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New Bill No. 2179 on Financial Monitoring and Anti-Money Laundering

Верховная Рада приняла в первом чтении законопроект №2179 о финмониторинге и противодействии отмыванию денег

Financial monitoring or Financial intelligence (Eng. Financial intelligence) is a concept similar to the concept of financial control, and is also directly related to the mandatory internal control procedures regarding financial transactions. Financial monitoring is also the activity of organizations engaged in operations with cash or other property to identify operations subject to mandatory control and other operations with cash or other property related to the legalization (laundering) of proceeds from crime, the financing of terrorism, proliferation of weapons of mass destruction.

Money laundering - imparting a lawful form of possession, use or disposal of money or other property obtained as a result of a crime [1], that is, their transfer from the shadow, informal economy to the official economy in order to be able to use these funds openly and publicly . In official documents, it is called “legalization (laundering) of money or other property obtained by criminal means”. Moreover, the form of cash can change from cash to non-cash (for example, through instant payment terminals), and vice versa (for example, by winning the lottery or buying a winning lottery ticket from the legal owner, including for an amount exceeding the winning amount) .

On November 1, the Verkhovna Rada adopted in its first reading bill No. 2179 on financial monitoring and anti-money laundering. The bill was supported by 378 deputies.

What do deputies offer

The bill proposes a comprehensive improvement of national legislation in the field of financial monitoring.

Explanatory note to the draft law of Ukraine No. 2179 dated 09/25/2019 >>>

What gives a new bill, clarification of the Ministry of Finance

Thanks to the new bill, the financial operations of oligarchs, corrupt officials, and big business will be closely monitored by regulatory bodies.

“The law will ruin the life of schemers by closing a number of legislative gaps. It clearly spells out mechanisms for freezing assets and stopping financial transactions if they are associated with the transfer of money to offshore companies or the financing of terrorism, ”the ministry said.

Why is the bill important?

✔ The bill minimizes time costs for business: from 17 to 4 the number of transactions that must be reported to the primary financial monitoring entities (banks, insurers, credit unions, pawnshops, exchanges) is reduced. It is noted that reporting will occur on a case-by-case basis.

✔ Simplified reporting. The amount of financial transactions subject to mandatory financial monitoring increases from 150,000 UAH to 400,000 UAH. At the same time, reporting deadlines are extended from three to five business days.

✔ Digitalization of processes: simplified access to financial services through digital identification, i.e. remote verification of the operation owner will be possible.

✔ New rules are introduced when penalizing banks. With the introduction of the law, the magnitude of the violation will be of importance, not the size of the authorized capital.

✔ Innovations will increase the efficiency of banks, insurers, etc. and protection of citizens of Ukraine.

✔ The bill clearly spells out mechanisms for freezing assets and stopping financial transactions, toughening requirements for disclosing the ultimate beneficial owners of companies.

“The adoption of this bill will also allow Ukraine to fulfill one of the key conditions for the provision of the second tranche of macro-financial assistance to the EU in the amount of 500 million euros in 2019,” the Finance Ministry emphasized.

Previously reported

✔ In August, the NBU supplemented the rules for financial monitoring.

✔ For the third quarter of 2019, the NBU transmitted to the Security Service of Ukraine information on dubious transactions in 17 banks and two non-bank financial institutions totaling more than 17 billion.