Which operations are subject to financial monitoring and under what conditions in 2023

Financial monitoring has always been and remains one of the effective mechanisms for controlling the financial activities of economic entities.

Due to the full-scale war in Ukraine, a number of normative acts were adopted, which somewhat limited financial monitoring during the period of martial law.

Who conducts financial monitoring?

In Ukraine, the authorized entity for financial monitoring is the State Financial Monitoring Service.

Which document regulates financial monitoring?

The Law of Ukraine "On prevention and countermeasures against legalization (laundering) of proceeds obtained through crime, financing of terrorism and financing of the proliferation of weapons of mass destruction".

In accordance with the specified Law, namely Section 3, the following transactions are subject to financial monitoring:

• Threshold financial transactions. Threshold financial transactions include those that clearly meet the set criteria. For example, you can make payments in the amount of up to four hundred thousand hryvnias. Having carried out such an operation in the amount of four hundred thousand hryvnias, such an operation automatically falls under the definition of "threshold financial operation". After conducting such an operation, the financial institution must notify the State Financial Monitoring Service.
• Suspicious financial transactions. In other words, they are also called risky financial operations. The signs of such operations depend on the parties involved. For example, if one of the parties to the transaction is Russia or another country that does not comply with international norms regarding the prevention of money laundering, then such transaction falls under the criteria of "suspicious". Upon receiving notification of such operations, Derzhfinmonitoring is obliged to conduct an inspection.

Conditions for conducting financial monitoring in 2023

Receipt from the financial institution in which the operation is carried out that it has signs of a suspicious or illegal financial operation.

Recommendations

• Before conducting any operations, any business entity must familiarize itself with the indicators of suspicion from the NBU.
• If the financial institution has questions about the transaction or requires clarifying documents, try to provide them as quickly as possible.
• If you are not doing anything illegal, but the financial institution has a biased attitude towards you, then you should look for another financial institution for further cooperation. It is possible that such institutions have a high level of de-risking.

Use the services of proven lawyers and financiers. After all, this can help to avoid typical mistakes when conducting transactions and prevent the demand for unfounded documents on the conduct of a financial transaction.