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PARTICIPANT’S PARTICIPATION IN FINANCIAL MONITORING

 The issue of finance and funds is the responsibility of, in most cases, accountants. Receiving and supporting payments for services, as well as receiving cash (if any) are the direct responsibilities of the accountant. This issue is updated in connection with the amendments to the current legislation regarding the introduction of new rules of financial monitoring, which, among other things, provides for new subjects of its implementation.

 Therefore, we will consider the features of accounting support of financial transactions carried out by lawyers, law firms, law firms in terms of financial monitoring.

 According to Article 5 of the Law № 361-IX of December 6, 2019, the specially established entities authorized to carry out primary financial monitoring are in particular:

  • Lawyers;
  • Law firms;
  • Bar associations;
  • Business entities that provide legal services in accordance with the classifier of economic activities (NACE 69.10), as well as tax advice (NACE 69.20).

 Responsibilities for primary financial monitoring and the specifics of its implementation are provided for in Articles 7 and 8 of the above-mentioned Law. In particular, Article 7 deals with a risk-based approach, which defines the general external evaluation criteria for such a client, and Article 8 regulates responsibilities in more detail.

 The implementation of primary financial monitoring by the above entities occurs if their client carries out transactions:

  • purchase and sale;
  • asset management;
  • bank account management;
  • securities account management;
  • processes of creation or purchase and sale of legal entities;
  • processes of management of legal entities.

  The above operations give rise to the obligation to register with the State Financial Monitoring Service.

 However, information that has become known in connection with a lawyer’s secret or other legally protected secret and during the protection or representation of the client is not subject to monitoring and further informing the responsible entities. It should be noted that accountants are not subjects subject to legal secrecy, which raises the issue of notifying the head of the legal entity for further monitoring and other response measures. To avoid problems in this regard, the law firms’ accountants have recently entered into a non-disclosure agreement to exclude the Client’s financial monitoring obligation.

Please note that accountants working in law firms are not independent entities, but they have a secondary obligation to inform the manager about the transactions. And already the head further decides a spectrum of the actions within the limits of the Law on legalization.

 Thus, this issue is relevant and has arisen recently, and therefore there is no widespread practice and experience in its implementation. Therefore, in order to protect your business, you should always follow the legislative innovations, which will help you with the law firm “Prikhodko and Partners”.

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