On 28 April 2020 the Law of Ukraine “On Prevention and Counteraction to Legalization (Money Laundering) of the Proceeds of Crime or Terrorism Financing, as well as Financing of the Proliferation of Weapons of Mass Destruction” (Law on Financial Monitoring) enters into force and will replace the current law. The main changes of the Law on Financial Monitoring are the following:
- Risk-oriented approach to carrying out financial monitoring is implemented: From now on, each subject of initial financial monitoring (SIFM) is obliged to identify risks inherent to its business and implement the respective risk management system. In particular, the SIFM will be obliged to carry out an appropriate check of the clients and create their risk profile. The SIFM is additionally obliged to re-evaluate its risks and the clients’ risks based on their operations and analyze their risk profile.
- KYC: Verification of identification data of the respective person can be conducted by the SIFM without their presence (i.e., remotely).
- Work with politically exposed persons (РЕР): Henceforth, the РЕР is a public official independent of the length of their position (currently — starting from three years) and even if the PEP ceases to perform these functions, the SIFM is obliged to continue taking into account the respective ongoing risks for at least 12 months. At the same time, however, the list of PEP family members is reduced.
- Threshold financial operations: The threshold of operations subject to financial monitoring increased to UAH 400,000; at the same time, however, the number of criteria for the operations to fall within the scope of financial monitoring substantially decreased.
- Suspicious financial operations: These are subject to monitoring irrespective of the amount.
- Funds transfer: The SIFM providing funds transfer services, is obliged to supplement the funds transfers exceeding UAH 30,000 (with the exception of certain operations) with information regarding the sender and recipient of the transfer.
- Whistle-blowing: The SIFM is obliged to establish, for the employees, a procedure of notification of the director and/or the responsible employee regarding a breach of legislative requirements.
- Measures of influence: The amount of fines significantly increased — for the banks and non-banking financial institutions — up to UAH 135.15 million.
Apart from the implementation of FATF recommendations, The Law on Financial Monitoring additionally aims at compliance with the recommendations of the experts of the International Monetary Fund, the European Commission and the Committee of the Council of Europe on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism. With respect to the funds transfer requirements, the aim is to implement the provisions of Regulation (EU) 2015/847 “On information accompanying transfers of funds.”