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The Parliament Approves Law on Financial Monitoring

On November 1, the Parliament of Ukraine approved the Law of Ukraine “On Prevention and Counteraction to Legalization (Laundering) of Proceeds from Crime, Financing Terrorism and Financing the Proliferation of Weapons of Mass Destruction” (2179) in the first reading.
The law aims to improve the effectiveness of the anti-money laundering and counter-terrorism financing system by implementing international standards.
The law establishes in national law the FATF Recommendations and the 4th and 5th EU Directives on Anti-Money Laundering and Counter-Terrorist Financing, which are already in place in all EU Member States and are binding on potential candidates (including Ukraine).
Adoption of this law is part of Ukraine's international commitments within the EU-Ukraine Association Agreement, as well as the Memorandum of Understanding between Ukraine and the EU ratified in November last year, which will not only reach a new level of quality of the financial monitoring system but also provide an opportunity to obtain the second tranche of EU Macro-Financial Assistance of EUR 500 million.
Adoption of the law will ensure:

  • focus on the highest risks, threats, and vulnerabilities. This includes the shift to risk-oriented approach and the case reporting on suspicious transactions made by clients of initial financial monitoring entities,
  • permission to use the results of due diligence carried out by another initial financial monitoring entity,
  • an increase in the number of financial transactions subject to mandatory financial monitoring (from UAH 150,000 to UAH 400,000) while reducing the number of criteria of such financial transactions (from 17 to 4),
  • creation of a transparent instrument for prosecution for such violations,
  • determination of fine for large-scale and systemic violations.
  • reducing the costs of banks and financial institutions for reporting on financial transactions through the automative process of information provision and reduction of frequency of information,
  • improvement of the disclosure procedure for final beneficial owners.