destruction”.

Therefore, transactions which must be reported by a subject of primary financial monitoring (SPFM) to the State financial monitoring body shall exceed 300k UAH (currently – 150k UAH) and shall be related to cash, transfer of money abroad by the politically significant persons and persons related to them, or by the state, which does not fully correspond to recommendations by international organizations in the sphere of combating legalization (laundering) of proceeds of crime, or financing terrorism and financing proliferation of weapons of mass destruction.

For transactions of money transfer without identification and verification of client a threshold has also increased from 15k UAH to 30k UAH.

However, the circle of subjects of primary financial monitoring (SPFM) has become significantly wider. Now the existing SPFM also includes money exchange outlets, while the list of special SPFM now includes persons providing information-consulting services in the sphere of taxation and persons providing services related to creation, functioning and management of legal entities (excluding persons who provide services within the framework of employment relationships).

End beneficiaries verification mechanism was complemented for the purpose of separating ultimate beneficiaries from nominal persons.

Draft law also envisages risk-oriented approach for submitting information on suspicious financial transactions of SPFM. In line with this approach, considered are the type of a client, his geographical position and registration, kinds and ways the goods and services are provided to the client. Even a pre-threshold suspicious transaction or attempt thereof must be reported to the State financial monitoring body.

Draft law simplifies identification of a circle of politically significant persons based on declarations submitted to National agency on corruption prevention (NACP) and creation of a State registry of national public persons and their family members.

New rules for financial transactions by high-rank public officials and officers, judges, prosecutors and members of parliament, members of their families are also introduced and they envisage availability of the required information about their financial and property status.

A wide range of punishment is envisaged for violation offinancial monitoring rules by SPFM: from awarning in writing to fines ranging from 5 to 10% of the annual turnover for every filed fact, withdrawal of a license and even a prison time. For instance, any person engaged in intentional violation of the procedure of freezing assets of a person related to conducting terrorist activity can be sentenced to 8 years in jail.

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