Head of International Corporate Law and Fintech Practice
Expert in fintech, crypto, and international corporate law with over 20 years of experience. Specializes in crypto licensing (VASP/CASP), iGaming business support, and international structuring, asset protection, and OSINT analytics for risk assessment and due diligence.
Legal verification of the transaction for AML/CTF
Legal due diligence of transactions for compliance with AML/CTF (Anti-Money Laundering/Counter-Terrorist Financing) requirements is an important part of modern compliance practice. Its goal is to detect and prevent attempts to use financial instruments to launder proceeds of crime or finance terrorist activities. For international businesses, cryptocurrency companies and financial institutions, such due diligence is not only a legal obligation, but also a means of protecting their own reputation.
Procedure for checking compliance with AML/CTF requirements
AML/CTF checks are carried out in the context of national and international legislation. The European Union has adopted several directives that establish a general framework for combating money laundering, and Ukraine has a Law “On Prevention and Counteraction to the Legalization (Laundering) of Proceeds”. According to the rules, primary financial monitoring entities must identify customers, identify ultimate beneficial owners and monitor the nature of their transactions. In case of the slightest suspicion, they are obliged to notify the authorized authorities.
In practice, legal due diligence of a specific transaction involves a multi-level approach. It begins with the identification of the parties to the transaction: checking passports or corporate documents, confirming the status of the company, studying the beneficiary structures. Then the origin of the funds is analyzed. If we are talking about large payments from an individual, it is important to establish whether their income corresponds to the volume of the transfer. In the case of corporate clients, it is checked whether the company actually conducts declared economic activity and has the financial capacity to make such payments.
Particular attention should be paid to transactions that have risk factors. This may include interaction with jurisdictions that are recognized as offshore or have a high level of corruption, the use of cryptocurrencies without proper confirmation of the origin of assets, or conducting unusually large transactions without a documentary explanation. An important task for a lawyer is not only to identify potentially problematic signs, but also to document the conclusions so that in the event of a regulator’s inspection, it is possible to substantiate the company’s position.
Practical transaction verification algorithm
- Identification and verification of the client (KYC procedures).
- Analysis of the economic feasibility of the transaction and its compliance with the client profile.
- Examination of documents confirming the origin of funds.
- Verification of the counterparty and its country of registration.
- Recording the results with proper substantiation of legal conclusions.
A lawyer conducting such a check must be guided not only by formal criteria, but also have analytical skills. Often, the same transfer can have both legal explanations and hidden risks. For example, receiving a large amount from a newly created company from a dubious jurisdiction does not always indicate money laundering, but without a thorough assessment of the origin of finances, accepting a transfer is high-risk.
In the context of globalization of markets, the circulation of cryptocurrencies and the growth of the number of cross-border payments, legal verification of transactions becomes a tool not only for response, but also for risk management. It allows you to timely identify “red flags” in your clients’ activities and avoid penalties. For companies that provide traditional financial intermediation services or service cryptocurrency assets, early implementation of internal AML/CTF policies significantly increases trust from both regulators and business partners.
Thus, legal due diligence of a transaction for AML/CTF is a comprehensive procedure that combines knowledge of the law, financial analytics, and practical skills in assessing the client’s commercial activities. Its systematicity and proper documentation provide not only protection against legal risks, but also form the basis of a reliable compliance culture of the company.
What services does a lawyer at Prikhodko & Partners provide?
The law firm “Prikhodko & Partners” provides a full range of services for building compliance policies and legal verification of transactions. Our specialists will help:
- analyze a specific operation for compliance with AML/CTF requirements;
- develop internal procedures for controlling financial flows;
- prepare documents for regulators and banks;
- minimize the risks of penalties and blocking accounts.
If you are looking to protect your business from reputational and financial losses, contact “Prikhodko and Partners” – and we guarantee professional support at every stage.
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