Account blocking by financial monitoring

Financial monitoring of the bank is provided for in the Law "On prevention and countermeasures against the legalization (laundering) of proceeds obtained through crime, the financing of terrorism and the financing of the proliferation of weapons of mass destruction." It is this normative legal act that determines the types of monitoring. The aforementioned Law also regulates the procedure for conducting financial monitoring and establishes that state monitoring is provided by the National Bank, and primary monitoring is provided by other banking institutions. If we talk about the main task of such activity, then it consists in preventing illegal circulation of funds.

What amounts are subject to financial monitoring?

As for the amount of the bank transaction, in which the origin of the funds must be explained, it is 400,000 hryvnias. However, in practice it becomes obvious that much smaller amounts and financial transactions are also subject to monitoring. For example, in the summer of 2023, attention to transfers, the size of which exceeds the mark of 5 thousand hryvnias, increased. The bank may also be suspicious of situations when:

• the client's financial operations have recently become significantly different from the previous ones;
• amounts of the same size are steadily coming to the account of an individual, which may indicate the sale of a certain product;
• a large number of transactions are carried out on the card (several dozen per day), even if the amounts are small;
• the account holder makes regular transfers to the card to the same person, while the amount of the transfers is identical or similar (this may indicate an employment relationship that is not properly registered).

If we talk about the reasons for blocking the account, among them there may be signs:

• fictitious business;
• money laundering;
• withdrawal of capital;
• conversion of non-cash funds into cash;
• tax evasion, as well as other activities.

Thus, not only operations in the amount of 400,000 hryvnias or more are subject to real financial monitoring.

What to do if the account is blocked?

Human rights defenders of the Ukrainian Helsinki Union for Human Rights point out that the procedure for blocking bank accounts needs clarification. However, it happens often, so it's important to know what to do if it happens to you.

In such cases, you need to make a competent explanation to the bank with a request to unblock the account. Documentation proving the origin of the funds is also provided. Such documents include:

• declaration of property status and income;
• declaration of property, income, expenses and obligations of a financial nature;
• SPD declaration to the State Tax Service;
• financial statements submitted by the acquiring legal entity.

 
If you have an unpleasant situation related to the blocking of a bank account, you should not panic and take hasty actions. Contact a team of professional lawyers who specialize in, among other things, banking law. Such experts work at the "Prikhodko&Partners" law firm.

We will advise you, draft a competent explanatory letter to the bank, and also support your interaction with representatives of the financial monitoring department of the banking institution. This will make the whole process much easier for you and ensure the desired result.