The Ministry of Finance, by Order No. 440 of August 02, 2021 (registered with the Ministry of Justice on August 18, 2021 under No. 1087/36709), approved new Principles for processing information received from primary financial monitoring entities about financial transactions subject to financial monitoring, and criteria for analyzing such transactions.
These Principles describe:
- principles of processing information received from the reporting entity;
- criteria for analyzing information received from the reporting entity.
This Order is valid from August 31, 2021 (published in the Official Gazette No. 67 of August 31, 2021).
Accordingly, on August 31, the Order of the Ministry of Finance No. 306 of March 10, 2015 became invalid, which approved the old Principles of processing information received from primary financial monitoring entities about financial transactions subject to financial monitoring and criteria for analyzing such transactions.
Principles of processing information received from the reporting entity
The processing of information received from the reporting entity is based, as before, on the following eight basic principles:
1) completeness of information processing;
2) sequence of information processing;
3) information security and protection;
4) control over the processing of information by employees of the State Financial Monitoring Service;
5) timeliness and objectivity of information processing;
6) independence and non-interference in the activities of the reporting entity by employees of the State Financial Monitoring Service during their processing of information;
7) prioritization and categorical information processing, taking into account the risk-based approach;
8) comprehensive use of information from the Unified State Information System in the field of preventing and countering the legalization (laundering) of proceeds from crime, terrorist financing and financing proliferation of weapons of mass destruction, automated, information and reference systems, registers and data banks of state authorities and other information resources provided for by law.
In other words, the basic principles have not changed.
Criteria for analyzing information received from the reporting entity
During the processing of information received from the reporting entity, employees of the State Financial Monitoring Service will conduct operational and strategic analysis. This has never happened before. Accordingly, the criteria for analyzing the information received from the reporting entity will differ.
During operational analysis, employees of the State Financial Monitoring Service analyze information according to the following criteria, in particular:
- economic rationale and purpose of financial transactions (activities);
- type of asset or settlement form used in conducting a financial transaction (activity) and the amount of the financial transaction (activity);
- compliance of the financial transaction (activity) with the declared income, nature and content of the transaction participant’s activities;
- location, place of residence or place of residence of participants in financial transactions conducting a financial transaction (activity), or ultimate beneficial owners, their scope and period of activity;
- connections of participants in a financial transaction (activity) with politically significant persons, their family members and/or persons associated with politically significant persons (this is a new criterion);
- the subject of the agreement between the participants of the financial transaction (activity), as well as financial instruments used during the financial transaction (activity);
- comments and other available additional information received from the reporting entity and available to the State Financial Monitoring Service (this is a new criterion).
When conducting strategic analysis information is analyzed, in particular, according to the following criteria:
- trends in the legalization (laundering) of proceeds from crime, terrorist financing and financing proliferation of weapons of mass destruction;
- typologies for the legalization (laundering) of proceeds from crime, terrorist financing and financing proliferation of weapons of mass destruction;
- repeatability of processes related to the legalization (laundering) of proceeds from crime, terrorist financing and financing proliferation of weapons of mass destruction;
- area of influence or location of the phenomenon of legalization (laundering) of proceeds from crime, terrorist financing and financing proliferation of weapons of mass destruction, related threats and vulnerabilities;
- regarding the movement of assets involved in the legalization (laundering) of proceeds from crime, terrorist financing and financing proliferation of weapons of mass destruction;
- type of operations (activities) used by participants involved in schemes for legalizing (laundering) proceeds from crime, terrorist financing and financing proliferation of weapons of mass destruction;
- activities of related participants in financial transactions using professional money laundering networks.
The list of additional data for processing information received from the reporting entity has been expanded. If earlier there were only three of them, according to the new Order, they are eight. In particular, employees of the State Financial Monitoring Service will now take into account:
- additional information from the reporting entity, state, law enforcement and intelligence agencies, financial intelligence units on suspicion of legalizing (laundering) proceeds from crime, or terrorist financing or financing proliferation of weapons of mass destruction, or committing an act defined by the Criminal Code of Ukraine as a criminal offense, which does not concern legalizing (laundering) proceeds from crime or terrorist financing;
- availability of data indicating the involvement of a financial transaction or a set of related financial transactions in the legalization (laundering) of proceeds from crime, terrorist financing or financing proliferation of weapons of mass destruction;
- availability of data indicating the involvement of a financial transaction or participants in a financial transaction (activity) in a criminal offense that does not relate to the legalization (laundering) of proceeds from crime or terrorist financing;
- availability of data on the application of special economic and other restrictive measures (sanctions) according to Article 5 of the Law of Ukraine “On Sanctions” against participants in a financial transaction (activity) (ultimate beneficial owners);
- availability of data on the application of international sanctions against participants in a financial transaction (activity) or their assets;
- information received from the reporting entity about discrepancies between information about the ultimate beneficial owners of the client, which are contained in the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Formations, and information about the ultimate beneficial owners obtained by the reporting entity as a result of proper verification of the client;
- information received from the reporting entity regarding the refusal to establish (maintain) business relations, conduct a financial transaction.